After helping early-stage crowdfunding investment platform launch its Dallas-focused curated community platform last year, Nada is helping the company’s real estate arm to create a new investment opportunity in residential properties.
Next month the Dallas-based proptech startup launches a joint venture with Republic Real Estate called Cityfunds, a city-specific, index-like investment product.
“You effectively have a self-managed asset because that homeowner retains majority-equity ownership so that you can get to index quite rapidly,” said John Green, Nada’s co-founder and CEO.
Avoiding the challenge of purchasing a substantial amount of assets comes with creating other index-type funds. The Cityfunds product allows investors to invest in the diversified portfolio of rental properties and equity investments. The funds will be managed by joint venture the two companies set up called Cityfund Manager, LLC.
“With Republic, we have the optionality for someone to exchange equity in return for shares in one of the city funds or cash. It’s up to the homeowner,” Green said.
For its launch, Cityfunds will focus on Dallas, Austin and Miami. Green said those cities were chosen partly due to Nada’s and Republic’s presence in those regions' high demand and lack of housing inventory.
Initially, Cityfunds offerings will be Regulation D, then moving to a Regulation A placement. The goal is to follow a similar path for funds in Tampa Bay, Houston, Nashville, Phoenix and possibly San Antonio by the end of the year. Green noted locations in Mexico are also being looked at.
“What ends up happening is investors love to have access to assets within that market, but you can’t get it because there’s no inventory, or if there is, it costs a premium,” Green said. “Then, you have homeowners who do not have a desire to move because it’s a great market, a great place to be. They have a ton of equity, but they can’t do anything with it. You have these two problems and opportunities interchangeable.
The Cityfunds partnership came about after Nada launched a crowdfunding campaign last year on Republic’s Cities concept, which aims to create communities of local startups and stakeholders on its platform. That effort was successful for Nada, which has so far pulled in nearly $1.53 million from about 3,400 investors, bringing its total funding to close to $3 million.
Shortly before the launch of Republic Cities, Republic got into the real estate business with the acquisition of New York-based investment platform Compound. With that, it launched a few initiatives, including a digital real estate portfolio and a curated marketplace with specific property investment opportunities.
Green said the launch of Cityfunds would become Nada’s new go-to-market strategy in new regions. He added that it gives the company new investment products and opportunities for new customer acquisition.
“The plans for Nada are to really position ourselves as the… platform for retail consumers and investors,” Green said. “It enables us to offer a product to consumers… that creates liquidity and diversification in their largest asset.”
This article has been updated to reflect the correct spelling of Cityfund Manager, LLC and the correct amount Nada has raised in outside funding.
