Here, a Miami-based fractional vacation rental marketplace startup, announced formally launching and raising a $2 million pre-seed round, according to a press release shared with FinLedger.
The funding included participation from Liquid 2 Ventures (founded by Joe Montana), Mucker Capital, Bragiel Brothers, Alumni Ventures, Gaingels and a number of fintech executives, according to the release.
The marketplace seeks to unlock the $1.8 trillion short-term rental (STR) market for everyday investors, and accomplishes this by offering fractionalized property shares on its platform for as low as $1 per share.
“Real estate investing is broken – the barriers to procure and manage rentals are too high and it’s only accessible to an elite few. We launched Here because we believe anyone should have access to the same investment opportunities the ultra-wealthy have,” stated Corey Ashton Walters, Here founder and CEO, in the release.
Members are able to browse the marketplace based on investment criteria, and then can decide how many shares to purchase and invest (with each property securitized by the SEC and broken into shares).
Here then handles the property management from acquisition to management, eliminating the need for micro-management like collecting security deposits, credit checks or day-to-day management for individual investors. Members then earn monthly income based on their investment proportion and potential property appreciation.
While vacation rentals have traditionally been reserved to wealthy investors or those with significant property management expertise, Here says its platform breaks down that barrier and allows everyday users to find and invest in the high-profit asset class.
Prior to founding Here in 2020, Walters also cofounded of Homeworthy, a fully remote cloud-based real estate brokerage that functioned in more than 900 cities in the Pacific Northwest. He is also joined by industry veterans Caleb Olthoff (Head of Product) and Keith Breon (Head of Operations), according to the release.
In the following interview, FinLedger speaks with Corey Walters, Here founder and CEO, about the company’s launch, platform services and its plans for the future.
Q: First off, can you describe Here and the services you offer?
A: Put simply, we turn vacation rentals into stocks that you can trade. We work with the SEC to securitize and fractionalize assets, in this case, vacation rentals via real estate. We essentially enable anybody of any walk of life, whether you’re accredited or unaccredited, doesn’t matter [how much] net worth or how much money you have, to invest in an entirely new asset class.
Vacation rentals are kind of new thing if you think about it. I’m sure you’ve heard friends and family and people say they’re turning their place into an Airbnb because it makes a bunch of money. It’s been a very DIY (Do-it-Yourself) industry for a very long time. And over the last couple years, it shifted and in the last year specifically, we saw a really interesting opportunity to take a very arduous asset to manage and buy and source vacation rentals. High-performing ones are generally really unique destinations and they’re very hard to manage.
It’s like, “Let’s remove every barrier that exists. Let’s get rid of the property management layer.” If you want to be an ambassador we’ll handle that, so no credit checks and you’re not being put on any loan. The biggest one is money. If you wanted to buy a place in Connecticut, it’s hundreds of thousands of dollars to buy a property. If you buy it with a loan, it’s 20% down and it’s a lot of money. So for us it was like, let’s remove the biggest barrier to entry on the financial side. How low can we make it? That really removes the barrier, because it’s like anybody, like the lawn care guy outside, can invest. You can invest, I can invest, and wealthy people can invest. The idea is that anybody, from all walks of life, have the opportunity.
Q: What would you say the biggest change has been in recent years that sparked this idea?
A: Two things. The first one is just vacation rentals in general. Airbnb really changed the way people looked at the industry. Before it was like actual bed and breakfast, and other than that it didn’t really exist. People didn’t rent out their entire place, sublets were the closest thing to that. So there’s really been like a professional approach. That’s happened in the space and a kind of instant institutionalization, and there’s all these other kind of apartment hotels that exist. Really it’s just evolved over the last decade, from infancy to where we see it now. Where there’s more companies, it’s taken more seriously and kind of household name brands are being built in the space.
On the ownership side, REG-A (Regulation A) is a pretty new instrument produced by the SEC, that essentially allows you to raise money from people where normally it would be reserved for just accredited investors. It’s great. I personally think it’s great for the American economy, because it allows anybody to invest in things that are generally reserved for the very wealthy. Think about artwork, crazy collectibles and expensive real estate. I think those were the two like inflection points.
That was like the lightbulb, “a-ha” moment, like there’s actually an opportunity here. You take something very hard and and challenging to manage or own, and then you use fractionalization as a product to grant access to basically everybody.
Q: Looking at this fractionalization model, how exactly does the model function as far as participating, getting revenue and being paid?
A: Buying shares is super simple. You log on to the site and find an offering, in this case a property that you’d like to invest in, and we provide all the financials. Everything that’s going on in the property, like the average nightly rate, occupancy rate and these different things that are specific to short-term rentals. It’s a pretty seamless start to finish, kind of like if you’re buying shares in Robinhood.
Basically put in how many shares you’d like to buy or how much you’d like to invest, you sign a quick subscription agreement. Then after an offering, you’re then able to receive any net profit the property generates. If a property generates $5,000 in booking revenue, and it has $2,000 worth of expenses, you’d be entitled to your percentage ownership of that net profit. If it’s $3,000 and you own 1%, you’d be entitled to basically $30 that month of those net proceeds. You also get to take part in any potential appreciation the property generates. If we hold the property for three or four or five years, and let’s say our property goes up $200,000 in those five years, you’d be entitled to your percentage ownership stake.
That appreciation is really unique to this, because it’s not structured like a REIT or a fund. It’s actually very similar to if you and I, this weekend, set up an LLC to go buy a place. It’s actually structured identically from entity structure, but instead of there being two partners, there are hundreds. It’s really cool. You also get to take part in tax depreciation benefits, just like if we were setting up a partnership together to buy a property locally.
Q: Are these properties held by the company? Are people listing them through Here as well?
A: Currently, we are the ones that identify the properties. So we’re [identifying] properties on the open market, and then we retain a minimum of 1% ownership in every property that we acquire on the platform.
Q: I know that short-term rentals around the nation are facing various challenges with municipalities and limits associated with the property, what are your thoughts there? What have you seen and where do you see this going forward?
A: It’s a tough problem. Housing is a hot button item at the moment. Specifically in big city America, bigger cities like Denver, Portland and Miami specifically have been very anti-vacation rental. Full lockdown, you name it, they’re there. They’re out there looking for people to shut down.
What’s interesting is that if you go outside of the big cities and you focus more on destination markets, so these are more of the Aspen or in the Pacific Northwest it could be Leavenworth. In Florida, we’ve got Panama City Beach and the Gulf Coast. These are areas where people are traveling to and less living there full time, but these are more destination markets, places you vacation with your family. It’s actually the opposite.
The main reason why is that these economies heavily rely on tourism. It’s an interesting tale of two scenarios. Big cities have largely rejected vacation rentals and most destination markets have actually embraced them, because frankly they’ve always had these things like ‘bed and breakfasts’ and passive owners that didn’t actually live there full time. It’s interesting, tailed to two different scenarios, and we’re focusing on the destination markets. So places where people traditionally traveled to rather than live and work.
Q: Looking at the company itself, how is fundraising going and where do you plan to expand to in the coming months or year?
A: So we recently raised a $2 million pre-seed round from Mucker Capital, Equity Ventures, Alumni Ventures, Project Brothers and a few angels. We’re very fortunate to get them to back us at the super early stage. The goal is to launch as many cities as possible. Our model is very interesting because we launch properties instead of markets. The idea is that our first offering is in Largo, Florida, and the second one could be in Joshua Tree or the Poconos, Smoky Mountains or Rockies, so really focused on geographic diversity. Launching a lot of different properties and a lot of different locations, we think that’s very exciting.
Q: How did you settle on $1 as the lowest amount for investment?
A: It’s part of our mission. I get very excited when I think about like ‘arming the rebels.’ I get very excited about looking at what barriers can be removed, and in many cases we removed every barrier. Now the remaining ones are financial. Between the two of us, my original idea in my head was $10, or even $1. Think about Robinhood, you log into Robinhood and you can invest $1. How cool is that?
This is probably the best place to invest in vacation rentals today. It’s the best place to invest in real estate, the highest yielding asset class in real estate. So, what barriers can be removed to where anybody that lives anywhere could invest? In many cases, wealthy people will invest in this, but our mission is to make it easy for everyone. What barriers can we just continue to drive down? That’s something we think a lot about and it just makes diversification easy. You’re a young guy and like, my parents invested in funds, REITs and index funds, you name it. That’s where they put their money or the 401k.
I’m a 30-year-old man and my generation, we pick our own stocks that we want to invest in. We invest in crypto and we pick the coins we want to invest in, and we’re investing on Rally Road, Clickbait and Collectibles. I own like a fraction of like a Bored Ape, and that’s cool. It’s fun. We’re trying to build something for that generation of just being able to have selection of what they invest in and almost feel like you have ownership of that from like a collectible standpoint. I think a lot about that actually, it’s something I feel pretty passionately. It’s exciting to me, and if I feel excited about it, there’s got to be a couple 100 other people that feel the same way.
Q: When it comes to the property management, how do you handle that? What are the challenges there?
A: We got to touch on it a little in one of the prior questions you asked, which was around, ‘Where do I see it going?’ We have these goals of launching. One property in one market and then launching another property in the market. That’s incredibly expensive if you’re doing boots on the ground operations in every market, so we had to re-engineer our thoughts on that and how we thought about property management. Right now we’re acquiring existing vacation rentals, so that’s a property that’s currently performing well. They’ve got a great property manager in place, great ecosystem around them, it could be landscaper, cleaners, etc. The idea is that we actually want to keep that in place. So when we acquire a property there’s a good chance that if we keep it in place, it will continue to perform what we think it’s going to perform at, which it did in the year before. In many cases, we partner with the existing property manager to keep things very consistent, and there isn’t this like dead date when we acquire the property, we’ve got to rip everybody out and install our staff. The short answer is we partner with local third party property managers, and in many cases, the best and the brightest in those markets.
Q: What does your team size look like from the operations side at this point?
A: That was actually gonna be the thing I was gonna say, if there’s anything I wanted to chat about. I’m very proud of my team. There’s five of us today full-time. My founding team is made up of Caleb [Olthoff], he actually was VP of Technology at Evolve.com, which is the second largest vacation rental property management and property manager in the United States. Pretty big, pretty great company and he was there for 10 years. I convinced him to join me as employee number one, which was scary and exciting at the same time.
Then we have Eugene Davidzon for property acquisition, he actually came from Divvy Homes, which is a pretty big proptech company. He helped them acquire their first 600 homes. He was early on their property acquisitions team, and now leads property acquisitions here. More recently, we hired Keith Breon who was on the founding team of Vacasa. He was employee number three of Vacasa which is pretty cool. He leads operations at Here. He’s actually the brother of the founder of Vacasa which is kind of funny. Very proud of my founding team, and I think if there’s anybody on planet Earth to build this company, I think we’re assembling the team to do it. I’m very, very proud and actually met them all for the first time this last weekend. In person, we flew to Denver and [we] had it off-site. We went snowboarding and it was a lot of fun, but just kind of off topic. But yeah, it was very awkward at first. It’s weird. It’s kind of like meeting a pen pal.