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It’s no secret that the home rental market has exploded over the past decade.
More and more people are turning to sites like Airbnb and Vrbo, choosing to stay with someone else rather than a hotel.
They want more scenic places and more unique experiences. There was a time when roommates were often cheaper than hotels, but people were willing to spend more if the property and its amenities were worth it.
After all, why should we stay in boxy hotels? Can we stay in a beautiful unique house for the same price?
Dive into the flatshare market
Savvy buyers started buying houses and apartments for the sole purpose of using them as short-term vacation rentals.
It was no coincidence.
Vacation rentals generate on average 160% more revenue than traditional long-term rentals. Who needs to be an owner when you can be a host?
With investments in decor, updated appliances, and Instagram-worthy landscapes, owners could count on a steady influx of guests. The better the house, the higher the price.
Sounds like a simple way to secure a new stream of income, doesn’t it? Well, yes, and as many true vacation owners will understand, no.
Property management is known to be complex, especially when dealing with short-term clients.
These are total wild cards. Whether they’re making a mess, throwing a party, or just asking questions, guests are often a liability to both properties and owners’ time.
For many of these co-owners, it is a second job. Time and effort are already limited. If the so-called passive income from rental property isn’t so passive, is it still worth it?
That’s a good question and one that the rental company Here hope to solve. Founded in 2021, New Approach to the Rental Industry has already raised an impressive amount of capital and interest from the startup investment industry.
This is how it works.
Passive income that is actually passive
Everyone wants a piece of the home rental market, but not everyone has the time to manage a property.
Here the proposal is to treat vacation rentals more like inventory. Unless you’re on the floor or glued to the market index, you’re probably not in too much of a weed when it comes to your stocks.
As a shareholder, you are asked to learn more about the inner workings of the company you are investing in once a year, and this is simply a measure to make sure things are on the right track.
Learning About Passive Income is a Good Thing
This means you can capitalize on the success of a business without doing much. If you buy at the right time, keep an eye on business developments, and sell when the indicators tell you to, you can increase your net worth without much effort.
This is especially true when investing in low-risk index funds.
The idea behind Here is to bring some of this passivity to the rental market. You don’t need to know the safe code, wifi password or even interact with guests.
Think of Here as your stockbroker. They ensure the management of the property and its maintenance. As a co-owner for as many shares as you buy, you receive a portion of the rental sale when the property hosts guests.
Once you’ve made the purchase, it’s 100% passive. Here takes care of client communication, property maintenance and risk assessment.
When it comes to the rental industry, it’s a game-changing idea.
A service like this can make passive house rental income accessible to almost anyone, as long as they have the initial investment. Here owns the properties, its shareholders reap the rewards.
Plus, here’s approaching the purchase of these properties with a high-yield mindset.
They look for destinations that have a proven track record of consumer interest in short-term vacations. The focus is on long-term performance, so the value of these properties will only increase over time.
A higher value means a higher rental price. We’re sure you know what this means for residential shareholders.
Ownership in shares
What interests us here is how they approach the market for these rental properties. You can see the effect of crypto-market, app-based exchanges, and in-game NFTs here. Here the app looks like a mix between Airbnb and Robinhood.
As you browse, you will see a selection of rental properties that you can choose to invest in. Here offers a variety of properties, so users can buy stocks just like they would stocks, based on their value criteria.
For its part, Here uses a range of valuation models to establish a benchmark resale number for each property. This helps potential investors gauge the perceived or future value of the stock. These models are based on an algorithm that takes into account several factors, such as the comparison of other properties in the neighborhood, the renovated condition of the house and the state of the market for home sales.
When you find a property (or properties) you want to invest in, you essentially become a shareholder. You are interested in a series of Here LLC, home owner.
As such, you are entitled to receive quarterly cash distributions of net rental income from the property. You are also eligible for potential tax benefits normally associated with direct ownership, such as depreciation and amortization of expenses.
In short, you are the owner. You just don’t have to do the things owners usually have to do.
That’s the genius behind Here and why we believe it was chosen as one of the winning pre-seeds in Mercury Raise Round IV, which connects new start-ups with investors.
Here, takes care of the on-site management of the property, refurbishing and updating rooms that need it as well as resolving structural issues. It ensures the property is at the forefront of the increasingly competitive rental market by installing new flooring, smart home features and updated appliances.
No property comes to the Here app until it has undergone careful consideration or initial investment. In other words, it ensures that the property will stand out at the top when vacationers are looking for a place to stay.
It’s just the initial work. Here, manages the reservation of guests and confirms that they have access to the property. He makes sure he has the necessary items like toilet paper, towels and soap. He maintains cleaning schedules and handles any issues with customers as they arise.
Here solves the biggest puzzle regarding rental property. So much so that we’re not sure many people considering investing will miss owning the whole pie.
Slices, no matter how narrow or wide, are worth it, especially when shareholders start to diversify.
Home host turned CEO
Like many startup founders, Corey Ashton Walters came up with the idea for Here after encountering a problem that Here helps solve.
Walters assumes a familiar personality in today’s startup world. He’s a college dropout, a serial entrepreneur, and he’s already built a successful business in the real estate world. His first company, Homeworthy, reinvented the antiquated brokerage process to help bring more capital to sellers.
In 2015, Walters decided to list his Brooklyn apartment on Airbnb. The value was clear. Clients regularly travel to New York from around the world, so the need for rental property in the area is unlikely to wane.
The need far exceeded what Walters could handle. Working with clients and maintaining the property was becoming too difficult with a full-time job already demanding a lot of his time.
He pulled the listing and spent the next five years thinking about why the vacation rental market for owners is tough. Surely there could be an easier way to benefit from short-term rental income.
In 2020, these years of reflection have resulted in Here.
It started small. What if a rental owner could outsource its management? What if a rental owner could share the property with friends or family? Or like-minded investors? Or anyone? What if people approached rental property like stocks?
From Here to There: The Future of Rental Property
Approaching its first anniversary as a company, Here, with Corey Ashton Walters at its helm, has garnered impressive interest from the venture capital world and retail investors with over 10,000 investors on the waiting list to join Here. The company is building its app and has already opened it for early access.
We are excited to see how Here is growing and its effect on the vacation rental industry. We have a feeling we’ll be hearing a lot more about Corey Ashton Walters shortly.
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