- US home prices are still hovering near record highs, making real estate investing a costly proposition.
- Fractional companies help people invest in real estate even when they’re short on cash.
- Two startups that allow Americans to buy stakes in foreign real estate are disrupting the process.
Owning a home in the US is difficult – and expensive – enough.
Now Americans are showing more interest in Europe and other – relatively – cheaper places abroad to buy pied-à-terre and investment properties. The moves are not without challenges: Inflation and other costs weigh on homebuyer budgets, and prospective investors often have to contend with foreign investment regulations.
But some startups are making it easier for Americans to enjoy the benefits of buying a second home abroad or becoming a foreign landlord — without the high upfront costs.
Take Housie and Flyway, new startups that are tackling a growing trend in real estate investing: fractional ownership. The trend allows ordinary people to buy a stake in a property instead of paying the entire bill. In return, investors receive a share of the profits from the rental or, in some cases, a set time to view the property.
Can’t afford an entire Airbnb? Buy a share in one and reap profits as a co-renter.
Housie, a platform launched in Argentina in July 2022, offers clients the opportunity to invest in studio apartments at a fraction of the price in attractive locations for short-term visitors in popular South American cities such as Buenos Aires, Argentina and Santiago, Chile.
According to Germàn Rimoldi, Housie’s co-founder and CEO, the company admittedly takes advantage of some countries with weak economies, such as Argentina, which he says is a common approach to real estate investing.
“When Argentines started buying real estate in the US in 2008, I saw an opportunity to invest when prices were very low,” Rimoldi told Insider. “That’s when I realized that this approach is easy for most investors to understand.”
Right now, users can buy shares in properties for at least $100 and receive quarterly dividends based on how well the property performs in the short-term market.
Data from Redfin shows that the average price per square foot in Argentina was $195 in August 2022, down 16.5% from a year earlier. According to Rimoldi, Housie is buying Studios in the heart of downtown Buenos Aires for around $200 per square foot, which he says is significantly undervalued.
After the purchase, the company lists the properties on Airbnb. According to AirDNA, a vacation rentals data company, Buenos Aires has 12,105 active vacation rentals. For comparison, Miami has 13,280. So far, Housie has a total of six apartments — one in Chile, two in Argentina and three in Florida — and has over 1,200 US investors registered on the platform, according to Rimoldi.
On the other side of the world, London and Athens, Greece-based startup Flyway takes a different approach to fractional ownership.
Buy a share of a London flat for as little as $150,000 and stay there a few weeks a year
Fly away, which was founded in 2021 and raised $10 million in funding in August, aimed at a wealthier investor. Its clientele deals in luxury pied-à-terre, or second homes, that owners rarely visit.
Customers can buy up to six shares of 12 of a turnkey home in London – and soon other major cities – in exchange for at least a month’s worth of the home throughout the year.
“Throughout my life I’ve traveled to a number of cities very frequently and have always wanted a solution like this,” Nikos Drandakis, Flyway’s founder and CEO, told Insider. “I’ve spent so much money on hotels.”
Currently, Flyway is offering four houses in London, with the lowest share price starting at £131,000 per share – or $149,121 – for a one-bedroom unit on Liverpool Street, while the highest at £519,000 per share for a two-bedroom flat bedrooms. The dollar is strong against the pound and the euro at the moment, making investing in European cities relatively more affordable and attractive to Americans.
After dividing the property between the investors, Flyway takes on the role of a property manager and charges a monthly fee. While still in its infancy, Flyway has sold some shares, but the houses have yet to be rented.
As for future plans, Drandakis wants to see if his product works in London first, but intends to focus on large undergrounds as he believes these houses will attract more interest than beachfront apartments over the course of the year.
“With holiday homes, everyone wants to be there in July, and when you have eight, ten owners, it’s very difficult to divide the time,” Drandakis said. “But when you have houses in the city, you don’t usually have that kind of seasonality. There is demand for these houses all year round.”