Fractional Real Estate Investing from landlord's POV

[Matt OConnor]

Hi all,

My cofounder and I are in an accelerator for a micro-investing/robo-advisor platform for real estate with a target market of US millennial and genZ non-accredited investors, i.e. “the Robinhood/Acorns/Betterment of residential real estate”.

Our value proposition to landlords is mainly:

i) You can liquidate part of your property at any time, thus accessing capital otherwise ‘trapped’ in your property which you can then spend however you like, including rolling into purchasing your next investment property

For example: sell 10% of 400k property for 40k cash

ii) Not only can you get liquidity, you can proportionately liquidate your property for an equivalent above market rates, as investors are willing to pay a premium for access and liquidity.

For example: sell 10% of your 400k property for 45k (not 40k)

This obviously creates complications - especially around rental yields and expenses, so we are looking for opinions and feedback from landlords like yourselves on the below:

1. If you retained full rental income but also fully covered all expenses as if you were 100% owner, is the option to partially liquidate your property generally appealing (point i above)?
2. If you retained full income and expenses, is it only appealing if done at a premium (point ii above)?
3. If you liquidated part of your property at a premium (point ii above), would you be willing to split rental yield net of your costs? What concerns/complications/fears would you have about this?
4. Any other thoughts you have?

Cheers