You can’t afford a house, but you can probably afford Nada

Comment

Image of a family, house, piggybank and bags of money stacked on top of coins to represent estate planning.
Image Credits: William_Potter (opens in a new window) / Getty Images

Rents are going up in cities across the U.S., but the national homeownership rate has been steadily declining as prospective buyers grapple with low supply, weakening purchasing power and record-high costs. What if there was a way to invest in a city’s home equity market you think is growing even if you can’t afford to buy a property there?

That’s the idea behind Nada, a Dallas-based fintech platform whose goal is to widen access to real estate wealth. The company offers index-like real estate investment products called “Cityfunds” that allows anyone, including non-accredited investors, to buy into a city’s home equity market with a minimum of $250 dollars, CEO and co-founder John Green told TechCrunch.

Currently, the company offers funds focused on the Dallas, Austin and Miami markets and plans to launch six new Cityfunds in the next 12 months, Green said. Through that offering, Nada aims to raise $75 million from retail investors by offering funds focused on new cities, he added. The first one will be Tampa, which Green says Nada plans to launch by the end of this month.

Nada founder and CEO John Green
Nada founder and CEO John Green. Image Credits: Nada

It’s worth noting that Nada isn’t only focused on capturing customers who want to invest in the real estate market. Its other target customers are homeowners who want to spend their home equity on everyday costs, which they will be able to do using Nada’s real-estate backed debit card, Green said. The company plans to launch the card by Q1 of next year, he added.

Typically, homeowners can access their home equity through a line of credit (called a HELOC) that they draw upon to fund big expenses such as renovation, educational costs or to consolidate their outstanding debt at a lower interest rate. This is a debt product that tends to accrue interest at high rates, and with interest rates across the board rising, Green explained, customers will look to alternative ways to access their home equity.

With Nada’s card, spending home equity is treated as an equity investment rather than as debt and doesn’t affect the user’s credit capacity or require interest payments, Green said. So how does that work?

“It’s just that we have an equity position as a co-investor alongside the homeowner,” Green said. “When the appreciation of the home goes up or down, our percentage is the same. And so as a homeowner, if you’re looking to get cash out of your home, today might be a little sensitive to do so considering the current interest rate market, and this is a product that’s not directly impacted.”

Nada will be able to offer the card through a banking partnership, though Green did not disclose which bank it plans to use for this. Users will also be able to earn cash-back rewards when using the card, according to Green.

Beyond the new Cityfunds offerings, which Green likened to a mini-IPO, and the card launch, the company eventually plans to build out a secondary trading platform, launch a mobile app and offer a rewards function that distributes shares to users.

To that end, the company just raised $8.1 million from investors for its seed round led by LiveOak Venture Partners. Other participants in the fundraise included Revolution’s Rise of the Rest Seed Fund, Capital Factory, 7BC Venture Capital, Sweater Ventures, LFG Ventures, Badra Capital and Stonks Fund, according to the company.

Images of Nada's not-yet-released mobile investment app
Images of Nada’s not-yet-released mobile investment app. Image Credits: Nada

The company also announced that both Krishna Srinivasan, LiveOak’s founding partner, and Jesse Stein, co-founder of metaverse real estate company Everyrealm, will be joining its board of directors. Nada originally launched its Cityfunds product in partnership with investment platform Republic, according to Green, which Everyrealm spun out of six months ago. Green noted that Nada itself has no plans to expand outside of physical, real-world assets.

Nada makes revenue on a transaction basis and through charging fees to investors in its fund of 1.5% per annum, slightly lower than the 2% fee typically charged by other alternative asset managers including venture capital and private equity firms, Green said.

Ultimately, Nada’s edge comes from its ability capitalize on declining homeownership rates by offering customers an alternative way to get exposure to the real estate market. Its debit card, if all goes according to plan, will also offer what may be quite attractive financial flexibility to homeowners.

“We are not looking to build products that are just transactional. We want to build this relational partnership with a homeowner/consumer in real estate as an asset. And so, long term, what we want to have is our customers see the ability to move money from their home equity into a spending account not dissimilar to how they would with [moving] savings into checking, to have that amount of liquidity and access to the product,” Green said.

More TechCrunch

Ahead of the AI safety summit kicking off in Seoul, South Korea later this week, its co-host the United Kingdom is expanding its own efforts in the field. The AI…

UK opens office in San Francisco to tackle AI risk

Companies are always looking for an edge, and searching for ways to encourage their employees to innovate. One way to do that is by running an internal hackathon around a…

Why companies are turning to internal hackathons

Featured Article

I’m rooting for Melinda French Gates to fix tech’s broken ‘brilliant jerk’ culture

Women in tech still face a shocking level of mistreatment at work. Melinda French Gates is one of the few working to change that.

13 hours ago
I’m rooting for Melinda French Gates to fix tech’s  broken ‘brilliant jerk’ culture

Blue Origin has successfully completed its NS-25 mission, resuming crewed flights for the first time in nearly two years. The mission brought six tourist crew members to the edge of…

Blue Origin successfully launches its first crewed mission since 2022

Creative Artists Agency (CAA), one of the top entertainment and sports talent agencies, is hoping to be at the forefront of AI protection services for celebrities in Hollywood. With many…

Hollywood agency CAA aims to help stars manage their own AI likenesses

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

3 days ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

3 days ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities