While the idea of owning rental properties is attractive to many Americans, the ability to examine and afford such investments in single-family homes is out of reach for a large portion of the population.
Mongols Club is a new startup that wants to help more people achieve their dreams of becoming a landlord. She’s hardly the only one. A number of startups have emerged in recent years with the same goal, including Arrived, Fintor, Fractional, and others.
Founded last year by two former Goldman Sachs real estate investors, the Washington, D.C.-based Mogul Club launches to the public today with $4.2 million in total funding, $3.6 million of which was recently raised in a seed funding round. The startup claims that the differences between them are two-fold. First, it’s a real estate investing platform built partly on blockchain technology, which CEO and co-founder Alex Blackwood believes ultimately makes it more efficient.
Blackwood also believes that his and his co-founder Joey Gumatatao’s experience at Goldman Sachs gives them an advantage in that they have experience searching for properties that are not only suitable for investment, but are likely to provide higher returns and appreciation.
“We started the company because we were looking for simple ways to deploy personal capital in high-quality real estate outside of the office,” Blackwood told TechCrunch. “In researching the options, there were no fractional ownership platforms providing the level of deals we were trained to expect, so we built a solution… We are redefining who can become a real estate mogul and what that stereotype looks like.”
Blackwood said that every property on his platform (so far there are only a few) goes through “the same level of diligence and careful underwriting that investors go through at the institutional level.” In other words, the startup is discriminating. Less than 1% of the company’s properties on and off the market are listed on its platform.
“For example, the value of our most recently sold property increased by 34% in just the past two years, and another recently listed property was valued at significantly higher than its purchase price just two months after acquisition,” Blackwood said.
The company says it shares all legal documents so that the process is transparent for investors.
“The information available for each property is more information than we could provide in a review by the Goldman Sachs investment committee,” he said. “Our fees are some, if not the lowest among the range of competitors. All IPOs forecast on our site take these fees into account.
Investors on the platform will be eligible to apply for access to the “Mongol Club,” a community of investors who can participate in quarterly in-person events and master classes.
So far, mogul It has focused primarily on the supply side of the equation, forming relationships with “inventory partners.” It went public today with assets worth approximately $2.5 million (and growing).
The company plans to use its new capital to build new features and offer $10 million worth of single-family rental properties by the end of the year.
Its revenue model involves charging a flat 3% fee for hosting a property, which is capitalized into the property’s upside. If the property requires capital expenditure, maintenance or leasing, Mogul will only prepare and provide the property to end users when it is leased. In these cases, a 2% fee will be charged.
“Going forward, we have negotiated wholesale discounts with property managers on their fees. To align incentives with users, we are charging a 2.5% fee on rental income,” Blackwood said. “Because of wholesale property managers’ discounts, the total fees on rental income are lower.” From any other platform or fund.”
Although Mogul is built on blockchain, users will not be required to have blockchain experience, according to Blackwood.
“Blockchain technology makes it possible for more people to start investing because it reduces the hurdles that typically exist in the market,” he said. “We’re not doing this for the sake of novelty, but rather to provide a more efficient back office.
AY Ventures led the Mongolian Club’s seed round, which also included participation from Tim Draper & Associates, Draper B1, InterVest, Draper Dragon and Blizzard Fund, as well as several angel investors, including Rosie Rios, 43Research and development United States Treasurer and executives from Goldman Sachs, JP Morgan, and Carlyle, among others.
In an interview with TechCrunch, Draper described the Mongols Club’s approach as “Somewhat of a standout.
“They focus on making it easier for people to buy property securely, keep perfect records, pay their taxes and get their tax refunds — so it works for everyone,” he said.
Having also invested in stock management startup Carta, Draper said he can see the similarities between the two companies.
“A stock carta is a lot like a real estate mogul,” he said. “It’s the same approach of ‘We’ll track everything for you, your entire back office, and everything will be done exactly as it’s supposed to.’
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