- US home prices are still hovering near record highs, making real-estate investing a costly venture.
- Fractional-ownership firms help people invest in real estate even if they are short on cash.
- Two startups that allow Americans to buy shares of overseas properties break down the process.
Owning one home in the US is hard — and expensive — enough.
Now Americans are showing more interest in Europe and other — relatively — cheaper spots abroad to buy pieds-à-terre and investment properties. The moves are not without challenges: Inflation and other costs are eating into homebuying budgets, and prospective investors must often navigate foreign-investment regulations.
But some startups make it easier for Americans to enjoy the benefits of buying a second home abroad or becoming a landlord overseas — without the high up-front costs.
Take Housie and Flyway, new startups that embrace a growing trend in real-estate investing: fractional ownership. The trend allows everyday people to purchase a share of a property instead of footing the entire bill. In return, investors get a share of the profit from renting it out or, in some cases, a set amount of time to visit the property.
Can't afford a whole Airbnb? Buy a share of one and reap profits as a co-landlord.
Housie, a platform founded in July 2022 in Argentina, gives customers the opportunity to fractionally invest in studio apartments in attractive locations for short-term visitors to popular South American cities including Buenos Aires, Argentina and Santiago, Chile.
According to Germàn Rimoldi, the cofounder and CEO of Housie, the company is admittedly taking advantage of some countries with down economies, like Argentina, which he added is a common approach to real-estate investing.
"I saw the opportunity of investing when prices are significantly low when Argentines started purchasing property in the US in 2008," Rimoldi told Insider. "That's when I realized that that approach is easy to understand for most investors."
Right now, for a minimum of $100, users can buy shares of properties and receive dividends quarterly depending on how well the property does on the short-term market.
Data from Redfin shows the average price per square foot in Argentina was $195 in August 2022 — a 16.5% decrease from the previous year. According to Rimoldi, Housie is buying studios in the heart of Buenos Aires' downtown district for around $200 per square foot, which he believes is well undervalued.
Once purchased, the company lists the properties on Airbnb. According to AirDNA, a vacation-rental-data firm, Buenos Aires has 12,105 active rentals. For comparison, Miami has 13,280. So far, Housie has six apartments in total — 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, the London and Athens, Greece-based startup Flyway is taking a different approach to fractional ownership.
Buy a share of a London apartment for as little as $150,000 and stay there a few weeks a year
Flyway, which was founded in 2021 and raised $10 million in funding in August, targets a wealthier investor. Its clientele deal in luxury pieds-à-terre, or second homes that owners visit infrequently.
Customers can buy up to six shares out of 12 of a turnkey home in London — and soon to be other large cities — in exchange for at least one month to spend in the home during the year.
"Throughout my whole life, I traveled very frequently in a number of cities and I always wanted a solution like this," Nikos Drandakis, the founder and CEO of Flyway, told Insider. "I threw away so much money on hotels."
Currently, Flyway offers four homes in London with the lowest share price starting at 131,000 pounds a share — or $149,121 — for a one-bedroom unit on Liverpool Street, while the highest is 519,000 pounds per share for a two-bedroom apartment. The dollar is strong against the pound and the euro right now, making investing in European cities relatively more affordable, and more appealing, for Americans.
After splitting the property between investors, Flyway takes on a property-manager role and charges a monthly fee. Still in the preliminary stages, Flyway has sold some shares but the homes have yet to be rented out.
As for future plans, Drandakis wants to first see if his product works in London, but intends to focus on large metros as he believes those homes will hold more interest during the year compared to beachfront spots.
"With vacation homes, everybody wants to be there in July, and if you have eight, ten owners, it's very hard to split the time," Drandakis said. "But when you have homes in the city, you usually don't have this kind of seasonality. It's throughout the whole year demand for these homes."