Proptech Firm Launches Fractional Ownership Platform for Short-Term Vacation Rentals
By Brian Pascus March 20, 2023 11:06 am
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ReAlpha, a real estate technology and investment company, announced on Monday the launch of a fractional ownership web platform that will utilize artificial intelligence (AI) to bring a collection of property offerings to investors looking to add short-term vacation rentals to their portfolios.
The platform will target vacation hot spots like Orlando and Nashville.
The first property to be listed by reAlpha is The Jasmine, a five-bed, 4.5-bath townhouse in Orlando. The 2,221-square-foot property is near both Walt Disney Studios and Universal Studios. ReAlpha plans to expand across the Florida market this year and then into Nashville, Texas and other parts of the Sun Belt, according to Jorge Aldecoa, president of reAlpha Homes.
Aledcoa said the goal of the new web platform is to “democratize” ownership models in the global short-term rental market, which he values at more than $1.2 trillion.
“How do we make this available to anybody, the regular individual who’d love to get into investing and just doesn’t have either the knowledge behind it or the capital to bring in 20 percent equity?” Aldecoa said. “It’s really about giving them that opportunity at a level that’s palatable for them, whether that be a smaller amount or larger amount.”
Under the reAlpha fractional ownership model, investors can buy shares in individual properties that have been sourced and authorized by reAlpha prior to being introduced into the market.
Unlike timeshares, which require the purchaser’s physical use of the property, investors in reAlpha’s short-term vacation rentals can purchase passive equity interests and still have the opportunity to receive quarterly dividends based on income flow and any appreciation on the property’s value.
The firm will use its proprietary AI technology — reAlphaBRAIN — to score assets on various real estate attributes, ranging from area population growth and long-term rental projections to walkability and number of nearby restaurants. After the AI assessment, reAlpha’s team will conduct its own evaluation before listing the vacation rental on its platform as an offering.
“We’re a tech company, and we’re playing in the real estate sandbox,” is how Aldecoa describes his firm. “We’re bringing a tech component to the [short-term vacation rental] space.”
Unlike Pacaso, a proptech firm that buys single-family homes and sells ownership shares of the home to as many as eight buyers, or Airbnb, which serves as both a broker and a web platform where properties are listed for short-term use, reAlpha plans to create a new property stock market that utilizes the inventory across the proptech landscape.
“The space is so fractionalized, in terms of true competitors, there aren’t too many doing what we are doing,” Aldecoa said. “This is an investment vehicle. It’s truly a passive investment for an individual.”
Brian Pascus can be reached at bpascus@commercialobserver.com
