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More than three quarters of U.S. millionaires have at least one thing in common—investments in real estate, according to Morgan Stanley.
Real estate has long been considered one of the least volatile, most lucrative investments, but it has usually attracted only wealthy individuals due to the large amounts of upfront money required to invest.
RESE, a startup launched by Harvard John A. Paulson School of Engineering and Applied Sciences and Graduate School of Arts and Sciences graduate students Matt Fernandes and Florian Berlinger, is building a platform to make real estate investing accessible for everyday people. Their smartphone app allows individuals to easily find available properties and then invest very small amounts to purchase shares, similar to the stock market investing application Robinhood.
“If you look at the track record of real estate and the valuation of real estate, you’ll see that it beats any performance metric that the stock market has offered. So, in some ways, you can have a safe haven for money and even make more money off of real estate,” Fernandes said. “We want to allow others, people who aren’t real estate investors, to partake in this and invest some of their money into this market.”
Another barrier that often prevents people from investing in real estate is the complexity of getting started.
Fernandes encountered this himself when he tried to invest in a property. The months-long process involves piles of paperwork and mountains of bureaucracy as investors submit offers, compete to purchase an investment property, complete closing procedures, and then face the unfamiliar challenges of finding tenants and managing the property.
RESE takes care of all that on the back end, Berlinger said.
“As an investor, you just pull out your phone and have a map of available properties. You select properties and get information about their historical performance,” he said. “If you see something you like, you can buy a share of the property, as little or as much as you want. We take care of the tenants, we do all the management, we file all the paperwork. The emphasis for the user is on simplicity.”
While striving to make their app easy to use, the team is juggling complex challenges as they get the product off the ground.
Launching a two-sided marketplace, one that matches individuals who want to sell equity from their properties with investors who want to buy it, is an intricate balancing act. The team will need navigate complex requirements to gain Securities and Exchange Commission (SEC) approval to access the public market.
The co-founders have relied on the support and mentorship of peers and advisors at the Harvard Innovation Labs as they’ve worked to overcome those hurdles.
They currently run a waitlist campaign on their website, but plan to launch a basic version of the app soon, which they will test with customers to gather feedback. To Berlinger, the startup process is strikingly similar to their work in SEAS research labs.
“I couldn’t be more excited to show it to the world and see what customers think about it,” he said. “Just like in research, I don’t think that everything will be perfect—that’s never how things go. But from there, we will improve and really build what the customer wants and needs.”
For Fernandes, while the learning curve has been great, his experience as a SEAS grad student has helped him stay focused on long-term goals and pivot to solve unanticipated problems.
“We’re solving what is inherently a very difficult problem, but that’s something we’re not shy about because we’re used to doing that in research,” he said. “At the end of the day, it is something we are passionate about, bringing together real estate and data science. And there’s a social mission behind this, as well. We are allowing other people to get into a field they didn’t have access to before.”
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Adam Zewe | 617-496-5878 | firstname.lastname@example.org