What is Landa and how does it work?
Landa is a real estate investing app. It operates by purchasing residential properties and offering them as rental homes. Landa then enables individuals to invest in these properties by purchasing shares. The company manages all aspects of property acquisition, rental, and maintenance, aiming to provide a passive income stream to investors.
Investors on Landa become shareholders in a limited liability company (LLC), each of which holds a property either directly or indirectly. Properties are divided into 10,000 – 100,000 shares (per property), allowing investors to buy into the property market at a scale that suits them.
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How risky is Landa?
3/5— Moderate Risk
Investing with Landa involves inherent risks, including market volatility, economic conditions, and property-specific challenges.
Additionally, while Landa takes steps to ensure investments are insulated from the company's financial status, the separation of each property series from Landa's own liabilities is not fully tested in bankruptcy courts. Each property series has its own title, bank accounts, books, and insurance policies, aiming to operate independently to protect investors in case Landa faces financial difficulties.
However, in a bankruptcy scenario, outcomes are uncertain, and there is potential for series assets to be used to settle liabilities of Landa or other series, despite precautions and legal structuring.
As with any investment, there is a risk of losing the initial investment, and investors are encouraged to review Landa's SEC filings for a complete list of risk factors.
How liquid is Landa?
2/5— Moderate Liquidity
Landa offers a platform for investors to gain liquidity in their real estate investments by allowing them to list and sell shares to other users. To sell shares, investors navigate to the property page in the app, where they can see current offers and list their own shares for sale. They have the option to set a specific price or to default to the market price, which is the highest buy order price available. However, setting a price does not guarantee a sale.
The app provides real-time information on active offers, including current price points and the volume of shares available. This data is organized in the order books for each property. It's important to note that trades can only be executed during market hours, which are from 9:30 am to 5:00 pm EST, Monday through Friday. Each trade also incurs a 2% fee, charged by a third-party broker-dealer.
Once the initial offering for a property is complete and all shares are sold, the property enters the trading phase, allowing investors to buy or sell shares. Investors can place limit orders to specify the price they are willing to accept for selling or paying for buying shares. Alternatively, they can place market orders to execute trades as quickly as possible at the prevailing market price.
How volatile is Landa?
3/5— Moderate Volatility
Real estate market volatility can greatly affect property valuations, with prices subject to rapid changes due to economic conditions, interest rates, and local market trends.
This fluctuation can pose risks for investors seeking short-term gains in Landa's property shares, as unpredictable market shifts can result in significant financial losses. Investors should be prepared for the possibility that their investment value could decrease if adverse market conditions arise.
What is the average rate of return for Landa?
5.0 %— Low Return
Returns from investing with Landa come from rental income and property appreciation.
Rental income provides a cash flow, distributed monthly or quarterly, based on the property's rental yield and operational costs. Appreciation occurs as the property value increases over time, with profits realized upon sale. Additionally, investors can benefit from various tax deductions related to real estate ownership.
Several factors influence these returns, including the property’s location, which can affect both rental rates and appreciation potential, and the type of property, with commercial and residential properties offering different risk and return profiles. Market conditions, such as interest rates and economic trends, also play a crucial role in shaping the investment's overall profitability. Understanding these factors helps investors align their choices with personal financial goals and risk preferences.
What is the minimum investment amount for Landa?
The minimum investment amount for Landa is set at $5 for buying property shares.
Personal account holders are limited to purchasing up to 10% of the greater of their annual income or net worth in any single property series, while there are no share purchase limits for entity accounts.
The platform also has a minimum transfer amount of $1.00 and allows weekly deposits up to $100,000 into an account.
What is the investment time horizon for Landa?
Landa's investment model is designed for long-term holding of rental properties.
Investors should be prepared for the possibility of holding their shares indefinitely, especially if an active trading market is not available or in cases of property unprofitability.
Who can invest in Landa?
Any U.S. resident over the age of 18 with a Social Security Number (SSN) is eligible to invest with Landa. However, the platform is not available to non-U.S. residents or residents of Puerto Rico.
Is Landa regulated or audited?
Landa's investments, known as "Shares," are regulated by the Securities and Exchange Commission (SEC) and carry inherent risks, including the possibility of losing money and the inability to sell shares quickly (illiquidity). When investing in Shares, individuals are investing in specific property offerings, not in the Landa company or app as entities.
Before Shares can be sold, Landa must file an offering statement with the SEC and receive qualification. Investors are provided with offering circulars that detail the risks and should be reviewed thoroughly. Once an investment is made, it is final without options for refunds.
While Shares are digital and not listed on any public stock exchange, they can potentially be resold on the PPEX ATS, a secondary trading platform operated by North Capital. However, the resale process is subject to various securities laws and the terms of the Series' Operating Agreement. The availability of this resale market cannot be assured, nor can its accessibility to residents of all states. Therefore, investors should be prepared for the possibility that they may not be able to sell their Shares and may need to hold them for an unspecified amount of time.
Is Landa insured?
Since specific information regarding Landa's insurance policies is not provided, a general explanation would be that properties managed by investment platforms like Landa are typically insured to protect against physical damages or losses.
However, insurance may not cover every scenario, such as market fluctuations, economic downturns, or fraudulent activities that affect property values.
Coverage limits also may not fully align with the current market valuation of properties. Investors should be aware that while insurance can mitigate certain risks, it does not eliminate all potential financial exposures associated with property investment.
Does Landa distribute payouts?
Investors with Landa can earn money through monthly dividends and by trading shares in the secondary marketplace. Dividends are calculated based on the property's net income, which is the total rent collected minus expenses, loans, and reserves. Dividends can be affected by factors such as vacancies, changes in rental prices, and unforeseen expenses. Trading shares allows investors to profit through appreciation if sold at a higher price than purchased, but can also result in a loss if sold at a lower price.
Properties are held long-term, and in the rare event of a sale, proceeds are distributed to investors without Landa taking a fee. Dividends are paid based on the settlement date of share purchases to reflect true ownership, and the first dividend is prorated based on when shares settled. Property taxes are paid annually from the property account.
Dividends are distributed monthly, typically on the first day of the month, from the rent collected the previous month. However, dividends are not guaranteed if a property lacks sufficient revenue in a given month. In cases of unprofitability due to vacancies or major repairs, dividends may be withheld, reduced, or paid from reserves if they are ample.
Landa retains cash reserves from rental income to cover unexpected expenses. In the event of a catastrophic event, Landa will aim to rebuild or repair using reserves or loans, but if that's not feasible, the property may be liquidated, and the LLC dissolved, with investors paid from any proceeds, though this is not guaranteed. Lastly, to maintain investment accessibility, Landa limits individual share ownership to 9.99% per property.
What are the annual fees for Landa?
Landa does not charge investors fees on the sale of properties or take profits from such transactions. However, there is a 2% trading fee applied to share transactions on the secondary market, which is incurred by both buyers and sellers.
This fee is charged by a third-party broker-dealer to process the trades, and Landa does not retain any portion of this fee.
How do I handle my investments in Landa?
Landa manages rental properties and oversees the entire investment process, from acquisition to tenant placement and maintenance.
Investors purchase shares of these properties through the app, with the option to sell their shares on Landa's secondary market.
How does Landa get taxed?
Landa issues tax documents to investors, including Forms 1099-B, 1099-DIV, and 1099-MISC, by January 31st each year.
These forms report sales of shares, dividends over $10 for any one property, and other distributions.
Income from Landa investments is taxable for both individual and entity accounts. Since tax situations vary, consulting with a tax advisor is advisable.
How many investors are on Landa?
As of August 2022, Landa has attracted over 25,000 investors and manages over 400 rental units across seven markets.
Who is the CEO of Landa?
The CEO and Co-founder of Landa is Yishai Cohen, who previously founded Smartbus at the age of 16 and sold it before his military service in Israel. Post-service, he partnered with Amit Assaraf, a skilled full-stack engineer who serves as Landa's CTO, to democratize real estate investing.