The concept of turning into an actual property investor for as little as $5 could seem too good to be true.
And for a lot of customers of Landa, a proptech firm that promised simply that — it has been.
Landa emerged from stealth in August 2022, asserting a complete of $33 million in funding and a pledge to assist on a regular basis Individuals entry residential actual property funding by way of fractional shares.
CEO Yishai Cohen and former CTO Amit Assaraf based Landa in 2019 in an effort to make actual property funding extra inclusive. The app’s solely necessities have been that customers be over age 18 and U.S. residents. They may begin investing with simply $5, and purchase and promote shares in addition to see real-time updates on their properties from the Landa app. (Assaraf left the corporate in December of 2023, in response to his LinkedIn profile. He has not responded to requests for remark.)
At present, Landa’s funding portal website is down and its app is inoperable. Customers declare they’ll’t entry their funds and haven’t been paid dividends in months. The startup is embroiled in litigation, together with a lawsuit from its early enterprise investor Viola.
One early person advised TechCrunch that Landa stopped paying dividends to him on his shares in January. When he requested Landa about it, they “punted the query,” he stated.
“I repeatedly emailed them about it and simply obtained deflecting solutions, nothing actual,” the person stated. “Then just a few months after that, the app grew to become unusable. It will not open.”
The person then requested if he might delete his account, which he had opened in 2021, and promote the shares. However he discovered Landa had disabled his capacity to promote shares.
“They’ve basically frozen me out of my funds and simply shut down the app,” the person stated. “The place is the cash? Why gained’t they return it to me?”
Over 130 complaints have been filed towards Landa to the Higher Enterprise Bureau, with dozens of individuals echoing related allegations. For example, on Might 1, one person who filed such a grievance shared that they had invested over $8,000 by way of Landa and stopped receiving dividends final fall. The person stated Landa customer support replied to their emails by saying that the corporate is “engaged on it.”
In mid-April, when TechCrunch requested Landa concerning the situation — together with the standing of its downed website and whether or not the corporate itself had shut down — CEO Cohen stated: “In fact not. The positioning will likely be again up.”
When requested why the app was not working and why customers had not obtained dividends in months, Cohen’s terse reply nonetheless appeared to check with the web site, blaming the servers: “It’s unrelated to dividends. It’s from our servers. We’re on it.”
Upon additional prodding, Cohen on April 18 shared the next assertion: “We’re conscious of the problems at present affecting our platform and product, and wish to guarantee all traders that we’re actively working to revive full performance as quickly as doable. We’ve got stored traders knowledgeable by way of all updates, together with the server entry situation. We recognize the continued help of our traders and resident group, and stay dedicated to delivering on our imaginative and prescient of creating actual property investing accessible to everybody.”
Cohen didn’t reply to our request for a standing replace on Might 20. Traders NFX and 83North didn’t reply to our a number of requests for remark.
Embroiled in a lawsuit
It’s not simply customers who’re upset with Landa. The corporate’s major lenders are suing.
Viola Credit score and L Finance filed a lawsuit in New York State Supreme Court docket towards Landa in November 2024, accusing it of “quite a few defaults” on greater than $35 million price of loans they prolonged to the corporate. (Viola can also be an investor in Landa by way of its enterprise division.)
The lenders additionally accused it of lacking property tax funds that led to the pressured sale of these properties, neglecting properties, and even failing to gather rents.
The lawsuit — first reported by actual property trade publication Bisnow — states that after over a yr of making an attempt to get Landa to honor their commitments, the lenders eliminated Landa as supervisor of the properties and appointed an unbiased property supervisor and a chief restructuring officer.
After additional negotiations failed, the collectors later requested the court docket for, and have been granted, an injunction blocking Landa from accessing financial institution accounts, interfering with their makes an attempt to restructure the enterprise, and reclaiming cash they are saying is owed — together with proceeds from property gross sales.
Regardless of the injunction, the lenders returned to court docket in January 2025, claiming Landa advised tenants to ship lease funds to a special checking account not lined by the ruling. They found this whereas making repairs to 1 property’s septic system. In addition they accused Landa’s CEO of making an attempt to promote or refinance some properties.
The court docket ordered Landa to elucidate itself. As a substitute, in early March, Landa requested the court docket for a restraining order towards Viola Credit score and L Finance, claiming the unbiased supervisor was “put in unlawfully.”
Decide Jennifer G. Schecter was not happy. In March, she ordered each side to discover a answer “that’s good for your whole purchasers.” She denied Landa’s request for an injunction and ordered the corporate to pay practically $100,000. A couple of weeks later, Landa filed a proper countersuit. The case continues to be pending.
Difficult mannequin
Landa is only one of a number of startups that emerged in recent times providing fractional actual property investing. Additionally it is apparently not the one one which has struggled — particularly after mortgage rates of interest started hovering in 2022.
Fintor raised tens of millions of {dollars} earlier than seemingly pivoting to supply an “AI Agent to automate finance and actual property operations with human degree efficiency.” Dallas-based Nada, which provided index-like actual property funding merchandise known as “Cityfunds,” permitting non-accredited traders to purchase right into a metropolis’s house fairness market with as little as $250, additionally seems to have pivoted. Its web site now promotes a brand new tagline: “Entry house fairness to finance something.”
Arrived was maybe the highest-profile of the bunch — and the one one which appears to be actively working below the identical mannequin. In Might of 2022, TechCrunch reported that Arrived raised $25 million in a Sequence A funding spherical together with Bezos Expeditions, to permit folks to purchase shares in single-family leases with “as little as $100.” In accordance with its web site, the startup has to this point paid out over $13 million in dividends and curiosity and has 766,000 registered traders.
As for these individuals who invested with Landa, the way forward for their cash seems unsure. As of Might 23, Landa’s investor portal web site nonetheless redirects to a “come-back-soon” upkeep message.
