AUSTIN (KXAN) — With prices of Austin properties soaring, a new real estate app is set to launch here next month that would allow more people to cash in on it.
It’s called OwnProp, created by Rex CEO Peter Rex, who has been involved in real estate and technology for the past 16 years, says a spokesperson.
“In history, it’s been an asset class that’s been highly prized. Everyone’s wanted a piece of it, but the rich have only gotten access,” said Rex, who says he experienced the barriers when initially trying to get into the industry as a middle class American. “We are opening up, so that the masses can own real estate.”
His app will use blockchain technology to “democratize access,” allowing folks to buy and sell property like they would stock through the New York Stock Exchange.
“What blockchain does for us is it allows us to break up the ownership into millions of units, so that people can then participate in that ownership,” Rex explained.
Blockchain technology serves as a sort of digital ledger that can record transactions in an efficient and secure way, Rex says.
That means you wouldn’t need a lot of money to invest in real estate — even if you’ve only got a buck. But that part is still pending regulatory approval by the U.S. Securities and Exchange Commission, he says.
Rex expects the SEC to grant approval within 18 months, but in the meantime, the app will initially open to accredited investors in December and will include Hotel Ella, which Rex expects to close on in December, as well. The app will also include 1002 West Avenue, an office building.
According to the SEC, an accredited investor includes someone whose earned income has exceeded $200,000 for two years and expects the same for the current year or has a net worth of over $1 million, either individually or combined with a spouse.
“In simple terms… someone who might be able to withstand the risk of losing some money,” explained Mark Roberts, executive director of the Texas Real Estate Center at the University of Texas at Austin’s McComb’s School of Business.
“The fact that it’s being opened up to accredited investors, as opposed to the broader market, does suggest that… regulators want to see how these things are going to work and want to make sure… there’s the proper disclosure that goes on, that identifies what the risks are,” Roberts said.
He says this sort of crowdfunding of real estate investments through apps is a new but growing field.
“We’re early days on a lot of these things,” Roberts said. “Make sure you understand who the company is and, you know, are they… funded well enough to support their business plan?”
He advises any investor, whether accredited or a general neighbor, to follow a basic rule: do your homework.
“You don’t make your return until you sell your investment,” Roberts said. “For that $10 investment that you want to make, what’s your ability to sell it and add the option to sell it, so you can get your capital back if you ever want to? So that would be a good question to ask.”
He also adds investors should know things like how the building they’re investing in is going to be managed and who will be doing the upkeep.
“We’re moving through these hoops… methodically and securely and with a lot of careful, detailed execution,” Rex said.
He said people can sign up now to become investors in the future, through the website form.
The long-term goal of OwnProp is to scale nationally and even globally, so that, like the NYSE, anyone can buy into any property, anywhere in the world.
“The New York Stock Exchange of real estate. That means that we are going to have trillions of dollars of assets on this platform. So this is a start for us here, with this asset here, this Hotel Ella,” Rex said.
OwnProp is one of many initiatives Rex is working on from Austin, after moving his headquarters from the west coast last year. He believes Silicon Valley has lost its value of serving humanity, and wants to build a new tech leadership in Austin.
Rex detailed his plans in a recent interview with KXAN media partners, the Austin Business Journal.
Written by Tahera Rahman