Nestment is a company that streamlines the co-buying process for groups of friends and family who want to purchase property together. The company helps groups leverage their collective buying power to do so. To learn more about the company, Pulse 2.0 interviewed Nestment CEO and co-founder Niles Lichtenstein.
Niles Lichtenstein’s Background
Niles Lichtenstein said that when his father passed away in 1997, his scrappy single immigrant mother was able to keep their home by refinancing and renting out rooms to UC Berkeley grad students..
“I didn’t think much of it at the time, but the financial security that home afforded my family is what led me to co-found Nestment,” Lichtenstein reflected. “Even though homeownership was the primary source of financial stability for my mother, the traditional home-buying process was not designed for her. For younger generations and those from historically underrepresented groups, access to homeownership is riddled with barriers.”
In 2012, Lichtenstein was fortunate enough to make a little money from an exit. This was a few years after the 2008 crash and most of his family and millennial peers could not see a future where they could afford to own in the Bay Area so Lichtenstein started putting up capital and time to figure out how people could co-own together both in the Bay Area and outside.
“This became my R&D for what would become Nestment because while the concept wasn’t new there was a ton of friction in the process,” Lichtenstein added. “Fast forward 10 years and several properties later, while we had helped a few folks in our immediate community, the homeownership situation seemed to only be getting worse.”
Lichtenstein told me that he still remembers a close friend who said he and his wife had to decide between having a kid and affording a mortgage. This did not seem right, especially as we know there is a history of different mechanisms, especially in immigrant communities, like tandas, susus, huis of pooling capital.
Core Products
Nestment aims to fundamentally improve future wealth distribution by focusing the product on three key co-ownership areas:
1.) Enablement: Help groups fractionalize and purchase listings
— Align groups
— Analyze financial projections and save properties
— Enable legal and lending
— Connect with agent
— Close property
2.) Management: Help groups manage their fractionalized listing
— Coordinate group calendar
— Manage P&L of property
— Track equity of ownership and return
3.) Exchange: Enable selling and buying of those fractions
— List fraction for sale
— Market fractions
— Provide liquidity
— Enable efficient matchmaking
“We will also be launching an early pilot of our exchange – enabling someone to just buy a portion of a picturesque Tahoe Cabin, or a Hudson Valley Getaway or a multi-family in Los Angeles. This is the beginning of creating a mechanism to enable fractional supply and demand to meet and ensure the right structures are in place between lending, agents, title, etc.” Lichtenstein explained. “By allowing participants to pool their money and build community and equity together, Nestment redesigns what traditional homeownership can be.”
Building Out Nestment’s Model
When I asked Lichtenstein about the process of how the company was built, he said that it initially started with helping friends and family co-own their homes so that they could continue to afford living in the Bay Area. He quickly recognized that there was a bigger change occurring in homeownership and it had some massive trends behind it:
1.) Economic trends: Property prices way outpacing median incomes, and just when people had saved enough they were hit with increased interest rates. It requires twice as much salary for the same home compared to a few years ago
2.) Demographic trends: Millennial generation who viewed homeownership as more important than marriage ironically were the generation least able to afford it specifically young folks of color and unmarried women in their 30s and 40s that wanted financial freedom
3.) Technology and user behavior trends: An adoption of the sharing economy, a familiarity around fractionalization, and a trust that third parties could play an active role in your financial well-being.
After creating a single landing page, a couple of LinkedIn campaigns, and conducting hundreds of interviews, me and my co-founders, Mark DeMitchell and Rob Zimmerman, found that there was a large and growing number of folks that wanted to finally be able to purchase real estate by pooling capital with a group while also feeling like a true home-owner – which meant spending time in the home, while also renting out part of the property to offset expenses all while growing equity.
Evolution Of Nestment’s Technology
Nestment has been constantly evolving its technology. The company is continuously improving its data and analytics to help users understand the financial opportunities or risks of certain properties. And they are also evolving the operation agreement builder as well as integrating features like tax implications and other key data that can be tailored to a Nestment Group.
Biggest Milestones
What have been some of Nestment’s biggest milestones? Lichtenstein said that the goal post-launch was to reach the Nestment 100, which are 100 slots given to committed groups. And with the launch and various partnerships, the company has already reached nearly half of its goal in a month and is excited by that on top of the thousands of unique visitors that are coming to the site.
Customer Success Story
I asked Lichtenstein if he could provide a customer success story. He noted that on paper, 40-somethings with high-paying jobs, good credit, and an ideal debt-to-income ratio should have no problem individually purchasing a home. But for Selena and Wade, two besties who have been looking to buy a home for years, homeownership felt unattainable. With Nestment, they recently closed on their first home, located in Upstate New York. Together, they were able to hack homeownership by co-buying a home together, leveraging it as a stepping stone to build future generational wealth.
Funding
Ahead of Nestment’s beta launch, the company raised $3.5 million in a Pre-Seed round led by Protofund and IDEA Fund Partners. Joining them on the round were mission-aligned funds like Concrete Rose Capital and VamosVentures as well as The MBA Fund, and a robust set of angels from Airbnb and other relevant companies
Differentiation From The Competition
Nestment differentiates itself from other co-buying platforms in the following ways:
— Nestment’s unique incorporation and access to data sourcing, configuration, and integration enables customers to have an unparalleled experience through the co-buying process because they have previously unreachable information right at their fingertips, allowing them to make the most informed decisions when it comes to home buying.
— Nestment’s model was thoughtfully and intentionally crafted to integrate all positive aspects of the home buying and ownership experience. From start to finish, buyers have the community of Nestment, their co-buyers, and eventually, their home’s community and neighborhood at their disposal.
— Nestment’s services also include seasoned real estate experts, personalized concierge services, and even funds to help customers be competitive buyers so that throughout the whole process, they are supported with all the resources and capital needed for them to succeed.
— Combine living in the home, with also being able to drive revenue from that home – other models either enable pure investment, so you own real estate as an asset class – but you don’t really feel like a “home-owner” or you have a second home, but can’t generate revenue from it.
Future Company Goals
What are some of the company’s future company goals? The company said that for the short term, they will use these first 100 transactions and 100 meaningful group stories to drive the foundational model in 2023, . And for the long-term, the goal is to normalize and help create institutional support for pooling resources for access to homes.
“We are focused on co-buying groups composed of friends and family members, however, this launch lays the foundation of a larger plan to build a fractional marketplace for people without a group,” Lichtenstein concluded. “A Nestment marketplace will give more co-buyers access to homeownership and also allow sellers to fractionalize their homes, giving everyone ownership flexibility at a lower cost. Nestment’s liquidity fund will also offer to partner with groups as a member, lowering the down payment and opening accessibility to a broader real estate market for co-buying groups.”
