The thought of changing 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 Americans entry residential actual property funding by means 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 had 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 line with his LinkedIn profile. He has not responded to requests for remark.)
Today, Landa’s funding portal web site is down and its app is inoperable. Users declare they will’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 informed 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 acquired deflecting solutions, nothing actual,” the person stated. “Then just a few months after that, the app turned unusable. It wouldn’t open.”
The person then requested if he may delete his account, which he had opened in 2021, and promote the shares. But he discovered Landa had disabled his capacity to promote shares.
“They have basically frozen me out of my funds and simply shut down the app,” the person stated. “Where is the cash? Why received’t they return it to me?”
Over 130 complaints have been filed towards Landa to the Better Business Bureau, with dozens of individuals echoing comparable allegations. For occasion, on May 1, one person who filed such a criticism shared they’d invested over $8,000 by means 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 concern — together with the standing of its downed web site and whether or not the corporate itself had shut down — CEO Cohen stated: “Of course not. The web site might be again up.”
When requested why the app was not working and why customers had not acquired 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 are on it.”
Upon additional prodding, Cohen on April 18 shared the next assertion: “We are conscious of the problems at present affecting our platform and product, and need to guarantee all buyers that we’re actively working to revive full performance as quickly as doable. We have saved buyers knowledgeable by means of all updates, together with the server entry concern. We admire the continued help of our buyers and resident neighborhood, and stay dedicated to delivering on our imaginative and prescient of constructing actual property investing accessible to everybody.”
Cohen didn’t reply to our request for a standing replace on May 20. Investors 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 firm’s major lenders are suing.
Viola Credit and L Finance filed a lawsuit in New York State Supreme Court 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 be an investor in Landa by means of its enterprise division.)
The lenders additionally accused it of lacking property tax funds that led to the compelled sale of these properties, neglecting properties, and even failing to gather rents.
The lawsuit — first reported by actual property business publication Bisnow — states that after over a yr of trying to get Landa to honor their commitments, the lenders eliminated Landa as supervisor of the houses and appointed an impartial property supervisor and a chief restructuring officer.
After additional negotiations failed, the collectors later requested the court docket for, and had 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.
Despite the injunction, the lenders returned to court docket in January 2025, claiming Landa informed tenants to ship hire funds to a distinct checking account not lined by the ruling. They found this whereas making repairs to at least one property’s septic system. They additionally accused Landa’s CEO of making an attempt to promote or refinance some properties.
The court docket ordered Landa to clarify itself. Instead, in early March, Landa requested the court docket for a restraining order towards Viola Credit and L Finance, claiming the impartial supervisor was “put in unlawfully.”
Judge 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 remains to be pending.
Challenging mannequin
Landa is only one of a number of startups that emerged lately providing fractional actual property investing. It can be apparently not the one one which has struggled — particularly after mortgage rates of interest started hovering in 2022.
Fintor raised thousands and thousands 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 supplied index-like actual property funding merchandise referred to as “Cityfunds,” permitting non-accredited buyers to purchase right into a metropolis’s dwelling fairness market with as little as $250, additionally seems to have pivoted. Its web site now promotes a brand new tagline: “Access dwelling fairness to finance something.”
Arrived was maybe the highest-profile of the bunch — and the one one which appears to be actively working beneath the identical mannequin. In May of 2022, TechCrunch reported that Arrived raised $25 million in a Series A funding spherical together with Bezos Expeditions, to permit folks to purchase shares in single-family leases with “as little as $100.” According to its web site, the startup has so far paid out over $13 million in dividends and curiosity and has 766,000 registered buyers.
As for these individuals who invested with Landa, the way forward for their cash seems unsure. As of May 23, Landa’s investor portal web site nonetheless redirects to a “come-back-soon” upkeep message.
