Wander’s Vail Valley property, one of their recent properties to launch.
Wander
The 18-month old short-term rental company Wander will announce today the raise of a $100 million debt facility from Credit Suisse to rapidly accelerate the purchase of more homes for their portfolio, with the aim of having a Wander property within a three-hour drive for 80% of the U.S. population. This announcement comes on the heels of their new investment arm in the form of a captive REIT. Called Atlas, the real estate investment trust received millions of dollars in investment interest within the first 48 hours of its announcement a month ago.
“The big thing I wanted to accomplish was this idea of blurring the line between users and owners,” said John Andrew Entwistle, Wander Founder and CEO, as well as Forbes 30Under30 member. “That was really this whole idea with web3. How do you have your users become owners?”
Properties as part of the Wander short-term rental portfolio are transferred to Atlas once they are ready for paying guests. Built into the model is the agreement that Wander has the right to operate and maintain the properties even if they are under the Atlas umbrella, with profits being distributed to investors monthly or after there are profits from the sale of a property.
“Having that grace period, especially as the fund is so new, is really important because one bad asset can really affect returns,” Entwistle explained. “Down the line when Atlas’ own portfolio is hundreds of homes then it will be able to go and purchase homes directly. But until that happens we think segregating them is the right call.”
Entwistle describes this model as that of an index of vacation rentals, saying he explored the other real estate investment models of fractional ownership or tokenization but ultimately decided there was too much risk. “You have so much exposure to a single asset in a single location. We want to have diversity in terms of regions and locations and trends and what people want to do, to really stabilize the portfolio.”
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The model suggests there could be a way to address one of the biggest hesitations currently found in proptech lending, namely the discussions around whether or not there is any room left for large growth. As proptech companies start to suffer the headwinds of a downmarket, a prevailing worry is that growth can only be incremental compared to what the industry has seen to date. Blending property-based assets in high price tiers with a decentralized infrastructure may be one way proptech can find a way forward in the upcoming market shifts.
The home gym at Wander’s Hudson Valley retreat.
Wander
The Wander portfolio currently has 13 homes available for short-term stays, ranging from beach homes to wooded enclaves to ski community properties. As with their initial launch, each property caters to digital nomads with high-speed wifi, state-of-the-art desk set-ups, as well as home gyms and a Tesla for personal use during a guest’s stay.
“Wander has to be a user-centric company, otherwise it will simply fail,” said Entwistle. “If you look at different marketplaces, they make money purely from just getting people in the door. Literally, none of the parties are thinking about the user. If your users are your owners and your owners are your users you have to do what the users want.”
Entwistle goes on to explain the procurement process for finding homes to fit their portfolio is more exhaustive than most. Each house needs to meet the requirements of the debt facility in addition to being appropriate for a short-term rental. Then both a local appraisal and desktop appraisal take place to ensure it is a safe bet for the REIT. Or, as it puts it more simply, “You have a bunch of parties making sure that we purchase the right assets.”
Atlas pays a .65% asset management fee on gross asset value with an 8% annual dividend as the targeted yield, according to the public statement. Over 110,000 accounts have been created on the Wander platform, with a total of 2,205 nights booked to date at a 90% bookable occupancy for the last six months. Currently the REIT is only open to accredited investors, at a $10,000 minimum investment, but the goal is to open it to more investors and price points in the future.