Nada / CityFunds Review
Intro — What is Nada / CityFunds?
Nada… not the most inspiring name for an investing platform perhaps? Don’t judge a book by its cover! Or an investing platform by its brand name I guess. Nada is a newer player in the “real estate crowdfunding” space, with options for both accredited and non-accredited investors. Nada offers “CityFunds,” seemingly as its flagship product. The company bills itself as “Own a piece of Your Favorite City — real estate portfolios in the nation’s top cities.” Pretty clear.
This review takes a look at Nada and Cityfunds, a new(ish) platform for digitized, low-barrier-to-entry real estate investing.
Reviewing Nada / CityFunds — the Bottom Line
I couldn’t find any substantive reviews of this real estate crowdfunding platform elsewhere. That may not be a great sign, or it just means they’re early on.
Righteous Money Review - 4/5
UPDATE: I have upped my review to 4/5 stars, as the asset reporting seems to be there, appreciation is happening (however modest), and I like the communication from the firm so far.
What Type of Returns Are Possible on CityFunds
Well, as I mentioned, I’ve made $1.38 so far (but I haven’t invested anything that substantial). These are private, diversified real estate funds. They may not be high-octane as some of the other real estate crowdfunding platforms out there, but they are transparent about changes to NAV (net asset value) of their funds. No red flags so far.
I'm rich!
Understanding Nada and CityFunds: The Backstory
CityFunds is self-styled as an innovative investment platform brought to life by Nada, a company dedicated to democratizing real estate investment. (“Nada” is an odd name for a finserve outfit, but I digress.) Nada.co, since its inception, has aimed to lower the barriers for individual investors, allowing them to participate in real estate opportunities that were once reserved for institutional investors.
Their initiative, CityFunds, focuses on urban real estate investments with an emphasis on community growth and sustainable development. This is a little confusing… CityFunds is an offshoot of Nada, which I guess also operated something called Homeshares? Hard to say.
The company transparently makes clear who the founders and key members of their team are. That’s a good thing. Less good is the fact that their team seems pretty sparse on real estate experience. The founders seem more to be from tech and biz dev backgrounds. That said, they have compliance people and capital markets people, not really a red flag, just something to consider.
UPDATE: CityFunds appointed Tore Steen as CEO in mid 2024. Steen was the CEO and co-founder of CrowdStreet, which was the market leader in the real estate crowdfunding game until shit hit the fan at CrowdStreet with a bad deal. Sounds like more or less Steen fell on the sword and got the ax, but by all accounts is a reasonable guy and clearly has experience in the space. So, on balance, probably a good thing for CityFunds and should give investors some comfort.
How CityFunds Works: Simplifying Real Estate Investing
CityFunds operates under a straightforward premise: it allows individuals to invest in funds that support the growth and development of urban neighborhoods. These funds, in turn, invest in real estate projects within specified cities, promoting long-term capital growth. One noteworthy aspect that will come up repeatedly in this Nada review is the platform's commitment to transparency. Investors can access detailed information about each project before committing their funds, ensuring they are fully informed.
Nada offers a nice blend of diversification, low barrier to entry, and transparency. There’s pretty good info on their target markets where the funds operate, but a full asset-by-asset breakdown below the hood.
In making my first investment, I found the UX to be simple, the information level to be appropriate for a less experienced real estate investor (not too much, not too little) and the funding easy via Plaid integration.
Investment Performance: What to Expect
While historical performance is not indicative of future results, CityFunds has demonstrated a consistent track record. By focusing on high-potential urban areas and engaging in projects that contribute to community revitalization, the funds often see stable appreciation. It's important to note, however, that real estate investment carries inherent risks, and potential investors should consider these risks relative to their investment horizon and financial circumstances.
The platform’s securities are registered with the SEC, and they list NAV growth (appreciation) by fund in their offering docs. As of this writing, for example, the Austin fund has 8.8% historical NAV growth since inception.
Spotlight Investment: Austin CityFund
A highlight in the CityFunds portfolio is the Austin CityFund. This fund capitalizes on the rapid growth and development in Austin, Texas, known for its booming tech industry and burgeoning residential demand. The Austin CityFund invests in a mix of residential and commercial properties, strategically chosen to leverage Austin's economic growth while contributing to the city's social and cultural fabric.
I have invested in this fund. Partly I like the investment thesis (drivers in the local market that Nada presents) and partly I’m a fan of Austin. Good people, good food, good music! I will report back regularly with progress updates.
ESG and Impact Investing: A Core Consideration
An essential component of this CityFunds review is the platform's focus on ESG (Environmental, Social, Governance) factors. Nada incorporates ESG considerations into its investment decisions, reflecting a commitment to responsible investing. Projects funded through CityFunds not only seek financial returns but also aim to create positive community impacts, such as affordable housing, sustainable development, and economic revitalization.
Pros and Cons: Weighing Your Investment
Pros:
Accessibility: With a relatively low minimum investment, CityFunds makes it possible for more people to invest in real estate.
Community Impact: Investments contribute to positive community outcomes, aligning with the goals of socially responsible investors.
Transparency: Detailed reporting on fund usage and project outcomes is available to all investors.
Easy UX and Plaid integration
Cons:
Market Risks: Real estate markets can be volatile, and external economic factors can affect property values.
Liquidity: Unlike some other investment forms, real estate investments typically don't offer quick cash-outs.
Does not feel as established as other platforms in the space (Fundrise, EquityMultiple, etc.)
Final Verdict: Is CityFunds Worth Your Investment?
Righteous Money finds Nada / CityFunds to be a unique offering in the real estate investment sphere, particularly appealing to those who value community impact alongside potential financial returns. While all investments carry risks, CityFunds presents a compelling case for those looking to diversify their portfolios and invest in the growth of vibrant urban communities. As always, prospective investors should consider their financial context and investment goals before diving in.
What experiences have you had with CityFunds? Drop it in the comments below!
This review does not constitute financial advice.