Dubai based startup Bet offers retail investors from all over the world to buy parts of rental properties in the remarkable city of the UAE and earn a regular income. The startup, founded in 2020, claims that thanks to Dubai’s real estate regulations, it has been able to attract investor users to the platform from over 80 countries around the world.
The company, founded by Manar Mahmasani, Rami Tabbara and Ricardo Brizido in 2020, raised $8 million in a pre-Series A round from investors such as BY Ventures, MEVP and Vivium Holdings to expand its portfolio and launch in Saudi Arabia and Egypt. The company first raised a $4 million seed round last year.
“This round is a testament to what we’re building at Stake and our mission to provide access and liquidity to the world’s oldest, largest and most in-demand asset class. The proceeds will allow us to expand into Saudi Arabia and Egypt, continue to attract the best talent to the team and strengthen Stake’s position as a category leader in the MENA region,” Mahmasani said in a written statement.
Tabbara told TechCrunch during a conversation that after being in the real estate business for more than 15 years, he realized that many people want to invest in the MENA region but cannot afford to put in large chunks of money. without paying huge commissions to brokers and developers. So he wanted to speed up the real estate investment process with Stake.
Image Credits: Bet
The firm says it lists prime properties on its platform that are already rented out. To acquire a property, Stake looks at factors such as location, quality of construction, views and whether there are tenants. Tabbara said if the property is not rented, the company uses its data to list properties that can be rented quickly. Stake has paid over AED 1 million ($272,249) in rental income to investors, which is credited monthly.
Stake currently manages more than 44 properties with a total value of AED 56 million ($17.9 million). The company claims to have averaged a 17% monthly growth rate in both investors and assets under management (AUM).
“Our platform currently boasts 42,000 registered users and more than 2,100 active investors on the platform. Although we have users from many countries on the site, people from UAE, Saudi Arabia, Kuwait, UK and India are our top five investor bases,” Tabbara said.
Users can quickly register on the platform and invest from as little as AED 500 ($136). Because Dubai investment rules individual investors can only invest up to AED 183,500 ($50,000) per year. The proptech company also limits a single investor’s maximum ownership of a property to 33% to spread profits evenly.
The company does not rely on financing for the acquisition of housing. All the money to buy a property comes from the investors. While the Dubai Property Rule allows partial deeds, there is a limit of four investors, so Stake creates a special purpose vehicle for each property to facilitate the registration of a deed. All properties typically have an investment term of five periods, but the value of the house rises by 30% on the market and investors can vote to sell it.
Stake’s business model relies on various fees. When investors buy a property, the company charges them 1.5% with an additional 0.5% per year for maintenance. In addition, there are 0.2% know-your-customer (KYC) and anti-money laundering fees upfront and 0.1% per annum from the second year of the term. The company also charges investors 2.5% as an exit fee when they sell their stake. What’s more, if the property sells for a higher price than it was acquired, Stake takes a 15% cut of the profit. The company is still not profitable, but it has achieved 470% year-over-year growth in terms of revenue.
In the next 12 months, apart from launching its platform in Egypt and Saudi Arabia, the company also wants to build a second day trading platform where investors can sell their stake in a property to other investors. Stake is focused on launching a way to allow people to invest in vacation properties that are offered on platforms like Airbnb – something that platforms like Komoko and Here are trying in the US
In the local market, Stake’s closest competitor is SmartCrowd, which has raised a $3 million bridge round in June. Tabbara claims his company has already surpassed SmartCrowd when it comes to AUM.
“We rely on our team, technology and expertise in working with various properties to become the most prominent real estate investment platform in the Middle East and North Africa (MENA) region,” he said.