The investment platform for short-term rentals is winding down here

Change Take

In the evolving short-term rental industry, it is either consolidating or ceasing to exist.

— Srividya Kalyanaraman

Miami-based Here.co, which offered fractional ownership investments in short-term rentals, has shut down.

It launched here in 2022, boosted by pandemic-induced interest in short-term rentals. But macroeconomic conditions and higher interest rates forced the company to close — effective immediately.

The company will advertise all properties for sale. Upon the sale of each property, the net proceeds will be distributed to the respective investors after settlement of selling costs, termination costs, loan repayment and deferred fees payable to the manager, its website said. In its management role, the company will oversee the sale process, seeking the best possible outcome for investors, recognizing that market conditions will affect the terms of the sale. The aim is to sell all properties within the next six months to optimize value.

During this period, Here will continue to file required SEC reports for both Here and each series until the property sales close, according to Short Term Rentalz.

It is not the only company affected by macroeconomic conditions. Last week, Wisconsin-based property manager Frontdesk laid off its entire workforce of approximately 200 employees and ceased operations. Frontdesk has raised nearly $26 million in venture capital and has established itself as a prominent property manager in the US

The startup’s business approach involves renting out apartments at market rental rates, furnishing them for short-term rentals in more than 30 markets. However, challenges arose mainly due to upfront costs, associated capital costs and fluctuations in demand and rates.

And in November of last year, Cabana, a start-up offering RVs as a vacation rental, sought buyers to stave off closure after all efforts to secure additional venture capital failed. Its CEO, Scott Kubly, wrote in a LinkedIn post that the company has ceased operations and begun the sale process.

Having previously raised $16 million, including a $10 million Series A round in 2021, Cabana had notable investors such as Craft Ventures, Goldcrest Capital, Nordic Eye and entrepreneur Jason Calacanis.

Nevertheless, the company was unable to withstand the economic climate.

“It ended up being a series of macroeconomic events that felt like a black swan event that happens every 9 to 12 months. The automotive industry experienced a semiconductor shortage that halted global car production. This was followed by labor shortages and 10% inflation. Then interest rates jumped to the highest levels in 20+ years. And most recently, venture capital deployments have declined by ⅔ over the past 12 months,” Kubly wrote.

Startups like Here.co and Cabana, which were either founded or funded in the wake of a pandemic low-interest economy, have seen higher company valuations and increased growth potential.

However, with the current rise in interest rates and market contraction, companies that aggressively raised funds during this period are facing challenges in meeting their previous inflated valuations.

“And now that interest rates are going up and the market has pulled back quite a bit, it’s really hard for those companies that raised aggressively over that period of time to meet the valuations that they raised under, and so now they’re in this crisis,” Cara Whitehill, industry advisor and investor and founder of Unlock Advisors, previously told Skift.

Photo credit: Living room short-term rental in Nashville listed on Airbnb. Source: Airbnb.

Leave a Comment

Your email address will not be published. Required fields are marked *