The Definitive Here.co Review:

Here has positioned itself as a full-service platform to help retail investors invest and own fractional ownership of vacation rental properties. They aim to minimize the time commitment and cost of entry traditionally required to gain access to the vacation rental asset class. They've built their product to help first-time investors get started easily, while helping veteran investors gain access to new markets.

Here allows investors to buy fractional shares of individual vacation rental properties in various tourism-focused markets across the USA, promising better returns than traditional long-term rental properties.

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Who Can Invest?

Here is currently available to all U.S. based investors who have a Social Security Number (SSN) or Tax Identification Number (TIN).

They plan to open up investments to international investors in the near future, but as of September 2022, no specific plans have yet been announced.

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How Do They Find Properties?

Here users a "data engine" to analyze real estate, demographic and economic data from across the U.S. to help them identify markets with the best outlooks for gross rental yield.

Some of the data points they look at include:

• Availability of entry-level homes for sale
• Healthy economies with visitor growth
• Household growth
• Rental growth
• Home price appreciation
• Population growth

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How Much Experience Do They Have?

Here is a new platform. As of September 2022, Here has successfully funded seven properties, with two properties still listed as partially funded.

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Safety & Security

Here holds title for each of their properties in a unique series LLC administered by Here on behalf of its investors. Here states that this structure allows them or their affiliates to manage property operations and property/asset management, while allowing investors to access economic interest in the underlying property. Investors in turn purchase a fraction of the ownership in the LLC that contains the property of interest.

Here is regulated by both the Securities and Exchange Commission (SEC) as well as the Financial Industry Regulatory Authority (FINRA). Investments in Here properties qualify as a security registered with the SEC. They also maintain a 1% ownership stake in every property – this is meant to signal alignment between the interests of the company and that of its investors.

Here uses Plaid, a robust 3rd party payments system, to integrate investor's bank accounts with their platform to facilitate purchases of property shares.

Rent Payouts

Here properties are cash-flowing, meaning they're designed to produce income from the vacationers who rent them out. But that doesn't guarantee they will pay out on schedule, or pay out as much as one would expect.

Here doesn't project what kinds of rental income their properties may produce. The only documentation on Here's website about prospective rent returns is a simple graphic on their home page that refers only to vacation rentals as an asset class, and doesn't account for the higher risk and operational overhead inherent in vacation rentals.

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Not only that, but Here's investment cash flow is full of caveats.

First, they explicitly state that properties might not generate sufficient funds to produce cash flow, meaning investors won't get paid out. This language is likely meant to cover themselves from booking variability in more seasonal locations, but is concerning on its own.

Properties are also unoccupied when they hit Here's marketplace, meaning they aren't yet producing any revenue. Here refers to this period as "Onboarding". The Here team is busy completing any renovations, licensing, furnishing, and marketing asset production during this time. Investors can view the property's "Estimated First Payout Date" on the property page. As of Sept 2022, Here's two available properties are expecting their first payout in May of 2023 – nine months from now.

Assuming rent payments begin being paid out, investors are entitled to their pro-rata share of net booking income from the very first day that the property is rented out by guests and deposited into their Here account. Net income is calculated after Here deducts their Property Management and Asset Management fee. More on that in the Fees section.

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How Often is Rent Paid Out?

Here doesn't pay out rent in the traditional way. They instead pay out something more akin to a stock dividend to investors quarterly, which represents a pro-rated percentage of a property's net rental income.

Due to the magic of compound interest, investments perform better in the long term the more often rent yield is paid out and reinvested by investors. Quarterly dividends like the kind Here pays out mean that Here investors miss out on a bigger portion of an investor's compounding interest than they could if they paid out more often.

As Einstein said, "Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't, pays it."

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Expected Property Appreciation

Similarly to their property cash flow, Here publishes next to nothing about their properties' expected appreciation. Their homepage and FAQ are curiously lacking in any additional information about this.

The closest thing investors can find regarding expected appreciation is the Financials section on their Property pages, but that data used is actually just broad market-based data for higher end homes in the area. This data only outlines past local appreciation over the last five years and doesn't predict future value. This may provide investors with a somewhat skewed picture, since the pandemic years saw an unprecedented swing in real estate prices, particularly in the rural and suburban areas in which Here gets their inventory.

Because of this, there's significant potential for Here properties to devalue in coming years as the housing market reacclimatizes itself to the post-pandemic world.

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Vacation rental properties also carry another major factor in resale value - wear and tear. It's widely accepted that short term rentals are higher impact on a property's flooring, walls, and fixtures. Short term rentals typically have no damage deposit, either. Pair that with a revolving door of renters and higher-end fixtures and furniture to fix and replace as damage occurs, and expenses quickly pile up.

Here updates their investor's property fraction values quarterly, but they're unclear about how they monitor the value of that property over time.

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Fees & How They Make Money

Here.co makes money in two stated ways, and earns the bulk of money on properties before they are made available to investors.

Their public fee structure is pretty simple. They charge a quarterly Asset Management Fee of 0.25% on the property's total asset value, paid to Here from the property's quarterly income. Here collects this before property income is divvied up amongst its investors. If the property appreciates, then Here takes a higher percentage. Over their standard five year holding period, a property offered for $600,000 would net Here $30,000 assuming the property doesn't appreciate.

Here also charges a Property Management Fee "based on the gross revenue that a property generates over the lifetime of a property’s operations". Here doesn't say how much this is, but it's also deducted from a property's income before being distributed to investors.

There's also the matter of the difference between the price that Here.co purchases properties for and the price they offer them to investors for. This is where Here.co has hidden fees that have upset many users. See this example, filed by Here with the SEC where Here charges a $210,000 fee for a property that they bought for $816,000. That is an extremely high fee and tax on users.‍

‍Expected Return on Investment

This section is usually full of facts, figures, and calculations to help investors better understand their potential returns using this investing platform.

Unfortunately, we cannot offer this in Here's case. Here's lack of documentation and projection data make it impossible for us to make meaningful predictions about return on investment from Here properties.

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What If You Had Invested Elsewhere Instead?

Here's what would have happened if an investor had invested that $10,000 in other common investment vehicles instead.

Here vs. Bonds

You would have earned $3,824.59 in yield if you'd invested that same $10,000 into corporate bonds (which are similarly illiquid) and drawn Moody's long-term average (6.53%).

Here vs. REITs

You would have earned $9,142.84 in yield if you'd invested that same $10,000 into a fund mirroring all 12 equity REIT subsectors (real estate investment trusts) over the last 10 years (13.2%).

Here vs Stocks

You would have earned $10,581.68 in yield if you'd invested that same $10,000 into the stock market and drawn the S&P 500's average yield over the last decade (14.7%).

Holding Period

Here's liquidity policy leaves much to be desired. Once investments are made, investors are unable to access or sell those investments for at least five years.

Not only that, but selling investments is not the investor's decision – Here decides when they'll sell properties based on their own financial calculations. They might sell within the 5-7 year window as they expect, but they might sell earlier or later, too.

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Early Withdrawal

If you don't want to wait a full 5-7 years for your Here investment to mature, you are fully out of luck.

Here won't buy your shares back from you, and they currently don't allow investors to sell their shares to each other.

Here says they have plans to develop a secondary market that will allow investors to buy and sell shares amongst each other, but they also state that there is no guarantee that this will happen. Even if it does, they state that they'll be able to charge fees determined by them without telling you what you'll be charged before the transaction takes place.

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How Much Control They Have Over Your Money

In essence, they have all the control when someone invests in one of their properties.

→ They won't give your money back before they decide to sell the property

→ They'll decide what kinds of fees they'll charge if they ever develop a secondary market

→ They decide when to sell the property you're invested in

Once invested, Here investors are basically just along for the ride.