FatHouse

Easily invest in real estate opportunities in Latin America
$
50,000
worth of XLM on the day of pay-out*
worth of XLM on the day after voting*
Website
DeFi
Market platform
Financial Inclusion
Candidate:
SCF #10
Winner:
No items found.

FatHouse is a Real Estate Fintech startup that empowers millions of customers to emotionally connect and invest in real estate digital products to generate passive income, regardless of how much money they have or how much they know about real estate. FatHouse is solving a problem that, at least, 40% of the population faces in Latin America (265M people, $5B+ opportunity).


Our target customers are people in Latin America with an interest in real estate investing aged between 25-50, tech-savvy and early adopters of new products and technology apps, particularly in the world of financial transactions. Ultimately we want to help people build wealth, drive financial inclusion and literacy in Latin America, and position ourselves as a key player in helping the unbanked access real estate investment products.


We would like to use our budget to launch our MVP solution, hire initial key people on our team, and support spending on critical activities such as user acquisition, brand awareness, and compliance (legal).

In operation since

April, 2022

Based In

Bogota, Colombia

Stage

Development

Products & Services

Our goal is to sell tokenized properties to increase people's participation in the Real Estate (resilient and trusted) investment market. We will start with used real estate properties to speed up our launch and in order to guarantee we can offer monthly passive income to our users right away. This will be possible with Stellar thanks to its core capabilities to issue assets with fiat backing (in this case a physical asset) and liquidity.


In addition to this, we want to be able to issue digital assets. We are interested in Stellar because of its ability to support most of the LatAm common payment methods through its network, which allows us to serve a significant percentage of our target population that uses traditional methods today. This will allow our users to be paid, prevent fraud and enchance trust in our digital investment products.

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Previous submission

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What's new?

Goal & Budget

From a technology standpoint, our goal is to have launched our FatHouse platform based on Stellar’s technology by end of July 2022.


By end of 2022, FatHouse will have completed 10 or more sales of full properties; which represents +1,000 successful transactions, proving the company's thesis and MVP.


Over the next six months, our goal is to have an NPS score above 70 (excellent) through the implementation of a survey on our website, the monitoring of social media channels, and the alignment of our products and services to customers' expectations.

Steps to get there

In order to bring our product into production, we will need to complete the integration between our MVP no-code solution (already designed and UX tested) and the Stellar platform, including Tokenization and payments. We also plan to incorporate smart contracts as a feature to secure agreements.


Our operational plan includes a marketing campaign that will be divided into two phases, one, to inform and raise brand/product awareness and, two, to drive conversion of registered users. This will be done via three main channels: 1) organically through both our website and social media channels, 2) paid advertising, 3) a partnerships with a Colombian proptech which owns a database of 10,000 investment property owners.


The core of our product portfolio is based on real estate-backed tokens. At the moment, we already secured two properties for our launch in Colombia. For our team, success means that we will reach a substantial number of users that are interested in our product, but also have our two properties fully invested within a short period of time (less than 2 weeks).


For our launch, we need to be compliant with Colombian regulations. This will require us to demonstrate that we will not collect money before we are ready to provide our service/products, but also that we are compliant with all local tax and fintech regulations. Despite this, we do not need a special license to operate.


For this, we will partner with a legal firm that will advise us not only on the business structure and core business elements (tokens, smart contracts, taxes, etc.) but also on the regulatory aspects of the business, which includes recommendations to minimize regulatory friction and the need for special licenses in the short term (this will mean partnering with organizations that already have those licenses).


We would need the support of a software developer, ideally with blockchain experience to help us with smart contracts and tokenization. During a recent Techstars Blockchain Hackaton in Mexico City, which we won, we worked with a developer that is interested in the project, the team, and knows the technology. We are open to meeting more people and hope to make a decision on this soon.

Our Request

Progress so far

FatHouse is currently in the prototyping phase. Even though we have not launched and we do not have active users yet, we know that the potential for the rental investment market for FatHouse is $5B+ in LatAm. We believe this to be conservative as it is based on a traditional, inefficient framework vs. non-blockchain


We have performed research on hundreds of potential customers in order to identify pain points and product needs for our product, test the UX of the website, and estimate the size of the opportunity in Latin America. The business has not launched so do not have any active users, although we are working on building a database of interested customers through social media channels, our website, and a partnership with a Colombian Proptech.


We will launch in Colombia first, as it is a market that we know best, and the best in terms of rental yields on average across Latin America today. That said, our goal is to operate in all major markets in Latin America, prioritizing Spanish speaking at first, namely Colombia, Mexico, Chile, and Peru.


We have not raised any funds yet and have been self-funding all of the work we have done. We also have two properties available for our launch that have come from our close network/family and are part of our friends and family contributions to the business.

Overview

Problem and Solution

People in Latin America want to invest in Real Estate. However, they face three main barriers: high entry prices (capital barrier), low liquidity in the market (up to 9 months to sell a property in Colombia, for example), and lack of real estate expertise. FatHouse seeks to solve exactly this in order to democratize Real Estate investment opportunities across Latin America.


Our goal is to help anyone to fractionally invest in rental properties in Latin America, regardless of their experience or budget. We are solving our users' pain points by creating a platform that allows customers to browse and compare digital investment products (tokens) of rental real estate assets and start earning passive income right away.


We are also just getting started. Our plan is to create a peer-to-peer secondary market as a way for our customers to buy/sell their shares using FatHouse or their tokens using a FatHouse or a marketplace.


We like to think of ourselves as the Robinhood (app) for real estate investments.


How do you use Stellar in your solution?

FatHouse will use the Stellar platform in several ways:

  • Payments: We will leverage Stellar’s payment partner network for our launch since SDF anchors can support bank transfers and cash payouts which solves our customer needs.
  • Digital asset: Stellar will help us to issue and manage our digital assets while providing the compliance features
  • Smart contracts: These will not be available right away but we plan to use Stellar’s Smart Contract capabilities once they are available. For the launch, we will design our own with our internal development team.


Target market

Launch and 2022: Latin America customers with an interest in real estate investing aged between 25-50, tech-savvy and early adopters of new products and technology applications.

2023 and beyond: International customers with a similar profile.

Overall, we want to prioritize people that are already using fintech apps for investment, financial services, business, etc.


Revenue model

FatHouse has a B2C revenue model. Our revenue streams come from both the property acquisition/selling transactions in the form of a commission and the investment transactions on the platform. This means that every time a property goes through FatHouse, we will always make money.


In summary:

  • A commission on the properties acquired: every time we acquire or sell a property, we add a premium or a commission for our services. Note: Through one of our partnerships we will have access to discounted properties (vs. commercial value).
  • An investment fee on both the initial and P2P shares transactions
  • A property rental management fee (monthly)
  • A commission on the price spread from appreciation when properties are sold


Pricing strategy

Prices for the properties will always be set based on market analysis, wanting to maximize returns for both our customers and FatHouse and to guarantee we stay competitive. We know that our users are price-sensitive since most of them are young investors and many of them do not have enough money to buy an investment property of their own (there is another user persona interested in diversifying their investments, but his participation in our pool of investors will be lower).


Most of our competitors' investment thresholds are in the $1,000+ range as a minimum investment. Based on our research, we know it is critical to have much lower investment thresholds in order to reach our target population. FatHouse focuses on long-term rental income and property value appreciation, and low entry investment thresholds ($100-200). We believe this is the key to empowering millions of customers to access this highly desired investment market in Latin America.


Initially, the customer service will be done by the founders using tools such as forms, email, and WhatsApp Business. The credit policy is based on Fintech regulations.


Sales Forecast

During the first quarter of operation, we expect to launch, at least, one property every month, and move quickly to two once within a short period of time, iterating and making improvements to our UX based on learnings and results.


Based on our knowledge of the investment market, there will be seasonality so the months around December will be fairly quiet. Starting in 2023 the volume of offered investment opportunities will grow and we will close the first 12 months of operation with at least 30+ properties offered and sold to our customers (fully invested). The average home price (yes, we are starting with houses and apartments and moving in the future to other opportunities like commercial or Industrial…) in Colombia will be $80K.


Financial Plan

Based on our sales forecast, we expect to have a gross profit of $155K, coming mainly from the margin obtained from the purchase and sale of the properties vs. investment transaction fees.

Our largest fixed cost in the first year will be hiring. Our plan is to hire key staff such as a graphic designer, a finance manager, and marketing personnel. Another large fixed cost is part of our marketing spend (brand awareness).


We want to be fiscally responsible during the first few months of the operation and are estimating to nearly break-even during the first 12 months of operation. (+$10-20k net profit) and until we fully try our MVP product and customer hypothesis.


This financial plan is based on the sales forecast in the previous section.


Industry and Market Research

As mentioned by real estate publication Immobiliare:”...real estate represents the largest individual asset class that can be tokenized. The real estate market is worth around $228 trillion of dollars and only 7% of this is available to retail investors. Only 3% of the world population has invested in real estate, but more than 80% believe that real estate is a good investment. The real estate investment process is not efficient today and greater liquidity would increase the existing market by 20-25% through increased liquidity”. FatHouse wants to be a part of that change by creating a platform that improves the customer experience for real estate investors and drives liquidity in this market as a result.


Threats and Risks

Regulatory: Financial products are amongst the most regulated out there. That said, Latin American governments are working hand in hand with industry players to develop new frameworks that allow for innovation and disruptive product development.

Competition: Banks could offer similar products. FatHouse wants to position itself as a viable alternative to these institutions with a focus on experience and customer trust.

Real Estate pricing volatility: Potential pricing bubbles can temporarily impact consumer confidence in real estate investments which could dampen our top-line growth. However, we do not see this dramatically impacting our profitability in the long run, as we are focused on long-term type investments.


Competition

Our competitors in the fractional real estate investment market are startups with a heavy focus on crowdfunding for new construction (Briq.mx, WeSeed,...), which generate returns based on the sale of the asset, and have high investment thresholds ($1,000+) and long lock-up periods (12 months and upwards.


Marketing and Sales

At FatHouse, we will start using a mixed strategy of Inbound and Outbound marketing to attract users through high-value content, but also proactively reach out to those who may be interested in our service but are not familiar with our brand and products.


We have already identified our users, although we will continue redefining the user persona based on results from our first interactions and campaigns.


Thanks to this, we already have the initial social media pieces to be used from June 2022 onwards so we can start creating a solid database of potential customers and start feeding our funnel.


Additionally, with the launch of our MVP website, we will use SEO strategies (mainly for educational purposes) and we will do email marketing thanks to available alliances.  For us, it will be essential to use Paid Marketing to generate brand awareness and drive traffic to our site.


For us, the conversion of users starts by guaranteeing traffic, following the user's journey map, connecting with them, and generating not only trust but delivering on our value proposition.


Ideally, we will have more than paid conversion and the word of mouth will help us bring new users who will make it easier to convert. Over time, our customers will increase both the size and number of investment transactions, which will increase their LTV for FatHouse.


Resources and Relationships

As part of our launch plans, we have closed two partnerships with proptechs in Colombia, Habi and Aptuno (they both have Latin America scope). The first one allows us to have a healthy funnel of discounted properties for our platform. The second will help us have accurate information on market rental pricing and secure monthly rent in all of our investment assets. They will both be critical to help us scale.


Additionally, the Aptuno agreement allows us to make use of the property owner database that they have built throughout their operation, with which we would reach +10k users interested in Real Estate investments.


Finally, through friends and family, we have access to email marketing campaigns with a consulting company, which will allow us to reach more than 40k executives in the health sector in Colombia.

No items found.

Links

Problem and Solution

People in Latin America want to invest in Real Estate. However, they face three main barriers: high entry prices (capital barrier), low liquidity in the market (up to 9 months to sell a property in Colombia, for example), and lack of real estate expertise. FatHouse seeks to solve exactly this in order to democratize Real Estate investment opportunities across Latin America.


Our goal is to help anyone to fractionally invest in rental properties in Latin America, regardless of their experience or budget. We are solving our users' pain points by creating a platform that allows customers to browse and compare digital investment products (tokens) of rental real estate assets and start earning passive income right away.


We are also just getting started. Our plan is to create a peer-to-peer secondary market as a way for our customers to buy/sell their shares using FatHouse or their tokens using a FatHouse or a marketplace.


We like to think of ourselves as the Robinhood (app) for real estate investments.


How do you use Stellar in your solution?

FatHouse will use the Stellar platform in several ways:

  • Payments: We will leverage Stellar’s payment partner network for our launch since SDF anchors can support bank transfers and cash payouts which solves our customer needs.
  • Digital asset: Stellar will help us to issue and manage our digital assets while providing the compliance features
  • Smart contracts: These will not be available right away but we plan to use Stellar’s Smart Contract capabilities once they are available. For the launch, we will design our own with our internal development team.


Target market

Launch and 2022: Latin America customers with an interest in real estate investing aged between 25-50, tech-savvy and early adopters of new products and technology applications.

2023 and beyond: International customers with a similar profile.

Overall, we want to prioritize people that are already using fintech apps for investment, financial services, business, etc.


Revenue model

FatHouse has a B2C revenue model. Our revenue streams come from both the property acquisition/selling transactions in the form of a commission and the investment transactions on the platform. This means that every time a property goes through FatHouse, we will always make money.


In summary:

  • A commission on the properties acquired: every time we acquire or sell a property, we add a premium or a commission for our services. Note: Through one of our partnerships we will have access to discounted properties (vs. commercial value).
  • An investment fee on both the initial and P2P shares transactions
  • A property rental management fee (monthly)
  • A commission on the price spread from appreciation when properties are sold


Pricing strategy

Prices for the properties will always be set based on market analysis, wanting to maximize returns for both our customers and FatHouse and to guarantee we stay competitive. We know that our users are price-sensitive since most of them are young investors and many of them do not have enough money to buy an investment property of their own (there is another user persona interested in diversifying their investments, but his participation in our pool of investors will be lower).


Most of our competitors' investment thresholds are in the $1,000+ range as a minimum investment. Based on our research, we know it is critical to have much lower investment thresholds in order to reach our target population. FatHouse focuses on long-term rental income and property value appreciation, and low entry investment thresholds ($100-200). We believe this is the key to empowering millions of customers to access this highly desired investment market in Latin America.


Initially, the customer service will be done by the founders using tools such as forms, email, and WhatsApp Business. The credit policy is based on Fintech regulations.


Sales Forecast

During the first quarter of operation, we expect to launch, at least, one property every month, and move quickly to two once within a short period of time, iterating and making improvements to our UX based on learnings and results.


Based on our knowledge of the investment market, there will be seasonality so the months around December will be fairly quiet. Starting in 2023 the volume of offered investment opportunities will grow and we will close the first 12 months of operation with at least 30+ properties offered and sold to our customers (fully invested). The average home price (yes, we are starting with houses and apartments and moving in the future to other opportunities like commercial or Industrial…) in Colombia will be $80K.


Financial Plan

Based on our sales forecast, we expect to have a gross profit of $155K, coming mainly from the margin obtained from the purchase and sale of the properties vs. investment transaction fees.

Our largest fixed cost in the first year will be hiring. Our plan is to hire key staff such as a graphic designer, a finance manager, and marketing personnel. Another large fixed cost is part of our marketing spend (brand awareness).


We want to be fiscally responsible during the first few months of the operation and are estimating to nearly break-even during the first 12 months of operation. (+$10-20k net profit) and until we fully try our MVP product and customer hypothesis.


This financial plan is based on the sales forecast in the previous section.


Industry and Market Research

As mentioned by real estate publication Immobiliare:”...real estate represents the largest individual asset class that can be tokenized. The real estate market is worth around $228 trillion of dollars and only 7% of this is available to retail investors. Only 3% of the world population has invested in real estate, but more than 80% believe that real estate is a good investment. The real estate investment process is not efficient today and greater liquidity would increase the existing market by 20-25% through increased liquidity”. FatHouse wants to be a part of that change by creating a platform that improves the customer experience for real estate investors and drives liquidity in this market as a result.


Threats and Risks

Regulatory: Financial products are amongst the most regulated out there. That said, Latin American governments are working hand in hand with industry players to develop new frameworks that allow for innovation and disruptive product development.

Competition: Banks could offer similar products. FatHouse wants to position itself as a viable alternative to these institutions with a focus on experience and customer trust.

Real Estate pricing volatility: Potential pricing bubbles can temporarily impact consumer confidence in real estate investments which could dampen our top-line growth. However, we do not see this dramatically impacting our profitability in the long run, as we are focused on long-term type investments.


Competition

Our competitors in the fractional real estate investment market are startups with a heavy focus on crowdfunding for new construction (Briq.mx, WeSeed,...), which generate returns based on the sale of the asset, and have high investment thresholds ($1,000+) and long lock-up periods (12 months and upwards.


Marketing and Sales

At FatHouse, we will start using a mixed strategy of Inbound and Outbound marketing to attract users through high-value content, but also proactively reach out to those who may be interested in our service but are not familiar with our brand and products.


We have already identified our users, although we will continue redefining the user persona based on results from our first interactions and campaigns.


Thanks to this, we already have the initial social media pieces to be used from June 2022 onwards so we can start creating a solid database of potential customers and start feeding our funnel.


Additionally, with the launch of our MVP website, we will use SEO strategies (mainly for educational purposes) and we will do email marketing thanks to available alliances.  For us, it will be essential to use Paid Marketing to generate brand awareness and drive traffic to our site.


For us, the conversion of users starts by guaranteeing traffic, following the user's journey map, connecting with them, and generating not only trust but delivering on our value proposition.


Ideally, we will have more than paid conversion and the word of mouth will help us bring new users who will make it easier to convert. Over time, our customers will increase both the size and number of investment transactions, which will increase their LTV for FatHouse.


Resources and Relationships

As part of our launch plans, we have closed two partnerships with proptechs in Colombia, Habi and Aptuno (they both have Latin America scope). The first one allows us to have a healthy funnel of discounted properties for our platform. The second will help us have accurate information on market rental pricing and secure monthly rent in all of our investment assets. They will both be critical to help us scale.


Additionally, the Aptuno agreement allows us to make use of the property owner database that they have built throughout their operation, with which we would reach +10k users interested in Real Estate investments.


Finally, through friends and family, we have access to email marketing campaigns with a consulting company, which will allow us to reach more than 40k executives in the health sector in Colombia.

No items found.

Links

About the Team

Name: Diego Varela

Position: Co-founder - CEO

Discord: captfantastic#3365

LinkedIn: https://www.linkedin.com/in/diegovarela/


Name: Laura Daniela Muñoz

Position: Co-founder - COO

Discord: Lauradaniela#4830

LinkedIn: https://www.linkedin.com/in/lauradanielamunozpalacios/

*The USD valuation of the award in XLM is calculated using the CF Stellar Lumens-Dollar Settlement Price on September 27, 2021 as administered, maintained, and reported by the cryptocurrency index provider CF Benchmarks Ltd. (using the ticker “XLMUSD_RR”) (available at https://www.cfbenchmarks.com/indices/XLMUSD_RR)
* The USD valuation of the award in XLM is calculated using the CF Stellar Lumens-Dollar Settlement Price on the date of transfer as administered, maintained, and reported by the cryptocurrency index provider CF Benchmarks Ltd. (using the ticker “XLMUSD_RR”) (available at https://www.cfbenchmarks.com/indices/XLMUSD_RR)
*The USD valuation of the award in XLM is calculated using the CF Stellar Lumens-Dollar Settlement Price on December 16, 2021 as administered, maintained, and reported by the cryptocurrency index provider CF Benchmarks Ltd. (using the ticker “XLMUSD_RR”) (available at https://www.cfbenchmarks.com/indices/XLMUSD_RR)
*The USD valuation of the award in XLM is calculated using the CF Stellar Lumens-Dollar Settlement Price on July 5, 2022 as administered, maintained, and reported by the cryptocurrency index provider CF Benchmarks Ltd. (using the ticker “XLMUSD_RR”) (available at https://www.cfbenchmarks.com/indices/XLMUSD_RR)