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Cher

Cher helps people connect to co-own homes.

USA, California
Market: Real estate, Services, Mobile applications
Stage of the project: Operating business

Date of last change: 06/25/2019
Min investment
$  35.000
Total required
$ 1.000.000
Rating
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Idea

Cher is the first real estate SaaS platform helping people more universally co-own residential real estate. Our software connects different home buyers together, build their network, access quality real estate professionals, and streamlining the entire co-owning process for their primary residences or investment properties.

Cher is not just a software service, but a new way of life. We allow for homeownership to be made possible for millions of qualified people living in unaffordable metropolitan areas.

Current Status

+ 45,000 Enrolled users, Beta product developed, + 300 Enrolled real estate agents, Co-owner deals closed, Airing on CBS May, Generating Revenue – Cher’s Clique & Sale of Leads

Market

Primary market – 9 million millennial renters within our targeted unaffordable metropolitan locations. Secondary market – 500,000 investment property owners. Future market- 500,000 Generation Z renters in targeted unaffordable metropolitan locations. Serviceable Available Market is 10,000,000 buyers.

Problem or Opportunity

Rental rates continue to increase in metropolitan areas. Problems like rising mortgage rates, student debt, lack of home buying or co-owning knowledge, and slow salary growth are a few of the challenges facing homebuyers today. Annual rate of growth for an employed individual income is growing at a slower rate of 2% - 3% versus yearly increases of 5% - 10% in rent. With these factors facing real estate buyers, it creates barriers into owning a primary residence, secondary home, or investment property. As millennials compromise on homes in undesirable locations, they are not only unsatisfied but also less likely to be able to afford an investment property due to slower appreciation in these areas. There are several current challenges today of co-owning homes with non-relatives i.e. joint tenancy with equal ownership rights. Many people today do not realize they may co-own homes with non-relatives. The individuals who are aware of this and proceed have to incur high legal costs, added escrow closing costs, form an LLC, and have limited flexibility to opt-out of ownership and access their equity. The only current feasible option is to mutually sell the property which is rarely agreed to on timing.

Solution (product or service)

Cher is a stepping stone for individuals to eventually achieve their homeownership goals by bridging the gap between renting and owning one or multiple properties by oneself. By matching co-owners in joint tenancy, buyers can enjoy a quality of life through co-ownership that is equal or better than the living conditions paid for by renting while allowing the opportunity in building equity and in turn paying equal or less payments towards mortgage costs. Users will be able to co-own in desirable areas yielding strong appreciation without compromising. Cher collaborates with mortgage brokers and lenders to pre-qualify borrowers and provides competitive loans with no cost in closing loans for co-borrowers thus making co-owning a flexible solution to build equity, cash out from the bank, and switch co-owners more freely than before without paying added loan closing costs for this service. Slightly higher interest rate loans are provided upfront to create these no cost loans covering all title and appraisal fees. Teaming up with mortgage insurance providers, Cher offers an optional security policy to protect each co-owner from adverse effects in the event that either co-owner(s) are unable to pay their portion of the mortgage. When Cher is producing enough profits, the company will provide an option to buy out any exiting co-owner(s) at their discretion.

Competitors

Cobuy provides a platform for users to co-own real estate if they already have a relationship built. Unison provides a co-owning platform however the company is the second co-owner on title and mortgage. Cher is the only platform providing both services and a network of vetted matches to co-own homes with.

Advantages or differentiators

Cher is first to market. A provisional patent has been issued and will convert to non-provisional August 2019. In February, we conducted freedom to operate search which resulted in no infringement found on existing IP. Our utility patent protects our integrated map, matching algorithm, and Cher’s overall service as a social co-owning platform. Cher is our registered trademark name and protects our software identity from other entities with names having similar pronunciations. Cher owns 150+ domains (ex: co-borrower.com, share.homes, co-bo.homes, co-own.homes). All contain common terms and phrases related to co-owning real estate. Strategy for promoting Cher’s online presence to drive SEO web traffic.

Finance

Total sales first year will be 225 co-owned homes closed through Cher. 5 year projection will be 20,000 co-owned homes through Cher which includes primary residences and investment properties. Our 5 sources of revenue include two of which are subscription based and three which are transactional.

(In Millions)
2019 2020 2021 2022 2023
Revenue: $1.7 $8.6 $18.6 $54 $90

Expenses : $1.3 $4.7 $7.5 $11.2 $15

EBITDA: $0.2 $2.7 $8.6 $42.8 $70

Business model

5 sources of revenue which are 2 sources contingent on escrow closing and 3 sources which are generated through user traffic. 1) 25% - 35% referral fee fr om gross commission of buyer’s real estate agent. 2) Cher’s Security – optional insurance coverage wh ere Cher’s revenue fee is provided by Insurance provider. 3) General advertisement in the form of sponsored content. 4) Sale of user emails in the form of leads to real estate professionals (STARTED) 5) Cher’s Clique – monthly subscription to be at the top of user dashboards (STARTED). Future revenue expected from buying out exiting co-owners and from mortgage brokers who are originating co-borrower loans on Cher. We expect from our daily amount of accounts created ranging between 500-600 new users, 250 people will actually begin the process of creating new accounts on a daily basis. From our current traction, we project that half of these 250 created accounts will be designated as inactive users and lost through attrition. From these 125 users, we project that under 5% of these users will close escrow on a daily basis and 25% of these escrows that do close opt into our optional Cher Security.

Money will be spent on

Cost of Sales = $540,000

Marketing = $300,000

Research & Development = $110,000

Consultants = $50,000

Offer for investor

Convertible Note - Primary Deal
10% APR converts at Series A round 20% discount
Max Valuation Cap: $7M

Preferred Equity - Secondary Deal
$5M pre-money valuation

Current round - Seed


Team or Management

Risks

Market shifts

Won the competition and other awards

tied for third place at 144th SF Startup Battle

Invention/Patent

Provisional patent issued and filing non-provisional patent October 2019. Patent protects design and as a social co-owning real estate platform. Name of company "Cher" is our registered trademark for software and real estate pronounced "Share".

Photos

Photo 1 - Cher

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Idea
Current Status
Market
Problem or Opportunity
Solution (product or service)
Competitors
Advantages or differentiators
Finance
Invested in previous rounds, $
Business model
Money will be spent on
Offer for investor
Team or Management
Mentors & Advisors
Lead investor
Risks
Incubation/Acceleration programs accomplishment
Won the competition and other awards
Invention/Patent
Photos
Product Video
Website address