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Small Multifamily: Real Estate's $5T Opportunity (Part 2)
While larger assets and single-family homes are attractive targets to institutional investors, small multifamily building...
Disclosures & Disclaimers
This is an offering for Class A Common Stock in GromaREIT. It is not an offering for a share, membership or partnership interest in Groma Fund I or any of its affiliates.
OpenDeal Broker LLC charges you a two percent (2%) administrative fee on the gross principal transaction with a minimum fee of $5 and a maximum of $300. The fee is added to the total amount of your investment at checkout.
Past financial results are no guarantee of future performance. Click here for important information regarding Financial Projections which are not guaranteed.
The company has neither generated significant revenue, nor has it had any significant operating history.
Overview
GromaREIT: Democratizing access to real estate investment
For generations, building wealth through real estate ownership has been a cornerstone of the American dream. Owning a small multifamily building and living in one unit while renting out the other was once a common path to building generational wealth. However, owning property, especially rental units, has become increasingly expensive and inaccessible. Today, economic realities like high housing costs and interest rates make it harder to get started on this path.
At Groma, we believe everyone should be able to participate in the wealth-building opportunities owning real estate provides. We launched the GromaREIT to unlock small multifamily investment, allowing individuals of all investor types to build wealth through real estate ownership.
Groma initially focuses on acquiring, modernizing, and operating 2-20 unit rental properties in the Boston region. Our novel technology simplifies everything, from identifying investment-worthy properties to optimizing maintenance and operations. This tech-forward approach minimizes expenses and maintenance surprises and maximizes investor returns.
Investing in the GromaREIT means not having to take out a mortgage, saving for a down payment, or responding to late-night resident calls. Invest in flexible amounts and enjoy income from a diversified portfolio of multifamily properties, and appreciation of your investment as the assets grow in value over time.
Portfolio
Upgraded Triple-Deckers: The Modern Urban Rental
In Brooklyn, they’re called walk-ups; in San Francisco, four-plexes; in Chicago, three-flats. Chances are you've lived in one or know someone who has. While located in great neighborhoods, today, these buildings often run into one of two scenarios; becoming rundown through lack of appropriate care or being fully converted into condos, often shrinking from three units into two luxury assets.
Instead, Groma upgrades these properties into Modern Urban Rentals (MURs), preserving and improving urban rental housing.
MURs prioritize high-quality finishes and energy efficiency, creating homes for middle-income professionals like nurses, tech workers, lab techs, and teachers. They’re comparable in quality to new construction, without the on-site amenities like a concierge or gym, but also without the sky-high price tag.
These revitalized assets satisfy the demand for walkable, transit-oriented housing while preserving and improving existing housing. The GromaREIT intends to hold each property for the long term (at least ten years), enabling us to stabilize the properties and making it easier for individuals, including the residents in our buildings, to invest in the MUR ecosystem alongside us.
As of Q1 2024, the GromaREIT has:
- 47 buildings in the Greater Boston area
- 305 residential units
- 97% occupancy for residential units
Market
Starting in Boston, Ready to 
Scale Nationally
The GromaREIT is built for scale, targeting areas with high rental demand, a large inventory of multifamily properties, low crime rates, and desirable living environments. Across the United States alone, an estimated one million properties have the potential to be transformed into Modern Urban Rentals.
We kicked off the GromaREIT in Boston due to a combination of factors: high density of triple-decker housing, booming rental demand, and a dynamic demographic profile. Greater Boston boasts a population of 4.8 million, making it the 11th-largest metropolitan area in the US. With 35 colleges and universities fueling a talented workforce, Boston also has historically low unemployment rates (2.7% as of November 2023).
As we prepare for expansion, we assess regional growth characteristics. Our research has identified 25+ markets – including Brooklyn, Chicago, LA, Boston, and Austin – that share Boston's potential for successful Modern Urban Rental development.
This targeted approach ensures we invest in areas poised for sustained growth, offering our investors value and aligning with our commitment to revitalizing neighborhoods through responsible development.
Strategy
Grobot: AI Meets Real Estate
The GromaREIT sets itself apart by focusing on undervalued multifamily assets and unlocking their potential. To accomplish this, we developed Grobot, a proprietary AI-driven property acquisition, renovation, and operations platform. Small multifamily assets can present unique challenges from a combination of factors: primarily renovating older buildings to bring them to modern standards and managing properties geographically dispersed across cities. We address these inefficiencies by integrating AI and automation throughout our property lifecycle: acquiring the right properties, bringing them to modern environmental/living standards, and operating them efficiently with a high-quality resident experience.
Acquire
We source properties in three key ways 1) on-market via MLS, where properties are listed 2) soft-market via our broker relationships and 3) via our own proprietary sourcing methods for truly off-market deals. Grobot includes an AI auto-modeling tool that we use to find the ideal properties to invest in. This tool integrates data from 30+ third-party data sources, including walk scores, crime rates, etc., alongside Groma’s own first-party data, which showcases leasing trends, demand, and which regions are potentially underpriced. By analyzing thousands of properties rapidly, we eliminate unsuitable properties and allow our acquisitions team to tour and analyze only the most promising ones for the GromaREIT, and maintenance teams. In many markets, like Boston, freezing temperatures are a reality of winter, and ahead of any storms, Groma can automatically set minimum temperatures in all units to prevent damage like burst pipes.
Modernize
Upgrading each property is key in transforming a multifamily into a Modern Urban Rental. The first step is integrating smart home functionality into every property. This provides a better resident experience (no more lost keys with smart locks!) and enables remote management capabilities for Groma’s in-house property operations and maintenance teams. In many markets, like Boston, freezing temperatures are a reality of winter, and ahead of any storms, Groma can automatically set temperatures in all units to prevent damage like burst pipes.
Managing ongoing operations can be costly, especially without on-site property managers, which are common at larger multifamily buildings but impractical for a distributed portfolio like Groma’s. Grobot is trained on vast datasets of communication logs, ledgers, and best practices, while also having access to appliance manuals and other key documents. Grobot is the first to field resident requests and can help them fix some issues themselves. When they can’t, Grobot reads the manuals, looks at prior tasks, and produces a maintenance technician task with all the relevant details. This allows our vertically integrated property management team to focus on improving the resident experience and increasing returns to investors.
Grobot plays a role at each stage of the real estate life cycle to help lower operating costs, improve resident services, and scale portfolio growth.
Operations
Groma's Platform Drives Sustainable MUR Growth
Groma's real estate technology improves the financial performance of MURs and provides a better resident experience. Below we have outlined a sample building based on the data from the 39 buildings we acquired in 2020 and 2021: after three-plus years of ownership and utilizing Groma's platform, our platform can generate a significant reduction in operational costs alongside an increase in rental income. This three-year timeframe reflects the typical stabilization period for newly acquired properties, allowing for a clearer picture of Groma's operational impact.
- Acquisition Price: $1,100,00
- Unit Count: 3 Units
- Unit Layout: 2-3 Beds 1-2 Baths
- Renovation Budget: $90,000
- Debt LTV (how much of the total purchase price is debt): 60-65%
At Purchase v. Year Three of Groma Operations
Track record
Building on Proven Success of the MUR Strategy
Groma acquired its first 39 properties from mid-2020 to late 2021. These served as the first implementation of the Modern Urban Rental strategy and our testing ground for integrating our technology throughout the real estate lifecycle. These properties are currently generating a ~6% yield, and as of Q4 2023, the GromaREIT is a partial owner of these buildings. The GromaREIT acquired its first property in 2022 and continues to invest in and expand its portfolio.
As of Q4 2023 the GromaREIT has:
- 5 quarters of consistent distributions
- $80,934.82 distributions paid
- 44 / 47 properties stabilized and cash flowing
Team
Groma’s Team Blends Real Estate and Technology Expertise
GromaCorp, Inc. (“GromaCorp”) is the operator and sponsor of the GromaREIT.
Groma’s team of 30 is led by executives with decades of experience in both real estate and technology. Groma’s president, Seth Priebatsch, has made his career leveraging technology to redefine industries, first food service and now real estate. Our team has completed over $10B in real estate transactions, and four executives join with the unique experience of successfully growing and exiting high-tech growth companies: LevelUp ($400 million exit, 2018) and Grubhub ($7 billion exit, 2021).
Offering
GromaREIT: Fractionalized Multifamily Rental Investment
The key objectives of the GromaREIT are to:
- Provide consistent passive income through quarterly distributions
- Preserve and increase your principal investment
- Use technology to improve the resident experience and investor returns
Disclaimers: The above table shows average industry returns and a subjective analysis of the criteria of those returns. Individual investment choices, asset classes, and indices will vary. There is no guarantee that GromaREIT’s real estate will perform similarly to the average of real estate as an asset class shown above.
The Groma Real Estate Innovation Trust (GromaREIT) leverages technology with the goal of driving steady investment growth, consistent distributions, and diversification – all with a convenient investment process.
- Passive Income: Earn income from rental properties. Our technology lowers operating expenses, and our renovations increase market rentability. The benefits flow back to you in distributions and asset appreciation.
- Diversified Portfolio: When you buy a traditional home, you’re effectively making a huge bet on the long-term performance of a single asset. This can go very well, but it can also go very poorly, as is the case with any narrow bet. Diversification across a broader portfolio of assets tends to substantially reduce risk relative to single asset ownership.
- Appreciation: Watch your investment grow alongside Boston's multifamily market and the other markets we invest in in the future.
- Frictionless Investing: The Groma team handles all operations from investment to property management.
The GromaREIT charges a 1% asset management fee and a 12.5% performance fee after certain returns criteria are met. Please refer to the PPM for a full breakdown of these and other fees. You can also view the table above for a hypothetical example of returns for REIT investments more generally.
Impact
Groma’s practices also have significant environmental upside. We upgrade our buildings to be more environmentally efficient, helping reduce our residents' carbon impact without asking them to change their behavior. We also help to preserve modern workforce housing in the Greater Boston area, a metro with a major housing shortage and a great need for cost-efficient rentals.
We also use blockchain technology to enable smaller transactions and a broader array of community investors with the end goal of allowing renters to turn their monthly rent checks into fractionalized real estate investments. In 2022, renters spent $700 billion on rent in the United States alone. While these dollars provide necessary living space, they do not help renters build their own personal wealth. By investing in the GromaREIT, we enable our community members to build a “digital starter home,” investing in real estate at their own pace and democratizing access to real estate wealth creation.
Funding
GromaREIT shareholders range from high-net-worth individuals to institutional partners. Seth Priebatsch, the founder and President of Groma, has invested over $5M in the GromaREIT and has also invested over $5M in GromaCorp, the operating company.
The GromaREIT has raised ~$16M in equity so far and has ~$31M in assets under management spread across 47 buildings in the Greater Boston area.
With $30M raised from top VCs and entrepreneurs, GromaCorp is well-funded and ready to scale the GromaREIT. As well-funded as GromaCorp is, we nevertheless custody GromaREIT assets (properties, cash, equity) separately from GromaCorp, minimizing your exposure to “tech startup” risk.
Meet the GromaCorp Advisory Board
- The Groma Advisory Board is composed of industry leaders and experts who help us achieve our vision. They hail from backgrounds in real estate, traditional finance, blockchain, academia, politics, and more.
Summary
GromaREIT provides access to a diversified portfolio of strategically upgraded multifamily buildings known as Modern Urban Rentals (MURs). These buildings are carefully selected in growing markets with high rental demand, offering the potential for income generation and appreciation.
Our AI platform, Grobot, supports our team in identifying, renovating, and operating these properties. Grobot's data-driven approach optimizes resident experiences, operational efficiency, and investor returns. In our first 39 buildings, we have achieved an average distribution of ~6%, which is not inclusive of any appreciation in the underlying assets themselves. We believe this demonstrates the potential of the MUR opportunity to generate a healthy mix of current income and potential asset appreciation over time.
At Groma, we believe in shared success. Every member of our team has a stake in the GromaREIT, aligning our interests with those of our investors. We are excited about the prospects for the GromaREIT and look forward to the opportunity to have you invest alongside us. If you have any questions, reach out to our team directly via the Republic platform or at investor-relations@groma.com.
Remember, all investments involve risk. Real estate is no exception. For a comprehensive understanding of GromaREIT's risks, please review our Private Placement Memorandum.
Disclaimers
Important Disclosures
This material is being furnished on a confidential basis to a limited number of sophisticated investors for the purpose of providing certain information about an investment in the common stock of Groma NAV REIT, Inc (“Groma NAV REIT”). The recipient agrees that it will, and will cause its representatives and advisors to, use the information only to evaluate its potential interest in Groma NAV REIT and for no other purpose and will not, and will cause its representatives and advisors not to, divulge any such information to any other party. Any reproduction of this information in whole or in part is prohibited. This material is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to purchase Interests. Any such offer or solicitation will only be made pursuant to the confidential private placement memorandum of Groma NAV REIT, as amended and/or supplemented from time to time (the “PPM”), which qualifies in its entirety the information set forth herein and which should be read carefully prior to investment in Groma NAV REIT for a description of the merits and risks of an investment in Groma NAV REIT. Any decision to invest in Groma NAV REIT should be made after reviewing the PPM, conducting such investigations as the investor deems necessary and consulting the investor’s own legal, accounting, tax and other advisors in order to make an independent determination of the suitability and consequences of an investment in Groma NAV REIT. Neither Groma NAV REIT nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein and nothing contained herein should be relied upon as a promise or representation as to past or future performance of Groma NAV REIT or any other entity. An investment in Groma NAV REIT is speculative and entails a high degree of risk. No assurance can be given that Groma NAV REIT’s investment objective will be achieved or that investors will receive any return of or on their capital.
Prospective investors are advised that past performance is not necessarily indicative of future results, and there can be no assurance that Groma NAV REIT will achieve comparable results to any performance data provided herein. Prospective investors are encouraged to contact GromaCorp, Inc. or Republic to discuss the information provided herein.
Except where otherwise indicated, the information herein was compiled as of September 17, 2023 and Groma NAV REIT does not have any obligation to update material.
The offering is not an offer to sell, nor shall any Interests be offered or sold to any person in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws of such jurisdiction. Any securities referenced herein have not been registered under the United States Securities Act of 1933, as amended, or under any applicable state securities laws or the securities lase of any other jurisdiction, nor is any such registration contemplated. The information contained in this material has not been recommended, approved or disapproved by the United States Securities and Exchange Commission or by any State securities commission or any similar body nor have any of the foregoing authorities passed on the accuracy or adequacy of this material. Any representation to the contrary is a criminal offense.
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