Landa Real Estate Investing: What Happened?

Landa's Promise of Affordable Real Estate Investment Faces Scrutiny

The proposition of entering the real estate market with an investment as small as $5 might appear implausible.

For numerous individuals utilizing Landa, a proptech firm that initially presented this possibility, this has unfortunately proven to be the case.

Landa's Initial Launch and Mission

Landa officially launched in August 2022, having secured $33 million in funding. The company aimed to democratize access to residential real estate investment through fractional ownership.

Founded in 2019 by Yishai Cohen, the CEO, and Amit Assaraf, the former CTO, Landa sought to broaden participation in real estate investing. The application required only that users be at least 18 years old and reside within the United States.

Investment Features and Subsequent Issues

Users were able to begin investing with as little as $5, facilitating both the purchase and sale of shares. Real-time property updates were also provided via the Landa application. (Assaraf departed from the company in December 2023, as indicated on his LinkedIn profile; he has not yet responded to inquiries for comment.)

Currently, Landa’s investment website is unavailable, and its application is non-functional. Investors report an inability to access their funds and a cessation of dividend payments for several months.

The startup is now involved in legal disputes, including a lawsuit initiated by its early-stage investor, Viola.

User Accounts of Lost Funds

One early adopter informed TechCrunch that dividend payments on their shares were halted in January. Inquiries directed to Landa were met with evasive responses, according to the user.

“My repeated emails received only deflections, lacking concrete information,” the user stated. “Subsequently, a few months later, the application became unusable, failing to open.”

The user then requested account deletion and share liquidation, but discovered that Landa had disabled the ability to sell shares.

“Essentially, my funds have been frozen, and the application has been shut down,” the user explained. “The question remains: where are the funds, and why are they not being returned?”

Growing Complaints and Limited Responses

More than 130 complaints have been lodged against Landa with the Better Business Bureau, with numerous individuals reporting similar experiences. For example, a complaint filed on May 1 detailed an investment exceeding $8,000 through Landa, with dividend payments ceasing in the previous fall.

The user reported that Landa’s customer service responded by stating the company was “working on it.”

Landa's Statements and Lack of Updates

In mid-April, when TechCrunch questioned Landa regarding the issues – including the website outage and potential company shutdown – CEO Cohen asserted: “Of course not. The site will be back up.”

When pressed about the application’s functionality and the lack of dividend payments, Cohen attributed the problems to server issues, stating: “It’s unrelated to dividends. It’s from our servers. We are on it.”

Following further inquiry, Cohen provided the following statement on April 18: “We are aware of the issues currently affecting our platform and product, and want to assure all investors that we are actively working to restore full functionality as soon as possible. We have kept investors informed through all updates, including the server access issue. We appreciate the continued support of our investors and resident community, and remain committed to delivering on our vision of making real estate investing accessible to everyone.”

Cohen did not respond to a request for a status update on May 20. Investors NFX and 83North also did not respond to multiple requests for comment.

Legal Challenges Facing Landa

Dissatisfaction with Landa extends beyond its user base, as the company is currently embroiled in a significant legal dispute with its principal lenders.

Lawsuit Filed by Creditors

In November 2024, Viola Credit and L Finance initiated legal proceedings in the New York State Supreme Court against Landa. The suit alleges “numerous defaults” pertaining to loans totaling over $35 million extended to the company. It's noteworthy that Viola Credit also holds an investment stake in Landa via its venture capital arm.

The lenders further contend that Landa neglected its financial obligations, including missed property tax payments. This resulted in the forced sale of certain properties and a general state of property neglect, alongside a failure to adequately collect rental income.

Management Removal and Restructuring

According to reports initially published by Bisnow, a leading real estate industry source, after more than a year of unsuccessful attempts to secure adherence to loan commitments from Landa, the lenders took decisive action.

Landa was removed from its managerial role concerning the properties, and an independent property manager, along with a chief restructuring officer, were appointed to oversee operations.

Injunction and Allegations of Non-Compliance

Subsequent to failed negotiations, the creditors petitioned the court for, and ultimately received, an injunction. This legal order prevented Landa from accessing its bank accounts, obstructing the restructuring efforts, and reclaiming funds believed to be owed – including revenue generated from property sales.

Despite the injunction being in place, the lenders returned to court in January 2025. They alleged that Landa directed tenants to remit rent payments to a bank account not subject to the court’s ruling. This discovery occurred during repairs to a property’s septic system. Furthermore, accusations were made against Landa’s CEO regarding attempts to sell or refinance properties.

Landa's Response and Court Orders

The court demanded an explanation from Landa. However, in early March, Landa unexpectedly filed for a restraining order against Viola Credit and L Finance, asserting that the independent manager had been “installed unlawfully.”

Judge Jennifer G. Schecter expressed her disapproval, urging both parties to reach a mutually beneficial resolution. She denied Landa’s request for an injunction and mandated the company to pay approximately $100,000 in legal fees. Shortly thereafter, Landa submitted a formal countersuit, and the case remains ongoing.

Key Takeaways

• Landa is facing a lawsuit from its primary lenders, Viola Credit and L Finance.
• The suit alleges defaults on over $35 million in loans.
• The court has issued an injunction against Landa.
• A countersuit has been filed by Landa, and the case is still pending.

The Difficulties of the Fractional Real Estate Model

Landa represents a single instance among numerous startups launched in recent years that facilitate fractional ownership in real estate. It is not alone in facing difficulties, particularly following the substantial increases in mortgage interest rates that commenced in 2022.

Fintor successfully secured significant funding before shifting its focus to providing an “AI Agent” designed to automate financial and real estate processes with performance comparable to that of a human. Nada, headquartered in Dallas, which previously offered real estate investment products termed “Cityfunds” – enabling non-accredited investors to participate in a city’s housing equity market with a minimum investment of $250 – has also undergone a change in direction. The company’s website now features a revised slogan: “Access home equity to finance anything.”

Arrived gained considerable recognition and currently remains the only company operating under its original business model. TechCrunch reported in May 2022 that Arrived had secured $25 million in Series A funding, including investment from Bezos Expeditions, to enable individuals to purchase shares in single-family rental properties with investments starting at $100. The company’s website indicates that it has distributed over $13 million in dividends and interest to date, and boasts a registered investor base of 766,000.

The outlook for investors who utilized Landa’s services remains unclear. As of May 23rd, Landa’s investor portal continues to redirect users to a maintenance message indicating a temporary unavailability.

The challenges faced by these companies highlight the complexities inherent in the fractional real estate investment landscape.