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If you’re interested in real estate investments like me, you may have recently seen ads for Techvestor online or on social media with an 18-19% internal rate of return (IRR)! What’s more intriguing is they advertise as passive-only.
With concerns of a real estate crash and a worsening credit crunch, finding good cash-flowing real estate opportunities is increasingly hard. Short-term rentals (STRs) have done very well recently, but not as well as the 30% cash-on-cash returns we saw during low-interest rates. Even more, these rentals require active management.
This is where Techvestor comes in – a passive STRs portfolio with very high returns. But, is it too good to be true?
Quick take: Investing in Techvestor could be a good idea; there is no evidence of fraud, but too many red flags are documented about the operators running the fund for me. The risks may be worth your rewards, depending on your goals.
Disclaimer: This is my opinion based on research and not financial advice.
What is Techvestor?
Techvestor positions itself as a tech-enabled real estate investment firm. They strategically invest in Airbnb-style short-term rental (STR) properties, offering investors a blended cash-on-cash return of 8-12%.
The proprietary rental platform analyzes 18 million monthly data points in 250+ markets. It has underwritten more than 100,000 properties every month, has raised $37+ million, and has over 75 properties in its portfolio across funds.
Because they own many properties in various regions, they offset one of the more significant risks of STRs – seasonality. Techvestor reports that the occupancy rate of their properties is 79%- almost 20% above the AirBNBs, which has been at around 60% post-COVID in 2022 and 2023. Additionally, STR demand is growing, with supply growth slowing.
Techvestor is a passive investment. To invest, you must be an accredited investor with a minimum investment of $25,000.
Figure1: Airdna.com data -STRs on AirBNB.com growing in 2023
The firm raising capital for Techvestor runs the operations. Today, they are encouraging investors to participate in their Fund 2, which includes owning more than 100 homes in 8 markets.
On the surface, these offerings are promising, aiming to cater to both seasoned investors and newcomers looking to enter the real estate investment sector. But t with every metric outperforming industry averages, from IRR to occupancy, it seems too good to be true.
Who is Techvestor?
The team at Techvestor is led by Sabrina Guler and Sief Khafagi.They both have a background in real estate, working at tech companies, and started investing with tech people (not investing in tech, as you might think the name implies).
Per reports, Sief’s past companies, Scoutpads, Metallic Blue Development (MBD), and Superhost Labs, are bankrupt, although more online evidence of their existence needs to be provided.
Forums like Bigger Pockets have stories of people affected by the operator’s past businesses and losing money from investments they made with Sief. If the reports are true, it’s a serious concern given that the founder has removed evidence of these endeavors online and did not handle the communication around losing investor capital well.
I contacted the company to understand if they had a position on the CEO’s past enterprises. I received a form letter stating everything I referred to was clickbait and that the CEO of Techvestor has never lost an investor’s money.
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Is Techvestor Legit?
While new, Techvestor appears to be a legitimate platform for passive investors, and there are no negative reviews I could find from active investors despite the concern with the CEO’s reported history.
Pros of Techvestor: What are the Potential Opportunities?
Buy-box and ’16-Points Strategy’
The company claims to be backed by a 16-point strategy. This includes seasonality, uniqueness, diversification, tax benefits, and STR-friendly states. Using AI and machine learning to analyze market trends and company performance adds a layer of sophistication to its approach.
They buy properties that have 17-21% of gross STR revenue. That means they try to buy 4-6 bedrooms for approximately $500,000-600,000 with 120,000 of annual income. Historically, and during COVID, some properties outperformed this with over 25-30% revenue ratio to property price.
Property Exit Plan
Techvestoor also has a clear exit plan. They will hold a property for five years while providing cash and quarterly dividends with around 8-12 percent cash on cash yearly.
Once this hold period is completed, Techverstor initiates its search for selling the portfolio. So far, they have not reported selling properties. If a property performs well, it is unclear why it would trade instead of holding or refinancing if rates are favorable.
No Technical Knowledge Required
Techvestor claims to be the caretaker of your investments. You invest, receive 100 percent of your tax returns, and are not liable for any loans or capital calls. You do not need insider expertise, as the platform uses the latest technology to guide passive investors to earn from STR.
Markets Techvestor is Operating In
Techvestor is already in many markets within some of the following areas:
- Scottsdale, AZ
- Clearwater and Tampa, FL
- Poconos, NY
- Blue Ribbons, Georgia,
- Memphis, TN
- Panama Beach FL
The team is focused on regulations in place for STR, so there is potentially less risk of a property being forced out of a given market.
Cons: What are the Red Flags?
While Techvestor’s offerings might sound impressive, a closer examination raises some red flags that warrant caution:
Team’s Suspicious Track Record
The most significant red flag about Techvestor is what I’ve already discussed above about the operators’ history.
Reviews and Negative Feedback
Techvestor has not reviewed popular forums like Trustpilot.com or Better Business Bureau (BBB). The negative reviews on Reddit and Biggerpockets outweigh the positive ones, questioning the legitimacy of the operators of this platform.
However, the form email referred to 115+ reviews on Reviews.io, a site I have not used even for software reviews. All the reviews are gushingly positive. That said, not all the reviews are about Techvestor, with some referring to Superhost Labs, an entirely separate business that is the property management for Techvestor’s STRs individuals can use, too. Another way of saying it is that Techvestor’s capital under management may directly or indirectly subsidize their property management company.
However, there appear to be some reviews for Techvestor that are positive, but not a significant number that it is clear they should have been paid for or truly 3rd party investors.
Fees
Techvestor does not discuss the fee structure on the website or in the template materials they send when you fill out the intake form.
How much does the operating company take? How much does Superhost Labs charge Techvestor? Typically, in a real estate syndication investment, the syndicator makes a percent of profit i.e. carried interest above a threshold, a preferred return. However, Techvestor says they will return it as “growth equity.” I have no idea what that means in terms of percentages and what their carry is for success.
Unrealistically High Returns
Like many investment platforms, Techvestor makes grand promises about potential returns. It’s important to approach such promises with skepticism; STR is inherently volatile, especially with rapid interest rate changes.
Promising such great world-class returns is possible, but as Jeff Bezos says, your “margin is my opportunity.” Local competition and regulatory changes could also severely impact future returns.
Missing Tax Savings
Much of the benefit of real estate investing is tax savings. With an income-oriented vehicle like Techvestor, you give up potential tax advantages and depreciation. However, that is typical in a passive income-oriented investment. You also miss out on passive losses in an LTR investment compared to an asset like Techvestor.
Forced Appreciation
There is no evidence of Techvestor finding many real estate properties and improving them with a rehab to increase appreciation. Forced appreciation is a great buffer, especially when buying single-family housing in a recession because it enables a real estate investor to create value while property prices are declining. For example, a company like doorvest.com specifically orient towards this approach passively.
Should You Go for It? My Verdict
Shifting to a tech-oriented platform around STR that promises guaranteed returns is undoubtedly hard to resist for people interested in real estate investments.
However, there are strong arguments against investing with Techvestor, including the suspicious track record of investors, no listing on Trustpilot, and tons of negative feedback.
After reviewing what’s publicly available about Techvestor’s team and company, there is no hard evidence of wrongdoing. However, after watching interviews with the team and reviewing the ultra-fast response, I can only say to be careful, given the rumors.
Also, keep in mind that STRS can be volatile compared to long-term rentals (LTRs) due to increasing regulations and local competition, especially in markets like Scottsdale, AZ, where Techvestor has properties. Notably, prices are so high now in markets where STRs are desirable that the property may not be worth what Techvestor is paying if they sell properties under duress.
STRs have been high-performing assets for many doctors who want a potentially high cash-on-cash return if they want to get the most out of it. If you invest with someone else, ensure it is an operator you trust with a good track record.
Our friends and colleagues Leti and Kenji running Semiretiredmd.com is one great place to learn active AirBnB management if you’d like to have your real estate side hustle.
FAQs
What is Techvestor?
Techvestor is a proprietary platform that helps investors earn money by passively investing in short-term rentals (STRs).
Is Techvestor.com legit?
Techvestor.com is a legitimate platform for real-estate investments, with no evidence of scams or fraud. Investors should be cautious while making such costly investments.
Who qualifies as an accredited investor?
An investor with a net worth of $1,000,000 or earning more than $200,000 annually in the past two years is an accredited investor. If you have a spouse, this annual earning amount increases to $300,000 annually. Techvestor approves your accreditation status before allowing you to invest; this means Techvestor is for high-earning investors only.
What are the alternatives to Techvestor?
Semiretiredmd.com, International Land Alliance, Four Corners Property Trust, and Bridge Investment Group are some alternatives to Techvestor.
