The company will leverage the funding to develop the boutique multifamily building into a 10-unit Starcity community in the desirable NOPA neighborhood
Today Starcity, a startup pioneering the community-based living experience, announced that it has raised $1M in funding in partnership with David Makharadze and his company Prophit Investments. The deal will allow Starcity to move forward with developing a new community at 1854 McAllister Street in the NOPA neighborhood of San Francisco.
Starcity converts underutilized multi-family, hotel, and office buildings to residential co-living properties, adding to a city’s housing stock without displacing current residents. The company currently owns and manages four properties throughout San Francisco, with nine more communities under development. Starcity has raised more than $20M in venture financing in the last 18 months from investors including Bullpen Capital, NEA, Social Capital and Y Combinator, and has struck deals with institutional real estate partners to participate as investors in some of their larger properties.
Prophit Investments is a real estate investment group, focusing on investments in neighborhoods that offer current, medium and long term positive economic and demographic growth. Prophit Investments selectively chooses value add and development projects which require equity investments between $1 million and $10 million that fall below the radar of institutional investors.
“As Starcity continues to grow, it’s important that we are partnering with local and regional real estate investors who help provide not only the capital, but who have the local knowledge and shared vision to make great cities accessible to everyone,” said Starcity co-founder & CEO Jon Dishotsky. “David Makharadze and his company Prophit Investments tick all of these boxes and more, allowing us to focus on developing and managing co-living communities that respect and support the neighborhoods within which we develop.”
The community on 1854 McAllister Street will be converted from a two-unit single family home to a 10-bedroom co-living residential property. Starcity plans to break ground immediately on the property and open the community by December 2018. Each member of a Starcity community has a fully furnished private bedroom and private or shared bathroom, and access to shared living spaces like kitchens, sitting areas, and TV areas. Leases are designed with flexible terms, and one convenient monthly payment includes residential utilities and shared supplies, as well as shared services like home cleaning, with the option to add on extra services like laundry or dog walking. Designed to foster community and social interaction amongst its members, Starcity delivers a welcoming living experience while adding three times as many units of housing to the market as traditional apartment rentals.
“In an increasingly competitive real estate environment, hot markets make it nearly impossible for a value add investor to find projects. Working with Starcity and their conversion process from apartments to co-living spaces allows room for a market price purchase of an asset/investment to still realize great returns which a private equity group might expect and is accustomed to,” said David Makharadze, founder & CEO of Prophit Investments. “We are thrilled to participate in the vision Starcity has to create affordable high end living experiences in top markets for the same price as an older unit in a less desirable location, and plan to allocate $10-20M to this strategy in the future.”