“We expect to have ten to twelve funds,” Wasterlain says. “We’re working with a third-party manager that we’re going to partner with that buys apartments that are a little bit old and tired, and then renovating to improve cash flow.”

Most future funds will directly invest in properties, rather than in REITs or other securities, Yu says.

The fund structure and automation allows CAPFUNDR to eliminate commissions and keep their fees below the average for non-traded REITs, and also permits them a rare level of transparency, says Wasterlain. CapitalFund will earn a 1.5 percent annual management fee from the REIT fund.

The duo note that some non-traded REITs carry up to 15 percent in fees and commissions depending on how they are purchased.

“Fees that high make it difficult to generate good returns,” Yu says. “Frankly, what we’re doing is making the market more efficient.”

The downside to the investments on the CAPFUNDR platform? Liquidity — there’s already a limited secondary market for non-traded REITs, and there are few options after buying into the fund.

“These are private equity-style real estate funds,” Yu says “Investors will have a redemption program and there will be a limited availability to redeem shares at a price slightly below the net asset value of the fund, but we really recommend that these should be viewed as a medium- to long-term investment with a life of five to seven years.”

Real estate needs a stronger online presence, says Wasterlain, but does not lend itself to the ‘robo-advisor’ model because the quality and value of the investments depend on too many subjective factors that are difficult to capture in an algorithm.

“There are a lot of checks and balances on the level of underwriting and due diligence,” Wasterlain says. “REITs are public companies, when you look at their 10k or their 10q, there aren’t a lot of detailed disclosures, so you have to do a lot of snooping around to figure out what’s going on. We believe it takes someone with a real estate background and the right relationships in the market to ask the right questions.”

CapitalFund Realty’s funds will only be available through the firm’s website, and the website’s users will be limited to accredited investors.