The Real Deal New York

Online housing investment platform Roofstock raises $35M in Series C

Startup plans to expand into new markets
By Konrad Putzier | October 04, 2017 07:30AM

Gary Beasley

Housing investment platform Roofstock raised $35 million in a Series C funding round as it looks to cash in on growing interest in single-family rental housing.

The funding round, led by Canvas Ventures, also included Lightspeed Venture Partners, Bain Capital Ventures, Khosla Ventures, Nyca Partners, QED Investors, and FJ Labs.

“We were drawn to Roofstock because we saw parallels with Lending Club,” Canvas’ general partner Rebecca Lynn said in a statement, referring to the crowdfunding platform Lending Club, which went public in 2014 and now has a market cap of $2.64 billion.

Roofstock CEO Gary Beasley said the firm will use the money to hire and to expand into new markets. The company has raised a total of $68 million from investors, according to Beasley. A $20 million Series B round in November included Bain, Khosla and Hone Capital, a subsidiary of Chinese private equity firm CSC Group, according to Crunchbase.

The Oakland-based startup, launched in 2016, is an online platform that allows investors to buy single-family rental homes online. The company inspects properties, provides an independent valuation, checks the title and puts buyers in touch with property managers. But unlike many crowdfunding platforms, it doesn’t actually invest itself. It charges sellers a 2.5-percent fee and buyers another 0.5 percent.

Beasley said institutional owners of single-family rental homes like the Blackstone Group’s Invitation Homes and Starwood Waypoint Homes, which recently agreed to a merger, and American Homes 4 Rent, account for a “good portion” of the listings. Buyers are a mix of institutions and retail investors. According to Beasley, around 20 percent of the firm’s retail investors are based in New York.

The firm, active in 15 markets, is considering New Jersey, but has its doubts about moving into New York City.

“It’s just hard to make the numbers pencil out in New York for a yield-oriented model,” he said.

Former Roofstock director Maren Kasper joined the federal department of Housing and Urban Development earlier this year as a Senior White House Advisor. A New York magazine report described her as the “most influential” person in a new leadership group ahead of HUD Secretary Ben Carson’s inauguration. She has since moved on to Ginnie Mae, which finances federally-backed homeownership programs, according to NYMag.