EasyKnock, a startup that buys homes and rents them back to sellers, raised $57 million in Series C funding, with plans to expand its services to farmland.
A popular corporate finance tool, sale-leaseback transactions are less commonly associated with the housing market. EasyKnock’s offering functions similarly to the commercial model, but targets middle-class homeowners: Owners sell their property to EasyKnock, then lease it back, allowing them access to the equity they have built up.
Demand for sale-leasebacks is booming in the uncertain economic climate, according to CEO Jarred Kessler. Average homeowners, squeezed by inflation and stagnant wages, are strapped for cash but would rather stay put than hunt for a new home or a place to rent, he said. EasyKnock’s average client is 50 years old with a home worth around $315,000.
Another key benefit for sellers: avoiding bidding wars with other prospective tenants — a common occurrence in today’s hot rental market.
“It’s a really bad dynamic,” Kessler said. “Rent is a function of inflation, and wages are not going up as much as pricing.”
EasyKnock, which was founded in 2016 and now operates in all 50 states, purchased three times the number of homes last year as it did in 2020. It expects “triple-digit growth” again this year, Kessler said.
Based in New York and Charlotte, North Carolina, the startup plans to expand its offering to farm owners in the second quarter once it integrates FarmlandFinder, a sale-leaseback provider for U.S. farmland, which it acquired in August.
“There’s a huge focus on the supply chain, and making sure that the food and supplies shortage we experienced during the pandemic doesn’t happen again,” Kessler said. “Farmers are going to need more and more support.”
An EasyKnock competitor called Rentback also facilitates residential sale-leasebacks, but the buyers are investors, rather than Rentback itself.
“We expect a lot of competition, because our business grew 200 percent last year, and that’s what happens,” Kessler said.
EasyKnock profits by charging processing and other fees, which are calculated as a percentage of the home price, but the bulk of its revenue comes from rents. It uses third-party data to establish market rates. The company covers taxes, insurance and HOA fees as the new owner, and it has an internal property management team.
EasyKnock frames its service as part of the broader push toward “flexibility” in real estate. The renter can buy back the home if they change their mind, Kessler said.
The startup’s Series C, detailed this week, involved a “large group of new and existing investors,” including Blumberg Capital and QED Investors — who led the company’s $20 million Series B round in June 2020 — as well as Gaingels, Moderne Ventures and Viola FinTech, the company said. Zillow co-founder Spencer Rascoff’s 75 & Sunny Ventures also participated.
The company will use the funds in part for the “development of new products,” it said.
EasyKnock has raised a total of $105 million in equity capital so far. No valuation was offered with the details on the fundraise.