It’s heady times in the single-family rental market.
Roofstock, an online marketplace for investors in the asset class, raised $240 million from SoftBank’s Vision Fund 2 and others in a Series E round — more than doubling its equity funding — at a valuation just shy of $2 billion.
The Oakland-based company’s $1.94 billion valuation more than triples the $600 million valuation given at the time of its $50 million Series D in January 2020. Roofstock claims it nearly tripled its revenue in 2021 while facilitating more than $2.5 billion in deals for single-family rentals.
“There has never been a time quite like this for single-family real estate,” co-founder and CEO Gary Beasley said.
As nationwide rents surged to new records last year, investors seeking passive income piled into the single-family market — even as home prices also spiked. Real estate investors accounted for a record 18.4 percent of all U.S. home sales in the fourth quarter, up from 12.6 percent in the fourth quarter of 2020, according to Redfin.
Low- and mid-priced homes — Roofstock’s focus, in the $150,000 to $400,000 range — have been especially popular, accounting for more than 70 percent of investor purchases in the quarter.
Softbank led the Series E, with participation from new and existing investors including Kohla Ventures, Lightspeed Venture Partners and Bain Capital Ventures. Commercial real estate giant JLL purchased a minority stake in Roofstock last March in a deal that coincided with Roofstock’s acquisition of JLL’s rental management platform Stessa.
The company aims to double its headcount this year and pursue “strategic M&A.” Targets may include property managers, Beasley said.
In a bid to broaden its customer base, Roofstock last year launched a fractionalization service, allowing investors to wager as little as $5,000 on a particular property. That endeavor competes with investment platform Fundrise and Jeff Bezos-backed Arrived Homes.
The company also has ramped up its iBuying activity — algorithm-based homebuying, renovating and flipping — to boost liquidity in its marketplace. While Zillow’s dramatic exit from the business last fall laid bare its risks, Roofstock says its unique approach, in which it buys homes with renters in place, helps offset the uncertainty and the costs of carrying the homes on its balance sheet.
“It really is helping us attract and put product on the shelves we know our customers want,” Beasley said.
The company is “putting the building blocks in place” to go public, and a year ago weighed the option of a SPAC merger before the bottom fell out of that model, Beasley said. But the company is not likely to take either route this year.
“Public is kind of a four-letter word these days, I think,” he said.