Single-family rental marketplace Roofstock hits $2B valuation

Startup raised $240M in Softbank-backed Series E, more than doubling equity funding

National /
Mar.March 10, 2022 05:00 PM

Roofstock’s Gary Beasley (Roofstock, iStock)

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.





    Related Articles

    arrow_forward_ios
    Eric Gordon
    Eric Gordon on the evolution of the residential data game — and how to stay competitive in the new world
    Eric Gordon on the evolution of the residential data game — and how to stay competitive in the new world
    Big Tech locations in NYC
    MAP: Here’s a look at all the Big Tech locations in NYC
    MAP: Here’s a look at all the Big Tech locations in NYC
    What will proptech look like in 2019 and beyond?
    What will proptech look like in 2019 and beyond?
    What will proptech look like in 2019 and beyond?
    From left: Amy Schumer and 190 Riverside Drive; Jimmy Fallon and 34 Gramercy Park East (Getty Images, Beyond My Ken, CC BY-SA 4.0 - via Wikimedia Commons, iStock)
    Jimmy Fallon, Amy Schumer selling Manhattan pads
    Jimmy Fallon, Amy Schumer selling Manhattan pads
    OKO's Vladislav Doronin and the Crown Building ( OKO Group, Aman)
    Crown Building notches another peak sale with $55M condo
    Crown Building notches another peak sale with $55M condo
    R-L: Willow's Kevin Danehy, Era Ventures' Clelia Warburg Peters, Fifth Wall's Brad Greiwe and The Real Deal's Hiten Samtani (Photo by Paul Dilakian)
    Real estate tech is coming for your business
    Real estate tech is coming for your business
    A photo illustration of a crystal ball predicting future home prices (iStock)
    Home sales, building to slow: Fannie Mae
    Home sales, building to slow: Fannie Mae
    New York skyline
    Rising interest rates will dampen city’s investment sales market this year
    Rising interest rates will dampen city’s investment sales market this year
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...