VC-backed start-up aimed at single-family home market targets LA

Tech start-up Roofstock, an online marketplace for purchasing single-family homes that’s backed by Salesforce CEO Marc Benioff and Bain Capital, is moving into the Los Angeles market.

The company, which has raised about $33 million in funding to date, is a platform for buying, selling and managing single-family properties. Using the website, institutional investors can buy investment homes one-at-a-time or in bulk, much like stocks, without having to deal with inspecting, leasing or managing them. In other words, customers can buy hundreds of homes at a time without having seen a property or met the tenants.

Oakland-based Roofstock was one of several firms that stepped up in recent years to provide a marketplace for people to buy homes from institutional investors, many of whom snapped up distressed homes en masse during the financial crisis and have since sought to sell or reposition their portfolios. The company takes a fee on every deal it closes.

L.A. is the 14th market for the company, which launched in 2015 and is already active in Atlanta, Dallas, Tampa, Indianapolis, Jacksonville, Las Vegas, Miami, Memphis, North Carolina, Orlando, San Bernardino, San Francisco and Southwest Florida.

The firm had held off on initially expanding into L.A., fearing that the price points wouldn’t appeal to bulk investors, CEO Gary Beasley told The Real Deal.

“The challenging part about L.A. is that the price points are pretty high, which tends to mean the yields are a bit lower,” he said. “But in surveying our investors, we found that they have a desire to get California real estate exposure.”

Thus far, it appears the company’s L.A. listings are primarily located in northern Los Angeles County and Compton, according to its website.

Beasley said that about 80 percent of the company’s deals are done by institutional investors, who prefer to use Roofstock over creating their own management infrastructure. Private individuals account for about 20 percent of business, and invest, on average, in two homes apiece.

Roofstock only lists properties exclusively, since it vets each home for its clients, Beasley said.

The company most recently raised $20 million in a Series B funding round led by Lightspeed Venture Partners in November. It also raised money from Hone Capital, the U.S. arm of the $10-billion Chinese private equity firm CSC Group, which participated in its Series A and B rounds.