Future City: Opendoor’s manifest destiny
Coast to coast
Flipping homes using algorithms to estimate values can be much more challenging on the coasts, where the housing stock is varied and idiosyncratic.
That hasn’t stopped Opendoor, the dominant iBuyer, from entering them. The San Francisco-based company said it will next attempt to “robobuy,” renovate and resell homes across nearly 500 zip codes on Long Island and in the lower Hudson Valley and New Jersey, targeting properties ranging from $300,000 to $950,000.
“This was a natural progression for us as we enter more complex, deeper markets,” Will Holmes, the firm’s head of agent growth, said.
Earlier this year, Opendoor expanded into its own backyard, the San Francisco Bay Area, and it said its experience there has helped it hone its approach and better manage risk across its more than 40 markets.
Investors remain circumspect. The company struggled to turn a profit last year due to the high costs of carrying and offloading inventory, and a recession could derail the business.
Opendoor, which went public in 2020 via a SPAC merger with Chamath Palihapitiya’s Social Capital Hedosophia II, was mum about when it might move into New York City. “We hope to expand to additional zip codes and serve as many customers as we can,” Holmes said.
Consolidate and conquer
There are some 80,000 single-family rental managers across the U.S. The Cupertino, California-based proptech firm Poplar Homes wants to consolidate the field.
Poplar Homes raised $53 million in a Series B round, aiming to triple its units under management this year to more than 20,000 from 7,500 as it expands geographically. The company operates in California, Colorado, Nevada, North Carolina, Missouri and Texas.
While major institutions like Brookfield and Blackstone have amassed formidable positions in the hot single-family rental market, the 7 million “mom and pop” owners across the U.S. still command an estimated 90 percent of it. Many would like to hand over leasing, maintenance and accounting duties to a third party, CEO Greg Toschi said.
“It has definitely heated up,” Toschi said of the business. “Many companies see potential in consolidating this sector.”
The company will compete with other proptech firms like Los Gatos, California-based Pure, which has pursued a similar growth strategy centered around acquiring small- to mid-size managers.
Poplar Homes did not disclose a valuation figure with the fundraise, which follows its $4 million Series A in 2016.
For the masses
Home365, a single-family and “small multifamily” investment and management platform for retail investors, raised $26 million in a Series B round led by Viola Growth, an Israel-based growth fund.
The Silicon Valley-based startup helps small investors find and manage properties, and it uses AI to automate transactions, maintenance and accounting, among other processes. Its platform covers some 7,000 assets worth an aggregate $1.5 billion across 17 cities and seven states.
“Our goal is to democratize … real estate investing for everyone across the globe by removing the risks and hassles,” said founder and CEO Daniel Shaked.
The company will use the new funds in part to expand coverage to new cities including Chicago, Seattle and Phoenix, it said.
Home365 has a research and development center in Tel Aviv and an operations hub in Lancaster, Pennsylvania. It previously raised $16 million in Series A funding in June last year. Greensoil PropTech Ventures led that round.
STAT OF THE MONTH
There are currently 10 SPACs seeking a proptech or real estate-related target..
Just weeks after axing 3000 employees, or about a third of its staff — its second major round of layoffs in months — Better.com asked remaining employees to leave voluntarily.
The New York-based digital mortgage lender’s business has been battered by rising interest rates, which have made buying or refinancing a home much more expensive.
The company “probably pissed away $200 million” in 2021 as a result of overhiring and hiring the “wrong people,” the company’s embattled CEO, Vishal Garg, said in an employee meeting after its first round of layoffs in December, TechCrunch reported, citing a video recording of the meeting.
Chief technology officer Diane Yu, who joined the company in early 2021, was said to have transitioned to an advisory role as the voluntary separation plan was announced.
The option is available to all corporate, product, design and engineering employees. Those who accept it will receive 60 days of severance pay as well as health insurance coverage.
• BeamUP, a Tel Aviv-based proptech firm that uses AI to design and manage buildings’ systems infrastructure, launched with $15 million in seed funding.
• Dwellwell, a Maryland-based startup that claims to have developed the first “check engine light” for the home, launched its service with $12 million-plus in seed funding.