Flyhomes is broadening its suite of home-buying instruments by buying the host-to-own platform Loftium in a Seattle startup actual property deal.
Phrases of the acquisition, first reported by Startup, weren’t disclosed.
Loftium’s 11 staff, together with its two co-founders, will be a part of Flyhomes. The 6-year-old startup will preserve its operations and branding, with no interruptions to each day buyer providers, in keeping with Loftium CEO and co-founder Yifan Zhang.
The acquisition comes at a time when the broader actual property market has been in flux due partly to rising rates of interest. Flyhomes, which helps home-buyers safe purchases with all-cash affords, laid off 20% of its staff in July, then diminished headcount once more in November.
Loftium and different Seattle actual property tech corporations together with Redfin, Zillow, and Inspectify additionally laid off staff.
Loftium made headlines in 2017 for its uncommon plan to supply down cost help to potential homebuyers who agreed to separate Airbnb earnings with the corporate by means of renting out a room in the home.
The startup pivoted in 2019, as a substitute renting properties to tenants at a reduction in the event that they agreed to change into an Airbnb host.
Loftium launched its host-to-own program a 12 months in the past. It’s much like the unique mannequin however has a couple of variations. Right here’s the way it works:
- Loftium first buys the home the client needs, locations a tenant in one of many rooms, then takes 40% of the rental revenue every month.
- After 1-to-3 years, the customer can buy the house from Loftium with a down cost of 3-to-5%, then pay a pre-fixed mortgage fee.
- The customer then has the choice to proceed renting the room for revenue.
- Loftium takes care of all of the rental duties: It remodels a room in the home because the visitor room, will get regulatory approval from the native authorities, and locates a tenant on-line.
Zhang stated the objective of the acquisition is to ultimately combine this service alongside Flyhomes’ search and home-buying instruments.
“Our mutual goal is de facto to convey extra affordability merchandise to the home-buying area,” stated Zhang, a finalist for Startup CEO of the 12 months on the Startup Awards in 2020.
A latest research discovered 41% of respondents slowed or stopped their dwelling search attributable to diminished buy energy, in keeping with Flyhomes EVP of Technique and Progress Adam Hopson.
He stated Loftium’s typical buyer profile contains middle-income staff who will not be on a trajectory to earn excessive salaries, together with nurses, academics and nonprofit staff. He added that these staff wish to dwell near the place they work however their wages will not be maintaining with the rise of housing prices.
“[This acquisition] offers us a strategy to increase the group of folks that we are able to function clients,” he stated.
Loftium has rental properties throughout 10 markets whereas its host-to-own program at present operates in Denver and Portland. Zhang stated the corporate has “seen extra demand for hosts-to-own than ever” however declined to present a particular quantity.
“I believe the general housing market has quite a lot of uncertainty,” she stated. “There are nonetheless quite a lot of fears and questions from dwelling patrons. However general, I believe our price proposition has very a lot resonated in this sort of setting.”
Loftium beforehand raised $15 million in Collection A funding led by Norwest Enterprise Companions, with participation from present backers Threshold Ventures and Founders’ Co-op.
Flyhomes additionally affords mortgage providers and has a Purchase Earlier than You Promote program that helps sellers purchase and transfer into their subsequent dwelling earlier than promoting their present property.
The startup has helped clients purchase greater than $5.7 billion value of properties at costs starting from $150,000 to $7 million.
The corporate is led by CEO and co-founder Tushar Garg. It has raised greater than $200 million so far, together with a $150 million Collection C spherical raised in June 2021.
Buyers embody Norwest Enterprise Companions, Battery Ventures, Fifth Wall, Camber Creek, Balyasny Asset Administration, Andreessen Horowitz, Canvas Companions, and former Zillow Group CEO Spencer Rascoff.