Earning passive income as an investor in single-family rental homes is a dream for many, but also something that can be intimidating to walk into.
Awning is a startup that aims to make the process less intimidating through a platform designed to allow people to invest in single-family rental homes not only in the cities or states they live in, but also in other markets in a way remote. And today, the San Francisco-based real estate brokerage is stealthily coming out with $ 9.3 million in a seed funding round led by Global Founders Capital.
Mass Mutual Ventures and several strategic angel investors, including Side co-founders Guy Gal and Ed Wu, SafeGraph founder Auren Hoffman, Peter Fishman, Former Opendoor VP of Analytics, Lightspeed Ventures Partner, Justin Overdorff and Scale founder Lucy Guo also participated in the funding.
Executive Director Shri Ganeshram partnered with Danaus Chang will start in 2019 Awning after stints as a founding member of the FlightCar team and product and engineering leader at Eaze. Before becoming an entrepreneur, Ganeshram had dropped out of high school in Texas after earning early admission to MIT (where he later co-founded FlightCar).
The platform launched in closed access earlier this year and is open to investors in the US and Canada today. Currently, it connects buyers with listings in three states: California, Texas and Florida. Part of the plans for the new capital is to add new markets to its portfolio in the coming months.
Awning works by using machine learning and data analytics in an effort “to showcase the best single-family rental properties nationwide to investors, with estimates of their financial returns.” A.Awning clients are paired with advisers to determine their investment strategy, and local Awning agents “qualitatively” review each property. These advisors can also help investors obtain financing and connect buyers with “vetted” property managers to monitor their properties and manage leasing and day-to-day maintenance.
It’s a similar, but different, model to another startup we recently covered: Mynd, a company that also aims to make it easier for people to buy and manage single-family rental properties, which last week announced that it had raised $ 57.3 million in funding from QED Investors. Unlike Mynd, Awning will not manage the properties for investors. It is also different because it focuses on helping individual investors, while Mynd also serves institutions.
Awning’s “consultants” (also licensed real estate agents) select the properties they believe are the most suitable for an investor based on their budget and goals, and using the startup’s proprietary machine learning model, they can estimate the rent. , expenses, appreciation and potential ROI. at each market quote.
The platform does this by ingesting all the different MLS listings in the various markets, and automatically analyzes each of the returns and risks after an advisor learns of a prospective investor’s financial goals.
“Once an investor is ready to move further, they can use our platform to communicate with an advisor and make offers.” Ganeshram said.
Historically said Ganeshram, the process for investing in single family rentals has been “cumbersome.”
“It feels like it’s stuck in the last century,” he added.
Awning’s “strong” human and technology components make it a faster and easier experience, the company claims.
So far, the platform has helped facilitate the sale of $ 5 million in real estate. You earn money by taking a commission from the seller, just like other real estate brokers do, and you don’t charge any additional fees. That commission is generally included in the 6% of the listing, it is paid at closing, and the 3% goes to the respective agents for the buyer and the seller.
Later this year, Awning plans to launch in Florida and Alabama, and then other markets over the next year. Expansion can be challenging because the business must establish a licensed brokerage in each state it wants to enter.
Global Founders Capital’s Don stalter He said his company had known Awning’s co-founders “for years” prior to Awning’s formation, and when they approached his company to start the company, he “knew we had to lead their first round of funding,” Stalter wrote. via email.
Kendrick kho of Global Founders Capital said it has invested in other real estate investment startups in the past five years, and believes Awning stands out from other offerings by its focus on individual buyers, rather than institutions. He also likes the company’s approach of “familiarizing buyers with their potential investments like actual physical houses rather than lines on a spreadsheet.”
“With their product and engineering expertise, they have quickly built a platform where data preservation, education, and accuracy are superior to alternatives,” Kho wrote.
He was also drawn to the fact that Awning does not reject the idea of partnering with real estate agents.
“Many entrepreneurs in real estate technology believe that human agents are superfluous, but they do not realize that when a buyer in New York City wants to buy their first investment property and is looking for homes hundreds of miles away,” he added Kho. , “He wants there to be a human agent to answer questions and be an expert guide through the process.”