Real estate investing startup Roofstock has just landed a significant $35 million Series C funding round led by Canvas Ventures, with participation from a host of other investors, including Lightspeed Venture Partners, Bain Capital Ventures, Khosla Ventures, Nyca Partners, QED Investors, and FJ Labs.
For those unfamiliar with Roofstock, the company launched in 2016 with a platform that allows investors to buy single-family rental homes online. Much of the leg work, such as property inspections, independent valuations, document checking and so on is done by Roofstock itself so busy investors don’t have to worry. Roofstock makes its money by claiming a 2.5 percent transaction fee from the seller and a 0.5 percent fee from the buyer once the transaction has been completed.
The main advantage of this model is it offers investors the transparency, data, and interactive planning tools they need to easily buy, own and sell single-family rentals,Roofstock says. The company’s marketplace creates value for both buyers and sellers. As almost all of Roofstock properties already have tenants, buyers receive rental income from day one. Sellers benefit from lower commissions and the ability to continue to earn rental income up until the sale of the property, while avoiding the hassle and costs of vacating the property before the sale through traditional channels. Investors can also take advantage of Roofstock’s network of certified property managers to manage the property on a day-to-day basis and further separate operating from investing.
It’s a model that seems to be working – for the company now raised a total of $68 million from investors in previous funding rounds.
“We were drawn to Roofstock because we saw parallels with Lending Club,” said Canvas Ventures’ general partner Rebecca Lynn in a statement, referring to the crowdfunding platform Lending Club, which went public in 2014 and now has a market cap of $2.64 billion.
Roofstock recently added a number of features to enhance the platform’s user experience, including providing buyers access to powerful, interactive financial tools that allow them to model customized financial scenarios over the term of their investment. Roofstock also launched its unique, proprietary, data-driven Roofstock Neighborhood Ratings that aids in purchase decisions across geographies. Additionally, the company has rolled out self-service features and tools for sellers, giving them the ability to optimize listing prices, manage offers and adding functionality to streamline the overall listing and sales process.
Roofstock’s chief executive officer Gary Beasley said in a statement that the company will use the fresh capital to make new hires and expand its product to other markets, with New Jersey likely to be next on its list.