![]() ![]() It uses third-party valuation models to come up with fair market value of a home. The company aims to build a standardized portfolio of homes, so it won’t be including a $25 million mansion outside of Palo Alto, for example. “We’re taking something that’s existed for a number of decades and are using technology to make it more accessible to more people.” We’re building technology to streamline that process,” Rubin said. “Institutions have been doing this for a long time via a mechanism called a 721 Exchange and it takes an army of lawyers and tax professionals and complicated pieces of paper to make it work. The company plans to launch in Seattle and “a handful of more markets” this year. Today, Flock has 110 homes in its portfolio across Denver, Austin,Texas and Kansas City. It claims to save the landlord money in taxes and other “frictions” if they had sold the home traditionally. The company makes money by acting as an asset manager of the fund and charging management fees, which is 1% of the value of someone’s account. But either way, they can put their ownership on autopilot and live off of the diversified income.” “So it also can serve as an estate planning tool. “Most people, though, want to hold on to them forever, live off the income and pass them on to heirs,” Rubin said. Some people decide to reinvest their proceeds while others opt for cash flow, with the ability to redeem shares over time. ![]() “Then we pay out the remainder in a distribution.” “They also get their share of all the rental income, which we collect and hold back a portion for maintenance, property taxes and insurance,” Rubin said. As the portfolio appreciates in value, so do the shares. So, someone who owns a $500,000 house can sell it to Flock and get back $500,000 worth of shares in the fund. Meanwhile, the landlords then get shares in a diversified portfolio similar to a REIT, Rubin said. Once the properties come into Flock, the company owns and operates the assets. “They get to keep all the benefits of owning real estate without any of the burdens such as paying taxes or maintenance.” “Flock buys the property from the landlord, who then gets shares in this partnership which owns a bunch of houses,” Rubin explained to TechCrunch. Its typical user is a landlord of single-family homes with one to four units that doesn’t necessarily want to be rid of their investment but also doesn’t want to deal with managing it anymore. Integrate property data into your business workflows today and get started with 100 free property searches here.Historically, only institutions have been able to be part of REITs (real estate investment trust), which are made up of companies that own or finance income-producing real estate across a range of property sectors.Ī startup called Flock Homes wants to give landlords a similar ability to own shares of a portfolio that is made up of multiple properties, and it’s just raised a $26 million Series A funding round toward that effort.Īndreessen Horowitz (a16z) led the financing, which also included participation from 1Sharpe Ventures (which is led by Roofstock co-founder and chairman Gregor Watson) and Human Capital as well as existing backers Susa Ventures, Primary Venture Partners and BoxGroup.įounder Ari Rubin dropped out of business school to pursue his concept behind the startup, which went live in May 2021 with four homes in Denver, Colorado. If you enjoyed reading our latest Funding Fridays blog and want to stay up-to-date on the latest venture capital funding rounds in proptech, fintech, and real estate technology, subscribe to our newsletter here.Ībout Estated: Estated is a leading property data provider with records on over 150 million residential and commercial properties nationwide across the United States. If you are searching for rich property data to help with information verification and property valuation, let's connect, we'd love to partner with you! It's an impressive deployment of proptech that's still in its infancy (founded in 2021 during the pandemic) and we can't wait to see what's next for Flock Homes!Ĭongratulations to the team over at Flock on your recent Series A funding round and your expansion plans later on this year. Ultimately, Flock is developing a powerful technology-forward tool, backed by machine learning and data, to evaluate purchases, aggregate a portfolio of real estate properties, democratize investor access, and enhance resident experience all-in-one. The company also uses an asset-light model which doesn't require cash to purchase homes but rather uses the money generated from when landlords are rolling in their equity from their homes instead. CEO Take: Essentially, Flock Homes is using technology to streamline a process that has existed for decades, called a 721 Exchange, while providing easier and widespread access for everyday American property owners to take advantage of this opportunity. ![]()
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