Flyhomes, a Seattle-based real estate tech company, is upping the ante to help compete in today's competitive real estate market after a $150 million cash raise to improve its cash offer services.
The company, which helps prospective homebuyers purchase a home with cash, provides short-term financing until long-term financing comes through with Flyhomes Mortgage. The Series C raise was led by Norwest Venture Partners and Battery Ventures, with additional funding received from Fifth Wall, Camber Creek, Balyasny Asset Management, Zillow co-founder Spencer Rascoff, Leo Capital, and existing investors Andreessen Horowitz and Canvas Partners. The company has transacted $2.6 billion homes since its inception in 2016, and this new round of funding should help its reach go further.
Cash offers help buyers bypass a lot of hurdles that come with financing a home, including appraisal contingencies and longer timelines, and can help give a competitive edge, especially in a multi-offer market like we're seeing today. In the past, cash offers were generally used by only institutional buyers or real estate investors who had the reach and flexibility in financing to purchase real estate with cash, especially in high-cost markets like Flyhomes operates in. It wasn't something everyday buyers had access to. But it's becoming an increasingly popular strategy for expanding in today's proptech industry.
Homeward, an Austin, Texas-based start-up, completed a $371 million raise to help advance its cash offer program earlier this year. Big companies like these, in addition to iBuyers in the market like Zillow, Opendoor, and Redfin, are making the opportunity to find a deal in today's market even harder. While Flyhome's small market reach still means there is ample opportunity to buy homes for cash without having to compete with everyday homeowners, the strategy backing these companies (and the money to back it) isn't likely to go anywhere soon.
How can investors compete?
It's important for real estate investors to take note of these trends and find ways to adapt to the increased competition as they seek alternative investment opportunities. Searching off market continues to be one of the best ways to source deals and beat out proptech competitors, but there's a good chance you'll still be met with competition among other smaller investors.
It's possible that big companies like Flyhomes or others are taking hold of a large market share in your area, but there are still a number of other markets to branch into. Currently, Flyhomes operates in four states -- California, Massachusetts, Oregon, and Washington -- targeting major metros like Boston, San Francisco, Los Angeles, Seattle, Portland, and several others.
Becoming an expert and having a large presence in your desired investment neighborhood can also be a way to find opportunities. It's great to see technologies improving the buying experience for homeowners, but investors need to get creative in order to compete today.