Redfin (NASDAQ: RDFN) announced that it will be acquiring RentPath for $608 million. RentPath will be bringing roughly 16 million average monthly visitors to Redfin, a company that is already seeing nearly 40 million site visitors per month.
According to Redfin estimates, 20% of Redfin’s visitors also want to see homes for rent, not just for sale. CEO Glenn Kelman Kelman said, "Together with RentPath, we can create an online destination for every North American to find a home."
More on RentPath
RentPath is a digital marketing and leasing platform for landlords. The company also owns Rent.com, ApartmentGuide.com, Lovely, and Rentals.com. All of these platforms combined see traffic of about 16 million users per month. And the company is moving right along: Redfin’s CEO stated, “RentPath has more than 20,000 apartment buildings on its rental websites and grew its traffic more than 25% last year.”
Some ways that multifamily landlords and operators use RentPath:
- Social media advertising with property-specific, targeted ads.
- Online reputation review management.
- Email and text communication with prospects.
This marks the second time someone has tried to buy RentPath. Don’t forget that CoStar (NASDAQ: CSGP) tried to buy Redfin but was blocked by antitrust regulators. This came on the back of RentPath filing for chapter 11 about a year ago.
Strategic vision for Redfin
The RentPath purchase makes a lot of strategic sense for Redfin. Right now, Redfin focuses exclusively on home sales.The RentPath purchase is a clear and obvious way for Redfin to grow for a couple of reasons:
- This gives Redfin the opportunity to monetize consumers that may at first be considering buying but switch to renting.
- If a single family investor buys a home using Redfin, it becomes a one-stop-shop where the investor can be funneled to RentPath to find a tenant.
- If someone is considering selling their home at first but then opts to make it a rental instead, Redfin will now be able to service that customer as well.
Redfin estimates that 10 million of its monthly online visitors will also be interested in rental properties, which should lead to clear synergies. On that note, Redfin and RentPath both grew traffic by over 20% in 2020. Redfin hopes this acquisition will help accelerate increased traffic.
Comparison to the Zillow acquisition of ShowingTime
The Redfin acquisition of RentPath came right after Zillow (NASDAQ: ZG) announced that it was buying ShowingTime. ShowingTime is a single-family real estate showing platform with over 1.2 million listings subscribed to its services. The platform is designed to make it simple for agents to schedule showings with clients, making it a better experience for both ends.
Back in 2014, Zillow’s CEO Greg Schwartz said that Zillow is "a media company that helps people find homes." While that may have been the case seven years ago, Zillow has morphed into a full-stack suite for the prospective homebuyer.
In many ways, Redfin’s RentPath acquisition is making a similar sort of signal, but in a different, almost opposite, way. Redfin is expanding into the marketing and media side of the business, while Zillow is expanding to the brokerage side.
The Millionacres bottom line
Redfin fired its own blow after Zillow scooped up ShowingTime earlier in the month. This signals that Redfin is ready to leverage its prominence on the homebuying side to make a splash with rentals. Which company will execute the acquisition and subsequent integration better? That's yet to be determined.