Awning, a real estate brokerage that focuses on buying single-family homes for investors, recently emerged from stealth mode and raised $9.3 million in a seed funding round led by Global Founders Capital.
MassMutual Ventures and several angel investors, such as Guy Gal and Ed Wu from Side, Peter Fishman from Opendoor, Lucy Guo of Scale AI, Auren Hoffman of SafeGraph, and Justin Overdorff of Lightspeed, also participated.
What Awning does
The cat's out of the bag regarding investing in single-family homes. Awning figured out that people make money in real estate as they do in the stock market, often faring better. Awning does what real estate investors have been doing all along -- finding single-family homes that would make good investment properties to rent out. That's it.
Awning assigns prospective investors a real estate agent who does what all agents do -- browse the multiple listing service (MLS) for homes -- a process that even non-agents can do using online sites like Zillow, Realtor.com, Redfin, etc.
Awning is the first brokerage to work only with investors who want to buy single-family homes. It makes money like any real estate brokerage, by getting a commission from the sale. The company claims to have better than your standard, run-of-the-mill agents because its agents work only with investors.
That's a big assumption to make. But customers can feel at ease knowing an Awning agent knows the terms "cap rate" and "OPEX" (operating expenses). An Awning agent uses machine learning to determine rental income -- a process that most investors and real estate agents decipher by looking at what comparable homes are fetching for rent -- information that can be found all over the internet.
At the moment, Awning buys homes only in California and Texas, but one would expect the company would like to expand to more markets. And indeed, Florida is next on its list. Awning has purchased $5 million of real estate for investors so far.
Awning recommends that investors put down at least 20% and finance the rest to achieve optimal success. It claims on its website that Awning customers outperform the stock market after 10 years. Keep in mind, however, this is a new company that hasn't been around anywhere near 10 years.
The Millionacres bottom line
Awning has a niche, it has raised a lot of money, and it might be worth checking out. Unfortunately, investors can't browse the stock of homes Awning recommends unless they join Awning.
If you're ready to buy a single-family home to use as a rental property, you might want to try Awning, at least for your first time, particularly if you want to invest in California or Texas. If you live in those states, you can also buy a home using your own agent, or you can invest in out-of-state properties using a site like Roofstock.