Buying and selling a home are among the biggest decisions someone will make, and they can also be challenging experiences.
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A few weeks ago, I wrote about Nomad Homes developing a platform to simplify the home-buying experience in Europe and the Middle East. Now meet Flat.mx, a property tech startup that is doing something similar in Mexico, but on the sale side.
Helping to get the process started, the 1-year-old Mexico City-based company raised $25 million in debt financing from Arc Labs. The new financing gives the company a raise of approximately $30 million. It raised a pre-seed round of $5 million in September 2019, co-founder Victor Noguera told Crunchbase News.
Flat.mx, which focuses on iBuying–a process that removes the hurdles to selling a home–is in the middle of the Y Combinator summer program and will use the cash infusion to scale the company, so it can purchase properties, then renovate and sell them.
“This is a very capital-intensive business,” Noguera said. “The typical home costs $150,000, which generates a barrier of entry, so we wanted to raise a debt round to scale quickly.”
Noguera, a financial consultant, and Bernardo Cordero, who worked for Linio, a Latin American e-commerce marketplace, first met each other at UC Berkeley and reconnected later on when Noguera was looking into building a fintech company. That is until they saw that the proptech industry was booming.
There is not a Multiple Listing Service in Mexico, which means there is no one source of information to find out what a home is worth, so property owners end up overpricing their homes, which leads them to sitting on the market longer.
“The more we looked at it, we saw that Mexico’s real estate industry was still doing transactions the way it was 40 years ago,” Cordero said. “If you wanted to buy a property, it could take nine months or a year to sell your home. We saw a huge opportunity there.”
Instead, Flat.mx will buy the homes instantly–cutting the time on the market from a year to weeks–do any renovations, and turn the house around in about two months, Noguera said. The company also provides a 30-day buyback warranty for buyers.
The company is currently purchasing homes in 50 neighborhoods around Mexico City and has built a small team of 30 people. Noguera and Cordero expect to expand into other cities in the next year.
“Our vision long term is to be a marketplace, like the Amazon of real estate,” Cordero said. “We are also forming partnerships with mortgage brokers to help buyers get mortgages quickly. iBuying is a stepping stone to creating an ecosystem.”
Feature photo of Victor Noguera and Bernardo Cordero courtesy of Flat.mx
Blogroll illustration: Dom Guzman