Doorvest, a startup that finds and renovates investment properties, has raised $2.5 million in seed funding.
Subscribe to the Crunchbase Daily
The company wants to create a modern way for people to own high-yield rental homes completely online, according to CEO Andrew Luong.
Residential real estate investing is something Luong himself has a background in. He started attending the University of San Francisco on the pre-medicine track before realizing it wasn’t for him. While working at a startup, it became clear how much he enjoyed being part of an early-stage company, and that he wanted financial security.
“I kind of looked for an avenue to generate income security for myself, build a long-term nest egg. I looked far and wide and landed upon real estate, specifically single-family homes.”
Luong grew up middle class, but by no means financially secure, he said.
“The financial security, or lack thereof, I saw firsthand (how) the lack of financial security inhibited one from pursuing their dreams,” he said.
He spent his days as a “rank-and-file startup worker,” as he put it, and his evenings investing and working in real estate, with roles like mortgage loan officer and owner of his own small portfolio of properties.
Luong saw others doing similar work and realized how many barriers prevent people from participating in real estate investing.
How it works
Residential real estate is especially hot right now, with existing home sales reaching a 14-year high in 2020, according to CNBC. Funding for venture-backed real estate startups raised $8.6 billion last year, according to Crunchbase data, as more people worked from home amid the COVID-19 pandemic and interest rates remained low.
Doorvest gets to know a customer and their investment goals before identifying and buying a property on their behalf. Usually the property is a house that “needs a little bit of love,” Luong said.
The startup handles renovations and places a resident in it, then sells the property to the customer for the cost of the home and renovations, plus an 8 percent markup. Doorvest also handles management of the home after it’s sold to a customer, taking a fee of 15 percent of the gross monthly rent.
The goal is to get more real estate into the hands of everyday people, Luong said. The company is currently focused on Texas as an operating area, specifically the Houston market. With the new funding, the company will explore its next market and grow its team, which is currently made up of 10 employees. The company, which was founded a little over a year ago, has customers in the “mid-double digits,” according to Luong.
“Even before COVID, we saw lots of customer interest. Ultimately the issue here is working people want to participate in real estate and generate income security and have long-term wealth and aren’t really able to,” he said.
The seed round, which was led by Mucker Capital, brings Doorvest’s total funding to about $3.6 million, according to the company, which last raised a pre-seed round in October.
Illustration: Li-Anne Dias
Stay up to date with recent funding rounds, acquisitions, and more with the Crunchbase Daily.