RealtyShares, an online funding platform that lets investors buy fractional ownership of properties, has acquired competitor Acquire Real Estate.
The deal marks the first acquisition in the online real estate investing industry and will help RealtyShares develop new technology, including a secondary market through which investors can trade shares of real estate equity or debt, RealtyShares CEO Nav Athwal said.
Athwal declined to disclose financial terms of the deal.
RealtyShares serves up a range of real estate investment opportunities, allowing both wealthy individuals and institutional investors to buy fractional ownership of properties or finance the purchase of such properties alongside other investors.
It has deployed $500 million for real estate projects across nearly 1,000 deals in 39 states, tripling second quarter origination volume over the last year to $140 million, according to Athwal. RealtyShares competitors include Fundrise and RealtyMogul.com.
RealtyShares purchased Acquire Real Estate for its technology and talent, Athwal said.
Acquire was the first online real estate marketplace to introduce an exchange through which investors could sell their property equity or debt to other investors, he said.
RealtyShares plans to build out this exchange with the goal of ultimately providing as much access and liquidity for shares of real estate equity and debt as the stock market does for shares of corporations.
Acquire also launched integrations that streamlined the process of investing funds from self-directed IRAs into real estate, according to Athwal.
These days, RealtyShares is focusing more on sourcing commercial investment opportunities, such as retail, industrial and hotel property deals.
But the company continues to tee up investments that involve single-family homes. Using funds from investors, RealtyShares offers home flippers six-to-12 month loans that cover up to 85 percent of the purchase price and rehab cost of a home, with interest rates starting at 9 percent.
Athwal noted that the “fix-and-flip financing” industry is becoming increasingly crowded.
“Over time, especially as the market continues to heat, you’re going to see compressed [profit] margins and riskier loans,” he said about loans for home flippers. “We don’t want to compete based on riskier loans.”
Some lenders have experimented with bundling loans for home flippers into “fix-and-flip mortgage bonds.”
Companies like RealtyShares used to identify as “real estate crowdfunders.”
But they’re increasingly partnering with institutional investors, such as hedge funds, rather than “the crowd,” leading them to drop the crowdfunder label in favor of monikers like “online lender” or “real estate investment platform.”