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Contxto – Any startup that works with the real estate process of iBuying will burn through money quickly. As a result, they’re highly reliant on equity capital or financing to get their projects off the ground.
To that end, proptech Flat.mx recently raised US$25 million in debt financing through Arc Labs.
The money will serve to scale as the startup reviews properties it can buy and re-sell. For the moment, the one-year-old company is working within Mexico City, but hopes to expand to more parts throughout 2021.
Likewise, the startup will be quite busy in the coming weeks as it juggles these plans and its acceptance into Y Combinator’s Summer 2020 Batch.
“We’re now focusing on scaling. We’ve proven that we can buy, remodel, and sell well to obtain some very interesting profit margins,” said Victor Noguera, co-Founder at Flat.mx.
“The biggest challenge now is to see how we can execute dozens of transactions per month.”
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iBuying? iDon’t understand
Don’t let the name fool you. iBuying has less to do with Apple and more with the process of buying real estate.
iBuying stands for “instant buying”. Through iBuying platforms, the value of a property can be quickly assessed and owners receive an offer within a relatively short period of time. It’s within this area that Flat.mx operates.
It will buy properties, flip them, and then resell them to earn a profit. Thus speeding up the entire process for all relevant parties.
Evidently, the upside to iBuying is it enables homeowners to sell their property faster. On the downside, they may get less for it than if it was sold on the open market.
In the end, it’s a matter of trade-offs.
Real estate startup Flat.mx
Despite multiple tech advancements, real estate is an industry that’s been slow to catch on. But for the proptech that spelled “business opportunity.”
Correspondingly, the startup launched in 2019 and in September of that year, raised a pre-seed round for US$4.6 million.
“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,” noted Noruega.
“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.”
More recently, Flat.mx also plans to partner with mortgage brokers to give potential buyers financing options. Besides giving buyers a chance to buy the home of their dreams, this strategy can expedite the process for the startup as well.
Market opportunities in iBuying
And for Flat.mx, its business approach in proptech is only the beginning.
“We see iBuying as a very disruptive model that can radically change the user experience. But we believe there’s a big opportunity to improve the experience in other verticals,” Noruega told Contxto.
“We believe that in the future, iBuyers can begin expanding into other underlying areas and iBuying will become a value-adding component for a more complete solution,” concluded the co-Founder.
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