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Real estate investing solution Backflip has secured a significant amount of capital to bolster operations, Inman has learned.
The mobile-forward fintech company that marries real estate investment search and analysis with streamlined financing has raised $184 million through two private credit funds: one is $30 million of equity, the other is asset-backed financing of $154 million, an Oct. 15 press release said.
The money will be used to fund residential transition loans, or RTLs, for Backflip users. Such loans are more commonly known as “fix-and-flip mortgages.”
After a raise of $15 million in April, employees at Backflip have even more reason to do just that. An Inman review of the company’s value proposition said that companies in its ilk can give younger buyers locked out of the market a new way to benefit from owning property.
“Backflip provides ARVs — after repair valuations — to help investors shape buying decisions. The financial components can be considered a significant sigh of relief from the agony of traditional lending practices, which are often exacerbated in an investment setting,” the review stated.
The press release stated that the company “grew its trailing 12-month origination volume 3x year-over-year to a $375 million run rate” and that users employed its resources to break down an average of $10 billion in real estate each month.
Backflip says the market for RTLs is growing fast, citing a new rating metric introduced by Morningstar that “catalyzed an unprecedented influx of institutional investors to the sector.”
These loans are subject to securitization, like other forms of property financing. Backflip said that a total $4 billion in RTLs were securitized in the first six months of 2024, a 546 percent jump year-over-year.
A September 2024 Morningstar summary of RTLs defines the loan type as “short-term bridge, construction, or renovation loans designed to help residential real estate investors purchase and renovate residential or small balance commercial properties, generally within 12 to 36 months.”
A June 2024 report from ATTOM on the state of flips said that “67,817 single-family homes and condominiums in the United States were flipped in the first quarter.” That volume represented 8.7 percent of the sales market, one out of every 12 home sales between January and March of 2024.
“Raising these private credit vehicles and the warehouse facilities allows Backflip to offer ever-improving capital products to our members doing the important work of rejuvenating obsolete homes. We are grateful for the trust and support of our capital partners, and are excited to be on the front lines of a rapidly-institutionalizing investment asset class,” said Backflip co-founder and COO Jake Rome.
The Inman review cited Backflip’s lack of hands-on oversight of construction over the homes it backs, as rehab projects are notorious for lengthy delays and cost overruns. However, the company does offer a team of advisors to guide members as they enter and carry out the process, an investment in personnel that could prove beneficial in remediating such on-the-ground risks.
