Fund That Flip, a New York- and Cleveland, Ohio-based marketplace lender of residential real estate loans, today announced that it’s secured $11 million in funding from Edison Partners. Founder and CEO Matt Rodak said that the capital infusion, which brings the startup’s total raised to nearly $15 million, will be used to scale distribution around the company’s core offerings and to develop additional loan products for institutional and accredited investors.
“Our mission is to enable our clients to create wealth and improve communities by investing in real estate. This additional capital is going to further advance the mission to more clients and communities across the country,” said Rodak. “Edison Partners has an impressive track record of investing in market leaders, and we’re incredibly excited and honored to have them as a partner as we expand our product offerings, technology, and services.”
Fund That Flip, which was founded in 2014, provides short-term (3-18 months) loans up to $5 million to real estate redevelopers who buy and renovate residential properties. Borrowers provide their address, financials, experience, and contact information, and Fund That Flip follows up with an offer. On the flip side, brokers submit loan applications and receive term sheets for clients within 48 hours, at which point Fund That Flip firms up the details within 10 business days to ensure they’re paid from escrow the day of the closing.
Fund That Flip says it looks for clients with a “successful” track record of buying, fixing, and selling houses, ideally those who’ve completed properties in the last year. It offers funding for 1-4 family residential properties with enough margin to mitigate downside risk (as verified by third-party appraisers), and it requires a down payment of 10% of the purchase price with rates ranging from 8.99-12%.
Post-origination, investors can purchase fractional shares of loans and earn an estimated 8%-9% annualized yield. Fund That Flip says that lenders can expect to see up to 10% annual returns with a minimum investment of $5,000.
“Fund That Flip’s offering is well-timed with the growth of the residential real estate industry’s addressable market,” said Edison Partners vice president Jennifer Lee. “As affordability continues to concern many home buyers, the renovation and recycling of existing homes offers an attractive, sustainable solution. We look forward to helping the Fund That Flip team accelerate their vision of being the destination platform for residential real estate investors.”
Fund That Flip claims that since its founding roughly five years ago, it’s doubled its revenue, loan origination volume, and customer base each year.