A San Francisco-based tech startup that pays cash for homes and then flips them for profit is considering expanding into Portland.
on March 15, 2016 at 5:00 AM, updated March 15, 2016 at 5:02 AM
The company, OpenDoor Labs, already operates in Phoenix and Dallas, where it does a combined $25 million per month in transactions, said spokeswoman Erica Domm. Portland is among several cities that OpenDoor may target next, according to Domm.
“Before the end of the year, we’ll probably be in one more market,” Domm said.
The company’s co-founders include chief executive Eric Wu, who founded a data analytics company that the real estate website Trulia bought in 2011, and Keith Rabois, formerly a top official at PayPal. It has raised $110 million to date and has 63 employees, a chunk of them data scientists who use software to determine the price of a home, Domm said.
Michael Orr, a real estate expert at Arizona State University, analyzed property records and found that through the middle of December 2015, OpenDoor had bought and sold more than 200 homes, paying an average price of $230,000 and reselling them within 90 days for an average of $245,000, according to a report in The Wall Street Journal. It does not do extensive renovations, Domm said.
Domm said Portland is attractive to the company because of its healthy job market.
“The employment numbers are good,” Domm said. “We look at growth potential for the economy.”
OpenDoor’s “sweet spot,” she added, is homes worth between $100,000 and $500,000 and built after 1960.
The rise of OpenDoor coincides with a record-setting real estate market in Portland. Prices have risen sharply over the past year, and the inventory of available homes has hit historic lows.
Previous attempts to profit from the trend have sparked backlash. The organizers of a house-flipping seminar featuring the stars of the HGTV show “Flip or Flop” postponed events in Oregon and Washington after a flood of social media users objected.
Unlike tech startups like Uber, OpenDoor isn’t simply a marketplace that allows buyers and sellers to find each other. The company actually purchases the homes it sells. That leaves it vulnerable to an economic downturn, but it’s a bet company officials are comfortable with for now.
“We think Portland’s definitely up there in terms of places where our product makes sense for people,” Domm said.
— Luke Hammill