Divvy Homes Raises $100 Million To Expand Into 20 Markets

Divvy Homes said it has raised $110 million in a Series C funding round so it can expand its home-buying service into additional markets.

The round was led by Tiger Global Management and joined by GGV Capital, Moore Specialty Credit, JAWS Ventures and several existing investors. Divvy said in the announcement that it has raised $500 million in debt and equity capital to date.

Divvy plans to use the cash to build out its home-buying operations to serve more than 70 million customers in over 20 U.S. markets. The company currently operates in 16 markets nationwide. Divvy also plans to unveil additional home-buying products.

Divvy offers an alternative path to homeownership by buying a property for a prospective owner, then renting it to them until they can build equity. Customers put down up to 2 percent of the home’s value and then make monthly rental payments, of which around 25 percent goes toward a down payment. They are generally able to build up enough for a 10 percent down payment through a three-year lease and can then buy the home before the end of the lease. Customers can also choose to walk away from the deal and cash out their savings from the plan.

“The Divvy team has built a company that enables more Americans to own a home. Over the next 10 years, we believe they could help over 100,000 families become financially responsible homeowners,” said Tiger Global Partner Scott Shleifer in a statement.

According to Divvy, its services have become especially needed during the pandemic, as banks tighten their lending qualifications. The company financed five times more homes during 2020 than it did before the pandemic, and has expanded into 16 markets.

“During COVID-19, new mortgages became difficult to secure as banks tightened underwriting requirements for approvals. As a result, families were locked out of homeownership opportunities during a global pandemic — a time when they needed safety and shelter most. Divvy stepped up in place of traditional financing,” said Adena Hefets, co-founder and CEO of Divvy Homes, in a statement.

To assist clients during the pandemic, Divvy provided rent relief and flexible payment plans to renters experiencing hardship, in addition to waiving late fees and suspending parts of their monthly payments.

In December, the National Association of Realtors reported that millennials were finally getting into the homebuying game, despite experiencing financial setbacks. According to the December edition of the group’s Buyers and Sellers Generational Trends Report, millennials make up the largest share of the homebuying population at 38 percent, with older millennials (aged 30 to 39) making up 25 percent and younger millennials (age 22 to 29 years old) making up 13 percent. These younger consumers are mostly buying first homes (86 percent of younger millennials and 52 percent older ones).