reAlpha closes $6m investment round

US: Digital marketplace reAlpha, which is launching an innovative platform designed to facilitate investment in the $1.2 trillion short-term rental market, has announced it has closed a $6 million investment round.

The lead investor in the round was real estate holding company Crawford Hoying, which has developed more than $1.3 billion of mixed-use, multifamily, office and retail properties in the past five years alone.

Brent Crawford, founder and principal of Crawford Hoying, said: “reAlpha’s data-driven approach is a paradigm shift for the short-term rental investment market. The proprietary technology developed to identify, acquire, and market properties with lower risk is a big leap.

“We strongly believe in the team’s conviction and vision to scale this into a leader in this space,” he added.

The new funding is set accelerate reAlpha’s growth, including investment in its platform, data science function and engineering capabilities. The proceeds will additionally be used to expand its geographical presence, operations and member network.

reAlpha CEO Giri Devanur said: “reAlpha enables superior alpha yield by investing in short-term rental properties. We have simplified the entire process of investing and managing these properties using advanced technologies. This allows ‘Mainstreet’ investors to access the real estate investment market like never before.”

According to reAlpha, a new wave of investment opportunities in real estate are emerging, spurred on by the heightened desire for short-term rentals and private accommodation during the pandemic. The company says that its model allows consumers to benefit from both the superior returns of short-term rental income and the increase in property value through renovations and appreciating market conditions, while investors can invest in vacation homes through the reAlpha network, democratising access to the market.

In June, it was announced that the Ohio-based firm was planning to spend up to $1.5 billion, including debt, to acquire a portfolio of short-term rental homes at an unprecedented scale.

Speaking to Bloomberg at the time, Devanur said that the money would be enough to purchase around 5000 short-term rental homes. The company initially plans to focus on buying between 100 and 500 properties in US cities such as Austin, Dallas and Miami, as well as discounted homes when a federal foreclosure moratorium ends.