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Goldman Backs Software Firm That Powers Single-Family Landlords

Entera parses property records to help landlords, home flippers and other investors match real estate listings to their buying criteria.

(Bloomberg) -- Goldman Sachs Group Inc. led a $32 million investment in a startup that enables single-family landlords to acquire rental properties, an increasingly competitive corner of the real estate market.

Entera parses property records to help landlords, home flippers and other investors match real estate listings to their buying criteria and make instantaneous decisions on how much to bid on a given property. Its clients include Invitation Homes Inc., the largest single-family landlord, property records show.

The company, whose software has fueled the acquisition of nearly $1 billion in properties since it launched 2018, plans to use the new capital to continue expanding the services it offers.

“We’ve had insatiable demand from our customers, who want to spend a whole bunch of money,” Chief Executive Officer Martin Kay said in an interview. “We are trying to build everything we need to service existing customers and continue to grow.”

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For decades, large investors mostly ignored single-family homes, viewing the properties as difficult to acquire and costly to operate. The U.S. foreclosure crisis let Wall Street firms buy homes cheaply and build property-management systems. The industry also got a boost with demand from families who wanted to live in the suburbs but couldn’t afford a down payment.

Kay was a technology executive who started investing in real estate around the same time, when he came to believe that software would be key as single-family landlords built scale.

The system his company developed starts by analyzing property records for all the single-family real estate in a given area. Homes are logged based on physical characteristics, local amenities and neighborhood demographics. Entera then matches investors to homes as they hit the market.

Entera which currently operates in 24 geographic areas across the U.S., helps clients negotiate with sellers, manage transactions and find service providers for construction and property management.

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The company has seen increased demand from customers during the Covid-19 pandemic, which has boosted the market for larger suburban living spaces and pushed real estate investors shunning hotels and office buildings toward rental houses.

Blackstone Group Inc., KKR & Co. and Brookfield Asset Management Inc. are among the companies to make new investments in single-family rentals since the pandemic began. A broader field of Wall Street firms, meanwhile, has committed billions of dollars to buying or building rental houses.

Goldman is backing the startup through its investing arm, Goldman Sachs Asset Management. Bullpen Capital, Craft Ventures and Valuestream Ventures also invested in the round.

Entera stands out by combining technology that helps investors decide which homes to buy with the ability to complete transactions, Paul Pate, a vice president in the growth equity business at Goldman Sachs Asset Management, said in an email.

“As a result, Entera is both a beneficiary and an enabler of the growing single-family rental asset class,” Pate said.

© 2021 Bloomberg L.P.

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