Opendoor, a Softbank-backed startup says it is safe for U.S. residents to begin buying homes once again. The company froze its business in March and was forced to lay off more than a third of its staff because they even knew it wasn’t safe to shop for a home safely.
However, operations resume next week in Phoenix, Arizona. They plan to reopen in more than 20 additional markets in the upcoming months.
The company’s main service to allow owners to sell their homes without any open houses or in-person closings — the perfect formula for social distancing. However, this formula does carry some risk.
“Opendoor uses debt to buy homes, and its borrowing costs rise the longer it holds a property,” reads Crain’s New York. “Purchasing homes over the summer with the intention of reselling them in the fall could prove costly if the nation is mired in a recession or hit by another wave of the virus.”
The company has raised $1.3 billion in equity capital from investors. Their business model:
- Buy a ton of homes
- Take on debt
- Hope their customers will buy.
Last year, they purchased 19,000 homes. By March, they had only 3,800 left.
“There is still demand for people to move,” Chief Executive Eric Wu said. “That could be driven by the fact that people need more space because they work from home, or they want to move out of the middle of the city because they want something less dense.”
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Read the full story in Crain's New York here: https://www.crainsnewyork.com/real-estate/home-flipping-giant-says-its-time-resume-buying
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