Pure co-founders Mike Catalano and Joe Polverari (PUREpm)
Pure, a single-family rental management platform, raised $50 million in its first institutional funding round, reaching a $300 million valuation in less than 18 months.
The Los Gatos, California–based company has grown rapidly by acquiring small-scale property management firms — 28 of them averaging 500 doors each since its October 2020 launch.
The 40,000 single-family rental owners across the U.S. have their own approaches to management, according to Mike Catalano, Pure’s co-founder and general partner. Many of the small-scale third parties that owners tap to manage their homes have hit a ceiling and want to be part of a larger enterprise.
“They’re looking for a management company to come in and streamline processes,” he said.
Level Equity, an early investor in the vacation rental management platform Vacasa, was the sole investor in the funding round. Pure, which spells its name with all uppercase letters for branding, earlier raised $25 million in seed funding from friends and family.
Single-family rentals are notoriously difficult to manage; portfolios can be spread out, sometimes across wide distances, and regulations vary from place to place. That hasn’t stopped a horde of investors from crowding into the market in the years since the 2008 financial crisis, seeking to capitalize on a booming housing market and secular shifts favoring renting over owning.
Major institutions like Blackstone, Starwood and Colony Capital have consolidated massive positions in the market, and investors are now behind 18 percent of home purchases.
Pure could be viewed as both an outgrowth and an answer to the growing institutionalization and commoditization of the asset class. The startup’s management sees its platform as glue for the vast, fragmented field of small-scale single-family managers.
The companies Pure acquires are already established locally. Pure provides them software to standardize and streamline processes such as finding tenants, collecting rent and handling maintenance. The firm says it also facilitates a “culture of collaboration.”
“We’re not here to disrupt or re-imagine anything, just solve the real problems that our property managers, residents and owners face every day,” said co-founder and general partner Joe Polverari.
In addition to management fees, Pure makes money by charging premiums for “resident benefits and client services,” a company spokesperson said. Additional revenue comes from maintenance and other improvements to properties.
HomeRiver Group is probably its chief competitor. The Florida-based company, with about 30,000 doors under management, has similarly grown by acquiring local management companies. Pure’s focus on technology distinguishes it in the field, Catalano said.
Oakland-based Mynd, another property management platform, has had “some similar ideas,” but its operations recently have skewed toward the institutional side of the business, he said.
Pure’s footprint is 15 states from the Pacific Northwest through the Sun Belt and up to Virginia. It wants to be in 25 states by the end of the year and to eventually expand beyond single-family homes into multifamily and other verticals, Polverari said.
“The trick is,” he said, “can you maintain everything that’s great about those industries — the people, how they interact with other people, how business gets done — and really make it efficient?”
Catalano has 25 years’ experience operating and acquiring property management companies. Polverari is a Silicon Valley entrepreneur with a background in fintech; he previously led corporate development and strategy at the software company Yodlee through its IPO in 2014.
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February 03, 2022 at 12:30AM
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Single-family management platform Pure raises $50M - The Real Deal
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