Innovation usually starts with entrepreneurs looking to solve a problem. Airbnb Founders Brian Chesky and Joe Gebbia couldn’t find a hotel room in New York City. Zev Siegel, Jerry Baldwin and Gordon Bowker wanted different flavored coffee drinks back in 1973, couldn’t find them and started a three-store chain in Seattle called Starbucks.
Doorvest Co-founder and CEO Andrew Luong was working to solve one problem: finding a way to invest in the real estate market. Luong had spent the last several years working good, well-paying jobs during the day and looking to build a bit of passive income security and a future nest egg by building up a real estate portfolio in his free time.
What he found was a friction-filled process complete with risk and tricky pitfalls that could easily scare a new investor off. And while there were platforms like Roofstock out there, he said, they were more geared toward larger investors looking to buy or sell large blocks of residential housing, not those looking to put a toe in the market by buying a property.
After spending about seven years living at the intersection of working by day and investing in real estate by night, he decided to build a solution for everyone in the form of an easier on-ramp for investors.
“What people needed was an avenue,” Luong said. “I saw that there were plenty of people with a good job, who were saving and were hoping to participate in America’s No. 1 source of wealth, which is the real estate market. But they really didn’t have a vehicle that enabled them to participate. Doorvest is a very full-service, end-to-end product. We believe that a lot of Americans have been locked out of real estate due to the many moving pieces that create a lot of friction.”
It’s that friction Luong said he believes Doorvest can iron out of the process for a growing class of consumers and make real estate investing a lot more attainable.
Who Doorvest Serves
Doorvest was, in Luong’s own description, born out of the pandemic. Luong had a lot of insight into the before and after picture of the market, but for all the systemic damage the pandemic has done in general, it has in fact been a tailwind to Doorvest’s business. First, he said, because it has pushed down interest rates to an incredibly low level, meaning mortgages are easier than ever for qualified consumers to secure at a low price. That makes real estate inviting to potential investment buyers in general.
Moveover, he said, the big migration out of urban areas that the pandemic has inspired has been a big boost to the Doorvest business because it has pushed the purchase of the types of homes that are generally popular onto the platform.
“The majority of the homes that are transacted through the Doorvest platform [are] standard, suburban, three-bedroom, two bath, two car garage homes in suburban neighborhoods,” he said. “So, buying a rental home is almost a bet on the future of America being a little bit more urbanized.”
Doorvest’s customers tend to fall into two large buckets. The first is the truly new, first-time home buyers and real estate investors. These are folks that likely have a 401(k) and perhaps done some stock trading who are “hoping to participate in real estate.” The second large bucket are people who are already homeowners who have some experience in the real estate market personally who are looking to make their first step into investing.
And what Doorvest offers these entrants to the market is guardrails to minimize the risk associated with entering the market. The company has done that with the recent launch of its home renovation guarantee, which means Doorvest will take on all the renovations and capital expenditures that need to be made in the first year of homeownership. The company also guarantees rental income at market rate from Day One and over the course of the rental, Luong said.
“Because we felt confident about the work that we’ve done, we wanted to add the ultimate layer of confidence, which is a guarantee,” he explained.
The Changing Future Of The Market
Real estate as a category is changing as an increasing number of firms are dicing up real estate as a category to find different ways to support and bring in an increasing number of consumers. That, he said, is a very exciting development and something that Doorvest sees as a benefit as it offers more opportunities for partnership and providing more extensive services to its end customers.
He said he does not see it as necessarily the emergence of more competition however, as Doorvest’s competition isn’t necessarily in the real estate market. The customer it is competing for aren’t specifically looking to buy a house; they are looking for the best possible income generators over time.
“I’d say our main competitor is really the high yield savings account or your 401(k) or other avenues of income generation and long-term wealth building,” he said.
And Doorvest, he said, faces the future with enthusiasm because a growing number of consumers are looking for a way for real estate to be that path to longer-term wealth generation.
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