More expansion news from affordable housing startup PadSplit: more rooms, more markets, more funding and an effort to increase the supply of homes.
PadSplit member in front of his Atlanta residence
Founded in 2017, the Atlanta-based company aims to alleviate the affordable housing crisis with a new take on the rooming house. To that end, its platform helps both real estate investors to convert homes or apartments into shared housing for low-income residents and renters to sign on.
Now, to boost the supply of available properties, founder Atticus LeBlanc is developing what he calls “PadSplit turnkey”, a platform aimed at casual real estate investors who might not otherwise be interested in buying a home and turning it into a shared residence. Up until now, the company has focused on professionals.
Plus, since 2020, the number of shared units (rooms) increased from around 1,000 to about 2,900. Plans are to up that number to around 3,500 by the end of the year. The company has also expanded into such markets as Houston, Dallas, Indianapolis, New Orleans and San Antonio, with more in the works. And the company recently raised a $20.5 million Series B round of financing with investment from Core Innovation Capital, Impact Engine, Citi and others.
“We’re trying to expand into new markets as quickly and effectively as we can,” says LeBlanc. “And we’re trying to make it as easy as possible for anyone who’s interested in owning a PadSplit home to do so.”
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Platform for Investors
PadSplit’s strategy is to provide benefits to both renters and investors. For the latter, there’s a platform to help turn existing properties into shared living spaces, with such capabilities as lead generation, screening of residents and help collecting and processing rent. (Residents potentially can pay per paycheck or even daily). Also there’s a 24/7 customer service call center to handle complaints. (Think a housemate’s neighbor is blaring music on full blast). PadSplit also provides management services and marketing support, in addition to such tasks as handling background checks.
Atticus LeBlanc
With the new turnkey platform, however, LeBlanc is seeking to target nonprofessional investors. To that end, it will perform such tasks as helping them to source homes and handle construction project management and property management oversight. “You don’t have to be an expert in real estate to get involved,” says LeBlanc. He also says it’s a way for someone in a high-rent region like San Francisco to buy property in a more-affordable area.
Ultimately, LeBlanc aims to address what he sees as the two key factors needed to solve the affordable housing crisis. First is increasing supply. The other is reducing barriers to entry.
All-Inclusive Rate
As for residents, called members, many of whom work in schools, restaurants, hospitals, grocery stores, hotels and government offices, they pay about $600 a month, an all-inclusive rate that covers everything from a fully furnished room and wifi to access to telemedicine. Rooms go for 40% to 50% of the average cost of a one-bedroom apartment in PadSplit’s markets, with no required minimum credit score or security deposit. Plus, homes typically are located near job centers or public transit.
The upshot is that, in addition to having an affordable place to live, residents save $516 a month on average. That’s also allowed many to build credit histories and move into their own apartments. Some have even bought homes, according to LeBlanc.
Most homes are renovated single-family houses. That’s because, according to LeBlanc, such residences have an excess of “inefficient space,” like a dining room, that can be turned into bedrooms/living spaces. But he has also gradually increased the number of apartments in apartment buildings open to PadSplit renters, he says. Plus, some home owners are renting individual rooms in their abodes, although that’s in a pilot stage.
