This article was originally published in my newsletter Emergent.
In Brazil renting apartments or buying homes has historically been a tedious and inefficient process fraught with complexities. Everything from searching for properties to rent or buy to the need to provide guarantors and co-signers and often the requirement for rent insurance have made the whole process cumbersome. However, much like the inefficiencies and challenges of the used-car sales market helped inspire the founding of Kavak in Mexico, the inefficiencies of the property market in Brazil have helped inspire the creation of QuintoAndar.
QuintoAndar is a Brazilian proptech company, founded by Gabriel Braga and André Penha with the vision of streamlining renting and purchasing of real estate in Brazil. QuintoAndar – which means “fifth floor” in Portuguese – provides a digital marketplace that connects tenants and homebuyers to landlords and sellers in Brazil. The platform has evolved to become an end-to-end solution for long-term rentals and property buying and selling.
The company is headquartered in São Paulo and is available in all five regions of Brazil across over 75 Brazilian cities. QuintoAndar is currently the most valuable proptech startup in Latin America and is backed by noteworthy investors like Silicon Valley-based Ribbit Capital, SoftBank’s LATAM-focused Innovation Fund, Kaszek Ventures and Dragoneer.
Over the years, QuintoAndar has:
- Raised $755.3M in funding to date
- Present in Brazil, Mexico, Peru, Ecuador, Panama and Argentina
- Achieved a valuation of $5.1 billion, the highest valuation for a proptech in LATAM
- Reached 175,000+ active rental contracts
- Achieved $50 billion+ in assets under management
- Made 60,000+ homes available for sale on its platform
QuintoAndar offers a digital, end-to-end platform for real estate dealings and is essentially a complete ecosystem for brokers, agents, property owners and tenants. Technology simplifies the entire experience of buying, selling or renting a property. Customers are supported throughout the process, starting from browsing a verified property catalog to signing the final contracts. Through its tech-enabled services, QuintoAndar helps:
- Home buyers and renters: QuintoAndar’s main web application can be used to search for homes, schedule virtual or on-site visits, negotiate and complete all the steps of renting, buying or selling. All contracts are completely digitized, eliminating the need to physically visit notaries for finalizing a contract. QuintoAndar also removes a renter’s requirement to have a financial guarantor, large security deposits, or rental insurances.
- Sellers or landlords: Through the homeowners’ app, they can list properties for sale or rent, monitor visits, negotiate with buyers or tenants and close deals. QuintoAndar provides landlords with the guarantee that they will receive rent every month, and get coverage for any damages caused by a renter to a property. This enables landlords to have sufficient liquidity in the market.
- Real estate agents: They can use the agent’s app to manage their schedules, book visits, contact clients, and manage deals. On the property buying side, QuintoAndar offers a real estate financing simulation in partnership with major banks in the market. QuintoAndar also helps find the best rates and conditions with banks, intermediates the credit analysis, and helps with verification of all the necessary documentation. Once the financing process is started with the bank, it then monitors the process (for any pending issues, updated statuses, etc). Financing is then approved, and the contract can be signed by a buyer digitally.
Business and Revenue Model
QuintoAndar’s services are entirely digital. The company provides transparency by quoting single prices for each property which include any condominium fee, property taxes, and the rent itself and so there is no hidden fee. The company exempts tenants from providing any guarantor, a surety bond, or a security deposit and has also eliminated the need for any notaries through its digital signatures. The use of digital signatures also means a prospective tenant and a property owner can negotiate from 2 separate locations.
QuintoAndar makes money through the rent payments and a fee charged from property owners. Once an apartment is rented via the platform, QuintoAndar collects the rent from the tenant on behalf of the property owner. The first month’s rent is kept by the company as a broker fee, and QuintoAndar further charges an 8% per month fee from the property owner. This fee is standard in the market and at par with what rental agencies charge.
Loft was founded in 2018 and is a Brazilian proptech unicorn based out of Sao Paulo with a valuation of $2.9B. The company platform aims to serve as a “one-stop shop” which helps Brazilians manage the home buying and selling process. The company uses technology to simplify and enable real estate and credit transactions and has raised $788M in funding to date. Loft currently has more than 40,000 apartments for sale in four cities and is gradually expanding its reach and portfolio through acquisitions.
Similarly, Tabas is also headquartered in São Paulo and was founded in 2020. Tabas is a tech-enabled property management company that provides beautifully-designed fully-furnished apartments and corporate housing. In 2021, the startup surpassed $145M in revenue, and has raised $16.1M in funding to date. Tabas has 360 furnished, tech-enabled apartments in São Paulo and Rio de Janeiro that are available for stays of at least one month. In November 2022, Tabas was acquired by New York-based global proptech company Blueground.
Colombia-based La Haus has developed an online real estate marketplace operating in Colombia and Mexico. The company has a very similar mission to QuintoAndar and aims to make it easier for people to buy homes quickly and easily. The company has raised over $200 million to date and has hundreds of developers listing houses on its platform today.
Compared to players like these, QuintoAndar has a first mover advantage in the market. The company is a pioneer in the category and have inspired several global copycats. Unlike real estate listing platforms, QuintoAndar provides an end-to-end platform which also acts as a digital brokerage. Everything is handled, including the monthly payments for the landlord and eventual separation when the tenant leaves. QuintoAndar’s service enables apartments to be rented 10x faster than the offline competition, in an average of 4 days compared to about 30 days with a typical rental agency.
Its ability to provide rental guarantees to landlords is also a significant competitive advantage. This guarantee ensures the landlord receives timely payments even if the tenant has not been able to make a payment or makes delayed payments. This builds significant trust with landlords. Even more appealing may be the insurance and rent advance products the company provides, which enables owners to get months of rent in advance.
For tenants, QuintoAndar has removed the hassle of having to provide a guarantor or deposits, which helps them save money. This trademark rental scheme is a result of QuintoAndar’s credit engine which is powered by advanced data analytics and can help predict a prospective tenant’s capability to pay rent.
Brazil is one of the largest countries in the world with a population of 200 million and a $1.6 trillion economy. For the majority of its life QuintoAndar has been focused on growing its presence in Brazil given the huge opportunity the country offers. However in 2022 the company began dabbling with geographic expansion after establishing a presence in Mexico after its acquisition of Navent. Navent has more than 6 million properties listed on its platform across Argentina, Panama, Peru, Mexico and Ecuador. QuintoAndar has rebranded Navent as its new Benvi platform.
QuintoAndar has several growth paths ahead of it including:
- Expansion to other countries
- Expanding solutions portfolio through acquisitions
- Offering new real estate products
QuintoAndar is likely to continue the geographic expansion it started in 2022 and expand across Latin America. This pattern has repeatedly played out across different categories in Latin America. By starting from Brazil and building a lead in the Brazilian market which is the largest market on the continent, QuintoAndar has positioned itself to expand into new markets from a position of strength. Further geographic expansion will put it into direct competition with several major proptech companies based out of Colombia such as Habi and La Haus.
Another growth path for QuintoAndar is to expand its platform through strategic acquisitions. The company has shared it is open to acquiring more companies that it believes can be additive to its platform. In 2021 when QuintoAndar raised its Series E round, a large portion of this capital was invested in several acquisitions to help the company go beyond rental, buying and selling services, and add new products, such as real estate financing. That year, the company acquired Casa Mineira and its ads portal, for expanding the visibility of partner real estate agents through its marketplace. Similarly Atta Franchising, a network of 113 franchisees and 1,500+ real estate agents, was also acquired to speed up its ability to offer mortgage services to its users.
Lastly QuintoAndar can continue its growth path by broadening the suite of real estate related products it offers. For example, in mid-2021 the company’s founders shared their long-term plan is to evolve into a one-stop real estate shop that also offers mortgage, title insurance and escrow services. While the real estate market is a huge one the market for mortgages is equally large and inability to access mortgages is one of the key impediments in the entire real estate market.
QuintoAndar has pioneered a category in Brazil that has quickly inspired companies around the world to copy its model in markets with similar problems to Brazil. However, QuintoAndar has barely scratched the surface of its addressable market in Brazil alone with its 175,000 active rentals a fraction of the total housing stock in the country. The company has significant growth ahead of it and shows all the signs of potentially following the steps of NuBank as a homegrown tech champion representing Brazil on the global stage.
This article was originally published in my newsletter Emergent.