Nine Four Insights

Why We Invested: Bungalow

Nine Four is excited to announce our latest follow-on investment in Bungalow’s $75M Series C led by Deer Park Road, with participation by Atomic, Coatue, Founders Fund, Khosla Ventures and Maverick Ventures. This new round of capital will turbocharge Bungalow’s growth and expansion into new markets across the US.

Bungalow cofounders Andrew Collins and Justin McCarty share a goal of solving the affordable housing crisis, born out of their own experiences in seeing first-hand how unsustainable it is to live in many urban areas. We were originally drawn to Andrew and Justin’s simple, yet brilliant, solution to solving this problem: transforming existing underutilized single-family homes into multi-income properties to maximize existing inventory and reduce housing pressure almost overnight. While many other co-living companies we found were taking approaches of purpose-building assets that took large amounts of time and capital, which created rigid and less flexible solutions, Bungalow leaned into owning the experience for their customers (renters), and leveraging technology wherever possible to enable more streamlined operation of single-family assets for landlords. It was – and continues to be – a heavy lift to differentiate themselves from traditional operators, but Andrew and Justin and the Bungalow team have proven themselves up to the task.

The nascent stage of the institutionally owned single family home market presents a long runway for Bungalow to grow. While many investors are flocking to the asset class, the number of world-class operators of real estate – and operators who can create even more supply than a traditional owner – are few and far between. Bungalow’s “secret sauce” is in leveraging technology to manage the people and the asset. We’re seeing signs that as technology is built, adopted, and leveraged across single family portfolios, the operational intensity of multi-site property management is decreasing, positioning institutional operators such as Bungalow for success.

Although the Series C is an exciting milestone for Bungalow, getting to this point wasn’t always easy. The pandemic created a challenging operating environment, but in the face of many unknowns, Andrew and Justin led the company admirably. COVID-19 forced the business to evolve and subsequently transition to a more sustainable model that offers a strong foundation on which other higher margin products and services can be layered. In addition, Bungalow is expanding into other asset types (e.g. duplexes and triplexes) and building its product suite to suit.

Congrats again to Andrew, Justin and the entire team. We can’t wait to bring more affordable housing online faster!

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