Atlanta-based PadSplit and GROUNDFLOOR have been tackling real estate accessibility from two very different angles over the last few years.
Perhaps it was only a matter of time before they joined forces to help bring new affordable housing units to communities in need.
The two teams announced a new partnership this week, in coordination with real estate developer White Hawk LLC. The developer will use GROUNDFLOOR’s lending service to renovate 36 homes in Indianapolis, Indiana, which will be run as PadSplits, or shared-housing rental units.
“As a real estate startup in Atlanta, we’ve admired GROUNDFLOOR’s rapid growth and have talked to them over the last few years about various partnership opportunities,” Atticus LeBlanc, PadSplit’s founder and CEO, told Hypepotamus.
“An existing PadSplit property owner wanted to expand in Indianapolis, and they were looking for lending capital. We were excited to learn of GROUNDFLOOR’s interest in the portfolio and the market, and to finally be able to connect all the dots,” added LeBlanc. “For PadSplit, it was a way to accelerate entry into a new market without having to provide any upfront investment ourselves or even have boots on the ground, so we’ll be able to create 200+ new affordable housing opportunities there very quickly and efficiently.”
Brian Dally, co-founder and CEO of GROUNDFLOOR added that “Indianapolis fits the pattern of a lot of cities that have aging housing stock. It has a lot of job growth and it’s actually a pretty dynamic metro. In the US, it’s one that we’ve had our eye on for a while, we have, we’ve actually noticed that several of our smart investors in the Southeast have actually started to look at Indianapolis and make investments there themselves.”
Dally added that this partnership is ultimately helping all stakeholders, from real estate owners to investors to residents.
“The biggest beneficiaries of this partnership are lower-income individuals in Indianapolis, who will now be able to access quality affordable housing, close to job centers, and achieve more financial independence,” LeBlanc added in a statement. “We’ve always admired GROUNDFLOOR’s ability to increase housing density in cities and are excited to finally work with them.”
The Future of Real Estate Tech
The new partnership highlights Atlanta’s growing influence in the real estate and technology space, particularly as housing trends change coming out of the pandemic.
“There’s enormous demand for affordable housing options in nearly every market, and supply is very constrained in most,” added LeBlanc. “We’re hoping to structure other deals of this nature in the future as we expand to other cities. Already this year, we’ve launched Houston, Tampa, Richmond, and now Indianapolis.”
Dally said that the PadSplit loans are “an inflection point” for the wealthtech startup. GROUNDFLOOR also announced a new Accessory Dwelling Unit (ADU) pilot program in January 2021 that Dally calls an “example of another very innovative application of capital to attack the housing density problem.”
He added that while it took time to build up the new capital model, the platform now has over 100,000 investors and is coming off a month of closing 100 new loans.
“The source of capital matters. When you rethink where capital comes from, you get very different results in the real world because you find different types of entrepreneurs that are imagining different use cases that, frankly, Wall Street hasn’t caught up to yet.”
PadSplit, which raised a $10 million Series A in 2020, sees the partnership as an opportunity to continue to grow throughout the rest of the year. “The rest of 2021 will be focused on scale for us — growing our footprint in our home market of Atlanta and expanding into new cities across the country. We’re excited about changing the world, one room at a time!”