Rent-to-own startup Divvy Homes is being acquired in a fire sale by Charleston, South Carolina-based Maymont Homes, according to multiple people familiar with the matter. Maymont, a division of Brookfield Properties, manages a portfolio of single-family rental homes.
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Divvy and Maymont did not respond to requests for comment.
With U.S. housing supply at record lows, Divvy initially gained traction with families that had been priced out of homeownership, promising them a pathway to the American Dream and distancing its brand from the rent-to-own category’s predatory history. Divvy bought a home of the customer’s choosing and then rented it back to them while setting aside a portion of their monthly payments for a future downpayment. Customers had three years to buy the home outright at a predetermined price. “To my family, homeownership was everything,” cofounder and CEO Adena Hefets said.
In the four years following its 2017 founding, the San Francisco-based startup raised more than $400 million in venture capital from investors including Andreessen Horowitz and Tiger Global Management, as well as $1 billion in debt. By 2022, Divvy was on track to book more than $100 million in annual revenue.
But as the company expanded to new cities, customer complaints accumulated. In October 2022, Fast Company reported that Divvy was failing to address residents’ requested repairs, charging higher rents than its landlord peers, and evicting renters in greater numbers than before. Even some customers who had successfully bought their homes from Divvy said they were dissatisfied with the process and its costs.
At the same time, the Federal Reserve was raising interest rates, dealing a blow to Divvy’s business model. Hefets, at one time, had suggested that Divvy’s model would insulate it from such macroeconomic swings. But by late 2023, Divvy had conducted three rounds of layoffs, putting it in league with other struggling proptech startups.
In March 2024, Divvy announced a new product, DivvyUp, a subscription-based homeownership readiness program. CEO Adena Hefets has not posted on LinkedIn since announcing DivvyUp’s launch.
This post originally appeared at fastcompany.com
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