JULY 18 2022

Published in The Australian Financial Review

Fintech lender Futurerent, which offers property owners up to $100,000 of their rent in advance, has banked $9 million in its latest funding round after growing its loan book 10 times in the past financial year.

OIF Ventures doubled down after backing the fintech in its seed round. New investors include asset management firm BridgeLane Group, real estate and hospitality investor Mulpha International, investment platform and investor iPartners, family office investment house MFO Investments and real estate-focused fund Second Century Ventures.

The company – which was founded in 2019 by former Deutsche Bank Australia vice president Godfrey Dinh – gives property investors their rent in advance, in exchange for a fee of 6 per cent of the annual amount. The sales pitch to customers is that this lets them do renovations or invest in other assets, rather than waiting for future rental income.

Mr Dinh said it only took a month to close its latest raise, despite the challenging broader market conditions for start-up funding.

“We’re a bit different to a lot of other fintechs in the market. We’ve had no losses and zero defaults, and we’re helping a prime segment of the market with access to capital, so they can grow their wealth,” he said.

“The business has a large total addressable market, and we’ve proven there’s significant demand from property investors who want to access their rental income.”

Through his platform, Mr Dinh said property investors had applied for more than $2 million in advanced rent each month.

Mr Dinh, who would not reveal the size of Futurerent’s loan book, said it had a high rate of approval.

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Helping grow portfolios

“We deliver a simpler experience for property investors, and it’s not tied to their loan to value ratio,” he said.

Most of Futurerent’s clients choose to access a full year’s worth of rental income in advance, and then pay it back over three years, paying the 6 per cent each year.

Most of its customers only own one investment property, and their biggest challenge, Mr Dinh said, was accessing capital to keep growing their portfolios.

“We’ve asked investors what they would rather: $500 a week, or $52,000 in advance? For most property investors, getting up to two years’ rent in advance is a no-brainer,” he said.

Since the market peaked, housing values have dropped 3.3 per cent in Sydney and are down 2 per cent in Melbourne, according to CoreLogic.

But despite the pressure on home owners, Mr Dinh said he did not expect the downturn to affect real estate investors.

“Investors have been more insulated from the interest rate increases than owner occupiers because their costs have been offset by increasing rents,” he said.

“I expect there’s still going to be a lot of demand from investors, especially when they look to certain markets with great rental growth, infrastructure spending and the opportunity to positively gear property in an inflationary environment.”

Rental prices have surged 10 per cent nationwide in the 12 months to June.

OIF partner Jerry Stesel said the business had the potential to reimagine how property investors create wealth.

“Futurerent has identified that simple and affordable access to capital is the biggest barrier preventing property investors from creating wealth, and they have developed a groundbreaking solution,” he said.

“By giving property investors the option to use a streamlined digital process to unlock their rent, Futurerent has created a new financing category.”