WHY WE INVESTED
The prop-tech startup bringing buy-before-you-sell to Latin America
Acasa is changing the real estate landscape for homeowners in Latin America.
For Mauricio and Nicolas Peñaranda, who grew up in Colombia, real estate investment has long been a family passion. The brothers have been involved in it since they were teenagers — their dad was a doctor who took up real estate projects, keeping them busy on the weekends with his side projects. Soon the Peñaranda brothers were working on their own real estate investments. As they got older, friends began soliciting them for real estate advice and around 2013, while both were working at consulting firms, they realized they’d inadvertently developed an expertise in the industry. “We started thinking: ‘How can we take this to the next level?” says Mauricio.
In Bogota, where they grew up, and across Latin America at large, the real estate market has long been a challenging one to navigate. Because of limited banks, few mortgage options and complicated logistics, the process of selling a house can take upwards of ten to 14 months to complete. What’s more, high deposit requirements for mortgages — often as much as 30 to 50% of the total purchase price — make it especially hard for homeowners with assets tied into an existing property to sell and buy a new house.
And yet the demand is undeniable. Across Colombia and Mexico, there are more than a million homeowners wanting to move to a new house — creating a combined market opportunity of more than $12 billion. In Mexico City, the average worker spends 2.5 hours each day commuting, and Bogotá consistently ranks as one of the worst cities in the world for traffic congestion, largely necessitated by people’s inability to move to housing that better meets their needs.
When they first started concepting their real estate business, the Peñaranda brothers got together with their high school friend Eduardo Restrepo to buy undervalued properties and sell them for a premium. But in 2018, when Mauricio transitioned from consulting to working for a startup in the medical cannabis space, the move inspired him to start thinking more like a startup founder.
Finding the buy before you sell model
In 2020, as the real estate market was picking up with incredible speed in the middle of the pandemic, the three co-founders saw an opportunity to take a leap of faith and build something in the prop-tech space. They’d learned about the ibuying model being done at scale in the U.S. by platforms like Opendoor and Zillow, and felt they needed to come up with a more client-friendly approach. In early 2021, Mauricio stumbled across an article about a “buy before you sell” U.S. company called Knock and immediately recognized that the challenges this model was solving for in the U.S. were ten-fold in Latin America. “It clicked for me that this was solving a lot of the pain points we are seeing here in Colombia,” says Mauricio. “I started connecting the dots and said: ‘It’s now or never.’”
By that point, existing prop tech startups had already started moving the needle on digitizing traditional processes like getting a mortgage, and the pandemic only accelerated that progress. “Now you don’t have to go to the bank to sign 15 papers. You can do it online. It was the perfect storm for the market,” says Mauricio. “We were able to find many of those processes already online, which helped us hit the ground running.”
In May 2021, the three co-founders started Acasa. Based in Bogota, the startup offers a “buy before you sell” financing solution for homeowners, which enables them to leverage home equity in one property to get financing on the down-payment of a new home. Acasa helps originate a new mortgage for people looking to buy a home and makes it possible for them to do so before selling the home they own and live in. The co-founders were convinced this model could help people improve their quality of life. “We see the impact of being able to move more freely by leveraging the assets you’ve built throughout your life,” says Mauricio.
Breaking the mold with a new prop-tech model
But getting the business model established meant breaking through the status quo of how things were being done in the real estate space. Before Acasa, you had to first sell your home so that you could pay the down payment on your new house. This process usually took 10 months to a year, which meant that you’d lose out on the houses you initially wanted to buy because you couldn’t move quickly enough. Most people were forced to live with family, friends, or in short-term rentals before they could make their move. Others might buy their second house first before selling their old one and drain their cash flow. “It’s a painful cycle; we know you have the money, but it’s trapped in your house,” says Mauricio.
The contract Acasa developed for homeowners had to encompass the many moving parts of what they were offering: a loan, help getting a mortgage, and a guarantee that a homeowner’s current property would be sold within six months. The global law firm they hired to execute the contract at first told them it couldn’t be done because this wasn’t the typical way real estate transactions were handled. “Exactly,” they responded. “We want to do something that is atypical.” After a lengthy back-and-forth with the law firm, they figured out how to make the contract possible and again faced a similar challenge with banks they approached for underwriting. “This was about changing the way the processes and stakeholders move around,” says Mauricio.
Acasa makes it possible for a customer to close on their new house within five days to two months, without having to first sell their existing home. “We give you the money so you close on your new house and don’t lose it. Then we get you the new mortgage. Now we have your old property, which we can show 24/7 and we give you a guarantee that if we haven’t sold it in six months, we will buy it,” says Mauricio.
To prove to stakeholders that this model worked operationally, financially, and legally, they set out to do a pilot of five transactions in 2021. Finding their first clients was easy — everyone they spoke with knew someone facing this challenge. Their first client was a competitor from another prop-tech startup who was three months away from having twins and in need of a house. Another early customer was the woman working at the bank who was helping them with mortgage paperwork. Reception to the initial pilot was so positive that Acasa ended 2021 with 12 transactions.
It was important for the founders to make the user experience as easy as possible. Users on the website answer five to six prequalifying questions about their home, a risk model on their credit score is run and the property gets priced online — information that the client receives within 24 hours of submitting their application. Then a physical visit of the property is done and for those clients who already have a property they want to buy, they can close on it within two to three days or for those still looking, they get guidance for where to look with Acasa’s help.
Acasa offers customers fair market value for their house, but if it’s sold at a premium, the upside is split with the owner 50–50. On average, Acasa has been selling houses within 90 days. “People are giving us their largest asset and probably the biggest purchase of their lives,” says Mauricio. “Building trust is really important and we’re going to do what we can to get top-dollar for your house.”
In the year since it launched, Acasa’s team has grown to 44 people in Colombia and five in Mexico. It has become the first Colombian prop-tech chosen to participate in Y Combinator and at the start of 2022, began its expansion into Mexico, where the market, which is five times larger than Colombia’s, faces similar homeownership pain points. “We have moved extremely fast over the last 10 months,” says Mauricio. But that growth sees no signs of slowing down. “We’ve realized there are many more pain points for consumers during the process and we want to add more features to be an end-to-end fintech enabler.”
Quona Capital led Acasa’s $38 million seed and debt round in March 2022.