Just like the term 'commercial real estate', iBuying is broad in its definition. Using technology to buy residential single-family houses may be struggling as a model but there's no reason the tech can't work in other niches and with other business models.
Keyway's products let owners either sell and leave their property, sell and stay, rent-to-own or expand their footprint and are specifically aimed at medical professionals, veterinarians and multifamily owners.
We spoke to the company's co-founder Matias Recchia (pictured below) about Keyway's technology, business model and whether the travails of the residential iBuyers mean anything for his business...
What is the problem that Keyway solves?
Keyway offers institutional investors and family offices a simplified and streamlined way to invest in the highly profitable, yet often overlooked, small-scale commercial real estate asset class.
Keyway aggregates and centralizes highly-fragmented market and property data into a single solution capable of handling an entire real estate transaction. Our technology platform – which is powered by AI, machine learning and data science – connects sourcing and deal flow, market and property research, underwriting, transacting and asset management in one platform.
This provides us and our investors with a significant competitive advantage when navigating complex transactions as we can accelerate the investment process and close deals quickly.
How does Keyway generate revenue?
Keyway generates revenue through commercial real estate investment returns, including both fee income and asset appreciation.
Our current commercial real estate strategies focus on Multifamily and Net Lease investments. For Multifamily, we are focused primarily on small-scale, Class B properties in the Sun Belt due to its population and job growth. As values-based investors, we believe in making housing more affordable and accessible, while also improving the health, safety and wellness of our residents through ESG integration and other resident-first upgrades.
In addition to Multifamily investing, we partner with small businesses, particularly in the medical sector, to optimize the value of their underlying real estate portfolio. Our goal is to scale up the acquisition of net lease properties by becoming long-term capital providers and expansion partners to business owners, operators and investors.
What can you tell us about your technology?
Keyway leverages AI, machine learning and data science to make better real estate investment decisions and achieve superior outcomes. We use technology at every stage of the real estate lifecycle – sourcing, underwriting, transacting, managing and selling – to achieve smoother, faster and lower-cost deals.
Our proprietary technology aggregates highly-fragmented data into a centralized platform, providing increased transparency in a traditionally non-transparent asset class.
In addition, we are integrating generative AI and machine learning into our platform to create a real estate investment co-pilot named Mickey, which provides speed, efficiency and flexibility while also accelerating research and analysis, deal document automation and workflow and predictive analytics.
What is Keyway’s biggest challenge?
Building disruptive technology in an old school industry set in its ways takes time to develop, integrate and scale. We continue to educate investors about how our technology can streamline the entire investment process and how that leads to better outcomes for investors.
Can you share some numbers? How much real estate have you acquired?
Since we launched in 2020, we have invested more than $100 million in commercial real estate.
Obviously what you are doing isn’t exactly the same as iBuying single-family homes, but you are using technology to buy property. Do the recent setbacks faced by residential iBuyers concern you at all?
We operate in a different space than traditional iBuyers focused on single-family rentals, which is mostly a commodity asset with highly-transparent data.
In contrast, small-scale Multifamily is characterized by highly-fragmented, difficult-to-acquire information with a predominantly mom-and-pop owner base. Unlike single-family rentals, small-scale Multifamily properties are disparate assets. So, our proprietary technology is an essential tool to aggregate this fragmented data and disparate assets into a centralized platform.
Without technology, scaling small-scale commercial real estate properties into a robust portfolio, particularly in Multifamily, would be a daunting task.
The setbacks that residential iBuyers face now are an opportunity for Keyway to excel. Why? Institutional investors who have saturated the single-family rental market should begin to redirect their focus toward small-scale commercial real estate, particularly in Multifamily, which we believe will create a compelling investment opportunity over the next five to 10 years.
What is one thing our readers might not know about but would probably find interesting about the commercial real estate industry in the U.S.?
The commercial real estate sector is not all doom and gloom. Don’t think that what’s happening in the office space in San Francisco or New York applies universally. There are multiple asset classes within the broad landscape of “commercial real estate,” and geographic differences matter as well.
As an example, let’s take multifamily demand in Dallas, Texas. For the past two years, multifamily sales in Dallas have led the nation with $44 billion in total sales, pointing to the burgeoning demand for multifamily housing to accommodate the region's strong job growth. Dallas isn’t the only city seeing multifamily growth, but it’s a great example of one of the bright spots in the CRE market and one that is core to our portfolio thesis.
Your last investment round (Series A) was nearly a year ago. Are you looking to raise a new round soon?
Keyway is well-capitalized, and investor demand remains strong. While we’re always looking for new ways to grow, we have no current plans to raise another round of funding.
What is Keyway currently working on from an investment perspective?
We are actively investing in commercial real estate, particularly in Multifamily in the Sun Belt as well as acquiring Net Lease assets. We are also proud to serve as a long-term capital provider and expansion partner to owners, operators and financial sponsors.
We recently announced a sale-leaseback transaction and multifamily investment, with additional investments closing in the near-term.
What is the most common request from investors?
We receive many requests to invest in new verticals or geographies. We also hear regularly from investors who are excited to use our technology and experience AI and machine learning in commercial real estate.
How does Keyway stay ahead of the curve?
Our team is hard at work scaling our technology platform and integrating ChatGPT and machine learning. We are excited about building our investment co-pilot, Mickey, that is transformational in commercial real estate.
We are constantly staying ahead of the curve through innate focus on the latest developments in AI, machine learning and data science. As investors, we leverage data to make better investment decisions. That requires not only continual data analysis, but also a deep understanding of macroeconomic and microeconomic trends, which help to inform our views on real estate investing across sectors and geographies.