The archive · Money & Fintech · Strategic decision · 2016–2025
Divvy Homes' rent-to-own bet ends in a $1B sale that paid founders and VCs nothing
Rent-to-own startup Divvy bought homes for renters saving toward ownership; 2022 rate hikes broke the model and Brookfield took its assets for $1B.
Divvy Homes
What the business is
A rent-to-own platform that bought the house a renter chose, rented it back, and banked part of each payment toward a future down payment.
Starting capital：$30M Series A led by a16z in 2018
How it started
Founded in San Francisco in 2016 by Adena Hefets and co-founders, Divvy bought homes for renters and gave them three years to build a down payment through rent. a16z led a $30M Series A in 2018, and the pitch — an alternate path to homeownership — attracted HousingWire and Forbes recognition.
What happened
The boom peaked in 2021: a $110M Series C led by Tiger Global, then a $200M Series D at a $2B valuation, with total funding over $700M including a $735M debt facility in October 2021. PitchBook valued it at $2.3B. When the Fed raised rates from 2022, buying homes on debt stopped working; Divvy cut staff three times in a year. A Fast Company investigation in October 2022 reported above-market rents, unaddressed repairs and frequent evictions, and the company still launched a readiness program in March 2024.
How it ended up
In January 2025, Divvy agreed to sell substantially all of its assets — the home portfolio and brand — to Brookfield Properties' Maymont Homes for about $1B. After repaying debt, transaction costs and preferred liquidation preferences, common shareholders and founders' preferred holders were expected to receive nothing, and Divvy ceased to exist as an independent company.
Background
Divvy Homes, founded in San Francisco in 2016, ran a rent-to-own model: it bought the house a renter chose, rented it back, and credited part of each payment toward a future down payment, giving the renter three years to buy. The pitch was aimed at people who could not get mortgages, and venture backers led by a16z and Tiger Global poured in more than $700M of debt and equity, with a peak valuation of $2.3B in 2021.
The model depended on cheap financing: Divvy itself held the homes, and its October 2021 $735M debt facility priced the whole business around low interest rates. When the Federal Reserve began hiking rates in 2022, buying homes on debt stopped being profitable and renters' path to mortgages narrowed. Divvy ran three rounds of layoffs within a year and faced public complaints — reported by Fast Company — of above-market rents, poor maintenance and frequent evictions.
In January 2025 Divvy sold substantially all assets to Brookfield Properties' Maymont Homes for about $1B, roughly half its peak valuation. According to a letter from CEO and co-founder Adena Hefets, after repaying debt, transaction costs and preferred liquidation preferences, common shareholders and holders of founders' preferred stock were expected to receive no consideration. Hefets said she was 'not proud of the financial outcome.'
What has to be true
- The core bet assumed cheap debt would keep funding a home inventory that only pays off years later; rate hikes broke that assumption.
- Divvy bought the homes itself, so rising rates hit both its cost of capital and its customers' ability to qualify for mortgages at once.
- The 2021 valuation run-up, including a $735M debt raise months before the Fed's turn, left no cushion when the cycle reversed.
- An asset-heavy model also accumulated operational risk — maintenance and eviction complaints — that multiplied the pressure to sell.
What can be applied
A business model that depends on cheap borrowed money to buy inventory is an interest-rate bet in disguise; when rates rose, both the assets and the funding math turned negative at once.
Aftermath
As of late January 2025, Brookfield's Maymont Homes was absorbing Divvy's portfolio of roughly 7,000 homes and its brand, while common shareholders and founders' preferred holders were expected to get nothing after debt and preferences were paid. CEO Adena Hefets called the sale 'not the ending I had hoped for' but defended the mission, and the company's software and homes passed to the new owner.
Sources
- Once high-flying proptech startups Divvy Homes and EasyKnock are the latest to struggle
- Some shareholders of rent-to-own startup Divvy Homes may not see a dime from $1B sale
- Brookfield Properties' rental division to acquire Divvy Homes in 'fire sale'
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