Gabriel Braga and André Penha, co-founders of QuintoAndar. Photo: QuintoAndar/COurtesy
Business

QuintoAndar: Meet the Brazilian real estate unicorn

Brazilian home rentals startup Quinto Andar is helping to change the way Brazilians rent property, and it’s proof that investors should keep an eye in Latin America

The story of how Quinto Andar was founded is not much different from other successful startups. It started as a solution to a personal problem. When CEO Gabriel Braga first moved to São Paulo, he experienced first-hand difficulties in renting a property. He felt that online information was not good enough to make an informed decision. Not having a guarantor in the city was another ordeal.

Meanwhile, his CTO, André Penha, experienced problems on the other spectrum of renting. His property in Campinas had been sitting unoccupied for months at the hands of a real estate agency. When Penha took matters to his own hands, it took him no more than two weeks to rent the place. The fact that the pair met at Stanford University in California, the birthplace of groundbreaking technology companies such as Google, Facebook, and Instagram, seems to add that they were headed for success. Quinto Andar is now a Brazilian real estate unicorn that is revolutionizing renting in Brazil

READ ALSO: COVID-19 is speeding up the digitization of Latin America’s real estate market

What is Quinto Andar

Quinto Andar is the largest digital real estate startup in Brazil. The literal translation of Quinto Andar means ‘Fifth Floor’ in Portuguese. They are pioneers in the market for the way they advertise properties and manage payments. Firstly, it is all done digitally. They also aim for transparency, giving a single price for each property, including the condominium fee, property taxes, and the rent itself. And thanks to a partnership with the international insurance company BNP Paribas, Quinto Andar, tenants are also exempt from needing a guarantor, a surety bond, or a security deposit.

Quinto Andar has eliminated much of the unnecessary bureaucracy and the use of notaries during the process by adopting digital signatures. These hold the same legal weight as a paper signature, and are securely bound by a certification company, meaning that the tenant and the property owner can negotiate from two different locations.

The company provides a professional photographer for every property listed on their platform to create images for the ad presented on the app (which has versions for Android and iOS platforms) and Quinto Andar’s website. That’s how potential tenants can then make appointments to visit the desired rentals at a convenient time. Quinto Andar is the one to run a credit analysis on the tenant, and once it’s approved, both parties can easily sign the digital contract.

The success of this business model shows that the creators behind Quinto Andar have a granular understanding of how renting works and, most importantly, how much this modality of living is compatible with contemporary life. They’re also proof that the old-school rental process is still arduous and ineffective, which goes against the high mobility seen in major cities nowadays and the hyper-digital processes we’re all growing accustomed to.

READ ALSO: Brazil’s Creditas acquires Bcredi to boost its real estate vertical

After rounds of triumphs, in late 2019, Quinto Andar announced it would expand its features, allowing buying and selling properties. The feature first rolled out in São Paulo, in early 2020. A few months later, it was extended to Rio de Janeiro. Those are the only two capitals in which they are buying and selling, but they are 12 in total. Not unlike renting, buying and selling also has its challenges, many of which lie in the hands of bureaucracy. It can take up to four months between buying a place and getting the keys to it through the most traditional channels. Quinto Andar, instead, offers a bureaucracy-free, fast-paced negotiation. Technology is used to make sure the process is safe and transparent. The plan is to expand the service for all 30 cities where the company currently operates.

When was Quinto Andar founded

Quinto Andar was founded in 2013 and their mission is to connect property owners to renters, simplifying the process of renting and making it easier for both parties.

It first started its operations in São Paulo and Campinas (a large university city located 57 miles northwest of São Paulo). In 2016 they received their first round of investments, a total of $7 million, from Argentina-based Kaszek Ventures. In that same year, Quinto Andar took part in Google‘s Launchpad Accelerator Program. The next round of investments also happened in 2016: $12,6 million.

Two years later, in November of 2018, came Series C, with a whooping BRL 250 million (roughly $45,5 million) led by New York-based General Atlantic. In November of 2019, they finally reached their unicorn status in their Series D. Lead investor in this round was the Japanese giant Softbank International Group, backed by Dragoneer, as well as General Atlantic and Kaszek Ventures.

What is next for QuintoAndar

2020 started as an expansion year for Quinto Andar. In January, the startup had BRL 28.9 billion (almost $7 billion) in assets under its management. But then came the COVID-19 pandemic. Fortunately, Quinto Andar’s business model was a key ingredient amid chaos; because of it, the default wasn’t as severe as they had anticipated, even though a significant portion of tenants had to renegotiate values (and they were able to do so through the company’s platform).

READ ALSO: Brazilian real state startup EmCasa doubles revenues in 2020 and expects to hit BRL 50 million in 2021

The company is also studying mixed contracts — as in combining renting and buying. Shared ownership is another one of the topics Braga has recently discussed in an interview. It’s when someone buys percentages of a property over time, and pays rent on the portion that has not yet been acquired. Homeownership doesn’t look the same as it did a couple of decades ago and the people over at Quinto Andar certainly know that. 

In an interview for Forbes in 2019, Braga also said that he doesn’t rule out dipping his toes on different countries of Latin America and Europe or even Asia, that struggle with bureaucracy and inefficiency. “We want to expand internationally; it is important to be ambitious and have great plans, while also being aware of the need to take one step at a time.” In 2020, amid the COVID-19 pandemic, José Osse, the startup’s head of Communications, told LABS that the company’s expansion plans, both for other cities in Brazil and Latin America, were stalled. The plans’ resumption depends on the deceleration of the pandemic and clearer scenarios ahead.