Portals remain some of the most profitable businesses in real estate, while brokerage company profitability is more business model-dependent.
This article was shared here with permission from Mike DelPrete for Inman Intel, a data and research arm of Inman offering deep insights and market intelligence on the business of residential real estate and proptech. Subscribe today.
Cash flows are in for the first half of 2024, and some companies are losing money, some are making money, and some are making a lot of money.
Why it matters: Operating cash flows are an accurate measure of business model health, and a data-driven analysis reveals insights around various models and market dynamics.
- Operating cash flow is a metric that cuts through the hype to measure the actual profitability of the core operating business model: Does it make money?
Dig deeper: eXp Realty, a real estate brokerage, and Zillow, a tech company and portal, both generated the same amount of cash — a surprising result given the very different business models.
- Rightmove and REA Group are the most profitable real estate portals in the world.
- Real estate is similar around the world, but market dynamics and business models are very different, as highlighted by operating cash flow per capita (per capita means “per person”).
- Australia is the market that CoStar points to when talking about its monetization plans for Homes.com.
- But the markets are very different: Australia doesn’t have MLSs and has vendor-funded advertising.
The bottom line: The market is tough but it doesn’t mean all businesses are struggling, and real estate portals remain some of the most profitable businesses in real estate.
- The U.S. market is huge, but market size does not always correlate to profit potential — it has more to do with local dynamics.
- In the end, there will be winners and losers — companies generating cash and burning cash — which is an accurate reflection of business model efficacy.
Mike DelPrete is a strategic advisor and global expert in real estate tech, including Zavvie, an iBuyer offer aggregator. Connect with him on LinkedIn.