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Dallas-based proptech startup, Backflip, has secured significant funding to expand its residential fix-and-flip loan financing business. The company raised $184 million, with a $100 million warehouse line extended by Performance Trust Capital Partners being the largest contributor. Additionally, Backflip partnered with education lender ECMC on a $20 million joint venture and established a $10 million private credit fund.

    Setpoint, an Austin-based startup that provides warehouse lending to customers including iBuyers, provided Backflip with a $54 million credit facility. This deal comes after Setpoint itself raised $31 million from investors in August for its software platform.

    Backflip's niche is residential transition loans, which are short-term bridge or construction loans typically maturing between 12 and 36 months. The demand for these loans has increased due to the tight housing supply nationwide, leading more homebuyers to renovate existing homes rather than buying new ones.

    The market for residential transition loans (RTLs) is becoming increasingly institutional, with $4 billion in RTLs securitized in the first half of the year, according to Backflip. Morningstar Credit began rating these securitizations this year, citing a trend toward standardization that could lead to mainstream acceptance and further growth.

    "This trend toward standardization is a key turning point for a growing asset class," said Corina Gonzalez, a ratings executive with Morningstar. The agency expects the market to mature similarly to single-family rentals in Texas. Recent securitizations include Genesis Finance's $500 million deal in April and Toorak Capital Partners' second RTL securitization in September, covering loans for about 660 homes worth $237.5 million.