In this topic, I will start talking about startups in the rental property areas. This is the first part.
Divvy
Overview
Divvy Homes is a tech-enabled real estate platform that facilitates rent-to-own home purchases. The idea is like a 1% down payment to buy a home. Divvy will buy the house and then rent it to you. It’s not actually to buy the house but to lock the current price of the house. Every month you pay the rent instead of paying the mortgage. After you build up the savings, you can apply for a mortgage and buy the house from Divvy.
If the appreciation of the housing market is high enough, using a 1% payment to lock the current price might be a strategy. But if the house is bought twice, I assume the consumers have to pay the premium of this service.
For Divvy, they don’t need to have a lot of capital to buy houses. They can sell their houses as debt financing to raise money too.
I like the idea to help new home buyers build up savings.
One example
From NTREIS #20045627, the property was listed price at $295,000. After 18 months, the house price increased by 22%. If we use a 36-month lease for calculation, the house price is increased by 30% in 3 years. If the house price goes too high, it might be a deal after these months of lease. But if the house price is not that high after the lease, the house buyers will just pay the penalty and walk away.
Up&Up
Overview
The model is very similar to Divvy Homes, but it is more flexible.
From initial deposit to every month additional contribution, these money contributes to your Up&Up Wallet.
The Up&Up Wallet is the savings account in their system, and users can use the money as the down payment for the rented house or transfer to another rental place in their network
If you choose to cash out, you will receive 90% of your Wallet total value. If you choose to buy, it will be the fair market value of the house. So it might be better price compared to ‘lock-in’ price during the start of the lease.
Now I only see 11 homes to choose in the website. Other rental marketplaces should have more choices if you only care about rental.