If you were starting a plain vanilla SFH REIT, you'd probably do it the way that most started, which is identifying a large portfolio of distressed properties owned by e.g. a bank and then buying the portfolio so that you could immediately get to operational scale.
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So if between 2020 and 2025 when the purchase option comes due a house declines from $1 million to $900k, the user might say "Well, I have $150k in *this house* already and *already live here*, so in lieu of *moving* to an *entirely new* cheaper house, I will buy this one."
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(Not obvious to me whether the user gets pricing at the new mark or not; could see arguments for either or both.)
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"What if users default on the loans?" An interesting fact you'll learn if you enjoy reading bank annual reports: First Republic, which is effectively a community bank in Silicon Valley/etc, suffered a total of zero mortgages defaulting during the dot com bust. *Zero.*
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(They're not loans, etc etc. Just trying to show that the most obvious objection to this is a lot less powerful than people probably think it is, as is frequently true of most obvious objections.)
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Another interesting wrinkle in the model, from the user perspective: when you pick out a house, you're making a cash offer (and therefore can close *extremely* quickly) rather than going through a mortgage approval dance. Your mortgage approval happens ~5 years later.
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This model, OpenDoor, and the like arming lots of buyers with cash offers will have interesting downstream impacts on many, many assumptions about residential real estate purchase, because "financing takes about a month to arrange" is all but a law of nature there.
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