I'm reasonably sure that, on paper, the customers of this company are renters and the real estate fund is a fairly conventional landlord. But they just take the traditional bundle of rights that get subdivided by contract and statute and allocate them a bit differently.
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I think the whole scheme sounds terrifying because it's putting a ton of risk on individuals in the sense that your "equity earned" in the home is much much lower than if you actually did a traditional mortgage at 20% down and 4% interest which would put you at 30% of principle.
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Although if you remove the 20% I guess that's only 100k / 800k which is ~12.5%... which would make it better for individuals... hmmm
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There are many players doing this. Look at Unison: they “co-invest” in your home. They match your downpayment roughly and the point is that they get a larger share of the homes appreciation. So they own the profits of 50% out of a 20% investment
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My guess is that buyers that choose that plan want to: reduce downpayment so they dont pay the FHA fee, reduce monthly mortgage to get a bigger house, are not that positive about home appreciation. I would have serious concerns as an investor on this strange asset class
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Is this going to pump the housing prices in the bay area even higher? Seems like it would.
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