Ownify, a first-of-its-kind fractional homeownership startup based in Raleigh, North Carolina, has raised $7 million in seed funding led by Lobby Capital with participation from Socially Financed and Gaingels. The capital will help the company scale its unique model that enables first-time buyers to enter the housing market with as little as 2% down.
First-time homebuyers are facing immense hurdles. Rising prices, high mortgage rates, student debt, and down payment requirements have made achieving the American dream of homeownership increasingly difficult.
How Does Ownify Work?
According to data from the National Association of Realtors (NAR), only 26% of home buyers were first-time purchasers in 2021. This is an 8% drop compared to the previous year and a significant slump compared to the historical 50% peak seen in 2010. The typical first-time buyer is now age of 36, the highest age on record.
Ownify tackles this problem by offering fractional homeownership. With a 2% down payment, first-time buyers become immediate minority owners of the property. They build equity from the start while paying fixed monthly costs for five years that are often lower than rent.
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This is how the hybrid model works for proprietors. They pay a fixed fee to Ownify that includes the cost of renting the property from the company. They typically pay a substantially lower cost than if they would rent the same property via traditional channels.
Meanwhile, a portion of the fixed fee they pay every month progressively builds up their equity ownership. The company covers all repairs, insurance, and property taxes during those first five years.
Ownify’s calculator shows that a home valued at $400,000 would require a 2% down payment of $8,000 and would generate a monthly fixed fee of $3,250. Of that total, $541 will go toward the equity buildup and the remaining $2,709 will cover all occupancy costs.
Ownify’s Founders Understand the Problem as They Were Part of It For Years
“When I bought my first home, I had to borrow money from my parents for the down payment. They were incredibly helpful and I very much appreciated the help. But I always wondered why there wasn’t a better solution for first-time homebuyers”, was the thought that led Frank Rohde and his two co-founders to come up with the idea of Ownify.
After customers apply and get pre-qualified, an Ownify real estate agent helps them find a home. Ownify then makes an all-cash offer, handles inspections, and completes the purchase.
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Customers move in and build equity for five years through affordable fixed payments that cover expenses. After five years, they can buy out the remaining equity, renew the program or sell the home.
“Saving for a down payment is nearly impossible for most people, especially with student debt and high rents” the company’s website reads. “Fractional ownership gives people a path to build intergenerational wealth starting with their first home.”
Research from the National Realtors Association also indicates that the profile of first-time buyers has kept changing. They now represent a record low of total home purchases, are older than ever at a median age 36, and moved a median distance of 50 miles from their previous homes in search of affordable options.
“It’s not surprising that the share of first-time buyers shrank to the lowest level ever recorded given the housing market’s combination of historically low inventory, persistently high home prices and rapidly escalating interest rates”, commented Jessica Lautz, the VP of demographics and behavioral insights for the Association.
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“Rising home prices, increasing mortgage rates, high down payments and student debt make buying your first home harder than ever”, the co-founders of Ownify asserted. Their experience in the real estate industry showed them the struggles that ordinary people face when trying to buy their first home.
“We saw how hard it was for homebuyers to navigate a system stacked against them. That’s why we started Ownify – reimagining the path to homeownership to make it achievable for you”, the three entrepreneurs highlighted.
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