Learningmind
Learningmind
Stealth

Startup Idea- Homeownership made easy!

Hi guys, here is the idea, lets say person A would like to buy a house and he doesn't have down payment and also might be getting loan at a higher interest rate. We will come into picture buy the house for him and rent him for next 3 years, in next 3 years he will build his credit score, pay rent+ some portion of down payment at the end of contract he will get loan from bank and we exit. If A would like to exit from the contract has to pay some penalty and can walk away.

Benefits for the company- get a stable tenant who will keep the house like its their house, setup fee, investable down payment

Benefits for the customer- have 3 years of time to decide if they would like to buy the house, easy to build the corpus, can get loan at cheaper rates

15mo ago
Kotakachori11
Kotakachori11
Freelancer15mo

Bura mat maanana but wont work. You are basically becoming a makaan maalik on investment money or an NBFC for real estate.
-What will be the collateral ? Cibil score criteria ? NBFCs get ugly to get their wasooli. Will you be too ?

  • you can't change the factors that stopped him from getting a loan in the first place. 3 saal mein magic nahi hoga. I can say with guarantee aisa insaan penalty bhi nahi dega aapke contract ki.
  • and if he can change circumstances in 3 years he wouldn't need you or approach you in the first place. -how do you manage property rate fluctuations, delayed projects, litigations, NPAs in banks,
    Please sit with more people in construction before going forward. Don't take my comment negatively.
yesmonk
yesmonk
Stealth15mo

Damn you are good 💯

SmokeBuddy
SmokeBuddy
Stealth15mo

This

UpsetUnicorn
UpsetUnicorn
Stealth15mo

Seems investment heavy. Not rapidly scalable.

Quick question. Why pay only a portion of down payment? Also, if the location isn't good, and the A walks away after paying penalty, you will be stuck with bad property. If it's in a less developed area, you won't be able to find people willing to buy or rent it.

What will you do then?

Learningmind
Learningmind
Stealth15mo

on the location part the inhouse team will do the underwriting of the project and make sure if A walks away either we are able to sell it in open market or transfer it to some of our other customer. regarding investment agree, the idea is to tie up with bank/institutions and create some debt facility

WoozyDearest
WoozyDearest
MongoDB15mo

Check ZeroDown, they are a company in US who do the same(kinda)

Learningmind
Learningmind
Stealth15mo

Yes have looked at their model, thanks

GloomyCent67
GloomyCent67
MakemyTrip15mo

Bhai wahin se aaya hoga copied idea

Capische
Capische
Stealth15mo

Rental yield in India is 2-3% and interest rates are high.

To procure a home, you would be blocking money and earning less interest.
How will you make money?

If you expect to make money on flipping the home, the buyer might not pay extra as you would have done a future contract with him. If not, what if property rates don’t go up.

This works in markets where rental yield > interest rate

detoxymoron
detoxymoron
Stealth15mo

There's a reason that even after so many lending firms starting up, there's no good player taking a crack at home loans. It's a very high risk loan to underwrite and requires huge capital to sustain. No VC wants to touch this right now.

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