THE BASIS POINT

Future Of Home Ownership: Landlord Helps You Save Up

Below is a Bloomberg clip from Tuesday about whether current figures showing apartment building construction outpacing single family home construction is driving a “rental mentality” in America.

Not quite says Colin Weil, co-founder of Oakland-based real estate private equity firm WayPoint Real Estate Group.

“We believe that the dream of homeownership in America is not dead. In fact if you look at the statistics, 80% of renters today do aspire to homeownership in the future.”

Waypoint buys foreclosed single family homes, renovates them, then rents them out. Renters sign a two-year lease (that can be extended for up to four more years), and if they want to buy a home later, 10% of their rent accrues toward that goal. If not, then 5% of their rent accrues as a cash-back incentive.

Not a bad deal.

In addition to this core business model, Waypoint also helps foreclosed families stay in their homes by leasing back to them. On this topic, WSJ reported Friday that BofA is piloting a similar idea where owners give up their deeds and rent their home back from the bank.

It’s good to see BofA experimenting with this (not new) deed-in-lieu of foreclosure practice, but it isn’t going to provide as much maneuverability for the owner-turned-renter. I think Waypoint’s approach considers long-term consumer objectives more seriously.

A new Federal Housing Finance Agency policy allowing investors to buy foreclosed homes in bulk to resell them as rentals is a boon for companies like Waypoint. But there are many ways investors can execute, both good and bad for the consumer. Waypoint’s approach is among the more creative and consumer-friendly I’ve seen.

Weil acknowledges their newfound ability to acquire foreclosures in bulk as a positive, but thinks what they’re doing isn’t just a short-term crisis response but rather an emerging asset class for institutional investors who get it right.

Interesting stuff. Video and reference links below.


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Further Reference:
Waypoint’s Home Rental Credit Program
FHFA Will Foreclosed Homes To Investors For Rentals: Bloomberg
BofA Tests An Option To Foreclosure: WSJ