Wednesday, August 15, 2007
Thanks to Springwise for bringing this to my attention: Home Equity Share. An interesting twist on P2P lending, illustrating yet again how stale the mainstream financial industry has become, and how a little creative thinking can go a long way in that space. Here's how it works: It matches investors, who want to get into the real estate market, but don't want monthly payments or tenants, with buyers who have cash flow to make mortgage payments, but don't have a downpayment. The buyer can acquire the investor's share at a later date, or they can agree to sell the property and share the appreciation. Simple, really. Not that it doesn't have it's challenges (the mid-2007 subprime mortgage meltdown), but it has the advantage that this sort of arrangement is really quite common. Parents helping their kids buy their first house, for example. If you don't have parents who can help you financially in this way, Home Equity Share will find you a "surrogate". So far, the company doesn't seem to be leveraging existing social networking applications to connect people together who are likely to have a higher degree of trust due to smaller "degrees of separation", but that's an obvious extension.