Show HN: We're building homeownership where banks don't go

[sachinprism]

Hi, I’m John. My co-founder Jada and I are helping people in the Midwest buy houses worth $80k or less through a shared ownership structure that enables residents to accrue protected equity in their homes with each monthly payment - https://www.hurryhome.io/impact-investing-real-estate

Nearly 1 in 5 houses across the country are worth $80k or less. In many Tier 2 and Tier 3 cities, this stock makes up 10-30% of the available housing (in South Bend, IN where we live, the median house value is $78k). But these houses are still inaccessible for a lot of working families who want to be home owners - instead, they typically end up renting the same housing and miss out on the primary way Americans build wealth.

what’s stopping people from buying these houses?

Banks aren’t interested in making mortgages below $80k due to their profit structure. When a bank makes a mortgage, the majority of its revenue comes from the fees it charges to originate, typically a percentage of the total loan value. But since many mortgages are sold to the secondary market (Fannie and Freddie), it costs the bank the same amount to make a $50k loan as it does a $500k loan. If they are servicing the loan for Fannie or Freddie they’ll earn a fraction of the interest, but how much money that equates to still depends on the size of the loan while again having fixed costs. So if it costs a bank at least $800 to make a mortgage, they’ll lose money on every loan they make worth less than $80k - https://www.wsj.com/articles/small-mortgages-are-getting-harder-to-come-by-11557394201

This is the problem we're solving with Hurry Home.

We work with individuals looking to make investments for passive cash flow while still making an impact on people’s lives. Investors can buy homes for as little as $25k and earn a predictable return.

Excited to share this and would love to know your thoughts and suggestions

[AnimalMuppet]

Interesting idea. You're attacking a genuine problem, and kudos for doing so.

But just this week, Thomas Cook went bankrupt, and left a bunch of people stranded. My question is, if I send you $25k, and you go bankrupt, where am I? Where is the home buyer?

You need a clean exit mechanism that doesn't leave everybody trapped in some nightmare if you go under.

[sachinprism → AnimalMuppet]

Thank you! And if you work with us as an investor, you retain ownership of the title of the house, and your owning entity is on contracts with the buyer (recorded with the relevant county). If Hurry Home was to no longer exist, your ownership in the asset would remain, as would your relationship with the buyer. As part of our exit mechanism in this situation, we would set you up with a property management company who would earn the fee we typically would, and they would handle collection

[gus_massa]

> and earn a predictable return

Assuming that the clients don't default the mortgages. How do you calculate the risk profile?

[sachinprism → gus_massa]

We look at: - income over the last two years - rental & utility bill history over the last two years - evictions, foreclosures, bankruptcies, judgments, liens in the last 5 years - DTI (debt to income; their monthly debt obligations divided by their gross income) - We don't have income mins or maxs, but we can only have their housing payment to be 30% of their income, so there are incomes that would be too low for us considering that