Downpayments, a new & innovative real estate fintech startup, has unveiled itself from the shadows, championing the cause of real estate investors by providing interest-free financing for down payments on new properties.
Hailing from the vibrant city of Miami, this startup, which sprouted from the roots of the Australian entity Futurerent back in October, asserts its capability to empower investors in utilizing their existing equity to facilitate new property acquisitions, all without the hassle of property refinancing.
In a groundbreaking move, Downpayments boasts the provision of an interest-free down payment equivalent to 10% of the property’s purchase price, capped at $200,000. Clients, depending on their unique circumstances, can access funding exceeding the 10% threshold at “competitive” low rates. The company’s website reveals an enticing offer of a full 20% down payment at a fixed annual rate of 7%, with a generous four-year window for investors to settle their debts, sans penalties for early repayment.
CEO and founder Godfrey Dinh, associated with both Futurerent and Downpayments, remarked in an email interview, “Until now, most property investors have turned to ‘cash-out refinances’ to access their next down payment.” Dinh emphasizes the inefficiency of cash-out refinances due to skyrocketing mortgage rates, making it challenging for investors to refinance without compromising their existing low fixed rates. He further notes that home equity lines of credit (HELOCs) are not an option for investment properties.
Presently, Downpayments exclusively aids buyers in the acquisition of residential properties within Florida, specifically purchased for investment purposes.
The company’s revenue model, as revealed by Dinh to TechCrunch, revolves around offering interest-free down payment funding by incorporating in-house buyer’s agency brokerage services funded by sellers. Additionally, Downpayments earns commissions from the associated buyer’s agency, akin to the ‘Buy Now, Pay Later’ (BNPL) industry, where merchants contribute to covering the buyer’s finance costs. In this case, Downpayments enhances the value proposition by providing additional services to the buyer.
Securing an impressive $31.8 million in initial debt funding from Partners for Growth and an additional $1 million in equity financing from Second Century Ventures, supported by the National Association of Realtors (NAR), Downpayments is gearing up to facilitate investment property transactions with its newfound capital.
Dave Garland, managing director of Second Century Ventures, expresses his support for Downpayments, citing Futurerent’s success in Australia as a key factor. He noted, “In Australia, they’ve empowered countless buyers to overcome down payment hurdles. Now, they’re tackling the U.S. market where skyrocketing housing costs outpace incomes and savings.” Garland appreciates Downpayments’ unique model, which allows buyers to spread down payments over time, either interest-free or at low rates, thereby extending homeownership opportunities to a broader demographic.
Providing a glimpse into Futurerent’s impressive track record, Dinh discloses that the company, founded in March 2019 with 11 full-time employees, has experienced a threefold increase in revenue year-over-year. Having raised a modest $7.7 million since its inception, Futurerent boasts an annual revenue of over $3.34 million in Australia alone.