![]() They pay above-market rent, with the premium going toward maintenance costs and an eventual down payment. Hefets, who is also Divvy’s chief executive, said the company is essentially a “savings mechanism” for its clients. ![]() “Right now, we are doing more volume than we’ve ever done. Hefets, 33, who expected housing prices to drop and mass foreclosures that haven’t materialized. “I thought it would be the end of the world,” said Ms. Ford said, Divvy has “avoided the worst abuses” of an industry that has grown in popularity since the 2008 financial crisis.Īnd the economic destruction of the pandemic is driving demand up, she said. The company hopes to convert about half its renters into homeowners by the time its first round of leases expires.įrank Ford, a senior policy adviser with the Western Reserve Land Conservancy who has focused on housing issues in the Cleveland area, said that would be a considerable accomplishment, since Divvy’s clients often lack good credit histories. With the backing of investors like the Silicon Valley venture capital firms Andreessen Horowitz and Caffeinated Capital, as well as a Singaporean sovereign wealth fund, Divvy has grown rapidly, now renting more than 1,500 homes in nine markets, including Atlanta, Cleveland, Cincinnati, Memphis and Phoenix. Since it was founded in 2017, Divvy has earned acclaim as a member of a vanguard of companies aimed at people who have been cut out of traditional lending. In walking away from the home, he added, “we don’t get anything to show for that,” he said. “We are going to pay about $55,000 in rent over three years,” Mr. “We went in with the expectation that we would not be leasing from them for the full three years,” he said. Heavy spending in recent years meant they needed more time to assemble a down payment, and by buying early in their lease they netted a $10,000 discount. He and his wife, Pam, closed on their home 15 months ahead of schedule, for $172,000. Alexander, a teacher in Atlanta, couldn’t be happier. The pains and the progress Divvy has made are typified by the experiences of two educators in two cities. And the company has been involved in several dozen eviction cases, although many were eventually resolved or stayed because of eviction moratoriums put in place as a result of the coronavirus pandemic. In one area, Divvy is as likely to have sold to an outside buyer as to the tenant who picked out the home. Some clients complain of high costs and maintenance problems. Nash, have closed on their homes ahead of schedule and see Divvy as making good on its promise of offering a new path to homeownership.īut Divvy is also showing a few of the industry’s familiar warts. Its first round of three-year leases will soon expire, and those clients must make buy or back-out decisions. “We did some research on it because we were skeptical and worried we might get scammed,” said Nash Alexander, who closed on his home earlier this year. And would-be homeowners are offered services to help them get the mortgage they’ll need, while Divvy holds on to the extra money they put aside each month for a down payment.Īlready, some once-wary clients are convinced. The sale price is locked in at the start of the lease, and they can get a discount for buying early. ![]() Instead of offering clients a meager selection of rundown homes to pick from, Divvy allows them to select a property on the open market. Financially vulnerable people seeking a piece of the American dream often end up swindled for money and property improvements, then booted on to the street.ĭivvy Homes, founded three years ago and backed by highflying Silicon Valley investors, has said it aims to change all that. With high eviction rates, substandard properties and shady legal practices, rent-to-own home businesses are one of the darkest corners of the real-estate world.
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