Downpayments, a real estate fintech startup, is making waves with its innovative approach to helping investors secure new properties with interest-free down payments. Emerging from stealth, the Miami-based company, which originated from Australian firm Futurerent, aims to provide investors with a seamless way to utilize their existing equity for new purchases without the need to refinance their properties.
Key Takeaway
Downpayments is revolutionizing the real estate investment landscape by offering interest-free financing options, providing investors with a viable alternative to traditional down payment methods.
Interest-Free Down Payments
Downpayments offers an interest-free down payment of 10% of the property’s purchase price, with a cap at $200,000. Additionally, investors can access funding for amounts greater than 10% at competitive low rates. The company also provides a full 20% down payment option at 7% per annum, allowing investors up to four years to pay off their debts without penalty for early repayment.
Revolutionizing Property Investment
Traditionally, property investors have relied on cash-out refinances to access their next down payment, which can be an inefficient and costly process. With mortgage rates soaring, the environment for cash-out refinancing has become increasingly challenging. Downpayments seeks to address this issue by offering a more efficient and cost-effective alternative.
Business Model and Funding
Downpayments generates revenue by packaging in-house buyer’s agency brokerage services, which are paid for by sellers, and earns commission from the associated buyer’s agency. The company has secured $31.8 million in initial debt funding from Partners for Growth and $1 million in equity financing from Second Century Ventures, backed by the National Association of Realtors (NAR).
Future Prospects
With its new capital, Downpayments aims to facilitate investment property transactions and expand its services in the U.S. market. The company’s unique model has garnered attention and support, with Dave Garland, managing director of Second Century Ventures, expressing confidence in Downpayments’ potential to address the challenges posed by soaring housing costs.
