Fractional asset ownership has been tested in Eurozone region for at least 1-2 years now but there are lots of financial / bank risk mgmt implications to it. Also, disposal of assets is also another concern as risks is shared between the “would-be” homeowners and “interim” homeowner / in this case, Ribbon. The European startups in this space is containing risks via the creation of a LLC or PLC (in UK-case) for EVERY customer…so essentially, these companies will have 1000+ LLC’s under their corporate structure.
The fresh thought is: you move into a property of your choice, company pays and buys the house upright, you live in there and pay a fair market rent + x% above to compensate for company holding home equity leverage risks and then you slowly chomp away the rent – basically these renters will gain home equity (which traditionally is only available to actual homeowners) as they pay their rent up.
After the “would-be” homeowner or current renter gain enough equity up to 10% of the original price of the house, the relationship flips over, in which the company basically “flips” their portion of the equity ownership to the renters in which the renters will then be fully converted to 100% owner of the property. Though slicing and dicing macro variable risks (30Y and 10Y treasury duration risks particularly) and micro variable risks (local supply of units, job market etc.) between “would-be” homeowner and the company is one crystal ball to figure out.
If this works out, it will have profound implications on our country. Property Rights legal protection is one of many reasons foreign investors deploy investment capital in US residential and CRE, regardless of whatever investment vehicles they use.
Intersection notepad 