Homeowners Who Sell Then Rent

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01
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Part
01

Sell-to-rent

Homeowners usually make use of the sell-to-rent process in order to receive cash from their home’s equity, repay a loan, and to solve pressing monetary challenges. This process serves as an alternative to loans which may require monthly repayments. People who use sell-to-rent may have sorted out their needs, but they can no longer benefit from the appreciation of their sold home. So far, EasyKnock has bought "about 100 homes in five southern states" within the US.

OVERVIEW

  • Currently, the only company that offers "a residential sale leaseback program in the United States" is EasyKnock. Founded in 2016, EasyKnock created the very "first residential sale leaseback program," known as "Sell and Stay" (sell-to-rent).
  • In the past, people who wanted to sell their homes and still stay in them would have to list their homes for sale first. Using platforms such as Rentback and Figure, a homeowner finds a buyer; the owner can then make a deal to either rent it back or continue living in the house for a while before moving out.
  • The EasyKnock program allows US homeowners to sell their homes and cash out the equity funds. While selling these homes, the owners may choose to continue living in them by renting it back based on a lease agreement.
  • Since EasyKnock is a recently-established company, online data on its customer experience is scarce. Currently, the company "does not have any complaints registered at the Consumer Financial Protection Bureau".
  • According to a CNBC report, EasyKnock has bought "about 100 homes in five southern states". Earlier this year, the company announced plans to expand to "approximately 500 housing markets in more than 35 states and 2,000 homes".

CASE STUDIES

Ty & Tammy

  • Ty and Tammy are a case study of homeowners who have used sell-and-stay. This couple made use of this process in order to raise money to build a new home.
  • After their apartment was purchased by EasyKnock, the couple benefited by raising the money needed to build their new home. They were particularly glad that this process allows them the opportunity of staying in their current house until their new home is ready.
  • This couple did not have any negative experience with the process. In appreciation, they recommended the company, saying "people at EasyKnock are honest and easy to work with". They also went further to recommend the service by saying EasyKnock is the solution for anyone who needs the equity out of his/her home but is not ready to move out.

Adam

  • Adam, a father with teenage daughters, also used sell-to-rent. The reason behind his decision to use this process was a poor credit score. He described himself as someone who was "property rich, yet poor due to some bumps and bruises along the way".
  • After using EasyKnock's pioneer sell-to-rent service, he mentioned that he had a 5-star experience during the entire process — "from start to close".
  • Adam also does not have any negative experience with the process. Just like the previous couple, and many other users of the service, Adam was happy to "release the equity" in his home. He mentioned that besides the benefit of "getting a fresh start on life", he did not have to put his "teenage daughters through the stress of moving".

ADDITIONAL FINDINGS

REASONS FOR USING SELL-AND-STAY

  • Users of sell-and-stay usually do so in order to receive cash from their home’s equity without having to move out immediately.
  • A user of sell-to-rent recently mentioned that "the biggest perk to Sell and Stay" is the ability to buy the home back at an agreed price within a few months.
  • Consumers who use sell-to-rent recommend it as a "financial cushion" when a homeowner is "having money issues" such as repaying a loan. The process has earned a reputation for rescuing homeowners from bad financial situations, especially those who are "struggling to make ends meet".
  • Users have described sell-and-stay as a simple, fast, and convenient process that can be completed without having to vacate one's home. Many users have been able to close within 30 days.

BENEFITS OF USING SELL-AND-STAY

  • The sell-to-rent process allows homeowners to "access the cash tied up" in their home without necessarily having to take out a loan or make monthly payments.
  • By using "equity to prepay rent", homeowners may not have to worry about housing expenses for as much as three years.
  • Also, the seller transfers the costs of homeownership such as structural maintenance and property taxes.
  • This process also provides an alternative for homeowners to avoid the expensive closing costs that are associated with selling a house.

DRAWBACKS AND PAINPOINTS

  • A certain user was pleased with the overall experience; however, he gave EasyKnock a 4-star rating because there was "almost no interaction" with the company's staff at the closing day. This made the user feel "less like a customer and more like a case number".
  • Once this process is completed, a seller can no longer benefit from the appreciation of the sold home.
  • Sellers may not receive as much value for their property as they would if they sold their homes to a private buyer.
  • Also, in the event where an investor decides to discontinue renting the house to its previous owner, this results in an inconveniencing situation.
Part
02
of two
Part
02

Sell-to-rent: Competitive Landscape

Easyknock is a real estate company that aids homeowners in achieving financial freedom through innovative home value assessment solutions by helping them sell their property and remain in them as tenants. Their major products are Sell and Stay which offers home sellers a substitute for evaluating their home and MoveAbility which aids home sellers to access their home's value before it reaches the market.

EASYKNOCK

  • Easyknock aids homeowners in achieving financial freedom through innovative home value assessment solutions.
  • They help home sellers get the money and time they require while maintaining a share in their homes.

Products/Services overview

  • Sell and Stay: This product offers a substitute for evaluating home values designated body, HELOCs, and reverse mortgages free from the challenges about qualification.
  • MoveAbility: This product aids home sellers to access their home's value before it gets to the market. It creates an opportunity to raise the money and time needed to fund any next home plans without losing the current home market value.

Competitive advantage

  • The Sell & Stay product is the first of its kind in the United States that allows house owners to sell their home and remain in it as a tenant by looking beyond the credit score and W2 earnings.

Marketing strategy

  • Easy Knock is helping people who are unable to gain traditional refinancing as a result of non-traditional salaried earnings and FICO scores to be able to qualify by providing a new and flexible way in their products. Their target market is majorly single-family home with a minimum of $130,000.

Funding


RENTBACK

Produce/Services overview

  • Acquisitions marketplace: This provides a market place for people who are interested in acquiring a new home with the current gross, net, and internal rate of return rate of the houses.
  • Residential sale-leaseback marketplace: This product provides a marketplace for home buyers to "buy turnkey investment properties with guaranteed return".

Competitive advantage

  • Rentback helps convert part of the client's home value into prepaid rent relieving them of payments for some time at zero cost and credit or income qualification.

Marketing strategy

  • Rentback strategy involves convincing homeowners to sell their property to property investment companies, thereby allowing them to remain in the homes as tenants while they gain a platform service fee from the property investment company.

Funding

HOUSEHEROES

  • HouseHeroes is a leading cash buyer in Florida and a real estate investor. The company makes it easy to sell properties by buying all kinds of properties including empty lands, condos, eviction or problem tenant, and probate or inherited properties.
  • Produce/Services overview

    • HouseHeroes resources: They offer home sellers some useful resources to help with decision-making and fast sales.
    • Calculating offers: This tool helps HouseHeroes to estimate renovation costs and research a property market value.

    Competitive advantage

    • Compared to selling to an agent, with HouseHeroes, home sellers are assured of zero commission fee, zero closing cost, no mortgage financing, no appraisal needed, and reception of cash payment in a matter of days.

    Marketing strategy

    • HouseHeroes deals on virtually all kinds of properties and helps make house sales easy through 3 steps; contact us, get a fair cash offer, and close on your time frame.

    Funding

    Research Strategy:

    To provide a competitive landscape of Easyknock, Rentback, and HouseHeroes, your research team commenced with a thorough search on the listed companies' websites for information regarding the company description, overview of their services and products, competitive advantage, and marketing strategies. Data points on the funding of each company were derived from a trusted third-party website such as Crunch Base.
    Sources
    Sources