Crowdsourcing gives me that opportunity to support my diversity of interests. It keeps me alive with new challenges and interesting projects. Can't get much better than that can you? Oh yeah, and what's my risk? Time. I personally call it play time.John Lynn, Feb 2007
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Housing Funder
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Not freeish. Not freesque. It's free!
The Elevator Pitch
For people interested in free rent who agree to make home improvements during their lease the Housing Funder is a website that gets you free rent and even profits. Unlike tiny apartments, trashed houses, or 'the projects' our product offers FREE rent and in desireable neighborhoods.
The Idea
This idea combines 2 purposes 1) it lets people live in a house for free (these people are called "prospectors"
and 2) it lets people invest in real estate in very small amounts so their real-estate holding can be diversified (called "investors". Prospectors can also be investors if they want to also earn profit. First, a prospector goes out to find a house for sale that he wants to move in to. Then the prospector will post a profile of the house on the house4free website that includes the standard house information you can see on a realtor's website (called MLS data) as well as additional info such as photos that may be of more interest to investors. If he wants to he can also create what I call an "improvement plan" which is an agreement to provide certain repairs to the house to improve its resale value. The whole house listing on houses4free is called a proposal. Investors then bid an amount they want to on each listing, agreeing to contribute that amount to the purchase.
I thought of this idea when I was...
Each proposal also includes a timeline for improvements as well as a move-out date when the prospector must move out so the home can be resold. Investors then collect the profit in proportion to their initial investment. Prospectors can also profit based on thier completed home improvements.
Since this idea borrows somewhat on the prosper.com p2p loan idea, it borrows some concepts and terminology from there as well. For instance most investors will like to do research of their own (called vetting) before investing in both the prospector and the house. Risks include prospector risk which means you need to research how reliable each prospector is, includes appreciation risk which means you need to research how likely the property is to appreciate in the absence of home improvements, and also includes home improvement risks such as poorly done home improvements. But then again these risks are mitigated through proper vetting and good diversification.
Comments Posted
Anyone have any criticisms or suggestions?
It's a cool idea, but I definitely wouldn't invest at a site called house4free. I think the biggest challenge would be finding investors who trust residents enough. I guess prosper.com overcame that problem, but I think it would be even harder when you're relying on the resident to be good at home improvements instead of just being honest and paying the agreed-upon interest rate. Doing home improvements is a skill, and houses don't appreciate based on the number of home improvements done, but on the overall quality. Again, I like the idea, but it's something you should think about if you want the idea to take off.
Hi, thanks for the feedback. One advantage of this system over prosper is that it is like a secured loan. Lenders take on much less risk this way. Also, many homes don't need hardly any improvements at all (maybe just some cleaning up) in order to turn a profit. It will be up to the prospectors to find these types of homes to generate the most interest. And it will be up to the investors to decide how much trust to place in the prospector.
Also, the site would definitely need a better name.
I think, idea is bright and I would not mind to work for this idea. My suggestion so far is to add average price growth in year time, also add valuation from professional estate agent in this area which prospector should pay for.
There are some other ideas, so contact me and I really would like to work on this idea.
Regards,
marko
Great idea, hard to implement, but would be sweet if you could pull it off.
Quality control of the home improvement and repairs is going to be a problem. I wouldn't trust anyone who is not a professional with making home improvement repairs. It could even end up costing the investors even more because of shody work that has to be fixed and redone by actual professionals. People who are not trained in carpentry, construction, flooring, painting, etc. would not be able to do such repairs correctly.
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