Fintech

Downpayments wants to offer real estate investors interest-free financing

Comment

a house made from bills of 100 dollars
Image Credits: Kuzma (opens in a new window) / Getty Images

Downpayments, a real estate fintech startup, is emerging from stealth today with the mission of helping investors purchase new properties with interest-free down payments.

It’s a lofty claim.

The Miami-based startup, which spun out of Australian company Futurerent last October, says it’s able to give investors a way to leverage their existing equity toward making a new purchase without having to refinance their properties.

Specifically, Downpayments says it is able to provide an interest-free down payment of 10% of the purchase price of a property (capped at $200,000). Funding for greater than 10% of the purchase price can be accessed depending on the client’s circumstances, at “competitive” low rates, it further claims. A full 20% down payment is available at 7% per annum, according to the company’s website. Investors have up to four years to pay off their debts, with no penalty for paying early.

“Until now, most property investors have turned to ‘cash-out refinances’ to access their next down payment. Cash-out refinances are an inefficient way to access capital and mortgage rates skyrocketing to nearly 8% has created a difficult environment for investors to cash-out refinance without losing their existing low fixed rate,” said Godfrey Dinh, the CEO and founder of Australia-based Futurerent and Downpayments, in an email interview. “And, home equity lines of credit (HELOCs) are not available on investment properties.”

For now, Downpayments helps buyers with the purchase of any residential property based in Florida that is purchased for investment purposes.

So how does the company make money? Dinh told TechCrunch that Downpayments is able to offer interest-free down payment funding by packaging the in-house buyer’s agency brokerage services paid for by sellers. It also earns commission from the associated buyer’s agency.

“It is not dissimilar to the BNPL industry where the merchant pays to help cover the cost of finance for the buyer, albeit with Downpayments, additional services are provided to the buyer to create more value for our clients,” he said.

Downpayments has secured $31.8 million in initial debt funding from Partners for Growth and $1 million in equity financing from Second Century Ventures, which is backed by the National Association of Realtors (NAR). It plans to use its new capital to power investment property transactions.

Dave Garland, managing director of Second Century Ventures, said he was drawn to back Downpayments in part because of Futurerent’s track record in Australia.

In Australia, they’ve empowered countless buyers to overcome down payment hurdles. Now, they’re tackling the U.S. market where skyrocketing housing costs outpace incomes and savings,” he said. “Their unique model lets buyers spread down payments over time, interest-free or at low rates, opening homeownership doors to a whole new segment.” 

Futurerent, according to Dinh, has 11 full-time employees and has grown revenue 3x year-over-year. Founded in March 2019, it has raised just US$7.7 million and originated over US$3.34 million per year in revenue in Australia alone.

Want more fintech news in your inbox? Sign up for The Interchange here.

More TechCrunch

To give AI-focused women academics and others their well-deserved — and overdue — time in the spotlight, TechCrunch has been publishing a series of interviews focused on remarkable women who’ve contributed to…

Women in AI: Rep. Dar’shun Kendrick wants to pass more AI legislation

We took the pulse of emerging fund managers about what it’s been like for them during these post-ZERP, venture-capital-winter years.

A reckoning is coming for emerging venture funds, and that, VCs say, is a good thing

It’s been a busy weekend for union organizing efforts at U.S. Apple stores, with the union at one store voting to authorize a strike, while workers at another store voted…

Workers at a Maryland Apple store authorize strike

Alora Baby is not just aiming to manufacture baby cribs in an environmentally friendly way but is attempting to overhaul the whole lifecycle of a product

Alora Baby aims to push baby gear away from the ‘landfill economy’

Bumble founder and executive chair Whitney Wolfe Herd raised eyebrows this week with her comments about how AI might change the dating experience. During an onstage interview, Bloomberg’s Emily Chang…

Go on, let bots date other bots

Welcome to Week in Review: TechCrunch’s newsletter recapping the week’s biggest news. This week Apple unveiled new iPad models at its Let Loose event, including a new 13-inch display for…

Why Apple’s ‘Crush’ ad is so misguided

The U.K. Safety Institute, the U.K.’s recently established AI safety body, has released a toolset designed to “strengthen AI safety” by making it easier for industry, research organizations and academia…

U.K. agency releases tools to test AI model safety

AI startup Runway’s second annual AI Film Festival showcased movies that incorporated AI tech in some fashion, from backgrounds to animations.

At the AI Film Festival, humanity triumphed over tech

Rachel Coldicutt is the founder of Careful Industries, which researches the social impact technology has on society.

Women in AI: Rachel Coldicutt researches how technology impacts society

SAP Chief Sustainability Officer Sophia Mendelsohn wants to incentivize companies to be green because it’s profitable, not just because it’s right.

SAP’s chief sustainability officer isn’t interested in getting your company to do the right thing

Here’s what one insider said happened in the days leading up to the layoffs.

Tesla’s profitable Supercharger network is in limbo after Musk axed the entire team

StrictlyVC events deliver exclusive insider content from the Silicon Valley & Global VC scene while creating meaningful connections over cocktails and canapés with leading investors, entrepreneurs and executives. And TechCrunch…

Meesho, a leading e-commerce startup in India, has secured $275 million in a new funding round.

Meesho, an Indian social commerce platform with 150M transacting users, raises $275M

Some Indian government websites have allowed scammers to plant advertisements capable of redirecting visitors to online betting platforms. TechCrunch discovered around four dozen “gov.in” website links associated with Indian states,…

Scammers found planting online betting ads on Indian government websites

Around 550 employees across autonomous vehicle company Motional have been laid off, according to information taken from WARN notice filings and sources at the company.  Earlier this week, TechCrunch reported…

Motional cut about 550 employees, around 40%, in recent restructuring, sources say

The company is describing the event as “a chance to demo some ChatGPT and GPT-4 updates.”

OpenAI’s ChatGPT announcement: What we know so far

The deck included some redacted numbers, but there was still enough data to get a good picture.

Pitch Deck Teardown: Cloudsmith’s $15M Series A deck

Unlike ChatGPT, Claude did not become a new App Store hit.

Anthropic’s Claude sees tepid reception on iOS compared with ChatGPT’s debut

Welcome to Startups Weekly — Haje‘s weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday. Look,…

Startups Weekly: Trouble in EV land and Peloton is circling the drain

Scarcely five months after its founding, hard tech startup Layup Parts has landed a $9 million round of financing led by Founders Fund to transform composites manufacturing. Lux Capital and Haystack…

Founders Fund leads financing of composites startup Layup Parts

AI startup Anthropic is changing its policies to allow minors to use its generative AI systems — in certain circumstances, at least.  Announced in a post on the company’s official…

Anthropic now lets kids use its AI tech — within limits

Zeekr’s market hype is noteworthy and may indicate that investors see value in the high-quality, low-price offerings of Chinese automakers.

The buzziest EV IPO of the year is a Chinese automaker

Venture capital has been hit hard by souring macroeconomic conditions over the past few years and it’s not yet clear how the market downturn affected VC fund performance. But recent…

VC fund performance is down sharply — but it may have already hit its lowest point

The person who claims to have 49 million Dell customer records told TechCrunch that he brute-forced an online company portal and scraped customer data, including physical addresses, directly from Dell’s…

Threat actor says he scraped 49M Dell customer addresses before the company found out

The social network has announced an updated version of its app that lets you offer feedback about its algorithmic feed so you can better customize it.

Bluesky now lets you personalize main Discover feed using new controls

Microsoft will launch its own mobile game store in July, the company announced at the Bloomberg Technology Summit on Thursday. Xbox president Sarah Bond shared that the company plans to…

Microsoft is launching its mobile game store in July

Smart ring maker Oura is launching two new features focused on heart health, the company announced on Friday. The first claims to help users get an idea of their cardiovascular…

Oura launches two new heart health features

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI considers allowing AI porn

Garena is quietly developing new India-themed games even though Free Fire, its biggest title, has still not made a comeback to the country.

Garena is quietly making India-themed games even as Free Fire’s relaunch remains doubtful

The U.S.’ NHTSA has opened a fourth investigation into the Fisker Ocean SUV, spurred by multiple claims of “inadvertent Automatic Emergency Braking.”

Fisker Ocean faces fourth federal safety probe