3 ms·

> Further, "home equity" is a weird term in this context. Home equity is a mark of ownership and makes clear sense in the cass of a single home - 100% home equi

by darawk 7y ago

> Further, "home equity" is a weird term in this context. Home equity is a mark of ownership and makes clear sense in the cass of a single home - 100% home equity in a single house means you get 100% of all the profits after that house is sold. The total number of "shares" for a single house is fixed and never changes, meaning home equity never dilutes. For a collection of homes in this model, it's murkier because new renters and new houses would impact the number of "shares" available. If I understand correctly, I think they're thinking of it more like credit. When you make payments to them, you accrue "equity credit". You may exchange that equity credit for a given home, if it reaches whatever value threshold that home has. You can apply your equity credits to any home in their collection, however each home will require a different amount to purchase, and a different monthly payment to live in. I think it's a really clever and really interesting idea, if i'm understanding it correctly.

AkshatM 7y ago
Then I have even more questions, because in order to offset operating recurring costs for Arrived, that "equity credit" can't be a one-to-one mapping to the house's actual value - it has to offset costs for maintaining the house for you. In other words, if you use your "equity credit" to take a house for yourself, you could end up paying more than the house is actually worth.
- djmobley 7y ago
  Of course you end up paying more than the house is worth, just as you would if you paid down a mortgage with interest.
  - kijin 7y ago
    Moreover, you'd have to pay for maintenance even if you outright owned the house.
- darawk 7y ago
  Of course. You'll overpay, just like you would with interest from a mortgage. But you do get something in return for that overpayment. Whereas with a loan you merely get "time value" for your over-payment in the form of interest, here you are also buying the optionality of moving around. That option has value, and it's appropriate for them to charge some premium for that.

by darawk 7y ago

AkshatM 7y ago

Then I have even more questions, because in order to offset operating recurring costs for Arrived, that "equity credit" can't be a one-to-one mapping to the house's actual value - it has to offset costs for maintaining the house for you. In other words, if you use your "equity credit" to take a house for yourself, you could end up paying more than the house is actually worth.

djmobley 7y ago
Of course you end up paying more than the house is worth, just as you would if you paid down a mortgage with interest.
- kijin 7y ago
  Moreover, you'd have to pay for maintenance even if you outright owned the house.
darawk 7y ago
Of course. You'll overpay, just like you would with interest from a mortgage. But you do get something in return for that overpayment. Whereas with a loan you merely get "time value" for your over-payment in the form of interest, here you are also buying the optionality of moving around. That option has value, and it's appropriate for them to charge some premium for that.