Monday, January 4, 2016

"Why Not Sell a Portion of Your Home?"

The newest general partner at the venture capital firm, Andreessen Horowitz, is Alex Rampell.

According to NYT:
 Rampell, 34, has founded or co-founded seven start-ups, by Mr. [Marc] Andreesen’s count, including the shareware software Mr. Rampell wrote in 1996 as a high-school student, AlwaysOnline. It was a robo-dialing program that kept dialing AOL access phone numbers — in the days of dial-up service — and kept users online continuously. It sold tens of thousands of copies, eventually got banned by AOL, and largely paid Mr. Rampell’s way through Harvard University.
Most recently, Mr. Rampell was co-founder and chief executive of TrialPay, an e-commerce payment and advertising service, which was acquired by Visa this year. At Andreessen Horowitz, he will be focusing on financial technology start-ups, and he and the firm see finance as a big opportunity today.

One Rampell idea is to set up a fund that would invest to co-own houses. “They could own 10 percent or 15 percent of your house, so you don’t have to borrow as much,” Rampell told NYT. “I think there’s a lot of room for more of those kind of new asset classes.”

The originality of the idea seems to make is appear somewhat insane, but I think it could have some sound uses.

Rampell is apparently thinking about such financing in terms of aiding in buying a house:
Mr. Rampell said, such a fund could invest to co-own houses in, say, pricey Palo Alto, Calif., making it easier for prospective home buyers to make down payments and reduce their mortgage burden.
That's one possibility, but I think where it could have even a better possibility is after there has been an extensive boom in prices of real estate. If a homeowner doesn't want to move, but would like to cash out some of the equity in his house, the only way to do that now is with a second mortgage, which, of course, leaves the owner extremely vulnerable during a downturn, But if instead of taking out a second mortgage a 10% to 15% stake in the house is sold, the downturn wouldn't be so financially devastating if the first mortgage isn't that large in the first place.

I don't think it always makes sense to own a home, but it always makes sense to have as many financial tools out there as possible. No doubt some would use such a tool incorrectly to leverage up the type of house they could actually buy, but if it was a real ownership stake without special top money out privileges, there would be ways to use such a tool in a sound fashion.



  1. So, it's like taking your house public? Or a limited partnership? Huh. It IS interesting. Not to me, don't have a house haha.

  2. Part of this kind of reminds me of the method some people used before the real estate bubble popped(maybe some still use it, but I think it was cracked down upon):

    Take two mortgages on real estate, one at a higher rate for your down payment so that you could get the larger/main mortgage rate lower by hitting the banks ideal minimum down percentage for the best rate.