“Most of the time, it’s immediately curable or curable within a couple days. “If a rent payment is missed, we will follow up to see how we can help,” says Ma.

Naturally, like any other property owner, Divvy will evict tenants who don’t pay, even if it does so reluctantly. go more than 90 days past due on a debt payment) in the future,” says Experian. Consider: While Divvy may help some percentage of them improve their credit score, roughly 62 percent of consumers with credit scores under 579 are “likely to become seriously delinquent (i.e. Still, it’s also easy to imagine that some of Divvy’s aspiring homeowners will never actually own their homes. As Ma describes it, Divvy uses data science and algorithms to ensure that a property makes sense financially, meaning that it will likely appreciate and that the tenants aren’t paying so much that they can’t simultaneously build equity in their homes.ĭivvy also works with inspectors to make doubly certain each home is “move-in ready and won’t have large unforeseen expenses during the lease, like major roof, structural, pest, or foundation issues,” says Ma, who previously co-founded three startups, as well as spent several years as a program manager with Zillow. That equity, it insists, can later turn into the person or family’s first mortgage payment.įor largely self-serving reasons, Divvy does what it can to ensure that the house isn’t a dud, too. For example, Divvy says that it charges less in rent as a buyer’s equity begins to add up.

It’s easy to appreciate why this might be attractive to potential homebuyers who can’t secure a traditional mortgage in the current market - not all of whom suffer from poor credit but who are sometimes contract and self-employed workers without months of salary stubs to show nervous bankers. The reason, says the company: By partnering with Divvy, tenants - some of whom have credit scores as low as 550, which is considered “ very poor” by the consumer credit ratings agency Experian - can build their credit scores and eventually land a mortgage insured by the Federal Housing Administration, which requires a credit score of at least 580.Īccording to CEO Brian Ma - who co-founded the startup at the company creation studio HVF Labs - the idea is for this to happen within three years, at which point Divvy will sell and transfer the property over to them. It does this until the newly installed residents have amassed a 10 percent stake in the home. Divvy pays for the rest, then it collects a monthly amount that includes both market-rate rent and an equity payment. The family chips in at least two percent for a down payment. How it works: In Cleveland, Memphis, and Atlanta, where Zillow estimates median home prices are $52,000, $82,000, and $242,000, respectively, Divvy will enable a person or family to select a home they’d like to someday own, then to buy that home with Divvy’s help.

The approach of a nearly two-year-old, 15-person San Francisco-based startup called Divvy Homes is among the more creative we’ve seen, even while we question (for now) whether it’s good over the long term for potential customers. Tech startups have found all kinds of ways to lend money to those hampered by either too little or not very good credit.

Divvy credit