A San Francisco-based real estate tech company that wants to make homeownership more accessible is launching in Cincinnati.
Divvy Homes, which aims to help buyers with average credit and minimal savings buy homes, launched its rent-to-own program to the Queen City Wednesday. Since the company’s launch in 2017, it’s worked with more than 1,000 families across the country, according to company officials.
The Divvy team said it wanted to expand to another Ohio city after an “incredibly successful launch” in Cleveland in 2018. More than a quarter of the families it’s served are from Northeast Ohio.
It chose Cincinnati after months of extensive market research, according to a release. The company said the city was ultimately selected for its “strong employment, housing fundamentals and superior home quality.”
“The American dream of owning a home is still there, even as macroeconomics have made it harder,” Adena Hefets, co-founder and CEO of Divvy, said. “As we continue to join more communities, we’re so excited to give more people access to the wealth-building opportunity of homeownership.”
Divvy helps buyers with average credit and minimal savings become homeowners. The company buys homes on behalf of its clients, then rents those homes back as part of a deal that lets the renter build equity toward a purchase in the span of three years.
The process starts with a five-minute application to determine an approved home buying budget. Once a home is found, Divvy purchases the property, while the renter contributes roughly 2 percent of the home’s value.
About 25 percent of each monthly payment goes toward saving for a traditional mortgage, so the new residents have a down payment to buy their home in three years. If renters change their mind, they can walk away from the home and cash out for their savings, minus a 2-percent relisting fee. They’re also able to buy the home at any time.
Divvy also partners with local agents who can turn rental leads into homebuyers.
Divvy was founded by Hefets, previously of Square, and Brian Ma, previously of Zillow, along with co-founders Nick Clark and Alex Klarfeld. It was incubated at HVF, a San Francisco-based startup studio founded by Max Levchin, a former co-founder of PayPal.
Cincinnati is Divvy’s 9th market, joining Atlanta, Cleveland, Dallas, Memphis, St. Louis, Tampa, Phoenix and San Antonio. The Cleveland and Cincinnati markets will be managed by an Ohio-based team.
