In high-cost areas, many people find it challenging to own a home due to high home prices, high mortgage payments, or lack of even a modest down payment. A start-up company in Pittsburgh has created a unique solution to this problem.
FleQ advertises to make homeownership attainable, affordable and easy, without the “hassles” of needing a down payment, good credit, or even a job!
The way FleQ explains their process, a potential buyer chooses a home to purchase. The buyer contributes whatever down payment they decide. FleQ provides the remainder of the purchase price in cash. FleQ then determines the market rent of the property. Based upon FleQ’s percentage of the purchase price, the buyer pays the same percentage of the market rent to FleQ every month. The buyer is responsible for the same percentage of the real estate taxes, insurance, and repairs.
Over time, buyers can purchase additional shares of the property, thereby increasing their percentage of ownership. The idea is that eventually, the consumer will own 100% of equity in their house if they so choose, and Fleq will step away and hand over the title, without the consumer ever making mortgage interest payments. Alternatively, the consumer could choose to just pay Fleq rent and never buy the home. There is no expiration date on the deal and no penalties for deciding not to buy.
While the “fractional homeowner” can choose to sell the house at any time, one possible caveat is that upon the sale of the house, the “fractional homeowner” will receive his percentage of the equity in the house as a credit to use toward the next home purchase through FleQ.
While there are pros and cons to this model, it remains to be seen whether these home buyers will enjoy the tax benefits of ownership, the same rate of wealth accumulation, and whether FleQ will be – or even need to be – licensed in all states they wish to operate.
Warren Goldberg is President of Mortgage Wealth Advisors, a Certified Mortgage Planning Specialist®, and a published author. His interviews include Blog-Talk Radio, Newsday, The Daily News, Anton Press, and the Long Island Herald. Since 1992, he’s been sharing his financial knowledge and wealth-building strategies, including how to properly use your mortgage as a financial tool. His clients regularly express their trust and appreciation by recommending friends and family call when in need of mortgage, real estate, and financial guidance.
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