The company said its product was designed to change the traditional view of the rent-to-own business, where landlords were seen as predators that use their knowledge of pricing and contracts to take advantage of renters.
Under Divvy’s program, the company will purchase a home chosen by the customer, who typically puts 2% down and then pays a monthly amount that covers rent and equity payments. Through the equity portion, the customer achieves 10% equity credit in the home after three years. The customer then has the choice to take out a mortgage to buy out the home with the credit standing as down payment. They can also purchase the home anytime during the three-year period.
The program’s official launch follows a $7 million funding round and a credit facility. Divvy said it plans to use the funds to expand operations into Cleveland and Atlanta and built out its team. The funding was led by Caffeinated Capital with participation from Max Levchin's start-up studio HVF and the venture capital firm DFJ.
"Real estate is an industry plagued by manual processes," Levchin said. "The technology Divvy is building around application processing, underwriting, and managing these homes will allow Divvy to scale operations and provide better pricing to consumers compared to traditional institutions."
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Divvy Homes has officially launched a homeownership program that the real estate platform says bridges the gap between renting and owning.