People in various parts of the world often encounter different problems when buying their very first home, especially if their parents don’t chip in or if their savings are somewhat limited. Loftium is a company based in Seattle that aims to solve this problem by providing users with substantial down payment in exchange for a share in the potential Airbnb revenue of their new home.
Loftium doesn’t assume homeowners will actually hit 100% occupancy for their listing, founder and CEO Yifan Zhang told Quartz. In a city like Seattle, for example, she said occupancy would probably be closer to 50% to 80%. Loftium also plans to be listed as a co-host on each property so that it can maintain certain standards of hosting and request improvements to listings. If a homeowner who’s received a down payment decides they want to stop renting out their home before the contract ends, they must pay their share of the nights remaining plus 15% of that amount within a week, or else Loftium can put a second lien on the house, behind the mortgage lender.
Loftium Airbnb Rental Lowering Platform
With student debts and increasing rents, first homeownership might feel like an impossible goal for most young people today. Aspiring homeowners cannot expect to receive financial support from their parents and this can dim the chances of finding that suitable property.
These people are exact target of the services of Loftium. Loftium is especially made for people who have not been blessed with high income for savings while they pay rent and for those who cannot ask for help from their parents.
How Does Loftium Work?
What is the real deal behind Loftium, then? Loftium will basically provide potential homebuyers with up to $50,000 down payment provided that they consent about offering one of the bedrooms of the house on Airbnb within a 3-year period following the purchase.
With the use of the algorithm that will predict the amount of money that can be possibly earned from the room in a specific location, the platform identifies the amount of down payment they can offer, allowing them to customize the contract for each customer.
The terms of the contract seem a bit strict. Homeowners will be able to keep around 1/3 of the income that will be generated from offering the room for rent on Airbnb, with the remaining 2/3 going to Lofitum.
During the contract period of 3 years, customers will only get 8 days a year where they won’t be obligated to offer their room on Airbnb and if ever they choose to have a contract termination earlier, they need to pay upfront the remaining amount in one week.
Taking a loan from the Loftium Airbnb Rental Lowering Platform
In addition, if the customers of Lofitum failed to pay back the given loan, the company will have the right of being in second in line of receiving payment once the house gets sold. Loftium, on the other hand, will ensure that their customers will have an easier time hosting people.
At the moment, it is running a tiny pilot in Seattle wherein people that received mortgage from Umpqua Bank are qualified to apply for down payment. Eventually, the team hopes to further expand their services to many other US cities. They are working with various room rental services and lenders in order to offer more opportunities to encourage people to take a plunge into the homebuyer’s market.
Only time can tell if the business model of Loftium is going to be viable as Airbnb investment opportunities in other areas as well. The demand for this service should be strong enough in other cities aside from Seattle. The homeowners also need to attest that they are trustworthy customers. On top of that, restrictive local legislations about rental services of Airbnb type implemented in certain cities such as Amsterdam, Barcelona, and New York can become a serious complication for Loftium.