A Novel Path to Homeownership

Market Context and Problem Statement

• U.S. homeownership rates have stagnated since the post-Great Depression surge driven by the Federal Housing Administration (FHA) and Fannie Mae.
• Homeownership is currently difficult to achieve for Millennials (approx. 37% rate) and first-time buyers (dropping from ~50% of offers to ~33%).
• 76% of first-time buyers are forced to put down less than the recommended 20% equity.
• The stagnation persists despite record-low 30-year fixed mortgage rates.
• A "confluence" of three factors drives this trend:
  • Inventory Shortfall: For-sale housing inventory declined 35% in the $150,000 price tier (2013–2019), outpacing declines in higher price brackets; median home prices rose 120% since 1997 while wages remained flat.
  • Stricter Underwriting: Average FICO scores for approved mortgages rose from 690 to 740, excluding approximately 20% of the U.S. consumer base.
  • Financial Complexity: Millennials face higher debt-to-income (DTI) ratios due to student debt, limiting their purchasing power to cheaper homes that are increasingly unavailable.

Shift in Ownership Paradigms

• The industry is moving from asset ownership (buying title) to access and utility models similar to Uber, Lyft, and Airbnb.
• New "Guard" real estate companies are adding a fourth dimension to this shift: providing financial return on investment alongside access, use, and experience.
• Venture capital investment in real estate tech is signaling the start of a wave to fundamentally change purchasing models.

Divi Homes Product Model

• Value Proposition: Creates a "stair step" between renting and full ownership for consumers excluded from traditional mortgages.
• Operational Mechanics:
  • Divi purchases the home on the customer's behalf; the customer puts down 2% at closing.
  • Ownership is tracked in a synthetic equity account (Customer: 2%, Divi: 98%).
  • Monthly payments are split: a "rent" component (profit for Divi) and an "equity" component (builds customer ownership).
  • Ownership increases incrementally (e.g., 2% to 2.2%, then 2.4%) to reach 10% over three years.
• Exit Strategy: Customers can buy out the remaining 90% of the home at any time, or cash out their accrued equity percentage if they choose to leave.
• Current Footprint: Operating in six U.S. markets: Tampa, Dallas, St. Louis, Memphis, Cleveland, and Atlanta.

Future Vision and Service Integration

• Divi aims to evolve from a "stair step" into a complete lifecycle home ownership path.
• Pre-move-in Services: Integration of utilities (cable, internet), landscaping, and renter insurance.
• Maintenance Support: Divi covers major maintenance costs (e.g., plumbing failures) to preserve asset value and tenant experience.
• Mortgage Integration: If a customer qualifies for a traditional mortgage after the interim period, Divi facilitates the transition via internal underwriting or a "Divi mortgage" product.

Business Performance Metrics

• Yield Advantage: Divi reports higher rent yields compared to public single-family REITs on a constant purchase price basis.
• Operational Efficiency: Customers who "act like homeowners" exhibit lower vacancy rates, lower turnover, and reduced maintenance costs per home.
• Founder Validation: CEO Adina Heffetz confirmed personal rejection from three banks due to founder income structure, validating the market gap for non-traditional underwriting.

Forward-Looking Statements

• The speaker asserts that the "real estate revolution has begun," with consumers demanding access over ownership risk.
• Divi projects that the future of the industry will allow consumers to "get the home they want, when they want" without the immediate financial risk of a mortgage.
• The company intends to educate consumers on shifting from binary choices (rent vs. mortgage) to flexible access models.