No Down Payment? No Worries … As Long As You Host Airbnb Guests For At Least A Year

By Kate Martin
The News Tribune (Tacoma, Wash.)

Want to buy a home but can’t afford a down payment? It’s a conundrum many younger adults face as they continue to make student loan and car payments.

Seattle entrepreneur Yifan Zhang is here to help. Her company, Loftium, will help make your down payment, up to $50,000. But there’s a catch.

You have to agree to be an Airbnb host for at least a year and split the income with Loftium. Most home owners select a split of 80 percent to Loftium, Zhang said.

The company launched late last year, focusing on homes in Seattle. On Feb. 1, Loftium is expanding its reach to include all of Pierce, Snohomish and King counties.

“I think Tacoma is going to be a great market for us,” said Zhang, the company’s CEO and co-founder. “A lot of people don’t know Tacoma, but it has great Airbnb income.”

In 2016, Tacoma Airbnb hosts earned $2 million and hosted 15,500 guests, according to Airbnb. Homeowners with a spare room or a separate unit can rent out that space to people looking for a place to stay. The practice is legal in Tacoma as long as guests stay fewer than 30 days and property owners get a business license.

For Loftium user Kacie Washington, the offer she spied on social media site Instagram sounded “too good to be true.” She recruited her husband to sleuth out the details, and soon they were signing a contract with Loftium on a south Seattle home for a little over $500,000.

They’ve been hosting Airbnb guests nearly nonstop, starting earlier this month, she said.

“We always wanted to buy but the down payment was an issue,” she said. They had wanted to save money and get out of debt, keeping a worried eye Seattle’s ever-rising housing market.

“Everyone’s getting priced out that I know,” Washington said. “I was really nervous. Are we going to actually find something? It was important that we find a house.”

While she wasn’t comfortable saying what Loftium contributed to her home, the company pays aspiring homeowners up to $50,000.

Homeowners can snag a larger down payment the longer they vow to send most profits to Loftium, up to three years. The rest of the financing is worked through Umpqua Bank.

Homeowners must list the property on Airbnb for all but eight days a year. Don’t like hosting strangers in your home all the time? Homeowners can back out, as long as they pay Loftium back for part of the down payment, plus a 15 percent early termination fee.

With two young children, Washington said she and her husband opted to split the home into two separate living quarters. Her Airbnb listing includes three bedrooms, a bathroom, a fridge, microwave, coffee maker and other amenities.

“Literally as soon as it went live, it’s been nonstop. It’s been so busy. I’ve had people trying to book up through September. It’s been booming,” Washington said.

Assuming brisk occupancy rates, Loftium’s investment in her home will be paid back, and then some, over three years. Washington and her family will keep 20 percent of the proceeds, providing a small income stream throughout the life of the contract.

People are eying Loftium’s expansion to Tacoma as a way to become homeowners here.

Stadium District resident Lauren Dickerson said she’s been entering prospective homes into Loftium’s website, which estimates how large the down payment it offers might be.

Dickerson said she might pick a three-year Airbnb term if she can find a home with separated living quarters.

“I am unmarried and don’t have kids. It’s just me. So renting out a room in a house, it’s not inconveniencing anyone but myself,” she said.

At the end of the term, regardless of how busy the Airbnb listing is, homeowners are freed from Loftium’s terms.

A survey of a few homes in the Tacoma area showed projected Loftium down payment assistance of a few thousand dollars to more than $30,000. The website said a Tacoma household earning the median of nearly $56,000 would be able to afford a home worth up to $332,500, slightly above the county median home price of nearly $320,000 in December.

Zhang said her company takes the hassle out of the Airbnb listing process, which includes automatic changes in seasonal prices. For instance, business is lighter in the winter but strong in the summer, and prices change accordingly.

Washington said she’d never stayed at an Airbnb but plunged ahead. She has to clean up after the guests, who have been respectful because they understand it’s her home.

“It’s really a godsend,” she said. “It helped us become homeowners sooner than we thought, and its helped us have another income stream.”

Zhang said Tacoma is a test market of sorts.

“If we can prove Loftium works in Tacoma, it opens up so much more of the U.S.” she said.

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