Conventional wisdom says renters throw away money because they don’t build equity over time. But a couple of new startups are hoping to turn that idea on its head.
The security of ownership meets the flexibility of renting
Rhove extends “renterships” to tenants in Rhove-partnered apartment complexes. The arrangements give tenants a stake in the building — and their assets grow with the property’s value.
Rhove acts as an investor in the property by paying a lump sum to the owners. Tenants earn returns as property owners collect rent from the whole building, and as the property appreciates, the value of the shares increases.
Nico offers a similar concept.
The startup launched in LA’s Echo Park neighborhood, where gentrification threatened to push out some long-time residents. By purchasing rent-stabilized buildings and registering them as a financial trust, Nico offers portfolio shares to residents… giving them a leg up in keeping their homes.
What’s the bottom line?
A young person will spend $200k+ in rent over the course of his or her lifetime. With many Americans dropping ⅓ of their income on rent, it’s hard to save money to eventually buy a home.
And renters generally don’t have the same opportunities to accrue wealth as homeowners. One study found wide wealth gaps between older homeowners and renters, even when their incomes are similar.