To UNISON or not to UNISON?

Question

I received a solicitation in the mail today from a proclaimed home investment company called UNISON. I looked them up on the BBB and they are a legitimate company with an interesting business plan and investment opportunity. I am not sure it is a win win situation though. Has anyone else heard of them?

Jay Hinrichs · Answer

i see they are San Francisco based.. this model started in the mid to later part of the 80s in the SF Peninsula.. home prices by 89 ish were already up to 500k to over a 1million and this was before all the huge tech dollars..

so for those that wanted to buy a home. investors would put up the down payment then equity share.. at that time it was tough for someone to come up with 20% down which was the minimum needed to purchase a home.. I knew private investors who did a lot of this in Palo Alto area .. and of course with the run up in values they made tons  and the buyers who could never get into to a home made money.  Equity share in the right venue works just fine.. not for everyone of course.

Jay Hinrichs · Answer

ya don't know that would be something though to see apples multi billion dollar facility looking like some of the big auto plants in Detroit that are right out of a horror movie  LOL.. or google or facebook.. etc.. but who knows.

I was just commenting on equity share and how this is not a new thing and It probably started like I said in earnest in the bay area and maybe LA.. since prices there were 5 to 10X higher than almost anywhere else in the country during the late to mid 80s and beyond.

Taylor L. · Answer

I'm definitely not an expert on projecting decades-long trends in single family appreciation. However, as the saying goes, "Past performance is not indicative of future results." People are fleeing California, taxes are getting higher, and regulations are getting worse. To my mind it's not inconceivable that the tech and startup scene could appreciably shift away from the SF Bay area, taking with it most of the high paying jobs and demand for housing.

Many areas outside of CA have thriving tech industries right now. To my mind, it's not impossible that that industry could leave California, much like the textile industry leaving NC or steel leaving the rust belt.

Ed B. · Answer

It's a terrible deal for the home owner. You're giving them up to 82.5% of any future appreciation in exchange for them "loaning you money." that's a rotten deal and hugely in their favor. They're betting on enough stupid people to fall for their pitch, and there might be. But for most thinking people, run away!

Sara A Jackson · Answer

Thank you Taylor! My initial gut feeling was as you explained. I am new to REI. Learning all I can and trying to figure out how to get started with little to no money down. We are at the end of a long road with my husband's education. He has a good job but we don't want to be in our 70's before we are debt free. So, for a moment it caused me to pause and consider it, but thought I would check with some experts first. Thank you for your thoughts and council!!

Taylor L. · Answer

After briefly reading their website, I wouldn't do it.

"We invest equity alongside homeowners and homebuyers in exchange for a share in the change in value when the home is sold. No debt, no monthly payments."

They're missing out on the biggest and best feature of investing in real estate, cash flow.

Appreciation in single families isn't a good way to reliably make a return, as we learned in 2008-9.

In the multifamily syndication world, we only invest when we can earn cash flow during our hold period. Cash flow is the life blood of holding real estate. If single family values stall or fall, these guys at Unison will get killed.

As passive investments go, you could do much better than these guys, it seems to me. Turnkeys, syndications, and hard money lending are better options.

To UNISON or not to UNISON?

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