Interesting Home Equity Finance- (formerly Patch Homes)

2 Replies

Interested to see what you guys think about a company that is trying to bring a new financing vehicle to homeowners. 

Company: (formerly Patch Homes) 

After further research I noticed a few other companies with a similar business model:

Their Claims:

  • • Access up to $350k of home equity
  • • Up to 10 Year Terms

How They Make Money:

  • • They get a 30% profit share of your home appreciation (or depreciation)

Available In Certain States/Cities:

  • • California, Colorado, Utah, Washington, Oregon

My personal feedback/thoughts: Seems like a very interesting business model (for them). Not so sure about it's usefulness in the REI community. Especially seeing as it's only available in high appreciation markets you would likely be paying much more than a traditional HELOC or refi.

Thought I'd share in case any of you guys have brilliant ideas on how this could be leveraged. 

I looked into the service. The "terms" presented sound great, but when you read the fine print on the contract:
* Only good on owner-occupied primary residence
* Restricts your ability to rent or lease during the entire term with their approval
* They may inspect premises on demand
* They seem to have a restricted list of realtors' brokers available you have to use first if you want sell while in force
* ROFR: You have to present any offers for the property to them 1st - they can also accept offers on the property for you
* Seem to have a POA clause allowing them to do stuff on the property and related to it.

Personally, I read through this, I think it's really expensive on the $ alone, but the terms are onerous. Maybe for short term like a year or two, but I wouldn't want all that over my head. I also think this might jam up some Refis when they ask "what is this agreement you have?"

Standard HELOC or 2nd is way safer and defined.

They're in more states now. I'd say READ the contract (not therm "sheet") with your attorney and make sure you have other $ or other exits downstream you can use to wipe it out.