Homebase: Mortgage Alternative in Vietnam | YC-Backed

Homebase: Expanding Home Ownership in Vietnam

Despite a high overall home ownership rate of approximately 90% in Vietnam, a significant number of millennials encounter difficulties achieving this milestone. Increasing property costs in urban centers, combined with limited access to traditional financing, often necessitates delaying home purchases or relying on familial financial assistance.

Addressing the Financing Gap

Founded in 2019 and a recent participant in the Y Combinator program, Homebase presents a novel alternative to conventional financing for prospective Vietnamese homebuyers. The company functions as a co-investor, acquiring a portion of the property alongside the customer.

Customers then retain the option to gradually purchase Homebase’s equity stake until full ownership is achieved, or to sell the property and receive their proportional share of the proceeds. Throughout this period, buyers pay rent to Homebase commensurate with the company’s ownership percentage, while enjoying complete usage rights – allowing them to either reside in or lease the property.

Origins and Market Focus

Initially launched in Singapore, Homebase strategically shifted its focus to Vietnam. This decision was driven by the co-founder Junyuan Tan’s prior experience operating startups – RePrice Technologies and Atlantis Lab – within the Vietnamese market.

Tan encountered challenges securing a home loan due to the high interest rates associated with even short-term mortgages. According to Homebase chief operating officer Phillip An, comparable financing solutions are scarce throughout Southeast Asia, unlike the government schemes and rent-to-own options prevalent in Europe and the United States.

Inspired by US Models and Backed by Industry Leaders

Homebase’s business model shares similarities with those of Divvy Homes and ZeroDown, both based in the United States. Notably, key figures from these companies – Brian Ma, co-founder of Divvy Homes, and Troy Steckenrider, former COO of ZeroDown – have invested in Homebase.

Further investment has come from VinaCapital Ventures, Class 5 Global, Pegasus Technology Ventures, 1982 Ventures, Antler, and Darius Cheung, the founder and CEO of 99.co.

Expansion Plans and Target Markets

Currently, the majority of Homebase’s transactions occur in Ho Chi Minh City and Saigon. The company intends to extend its operations to Hanoi and Danang before the end of the current year.

Looking ahead, Homebase aims to enter other Southeast Asian markets where limited financing options hinder home ownership, including Singapore, Thailand, and Indonesia.

Addressing the “Unbanked” Population

Approximately 70% of Vietnamese adults are considered “unbanked,” lacking access to traditional banking services and consequently facing difficulties in obtaining mortgages. Homebase provides a solution for this demographic, as well as for individuals with bank accounts who seek a more streamlined and flexible financing alternative.

Flexible Contract Terms and Equity Options

Homebase contracts typically range from one to ten years, offering customers the choice to either acquire full equity in the property at the end of the term or sell it jointly with Homebase to recoup their investment.

The initial equity stake purchased by customers varies depending on their needs. Those utilizing Homebase as a mortgage alternative generally acquire a 20% to 30% stake, while real estate investors often begin with a 50% stake.

Funding and Partnerships

Homebase funds its property investments through collaborations with third-party financial institutions, including private high-net-worth individuals and family offices seeking diversification into alternative asset classes.

The company is also in discussions with various investment funds, encompassing equity, hedge, real estate debt, and emerging market debt, from Europe, the United States, and Singapore.

Due Diligence and Value-Added Services

Homebase employs a comprehensive applicant screening process, incorporating an internal checklist and onboarding procedure, alongside partnerships with real estate agents, developers, and other industry stakeholders in Vietnam.

For these partners, Homebase serves as a valuable tool for facilitating more transactions by providing financing solutions to customers. The company also conducts thorough due diligence on potential properties, verifying documentation and permits, and utilizes a proprietary asset valuation model based on market data.

Ensuring Alignment of Interests

This valuation service, which Homebase is actively expanding, is crucial for assuring buyers that the company’s interests are aligned with their own. As An explains, “We stand to risk our investment, too.”

He further notes that many customers are first-time homebuyers and benefit from assistance in identifying suitable properties.

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