EDIT: This post got the most feedback ever (other than the immediately preceding one about facebooking pictures of your kids). It turns out that all you need to do to get lots of comments is to make a post with an incorrect and not-completely-thought-out graph, and everyone eagerly posts corrections and ideas. (It was actually a really fun discussion… 😀 )
I’ve followed up here:
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So, one of my former students just started a company doing fractional home ownership. Their theory is that there’s some middle ground between fully renting and fully owning property that they’d like to facilitate. Here’s why I think they might be right:
This is your standard engineering/product/tradeoff/price-features/etc graph that people/your customers are used to.
What they’re suggesting is that the graph is really only populated at the edges* (with condominiums allowing lesser monetary costs with a reduction of ownership).
Airbnb and Uber/Lyft have monetized the space for unused housing and vehicle resources. Fractional and micro lending have started to do this for banking. Why not do this for the actual ownership of property?
People have been jointly owning property since there was the concept of property. The difference now is that we can do it in smaller tranches, and perhaps we can streamline the legal process. I think this streamlining is what will make the most difference. Condos are the closest we have in the consumer market (REITs are somewhat similar, but don’t let you own a part of the dwelling you actually live in).
It feels like there’s somewhere where this will make sense/take off, and it will have to do with the ratio between rent prices and ownership prices. A larger difference between these would give a larger space for partial ownership to work.
However, it feels like it needs a simple(r) set of easily enforceable rules, with benefits and reasons to comply for those buying and selling. I don’t know what these are yet, but I do know that all of the rules about condos are there for a reason, so it’ll have to be a really innovative contract to incentivize everyone to comply.
*Yes, I know that ownership is not absolute, but within the scope of this post, the space to the left of the graph is unreachable.
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