Home ownership can seem out of reach for many Americans, whether for strict lending conditions or strict monetary policy, an issue that Donald Trump addressed in his Presidential Inaugural Address.
While some Americans choose to purchase homes and live in them as renters, many others choose to rent but may not be willing to mortgage their homes for 10-20 years at an interest rate that can cause lenders to lose money, even though they might otherwise turn a profit.
Enter Onsite Property Owner, a new online service in Canada that allows Canadians to purchase homes without a down payment and pay just 2.5 per cent down, and this new program follows similar homebuyer schemes that have taken place in Canada in the past, as well as several programs in the United States.
Onsite’s founders say it is the first online Canadian product that allows homebuyers to become “owner-residents” of a property that has been purchased from Onsite, and is available through Onsite’s website. The Vancouver-based company provides pre-qualification screening, a real estate attorney for real estate closing, free mortgage services through a third-party mortgage company, and now homeowner associations as well, and allows customers to purchase for no more than $5,000.
“Onsite’s true innovation is giving customers the complete user experience they crave. We believe that our future of homebuyers has never been more promising,” said co-founder Greg Fothergill in a statement.
Like other rental investors in the United States, Onsite evaluates properties, tracks values, and sells the properties once homeowners have given their approval. But unlike many companies, Onsite’s founders are not necessarily invested in their customers, either.
“We are not looking to be your lender,” Ravi Sarma, vice president of product and marketing for Onsite, told Fox News. “Our focus is selling our product and helping people to become owner-residents of their own homes.”
Onsite, whose offices are at 1 Harbourfront Dr. (above Powell Hotel), asks customers to provide a bank account, state your income, and make a down payment of 5 per cent that’s also posted on their website. The company then matches prospective buyers with buyers that are looking to purchase another home for the same price.
“As the market becomes hotter, interest rates will increase, and Onsite can accommodate that market,” Sarma said. “It’s my goal to have our prices remain pretty much flat in the next few years.”
The company also allows homeowners associations to include homeowner fees, which can range anywhere from $50 to $600 per month.
But the company is not a real estate agent or an appraiser. Rather, Onsite is an app that connects interested customers with those who are looking to purchase properties.
They will even send a valuer to check out a property for a nominal fee, and any errors will be corrected before the customer receives their property.
“We are underwriting with the data that we have at that particular time. Our vision is that eventually our product will enable us to list properties and assess for ultimate sale,” Sarma said.
Since no down payment is required, there is little in terms of risk for Onsite, in spite of using much of the same value-tracking tools as competitors. The company was one of the finalists for the Canadian Governor General’s Innovation Award for 2016 and 2017.
“We have very solid equity. We have almost no debt,” Sarma said. “We are very optimistic that we’ll be profitable by year end or by the end of 2018.”
Unlike some programs in the United States, like the Federal Housing Administration’s loans, Onsite’s 3-2-1 program means their profits are only subject to the full taxes and property tax.
The company also doesn’t require customers to pay a fee to be a member of their homeowner association, meaning potential customers could use a rented property as their own.
But will all this online technology in Canada really cause the Canadian housing market to boom? According to Sarma, he’s not sure.
“Some people will say it’s successful and some people will say it’s a bubble,