My idea is some non profit gets setup to manage a system where someone announces their mortgage and then they can have friends, family and second and third degree friends and families finance your loan.
Let’s say someone buys a $250k house. Each person puts in $100 and then they get a receipt showing they are owed $200 against their 1/2500th share of the mortgage. Repayments are paid the $200 in return in a random time frame of between the first month to the last month 30 years later. Repayment is completely randomized, meaning you could get your money back really soon… Or a really long time from then.
There are a lot of other ways you could build on this idea.
If you take this idea a little further, you’ll eventually get a credit union.
No quicker way to negatively influence a friendship than loaning money. Doubly so with the expectation of interest.
I think you mitigate that by the related party knowing that repayment could be 30 years later. Its more like buying a low pot raffle ticket then a regular loan.
In this case, there’s no interest, but there is a big legal fight when they take out equity lines of credit and spend the money on hookers and blow.
That’s good, but for it to scale everyone should participate. Maybe we could manage it centrally to maximise the outcome, I guess maybe the state could do that? Kinda like taxes? And then the government could buy or build the house and give it to whoever asked for it… Wait a second!
When people describe what they hate about communism and socialism, they often describe capitalism.
A lot of people would be in favour of communism or socialism, they just don’t know it, due to propaganda against it.
A great example for this are insurances. If you’re not from the US, you pay a small amount of money or portion of your income and never have to worry about medical expenses again.
This concept can be applied to virtually anything! Food, water, shelter, you name it!
Like a credit union?
Yes - Building Societies
Isn’t this what jeff Bezos is doing with fractional real estate investment, except evil?
Not pooping on the idea, I would totally toss money towards a fractional mortgage to help someone else get a home, just noting how the upside down universe version of this idea is already out there.
sauc: https://arrived.com/
There are a lot of corporations doing this with investments too.
I did a quick skim of that website and it seems to be marketed towards the opposite side of the equation, the investors.
My idea is more about the mortgage and using crowd sourcing in social circles. The way I have structured the “investment” in my scheme is purposefully done to reduce lender animosity by making the payout more of a gamble, than a traditional investment.
I have been toying with ideas to even further tweak the model to increase investment. For example giving slightly better odds on repayment to investors that have used the platform/process to procure their own mortgage.
I had a similar idea. If you’re saving money for a down payment in a traditional bank account, the money is growing slower than real estate, so you’re falling behind. Investing in real estate backed securities solves that. And the beauty of it is that if the market turns down, so do house prices so you’re not getting farther from your goal of home ownership. Whereas if you invest in stocks you could have the stock market drop while housing stays high.
as long as the investment mortgages aren’t sub prime 🙃
A form of this exists but only compatible with smaller money amounts or whatever your entourage can bring in a bout a year maximum. I don’t know how you call it in English but a dumb translation from Moroccan practice would be “turn around” or “random drawing”.
Basically you just gather a bunch of people, as many as you can manage and decide on a single share amount, periodicity and number of participants. Each month, every body contributes with the share and somebody takes it home.
For example, you gather 10 people, and decide periodicity is 1 month. And decide the share is $200. You randomly draw the order of distribution. Some people do ask and negotiate the order of turns. Each month one person gets $2000 ($200 times 10) acorrding to the turns planing.
Some people can contribute in 2 or more shares. They simply pay a multiple amount of the share and get to get paid in multiple turns. For example you can have only 8 people but 10 turns.
You could call it turn based contribution.
Once the whole period is elapsed, every body should have had all of their money back.
People that have late turns feel like they simply saved money. People that have early turns feel like they got interest free, halal, loans from their friends.
Had a coworker that did this with a few friends. He was Islamic, thought it was just a thing their culture did. Never heard it outside that job.
Fascinating. Is there a term I can search to learn more?
Rotating Savings and Credit Association (ROSCA). It goes by many other local names across the world, but that’s the English wiki page title to get you going
Yes, the rosca Wikipedia page is describing the same system and currently including the Egyptian and Moroccan nes I famliar with. It is perhaps the system OP is looking for.
LendingClub used to do crowd sources loans with shares of 25$/pc
That mortgage officer’s answer is better than anything I can contribute, just saying something closer than credit unions to what you described was around a few years ago (depending on your perspective)
Not the same, but we had a crowd source house insurance setup. Basically, all the costs of the year were added up and then split between members. It was about half the cost of regular insurance.
This!
Interesting! Did everyone have their mortgage paid off or do lenders accept that kind of insurance? Who manages the funds?
I don’t know the answer to the first question. It was a Mennonite thing. All members had to be Mennonite or in a Mennonite church (there are lots of non-Mennonites going to Mennonite churches), or connected to a Mennonite organization.That probably helped to keep costs down as we tend to be honest and experienced at community cooperation. I believe the management was hired by one of the Mennontie conferences.
Isn’t this effectively what getting a mortgage from a co-op bank is?
I see no benefits to me owning even 1/2500th of somebody else’s house. I’d rather give my friend $100 so they have a place to live and be done with it.
Well one of the other 2,500 people might, so it’s there to give the legal protections they need to recoup their investment. But I agree, a majority of people wouldn’t see it as an investment. I would have no problem giving dozens of acquaintances $100 if I knew for sure it would lead to them getting a house.
I think this is an amazing idea. I would treat it like a charity though. I would much rather give $100/month towards this, than some random charity where the ceo makes millions per year.
Set it up so it’s kind of a co-op non-for-profit, where there are legal papers that can be bought instead of a head entity. That way, there’s no ceo in the future making millions per year.
Oh…
Enjoy: https://www.kiva.org/
Your better off getting 10 people and starting a commune
This idea got me thinking, and I started coming up with ideas to streamline it and pay investors more consistently and then I realized that between the two of us, we’ve invented banking.
Sounds like the community land trust portion of moms 4 housing
