RadioBDC Logo
Howlin' for You | The Black Keys Listen Live
< Back to front page Text size +

Ready to cash in on future home gains?

Posted by Scott Van Voorhis September 30, 2013 08:56 AM

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

Apparently, the real estate market casino is back in full swing.

With home prices on a tear of a kind not seen since the bubble years, FirstRex is ratcheting up its marketing aimed at home buyers who don't want to sink all their cash into a single, illiquid investment.

The San Francisco-based niche lender will cover half your down payment in exchange for a 40 percent share of the profits when you sell your house.

Launched back during the real estate bubble, FirstRex is now seeing increased demand as lenders demand huge down payments and home prices spiral upwards again, as this Bloomberg piece notes.

The company's home territory is on the West Coast, where $800,000 will get you a starter home, but FirstRex now plans to expand into Massachusetts and Connecticut, the story finds.

No surprise there.

At 20 percent down, you'll need to come up with $120,000 to get into that $600,000 home, hardly an outrageous number within the 128 beltway.

Still, are you really ready to trade away a big chunk of your future home gains?

FirstRex argues it can help you diversify your portfolio, enabling you to invest money in the stock market or other investments that you would otherwise be forced to pony up for a down payment with.

Sure, it's an interesting pitch, yet I wonder if it simply masks a less pleasant and appealing reality.

As home prices get crazy, it's not so hard to see how services like this could become a crutch for home buyers who can't come up with the big wads of cash needed to put 20 percent down.

Or, given human nature, this may also help some buyers stretch to buy more home than they could otherwise afford

Either way, buyers are trading away their future gains in order to get into a house. When it is framed that way, it suddenly sounds like much less of a good deal.

This blog is not written or edited by or the Boston Globe.
The author is solely responsible for the content.

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

About boston real estate now
Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

Latest interest rates

RE by the Numbers
South Shore Market Rankings - January 2016
Today we once again check in with towns and neighborhoods South of Boston and rank their real estate markets. As always we are looking at...