Your investment is used to buy a basket of properties via Homebase's flagship rent-to-own programs: Buy With Installment and Unlock Equity. The following are some risk mitigation measures we have put in place for our rent-to-own programs:
1. All the rent-to-own properties are essentially purchased under our name (i.e. we are the title owners of the property). This means that our recourse is very strong. If the underlying customers of our rent-to-own programs default, we can always proceed to liquidate the asset unencumbered as we are the full owners of the property.
2. We require our rent-to-own customers to put up at least 20% of the property value as initial deposit. Typically, our customers put in around 35% of initial deposits today. This initial deposit serves as first-loss capital (i.e. if the property prices drop or something adverse happens, these amounts of money will take the hit first before your investment gets affected).
3. Before choosing to work with a rent-to-own customer, we do rigorous checks on 5 C’s: collateral, cash on hand, cashflow, credit history, and character. To date, less than one-quarter of the customers that apply to our rent-to-own programs are approved.