Buying home is still a distant dream for many millennials. The fast-increasing prices make home buying an unaffordable and expensive affair.
Although the advent of new technologies has made home buying a bit easier in Southeast Asia, it still still has not addressed the root of the problem, especially in Vietnam.
In Ho Chi Minh City, the prices of apartments jumped 22.7 per cent in 2019 over 2018, according to international real estate advisory firm Jones Lang LaSalle. This has deterred many from buying homes.
The arrival of Homebase has changed things for the better in the country. The startup offers an innovative solution — it helps you own a house by becoming a co-investor in purchasing the house.
In other words, Homebase offers a path to homeownership by allowing millennials to buy a portion of a property and move in on the first day, with the option to buy out more equity over time.
To make investment decisions, the company utilises a combination of Big Data, asset valuation models and financial engineering.
A few days ago, Homebase raised an undisclosed amount of pre-seed funding from investors including Antler and Iterative to help more people achieve their dream of homeownership.
According to Homebase’s Co-founder JunYuan Tan, the problem in the property market today is caused by fast increasing prices and a high appetite for home-ownership, yet a stark lack of financing options.
“The traditional pathway to homeownership has not evolved to match the economic pathways that millennials have embarked on. We see an opportunity to develop a new homeownership journey that works for those of us who want flexibility and assurance as we work towards owning our dream homes,” he says.
In the interview, Tan shares his take on how the local market is primed with a young, educated middle-class that is growing rapidly, and the ever-increasing number of tourists, who discover the real estate market in the country every year.
Edited excerpts:
Also Read: Proptech is changing the face of real estate in Asia Pacific
What do you think is the biggest problem facing the proptech industry in Southeast Asia?
Proptech in the region is fairly fragmented and still in its early stages. It’s been observed, not just in Southeast Asia but also in other parts of the world, that the real estate space is fairly slow to adopt new technologies, and this is partly due to the fact that real estate is ultimately a business that requires a lot of human touches.
How does Homebase work for a homeowner wannabe? Please walk us through the user journey.
The notion is fairly simple: Choose your dream home and we (Homebase and customer) buy it together.
Customers work with Homebase to find any home on the market, pay the portion that they can afford, and Homebase will put up the remaining amount.
Homebase then allows customers to determine when they want to buy, whenever they’re ready. They can buy out all or part of Homebase’s stake at any time. In the meantime, they’ll pay rent for the portion that Homebase helped them pay.
The setting will last for several years. After that, Homebase only takes a portion of the capital appreciation if the home appreciates in value. Other than this, we don’t charge any other recurring interest or fees.
Also Read: How proptech is set to empower the Southeast Asian property market
What was the inspiration to start Homebase? Who are your co-founders?
My co-founders are Phillip An, Hung Doan, and Hai Vu. We were inspired to start Homebase after seeing the struggles of many of our local friends to own a home. Very quickly, we realised that the nemesis was a broken home-financing system.
Phillip is from San Francisco and realised that a few highly successful solutions/models in the US, such as Divvy Homes and ZeroDown, can be applied to Southeast Asia.
Very quickly, we interviewed more than 70 customers, and adapted the model to fit the local Vietnamese market; thus, Homebase was founded.
Can you tell us more about your team’s background?
I have previously founded two venture-backed startups in Vietnam, a software startup and a B2B Saas startup. I went to Manchester Business School, CFA.
Phillip An comes with an experience in consulting at McKinsey and investment banking at Goldman Sachs, with degrees from Caltech and Harvard.
Hai Vu was an engineer at Cisco. He has a PhD from the University of Texas, Dallas.
Doan was a Computer Science lecturer at a top university in Vietnam. He is also a Fulbright Scholar going to Harvard Kennedy School of Public Policy & University of Economics.
In the past, he has personally transacted 100-plus real estate properties
What are the challenges in introducing this concept to attract potential homeowners?
Home buying is an incredibly emotional decision involving huge sums of money, especially for first-time buyers. Naturally, it takes a little more effort to convince people to try a new product. But with patience, we’ve proven that it is surmountable.
What was it like joining Antler’s accelerator programme for a proptech company? Can you share with us your experience?
Antler is an amazing programme with an incredible management team behind it. Antler has been super helpful throughout our journey by guiding us from idea generation and validation, all the way to even pitching and fundraising.
They also connected us with plenty of mentors and investors. I cannot imagine coming this far and this quickly without the support of Antler.
Also Read: tryb Group invests in Indonesian proptech startup Gradana
DivvyHome‘s co-founder Brian Ma is one of your investors. Can you share with us how you first connected with DivvyHomes?
Our co-founder Phillip has a mutual friend with Brian Ma in San Francisco. So we thought it would be great to connect and learn from them. That’s how it started.
We choose to think that Brian investing in us is a testament, not only to the soundness of the idea but also to the quality of our team.
What is the success rate of the business approach done by Homebase so far?
Even though we’ve only set foot in Vietnam for a few months, we’ve already done a few property transactions. We have a huge pipeline of customers who are eager to use our solution.
Homebase was recently named as one of the World’s Top 50 Most Promising PropTech Startups by Plug and Play, the renowned US-based venture firm.
Although still in its nascent phase, our one-year-old company is determined to tackle the millennial homeownership crisis across Southeast Asia, one homeownership at a time.
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Picture Credit: Homebase
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