Irene, a three-month-old start-up launched in New Jersey, gives seniors the option of staying in their homes by giving them access to their home equity. How can Irene do such a thing for and with cash poor, home equity rich seniors? By buying their homes and taking over their mortgage payments, property taxes and home maintenance costs with the caveat that the senior sellers retain the right to either stay in or rent the house for the rest of their lives.
This idea of unlocking a senior homeowner’s equity in their home may be new in the US but this idea has been around for a long, long time in Europe, particularly in Italy and France.
Fabrizio Tiso, a co-founder of Irene along with Wilson Keenan, knows this strategy first hand. Tiso told Inman News, “(The idea of Irene) is a big innovation for the US housing market, but it’s definitely not a new, untested product. We see our solution saving tens of thousands of seniors every year across many different European markets.”
In Europe, buying homes from seniors who intend to “age in place” in “their” homes is done on a peer-to-peer basis. Individual buyers purchase the homes from senior homeowners, give the senior sellers the cash amount of the initial down payment and then take over the home’s mortgage payments, property taxes, insurance costs and maintenance costs. And the senior seller retains the right to live in the house until death
Irene is institutionalizing this strategy for US markets. The process goes pretty much like this…
- Irene staffers meet face-to-face with senior homeowners who are considering selling their homes to Irene.
- Senior homeowners, along with their family members and/or legal counsel, then discuss the options laid out by Irene staffers.
- If the senior homeowners decide it’s a go, Irene staffers then schedule a home appraisal and provide a binding offer to the senior seller that includes all details in contract form. (Details, of course, include such things as a home inspection.)
- The seller signs the contract and both parties agree on a closing date.
- At closing, Irene pays cash to the senior seller in the amount of the original down payment on the home and Irene acquires the title of the home. Irene then immediately takes over costs relating to mortgage payments, property taxes, home insurance costs and structural maintenance costs. And the senior seller continues to live in the house.
Senior sellers retain the right to stay in the home for the rest of their lives or rent out and keep any rental income generated from the home. Sellers are protected in contract to remain in the home if something unforeseen happens to Irene and/or its investors. Sellers can also choose to buy back the title of their home from Irene at any time.
Irene has already raised $1.3M from a New Jersey real estate accelerator, Meta Prop, and Notation Capital. The start-up chose New Jersey as its launch due to the state’s high property tax rates. Irene’s near-future rollouts include Florida (due to the state’s high number of seniors), California (lots of seniors and high property taxes) and Washington State.