At the recent, HIVE: Housing, Innovation, Vision and Economics conference in Los Angeles, Small Change CEO and founder Eve Picker moderated the session, “Can crowd sourced finance help fill in affordability gaps?” Eve was joined by a panel of housing innovators, including Yifan Zhang, founder of the startup, Loftium.
Loftium assists aspiring homeowners by offering down payment assistance in exchange for shared income through AirBnB rentals. It’s a new model to help homeowners bridge that initial, and often intimidating, affordability gap.
Small Change: Your company works to lower the barriers to home ownership through shaving off space within a home for AirBnB rentals. How do you evaluate target markets, especially when considering the ever-changing political environment in which cities regulate AirBnB spaces?
Yifan: There is a trend toward city regulation of Airbnb, but most cities have chosen to distinguish between primary residents (i.e. homeowners renting a spare room like in Loftium’s case) versus professional investors buying up entire properties for Airbnb. When cities pass regulation, they typically legalize primary residence Airbnb activity while placing limits on investors. Loftium works only with primary residence homebuyers.
Small Change: How do you respond to the charge that AirBnB limits housing affordability?
Yifan: A blanket charge like this one ignores the ways different Airbnb hosts are using the platform. Again, most cities are choosing to legalize primary residents who want to Airbnb extra space in their own homes. This type of Airbnb behavior helps generate income to make housing more affordable, not less, and Loftium taps into this income for our down payments.
Small Change: Do you see more opportunity for growth in second tier cities such as, say, Kansas City or Cleveland, rather than tier one cites like New York, Chicago, LA?
Yifan: We see opportunity for Loftium’s down payments in both types of cities. Unfortunately, housing affordability is a widespread issue across cities. However, Loftium may help different populations – i.e. we’ll serve the outskirts of high-cost cities like LA and NYC while being able to help across the board in lower-cost cities.
Like Small Change, Yifan is leveraging fintech to unlock economic potential in cities.