By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian realtor yesterday predicted his crowdfunding-driven rent-to-own initiative could build a $10m property portfolio within two years, adding: “The sky’s the limit.”

Matt Sweeting, broker with 1 Oak Bahamas, told Tribune Business that talks with legal advisers on the proposal were just about complete and he hopes to launch it during the 2022 first quarter as a solution to home ownership dreams for many Bahamians.

Anticipating “huge demand”, he explained that his plans were targeted at Bahamians in good financial standing with the potential to obtain home loans but who are nevertheless shunned by mortgage lenders because they are either self-employed or work in seasonal industries such as tourism.

Given the latter industry’s status as The Bahamas’ largest private sector employers, Mr Sweeting said his rent-to-buy initiative offered an alternative financing mechanism for such workers to realise their housing ambitions without having to come up with the 10-20 percent equity down payments now increasingly demanded by commercial banks.

He added that the proposal would use a crowdfunding mechanism, where investors could contribute as little as $100-$500, to the collective purchase of a residential property that would then be leased/rented to the intended owner.

The latter would repay investors via the rent, giving them a return on their investment, until the original purchase price is paid off, and only then obtain ownership rights. “The demand for alternative financing options is huge,” Mr Sweeting told Tribune Business.

“One of the projects that we’re going to roll-out and launch this year to address that is a rent-to-own programme. We’re in talks with out legal advisers to determine how we can legitimately operate alternative financing strategies to allow for people that have liquidity, borrowing potential to be able to seek alternative means for financing.

“We’re excited that we’re going to be able to launch this in the first quarter of the year. The way it will work is through a crowdfunding mechanism where micro investors are able to collectively buy the property, with individual investments as low as $100, and put it back on the market as a rent-to-own property that gives quarterly and monthly yields on the rent payments this person makes.”

Asked whether the capital raising would use an established crowdfunding platform such as ArawakX, Mr Sweeting said that “might happen” as he was in “early talks” with that entity. However, he indicated that it was more likely to take place through other “alternatives”.

Mr Sweeting added that realtors were one example of the self-employed professions he was targeting, given that - while regarded as one of the higher-earning jobs - they operate on a commission basis and therefore have to cope with inconsistent cash flows and incomes.

“This is to address that market. There’s huge interest,” he added of the rent-to-own plan. “There’s real opportunity. It’s bigger than I can see us handling, even in the first ten years. I don’t think it’s a gap we can bridge. We’re talking tens of millions of dollars in opportunities that are available through this kind of strategy.

“We’ve already had those initial conversations with the legal advisers. Those are pretty much done. We have a couple of ‘i’s’ to dot and ‘t’s’ to cross before we go live with this.” Mr Sweeting said his estimate that 40 percent of buyers in New Providence’s Venetian West complex purchased using in-house financing showed there was sufficient appetite for his initiative.

“It gives me confidence that there is a huge demand for it, and that it could work successfully for the purchasers and the investors,” he told Tribune Business. “I think within the first two years we could build a portfolio of around $10m, and the sky’s the limit from there.

“These are conservative estimates with people able to put in micro investments of $100, 500. It’s really fractional ownership, real estate ownership, and the bar is that much smaller. For those wanting to become real estate investors they will have an opportunity to do so.”

Mr Sweeting’s initiative thus represents an enterprising attempt to solve the problems of access to mortgage financing for a significant proportion of the working Bahamian population. The crowdfunding mechanism, though, would need multiple like-minded investors to come together and be patient given that typical mortgages extend for 20-30 years.

The 1 Oak Bahamas broker confirmed that traditional mortgage lenders were still requiring “considerable down payments” from borrowers before they will commit to lending funds for home purchases or new construction, and he added that they “have become a little less bullish” on lending to both tourism workers and the self-employed in the current COVID environment.

Voicing doubts that the Omicron variant’s emergence will dampen real estate activity, Mr Sweeting said a “lack of inventory” in the Bahamian segment - typically involving homes priced at $500,000 and below - was helping to both create a seller’s market and pricing pressure.

“We’re still reeling from low inventory and high interest,” he explained. “That interest has carried into 2022 where scores of people we were working with in 2021 were not able to find their ideal property and carry through. By all indications 2022 will be comparable to the business we did in 2021.

“There are bidding wars going on. We had bidding wars on three to five properties, and all of them sold over asking price. Those where I was actively involved in negotiations sold for approximately 10 percent over asking price. There’s a lot of activity in the market.”