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Reuters/Larry Downing
Soon to be on Airbnb.
LOFTY GOALS

Loftium will finance your downpayment for a house if you rent it continuously on Airbnb

By Alison Griswold

Usually when you hear about shady stuff happening in the sharing economy it comes from the “labor” platforms, i.e., companies like Uber, Handy, and Postmates, that rely on the labor of independent contractors to make their businesses work.

Those are the people that you read about getting stiffed on wages, struggling without benefits, getting locked into predatory loans, and sleeping in their cars. Shady stuff still happens on “capital” platforms like Airbnb but it tends to have more to do with local regulations than individual exploitation, and questionable lending arrangements usually don’t come into the picture.

Seattle-based startup Loftium may change that:

It will provide prospective home buyers with up to $50,000 for a down payment, as long as they are willing to continuously list an extra bedroom on Airbnb for one to three years and share most of the income with Loftium over that time.

That’s from a New York Times story on Loftium, which launched in Seattle on Sept. 18. A few more details, per the Times: Loftium will “determine the size of the down payment it is willing to put up using an algorithm that predicts how much income a room can generate.” Loftium will collect roughly two-thirds of the money its hosts earn through Airbnb. Those homeowners are expected to list their spaces on Airbnb all year round except for eight “freebie” days. Hosts can also cancel up to three guests per year if they feel uncomfortable about the person (a fourth sketchy guest and you’re apparently out of luck).

Loftium doesn’t assume homeowners will actually hit 100% occupancy for their listing, founder and CEO Yifan Zhang told Quartz. In a city like Seattle, for example, she said occupancy would probably be closer to 50% to 80%. Loftium also plans to be listed as a co-host on each property so that it can maintain certain standards of hosting and request improvements to listings. If a homeowner who’s received a down payment decides they want to stop renting out their home before the contract ends, they must pay their share of the nights remaining plus 15% of that amount within a week, or else Loftium can put a second lien on the house, behind the mortgage lender.

Loftium has raised $2.5 million in funding led by venture-capital firm DFJ. It has separately received financing for 100 down payments of up to $50,000 each—a total of $5 million—from a single institutional debt investor, Zhang told Quartz. (She declined to disclose the name of the debt investor.) Loftium has received federal regulatory approval to make its first 50 down payments in Seattle, and from there plans to expand to other cities with Airbnb-friendly regulations. “Obviously we have a huge incentive to launch in the right cities, because we’re the ones holding that risk,” Zhang said, adding that while Loftium has spoken with Airbnb, it’s not an official partner.

Millennial homeownership in the US is at a record low, and mortgage lenders are trying all sorts of weird things to coax the student-debt-burdened generation back into the market. They’ve tested avocado toast and now are selling the shared lifestyle. At first, this manifested in dorm-like accommodations that could be rented month-to-month, such as the residential WeLive buildings that shared offices company WeWork has opened in New York and Crystal City, Virginia. Loftium takes it one step further—to use startup lingo, advertising cohabitation as a feature, not a bug.

“A lot of people who like this idea are already living with their roommates or their parents, so this is a better situation for them,” Zhang told the Times.

That is one way to frame it, though the arrangement also seems uncomfortably close to serfdom. (Zhang told Quartz the arrangement is “not for everyone.”) Again, this is something we’ve seen before on the labor side of the sharing economy, such as with the subprime car leases that Uber funneled poor and immigrant drivers into in New York City. Those leases, which Quartz reported on earlier this year, were “flexible and affordable” so long as the drivers kept working for Uber, which deducted weekly payments directly from their earnings. Drivers could also take days off, but if they fell too far behind, they risked their car being repossessed.

Loftium might also want to pay even closer attention to local home-sharing regulations. In its home town of Seattle, the city council is looking at making home-sharing hosts pay $10 a night for every night they rent.

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