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1281 Homes Blog: This startup will buy Grandmas house and let her live there til the end & Emotional muscles web site BELOW
THURSDAY, JULY 12, 2018 PROPERTY NEWS: This startup will buy Grandmas house and let her live there til the end & Emotional muscles web site BELOW

Irene, a Manhattan based startup, is buying seniors homes and letting them live there for free for life.
According to an article from Slate, the burgeoning company just finished its seed funding round and is making acquisitions. In a time where pensions, social security and retirement savings are taking a good buffeting and property taxes and life expectancy keep growing, Irene offers an attractive alternative to potential foreclosure and financial burden in the twilight years.

Millions of seniors who are homeowners have lots of savings in the house, but not outside, Irene Founder and CEO Fabrizio Tiso told Slate.
Theyre whats called asset rich, cash poor, and as they adjust to retirement, their income reduces, and they cant afford the house, he added.
The catch is that Irene gets to buy these homes from seniors for far less than market value in whats called a life estate deal. Life estate deals work off of a table the IRS created that sets the value of the deal based on life expectancy and home value. The longer a person is expected to live, the less that person gets for his or her home.
Inherent in this model is risk that Irene must carry, namely that seniors have the potential to live a lot longer than expected. The hard part of this business is that Irene profits most when the time they have to pay for maintenance, property taxes et al. is short.

This model is not unlike a Home Equity Conversion Mortgage, also known as a reverse mortgage. You can think of it as a first cousin to life estate deals.
With an HECM, homeowners can cash in their equity for a government backed loan. The value of the loan is based off of life expectancy and the value of the homeowner’s equity, much like the life estate deals.
The difference is that the resident retains ownership of the home until death or sale whereupon the bank takes the house or the senior must repay the value of the HECM. In an Irene style life estate deal, ownership is transferred before death, and the seller becomes a tenant. Whereupon Irene offers to take on the responsibility for maintenance and pays the property taxes so that the seller lives functionally for free in his or her own home.

Irenes business model is not new. Its just uncommon in the U.S. The late Hugh Hefner sold the Playboy Mansion in a life estate deal shortly before his death, and the life estate model has been in use for years in France under the name viager, where sellers have learned to take advantage of buyers inability to look into their medical history and attempt to look sickly or frail to get a better deal on their homes.
Irene is betting on market conditions and demographic trends to catapult its life estate deals into profitability, but payday is a long way away.


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