Over the past year we’ve seen a number of real estate trends emerge, from rising interest rates to rent increases, to seeing more innovative models, the market is evolving and how we think about real estate is changing. 

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One of the most notable trends we’ve seen this year is the emergence of many alternative homeownership models. For first-time home buyers, these models can be a tool to help accelerate the path to homeownership. And this is exactly what Key’s co-ownership model was designed to do.

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Key’s co-ownership model removes the two biggest barriers to traditional homeownership, a significant down payment and the need to qualify for and service a mortgage. With co-ownership, Owner-Residents can start owning for an initial payment as low as 2.5%, and you’re never required to take on a mortgage. Removing these barriers makes co-ownership one of the best alternative homeownership models for first-time homebuyers.

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To better understand what Key’s co-ownership model is, it can be helpful to understand what Key’s model is not. We often get asked how we compare to other real estate models such as Rent-To-Own, Timeshare and REITs. Here’s a quick comparison of how Key is different from these models. 

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Key vs. Rent-to-Own

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Rent-to-own solutions are one of the more well-known alternative homeownership models that have emerged over the last few years. The concept is that you sign on to rent a property from a certain time period with the exception that you will buy it at the end of your lease. Depending on the rent-to-own program, your monthly rental payments could be going towards helping you save for a down payment, but for many this is not the case.

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There are a couple of important differences to note between Key’s model and rent-to-own. The first being that unlike rent-to-own where you are not building equity until you qualify for and commit to a mortgage at the end of your term, with Key you’re building home equity from day one.

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The second key difference is that with rent-to-own, after the end of your lease you are required to qualify for a mortgage and put down 5-20%. On top of this you are often on the hook for upfront non-refundable fees, so if you cannot qualify for a mortgage you risk losing the equity you’ve been saving up from your initial deposit. 

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With Key, you have the option to take on a mortgage and buy your home the traditional way after the end of your initial term, but there is no obligation. You can also choose to continue co-owning and building your home equity at your own pace. 

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You can learn more about how Key compares to rent-to-own here. 

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Key vs. Timeshare

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With a timeshare model, you buy the right to use a property for a certain amount of time each year, this usually is a short-term stay for about 1-2 weeks, making it a very different model than co-ownership.

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With timeshare since you are buying time at the property rather than the actual real estate, you do not have an equity position that can grow over time. Another notable difference is the number of co-owners, with timeshare there are multiple co-owners who receive the same time period with the same rights of usage. 

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As an Owner-Resident with Key you co-own alongside Key’s investors or property owners. You are the only person living in your home and it is your principal residence.. 

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With a typical length of stay of 2 weeks, your length of stay with a timeshare is limited. With co-ownership, both owners are signed to a predetermined term, which provides more security of tenancy. 

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Finally, with timeshare, agreements are difficult to cancel, making them hard to exit. With Key, after the first year you simply give 75 days notice when you’re ready to move out and you will get back your initial home equity investment plus your portion of appreciation if your suite has appreciated in value during your time living there.

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You can learn more about how Key compares to timeshare here. 

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Key vs. REIT

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A third model that we often get questions around is how Key compares to REITs. There are two main differences to note between the two models, the ability to reside in your home and the ability to grow home equity.

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As we know, with Key you are the only person living in your home, and you get to live there while building home equity. With Publicly traded REITS people invest in them to have exposure to real estate without needing to purchase individual properties. This means that you do not live in the property, and additionally investing in REITs is not a home equity investment, so you don’t have the ability to grow home equity.

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You can learn more about how Key compares to REIT here.

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With so many new options in real estate, navigating the real estate market can be especially challenging for first-time homebuyers. If you’re an aspiring first-time homebuyer consider learning more about what it means to co-own your home and how you could benefit from co-ownership. 

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