(fast-paced music)
- [Narrator] The US housing market is booming.
5.6 million single family homes were sold last year.
That's more than at any time since the 2006 housing bubble,
according to the National Association of Realtors.
And more and more, the buyers are investors.
According to John Burns Real Estate Consulting,
investors purchasing homes to rent or flip
currently make up about 20% of all US housing sales.
During the pandemic, millions of homeowners
have fallen behind on their mortgages,
according to the Mortgage Bankers Association.
And rental home investors are preparing
for a potential windfall.
Some investors are finding homes
through a growing niche known as Sale-Leasebacks.
That's a transaction where a property owner
sells a home, and then rent it back from the buyer.
Are programs like these offering
an opportunity to homeowners, or taking one away?
(wind chimes clanging)
- It's where I taught my kids to swim, you know it's,
it's just little things, you know.
My first big major purchase I ever made my life.
I don't really see myself living anywhere else,
or really wanting to.
- [Narrator] Blaine Marburger has lived in his home
in Denison, Texas outside of Dallas for nearly 20 years.
He never expected he'd now be renting it
from a New York Real Estate Investment Company.
- [Blaine] I kept falling short.
- [Narrator] After the pandemic ravaged his finances,
he found a company through an internet search
that offered to buy his house for $180,000,
and rent it back to him for $1,600 a month,
with the opportunity to repurchase it within a year or two.
- Eventually, this was my option.
- [Narrator] He raised his three kids here,
and imagined he'd stay in the house
until he retired from his job as a physical therapist.
Then the pandemic hit.
He says he lost half his income,
as he could no longer make home health visits.
- I got a forbearance on the house.
So I basically had a year that I didn't make a payment.
- [Narrator] During the same period,
he also went through a divorce,
and started paying child support.
- I think honestly, if the pandemic didn't come,
I could have made it.
- [Narrator] Marburger says he fell deeper into debt,
and his credit score plunged.
Even though he had temporary forbearance protection,
which allowed him to skip payments for up to a year,
and make them up later, he worried he could lose the home.
- I was very apprehensive about doing it,
but it was kind of, I was coming to the end of my options
deciding what am I gonna do?
- [Narrator] The company Marburger found, EasyKnock,
was originally conceived to allow homeowners
to start cashing out their homes when the market was hot,
or when an expense arose.
But during the pandemic, EasyKnock says it turned its focus
on distressed homeowners, who needed access
to quick cash to pay off debt.
Last summer, it raised $25 million from venture investors,
adding to the hundreds of millions of debt
it had already raised according to Crunchbase.
In Texas alone, it's purchased more than a hundred homes
over the past two years, according to public records.
- We've grown in the triple digits
and the percentage terms over the last year.
We've bought north of $220 million worth of homes,
and our average home is pretty much in line with
the national average, which is around $280,000.
- [Announcer] EasyKnock has a new path to financial freedom.
It's not a loan. - CEO Jarred Kessler
says the company decided to focus on sale leasebacks
to offer homeowners with bad credit
a way to take cash out of their house.
- [Announcer] All you have to pay is monthly rent.
- If people wonder if we're the lost and found,
and we're the destination of last resort,
the answer is absolutely not.
People can sell their home.
That's an easy solution for people.
If you want to stay in your home, and you want the cash out,
and you want to be treated with respect,
we're the best choice.
- [Narrator] For Marburger, the sale-leaseback
was both a last resort, and a lifeline
to pay off his growing debt.
EasyKnock paid $182,000 for Marburger's house,
which it valued at $315,000.
That paid off his mortgage balance of $119,000,
including a roughly $58,000 lien from years earlier,
and gave him $30,000 cash to pay off his debt.
EasyKnock took us $7,800 processing fee,
and is collecting $1,600 in monthly rent.
In 12 to 16 months, Marburger has the option
to buy back the house for $187,000.
- The house was about four years away
from being totally paid off before the pandemic.
So it's like,
(groans)
I just needed four more years, man.
And, but you know, it doesn't always work out
the way that you want it to.
- [Narrator] Millions of Americans
are in a similar situation as Marburger.
About 2.2 million homeowners are currently in forbearance,
according to the New York Federal Reserve Bank.
Serious mortgage delinquencies,
those more than 90 days late,
have quintupled since the start of the pandemic,
according to mortgage data provider, Black Knight.
Currently, federal and local
pandemic restrictions on foreclosures
are protecting some homeowners from being kicked out.
But Ira Rheingold, with the National Association
of Consumer Advocates, is worried about what happens
when those protections run out.
He remembers seeing programs like sale-leasebacks
during the housing crisis.
- As somebody who's done
consumer protection for a long time,
where people are harmed the most is when they're desperate.
When they're scared, and they're desperate,
and they're afraid of losing their home,
losing something, right?
They're afraid of going into bankruptcy.
- [Narrator] Rheingold says he understands
why sale-leasebacks are appealing for struggling homeowners.
But he thinks they're giving up too much for quick cash.
And he says in his experience,
rarely can distressed homeowners buy their houses back.
- I understand the short-term benefit of peace of mind.
The short-term benefit of not worried about
being homeless in a year.
But you're giving up your long-term stability.
You're giving up all of the equity that you may have
earned in your home over these years.
And if you want generational wealth,
if it's something that you want your kids to have someday,
or if it's a place that you want to
live for the next 30 years,
you're giving all of that up,
and you're selling it really low.
- [Narrator] Kessler says that at this point,
about a quarter of EasyKnock customers
have bought back their homes.
Morgan Stanley analysts say they expect sale-leasebacks
to continue to grow because of the robust
single family rental market, especially for retirees
looking to tap into their home equity.
They estimate there could be a million homes
sold through sale-leasebacks in the next five to 10 years.
Invitation Homes, the country's largest home rental company,
says it is planning a sale-leaseback program in the fall
as another channel to add to it's 80,000 homes,
though it's in very early stages.
- There's no street lights, it's just poles and,
you know, unless you're really kind of looking for it,
you'll drive right by it, and not even think twice.
- [Narrator] At this point,
Marburger says he has no regrets.
- If you don't pay rent, they're gonna come take your house.
It's not a nonprofit organization.
They're investors, I mean, they gotta make their money too.
Just like all of us do.
- [Narrator] But he's still optimistic
that he'll be able to buy back his house
at the end of his 16 month contract.
- I guess honestly the best way to put it is,
I'm still hanging on to a lot of memories.
I'm not really ready to give them up yet.
I'm not ready to start that chapter.