ZeroDown, a San Francisco-based rent-to-buy startup, has clinched a $150 million valuation, TechCrunch reports.

In exchange for a $10,000 fee, ZeroDown will buy a home on behalf of a renter.

The renter then moves in and pays a monthly bill to ZeroDown that essentially includes funds for a future down payment. Rather than accumulate in a savings account owned by the renter, those funds earn the renter “purchase credits” from ZeroDown.

The renter can then put those purchase credits towards a down payment to buy the home from ZeroDown in the future — but only if the renter remains in the home for two years. Alternatively, the renter can move out and redeem their accumulated purchase credits for cash — but again, only if they stay in the home for at least two years.

ZeroDown currently only operates in the Bay Area, which has some of the highest housing prices in the country, meaning that even homebuyers that would be considered wealthy in other cities can’t necessarily afford homes here. And that’s who ZeroDown aims to serve.

Customers or households must earn more than $200,000 a year and have some savings to qualify for ZeroDown, and eligible homes have to be priced between $550,000 and $1.75 million.

People who rent homes from ZeroDown, whom ZeroDown calls “homeownership partners,” are responsible for paying for maintenance of the home. Property taxes, home insurance, and where applicable, HOA fees, are included in the monthly bill that renters pay to ZeroDown.

ZeroDown didn’t immediately respond when asked if the renter loses some or all of the money they paid to ZeroDown for purchase credits if they move out before two years have elapsed.

But while renters may not enjoy benefits offered by a traditional landlord, like included maintenance, if they rent from ZeroDown, they get to lock down a home they really would like to buy, but don’t feel they can yet afford.

The company has raised $30 million in equity financing and more than $110 million in debt, $100 million of which comes from Credit Suisse, the company announced in August.

ZeroDown pairs qualified applicants with partner real estate agents to find the home they want, and then splits the buy-side commission with those agents. As of June, the company had a partnership with Berkshire Hathaway HomeServices Drysdale Properties.

“We prefer that you work with one of our partner agents, whom we’ve selected for their deep knowledge of the Bay Area housing market,” ZeroDown says on its website. “That said, we’re happy to partner with your agent if you’ve already been working with one and trust them.”

Email Teke Wiggin.

Show Comments Hide Comments
Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
By submitting your email address, you agree to receive marketing emails from Inman.
Success!
Thank you for subscribing to Morning Headlines.
Back to top
×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription
×