Seattle startup has creative solution for struggling renters
Feb 17, 2020, 7:56 AM
Houses in Seattle. (Nick Amoscato, Flickr Creative Commons)
Seattle startup Loftium first made headlines by covering down payments for home buyers, in exchange for those buyers agreeing to rent out a room on Airbnb. Now, it’s evolved to help Seattle’s renters afford the city’s ever-increasing cost of living.
Loftium touting success with unique approach for home buyers
The updated model is simple: A middle income renter signs up for Loftium to rent a high-end home that typically would be well out of their price range. In exchange for agreeing to rent out a room in that house on Airbnb, they receive a discounted rental rate themselves, and up to $55 per Airbnb booking.
To top it all off, Loftium not only handles the Airbnb rental process, but each home comes equipped with a fully furnished area for Airbnb guests, with its own private entrance, living space, and amenities.
“We split out a bedroom and bathroom that’s dedicated to the guests, and our Airbnb guest will stay in that space,” Loftium CEO Yifan Zhang told KIRO Nights. “They actually won’t come into the family space where renters live, so there’s no sharing of the living room or kitchen.”
Zhang estimates that for a home that typically goes for around $3,000 a month, renters using Loftium pay between $1,600 and $2,000, with the rest of the cost offset by the Airbnb rental space. Meanwhile, the actual owner of the home receives a market rate for their house, while fulfilling typical property management and landlord duties related to things like repairs.
This approach was a pivot away from the company’s original model, where it was covering down payments for home buyers. So, why the shift to renters?
Number of Seattle renters on par with number of homeowners
“The main issue we ran into was actually the cost of homes continuing to rise in Seattle,” Zhang described. “The middle-income home buyers that we were working with were struggling with both a down payment issue and a monthly payments issue.”
“That’s when we refocused on rentals, because then we can just tackle the monthly payments issue,” she added.
Zhang’s goal is to make it a beneficial agreement for all parties involved. Landlords get multiple years of guaranteed income, middle income renters get a high-end affordable housing option, and Loftium ensures that renters, landlords, and guests are all trustworthy and communicative.
“It’s your classic win, win, win, win,” joked KIRO Nights co-host Aaron Mason.
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