Easing the Housing Crisis by Building Better Tools | Summary and Q&A

February 6, 2023
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Easing the Housing Crisis by Building Better Tools


Divi aims to make home ownership accessible to all by providing a unique rent-to-own program.

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Key Insights

  • 🛟 Divi's founder, Adina Hoggard, was motivated by personal experience and the belief that homeownership is vital for creating a better life for future generations.
  • 👪 The mortgage system in the US has outdated criteria that make it challenging for many Americans to access affordable homes.
  • 👪 Divi's rent-to-own program offers an alternative path to homeownership by allowing customers to build equity over time and eventually purchase the home.
  • 😫 Divi operates with transparency and fairness, setting new standards for the rent-to-own industry.
  • 😮 The current housing market is experiencing a decline in home prices, likely due to rising interest rates and a decrease in demand.
  • ✋ Despite the decline, the housing market is different from the 2008 crisis, with a higher percentage of homes having equity and migration to new cities that is likely to continue.
  • 🥺 The decline in home prices may lead to more affordable housing in the future, benefiting consumers.

Questions & Answers

Q: Why is it so hard for people to get a mortgage and access affordable homes?

The main reasons include outdated mortgage criteria and requirements, such as down payments, FICO scores, and income verification, which do not account for the changing nature of employment and income sources.

Q: How did Divi decide on its unique rent-to-own business model?

Divi's founder, Adina Hoggard, recognized the difficulties in obtaining a mortgage and developed a model that mimics a mortgage while addressing the credit risk associated with individuals. The model allows customers to build equity and eventually purchase the home.

Q: What is unique about Divi's approach compared to the traditional rent-to-own industry?

Divi focuses on providing customers with the opportunity to choose their own homes, build equity, and covers maintenance, taxes, and insurance, unlike the traditional rent-to-own model. Divi aims to operate with transparency and fairness, setting new standards for the industry.

Q: How does Divi select its markets and customers?

Divi initially chose markets with more affordable homes where their seed funding could go further. They have since developed a quantitative approach to identify markets where they can serve the most individuals and provide good returns for investors. Divi's customers are typically non-salaried, working in fields like healthcare, and have a household income of around $100,000.


This video features an interview with Adena Hefets, the co-founder of Divvy, a company that aims to make homeownership accessible for more people. Hefets shares her personal background and explains why this mission is so important to her. She discusses the challenges people face in getting a mortgage and accessing affordable homes. Hefets also explains how Divvy's rent-to-own program works and how they differentiate themselves from predatory rent-to-own models. She talks about the markets Divvy operates in and the profile of their customers. Hefets also touches upon the importance of engaging with regulators and her predictions for the housing market.

Questions & Answers

Q: Why does Adena Hefets find the mission of making homeownership accessible meaningful?

For Adena Hefets, the mission of making homeownership accessible is deeply meaningful because owning a home was everything for her family while growing up. Her father, an immigrant from Israel, had to face challenges in getting a mortgage, but eventually, they were able to invest in property and use the cash from refinancing to pay for their children's education. This experience embodies the American dream of providing a better life for future generations through homeownership.

Q: Why is it difficult for people to get a mortgage and access affordable homes?

Adena Hefets explains that only 20% of Americans, based on median income levels, can actually afford a home. She attributes this challenge to several reasons. Firstly, the underwriting criteria and structure of mortgages were determined in the 1940s and have yet to evolve to accommodate the changing demographics and income sources of Americans today. Factors such as down payment requirements, FICO scores, and income variety (e.g., 1099 workers, gig economy, self-employment) make it extremely challenging for people to qualify for a mortgage.

Q: How did Adena Hefets decide on the business model for Divvy?

Adena Hefets explains that she came up with the rent-to-own model for Divvy as a solution to the difficulty of obtaining a mortgage. She wanted to create a structure that made it easier for individuals to buy a home while minimizing credit risk. The model allows customers to pick out a home, and Divvy purchases the property for them. Customers then sign a lease with an option to purchase, making monthly payments that include rent and equity. Divvy allows customers to build up to 10% ownership over three years, providing a path to homeownership.

Q: Why did Divvy choose to focus on markets in Middle America?

Adena Hefets shares that the initial choice to enter new markets was driven by the affordability of homes in those areas. Divvy had raised a $3 million seed round, which wasn't enough to buy homes in more expensive geographies. So, Hefets looked at a map and identified places where they could buy the cheapest homes, initially leading them to Cleveland, Ohio. Subsequently, Divvy took a more quantitative approach, considering factors such as the number of individuals they could serve and the potential return for investors. Their biggest markets now include Atlanta, Georgia, Florida, and Texas.

Q: Who are Divvy's customers, and how does Divvy serve underrepresented populations?

Divvy's customers typically consist of co-applicants with an average total household income of around $100,000. Fifty-one percent of customers are non-salaried, often working as 1099 or hourly gig economy workers. Approximately 25% are in healthcare professions, including nurses, x-ray technicians, and teachers. Divvy's customer base includes underrepresented minorities, with over 50% being female-led transactions. Divvy takes pride in serving individuals who may have been traditionally ignored by other financing options, aiming to provide a fair and accessible path to homeownership.

Q: How has Divvy innovated its rent-to-own model to avoid predatory practices?

Adena Hefets acknowledges the predatory history associated with rent-to-own models, especially during the 1980s. Divvy has intentionally taken a different approach to ensure fairness and transparency. Unlike traditional rent-to-own models, Divvy allows customers to pick out the home, build equity in the property, and takes responsibility for maintenance, taxes, and insurance. They provide free credit counseling and strive to treat every customer as if they were making decisions for their own family. Adena Hefets emphasizes her commitment to setting a high standard of providing a great and fair product.

Q: How does Adena Hefets suggest regulators can work better with startup founders in industries like housing?

Adena Hefets believes that the onus is on companies to initiate conversation and open up a dialogue with regulators. She acknowledges the challenges startup founders face in engaging with regulators while building their companies. However, she emphasizes the importance of actively reaching out, attending events, and seeking guidance through consultancy firms. Hefets expresses her willingness to have conversations with regulators and invites them to connect and provide guidance on setting the right standards and policies within the industry.

Q: What are Adena Hefets' predictions for the housing market in the near future?

Adena Hefets predicts that home prices will decline, as evidenced by the market softening and falling demand since early July. The increase in interest rates directly affects mortgage payments, resulting in a decline in home transactions. She anticipates a year-on-year decline of home prices around 10-15% going into the first quarter of the following year. Compared to the previous housing crisis, Hefets believes the market will experience a more moderate correction, considering factors such as increased equity in homes and migration to new cities. She advises people to prepare for a tougher housing market in the coming years.

Q: How does Adena Hefets view the lasting effects of the migration caused by COVID-19 on the housing market?

Adena Hefets acknowledges the migration patterns that have emerged during the pandemic, with people moving away from cities and towards suburbs, smaller cities, and rural areas. She believes this migration trend will continue post-COVID-19. Hefets suggests that the under-supply of homes in these areas will contribute to boosting the economy. Despite the expected decline in home prices, she doesn't foresee a housing crisis similar to the past, primarily due to the higher equity levels and positive long-term effects of the migration trend.


Adena Hefets's mission with Divvy is to make homeownership accessible to more people. She addresses the challenges individuals face in getting a mortgage and accessing affordable homes, highlighting outdated underwriting criteria and other factors that hinder homeownership. Divvy's rent-to-own program provides a structured path to homeownership, allowing customers to build equity and overcome traditional barriers. The company distinguishes itself from predatory rent-to-own models by prioritizing fairness, transparency, and customer well-being. Divvy serves middle-class households, underrepresented populations, and those in non-traditional employment. Hefets emphasizes the importance of engaging regulators early, welcomes dialogue, and believes companies should take the initiative to open up conversations. She predicts a decline in home prices and advises people to prepare for a more challenging housing market in the near future, but also recognizes the positive effects of migration and equity in homes.

Summary & Key Takeaways

  • Divi's founder, Adina Hoggard, was inspired to start the company based on her personal experience with homeownership and the belief that it is essential for providing a better life for future generations.

  • The current mortgage system in the US makes it difficult for many Americans to access affordable homes due to outdated criteria and requirements.

  • Divi's rent-to-own program allows customers to build equity in a property over time, providing a path to homeownership for those who face challenges in obtaining a traditional mortgage.

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