DIVVY HOMES

Adena Hefets was at Andreessen Horowitz studying housing and realized millions of Americans earn enough to afford a mortgage payment but can't save enough for a down payment or don't have the credit score to qualify. In 2017, she co-founded Divvy Homes to create a path from renting to owning.

Divvy buys the house the customer selects. The customer moves in as a renter but a portion of each monthly payment goes toward building equity — effectively saving for a future down payment.

After three years, the customer can buy the house at a predetermined price, walk away, or extend.

Divvy buys homes on behalf of customers who can't yet qualify for a mortgage. The customer rents the home from Divvy while building equity through a portion of their rent.

After 3 years, they can exercise the option to buy at a fixed price. Divvy makes money from the rent spread (rent collected minus costs) and from the markup on the home when the customer eventually buys.

The model requires massive capital — they're literally buying thousands of houses.

Rent-to-Own Program — Divvy buys a home the customer selects, rents it to them, and lets them build equity toward purchase. The core and only product.

Customers typically build 2-5% equity over 3 years.

Targeting underserved markets. Divvy focused on cities where homes are $150K-$400K — affordable enough for rent-to-own to work mathematically.

They avoided expensive coastal markets. They also partnered with real estate agents who brought in customers, creating a referral flywheel.

The capital intensity is enormous. Divvy has to buy and hold thousands of homes on its balance sheet.

If home prices drop, they're holding depreciating assets. If customers don't convert to buyers, Divvy is stuck landlording houses it didn't plan to keep.

Rising interest rates in 2022-2023 made the model harder — both for Divvy's borrowing costs and for customers trying to qualify for mortgages.

Andreessen Horowitz, Tiger Global, Caffeinated Capital, and GIC (Singapore sovereign wealth fund) were key investors. Brookfield Asset Management acquired Divvy in 2023, providing the massive balance sheet the model requires.