How does Venture House work?
Venture House leverages private market capital, multiplied by existing federal grant and loan programs, city and county bonding authority, and support from the nonprofit sector. By bundling large numbers of houses together, we open up Venture House support to larger investors, while spreading risk over the large number of properties, enabling targeted support by government and nonprofits, and efficient funding.
Venture Houses are much less expensive than conventional rehabs:
- Banks contribute the houses at low or no cost, taking the deduction and the Community Reinvestment Act (CRA) credits
- Our partner Bright Community Trust has a nonprofit general contractor subsidiary that provides a high-quality rehab with no sales tax for materials and much lower markups on subcontractors, saving 20-25% of rehab costs
- Rehabs use as much “sweat equity” from the new entrepreneur residents as possible, as they leverage their friends and other connections to provide manual labor for smaller rehab tasks
- Banking partners can tap low-interest federal funds to loan to Venture House at rates much lower than for-profit developers for the rehab costs, secured by the property value, and mitigating the risk across multiple properties
- The City forgives liens, lowering costs, and provides access to federal and nonprofit funding programs, and offers neighborhood support like increased police patrols during rehabs
- The City offers a 20% rehab rebate within its community redevelopment area, Venture House’s target zone
The result is a housing cost 1/3 to 1/2 of conventional market housing for entrepreneurs, enabling them to focus more time and energy on business – while creating jobs and revitalizing neighborhoods in the process.
Venture House holds the properties in trust, and can either lease or sell them to entrepreneur clients, with an underlying agreement that any future sale must be to another Venture House resident, and capping the equity appreciation by a resident-owner to allow a comfortable gain but not a speculative windfall, to support the ongoing affordability of Venture House properties; any additional appreciation remains within the property trust. Our partner Bright Community Trust provides these real estate trust services, and has been operating under this model successfully since 2008. Venture House will also offer entrepreneur renters who stay for at least 3 years down payment assistance to purchase a home in the City, tied to the increase in value of their Venture House property over their stay, to encourage their stewardship of the property.