FirstREX Helps With Mortgage Down Payments in Exchange for Home Equity

Jeff Uter would have needed to sell stocks or pull cash out of his consulting business to afford the down payment on a $780,000 home in Orange County, Calif. Instead, he paid half of the 20 percent required and got the other $78,000 from San Francisco-based real estate investment companyFirstREX. In exchange, FirstREX will get 40 percent of any gains in the value of Uter’s four-bedroom condo in a golf course community when it’s sold. “I have stocks and my own business,” says Uter. “I’d rather invest in that than put it in a personal residence.”

As house prices rise and lenders want larger down payments, FirstREX started this year trying to profit by striking deals with home buyers who need extra cash. “Houses are really affordable right now because interest rates are low, even after the recent runup, but housing is not that accessible,” says FirstREX Co-Chief Executive Officer Jim Riccitelli. “If you can’t get the house, affordability doesn’t really matter.”