Another real estate startup is coming to Austin, aiming to disrupt the expensive and stressful process of buying a home.

Called ZeroDown, the company offers a uniquely modern solution to the rent vs. buy dilemma through its "lease-to-own" product. It works like this: Customers go shopping for their desired move-in-ready homes listed on the market, which ZeroDown buys for cash and rents back to them.

Customers pay rent to ZeroDown and have a valuable option to buy the home on their own timeline at an attractive price. That's because ZeroDown will increase the purchase price for the customer by 2.5 percent per year during the three-year option period, a small fraction of the 12.1 percent year-over-year home price appreciation calculated by the Austin Board of Realtors for September 2020.

All of the upside above the 2.5 percent annualized level can be captured by the customer if and when they choose to buy the home from ZeroDown. Unlike a mortgage, there is no upfront down payment involved, even for pricier homes above $1 million, and the customer can decide to leave the home anytime after two years without the intense friction of having to list and sell the homes themselves.

"We created ZeroDown so that you don't have to wait to live in the home that you want," says co-founder and CEO Abhijeet Dwivedi. "You can find a home you love, move in, and then build toward ownership."

Austin is the third market for ZeroDown, following successful launches in Seattle and its hometown of San Francisco.

ATX's status as a hub of major real estate innovation — with companies such as OJO Labs; Opcity, which was acquired by Realtor.com in 2018; Archetape; Upequity; and Homeward — played a role in ZeroDown's decision to make the region its third market.

Like San Francisco and Seattle, the area is home to a fiercely competitive housing market, and committing to a big down payment is a challenge for many buyers, even those with high incomes and strong credit.

If you're wondering how ZeroDown makes any money with this model, here's your answer: Commissions from agents. The company also offers a "white-glove concierge service" that includes help with cleaning, moving, furnishing, and more.

The company has raised over $150 million of debt and equity capital in its lifetime, with equity from Y Combinator, the accelerator's former president Sam Altman, and Goodwater Capital, and a credit facility from Credit Suisse and Blackstone to buy homes for customers.

"The housing market has changed," says Dwivedi. "Why should our approach to it stay the same?"

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Visit ZeroDown.com to search available listings, review market data, and learn more about the process.