Moving isn’t for the faint of heart. Not only do you have to pack up your entire life into suitcases and boxes and get it all from Point A to Point B, you have to make a ton of decisions on where to move and what type of dwelling you’ll be living in next.
If you decide to buy your next residence, you must get your finances in order, make sure you have enough money saved for a down payment, hire a realtor, hire a mortgage specialist, tour houses, place offers on houses, and so on.
If you decide to rent an apartment, you must also get your finances in order, find a place with the space and amenities you need, and make sure you can afford the monthly payment.
You could also decide to sign a rent-to-own agreement on a property, but it can be very difficult to find eligible properties for these agreements.
Sounds like you have a handful of options to sort through before making a final decision, no?
While you should do what’s absolutely best for you, it’s important to know about an option where those other options meet in the middle: ZeroDown.com (1).
What Is ZeroDown.com?
ZeroDown.com is a new, modern type of rent-to-own agreement when it comes to acquiring your very own home. The company was formed in 2019 because its founders were tired of seeing hard-working people not being able to purchase a home for themselves. So, they came up with a plan that would give people all the benefits of homeownership with the flexibility of renting: A.K.A. a new rent-to-own plan.
What Exactly Does ZeroDown Do?
ZeroDown essentially acts as your realtor during your home search and your home-buying process. In short, once you find a home you like, ZeroDown will pay for your home in cash without needing a down payment from you (2). The company is then technically the homeowner, and it will lease the home to you so you can live in it. Subsequently, you’ll pay monthly rent to ZeroDown for a set amount of time or until you can acquire a mortgage and buy the house outright from the company (whichever comes first).
Now, that all sounds like a very simple process, but there are many more details and nuances that go into using ZeroDown for a rent-to-own agreement.
Qualifying to Use ZeroDown’s Services
You do have to qualify to be eligible to use ZeroDown’s services. You’ll need at least a 700 FICO credit score to begin with, though the company only conducts a soft credit check on you, so your credit score will not be impacted by it.
Additionally, you’ll need to provide basic information about yourself plus proof of income and assets. It typically takes around 24 hours for the ZeroDown team to contact you back to let you know if you’ve qualified to use its services.
The Details of the ZeroDown Home Buying Process
Once you’ve qualified to use ZeroDown’s services, you’ll be matched with its real estate team to help you find the perfect home for you and your family. If you already have a realtor you’re working with outside of ZeroDown, that’s completely fine. Just let the company know and you’ll be allowed to continue to use your realtor.
You’ll then be sent listings of homes from the MLS and, just like a normal home search, you’ll look through them and pick out the ones you want to tour. Once you’ve found a home you want to place an offer on, let ZeroDown know.
At this point, you’ll pay half of ZeroDown’s starter cost. In total, this starter cost will cover the services and closing costs during the real estate transaction once everything is finalized, but you pay the first half of it to ZeroDown before you even close on a house. You pay the second half of the starter cost once you close on your home.
The starter cost ranges in price depending on the area in which you’re searching for your home. It can be as low as $3,000 and as high as $10,000 (3).
As in most cases in life, cash is king. In most real estate transactions, if a buyer can purchase a property totally in cash, their offer will be the winner of any sort of bidding war that may occur. To ensure ZeroDown has the best chance of claiming the home you want, the company will place an all-cash offer on your home. Most of the time, the seller will accept this offer.
ZeroDown will have an appraisal done on the property before the deal officially goes through. If the appraisal comes back as less than what ZeroDown is going to pay for the property, the company reserves the right to reject the deal.
Since ZeroDown is paying for your home in cash, closing on the house goes much faster than someone paying for it with a mortgage. Therefore, you’ll be able to begin leasing your home from ZeroDown and move into your home in as little as two weeks. As a side note, if you were to traditionally purchase a home with a mortgage, you would need to wait at least 30 days before you could move into the home.
While you’re leasing your home from ZeroDown, your monthly payment is quite literally just a monthly rent payment. There’s no interest or principal that needs to be paid. ZeroDown will handle property taxes and homeowners’ insurance, though you need to pay for any homeowners’ association (HOA) fees that may be due. You’ll also need to acquire renters’ insurance while you’re leasing.
During your leasing period, you can enjoy concierge service living. While you, as the tenant, must take care of daily maintenance around the house, if anything major happens which makes the home inhabitable, ZeroDown will help you remedy the problem. These types of problems include structural issues, HVAC issues and roof repairs. The concierge service can also help you find and book maintenance providers if you need assistance, too. The concierge service is available 24-hours per day, seven days per week.
You have the exclusive option to purchase the home from ZeroDown and officially call it your own between 30 days to three years after you begin leasing; no other outside person can put an offer in on the house. If you decide to purchase, you simply get a mortgage from the lender of your choice; it should be noted that ZeroDown is not a lender, cannot offer you a mortgage and cannot guarantee you’ll actually qualify for a mortgage from a lender.
The purchase price of the home is set when ZeroDown initially purchases the home. There is a flat increase of 2.5% in annual appreciation of the property in addition to the original purchase price. That original purchase price plus the appreciation is what you’ll need to acquire a mortgage for once you decide to buy.
If you find you don’t like the home or the home just isn’t working for you and your family for whatever reason, you are not obligated to purchase the home. You are obligated to live there for at least two years though before you can move out, no questions asked. If you move out, ZeroDown will simply sell the home to someone else.
Regardless of if you decide to stay or go, you should know you can make minor changes to the home while you lease it (4). These changes include painting walls, replacing the carpet, hanging pictures on the walls and replacing appliances. Any major remodeling or construction is not allowed.
ZeroDown’s Property Guidelines
ZeroDown pulls all its house listings from the MLS, though it should be noted not all the listings will meet the company’s property guidelines (5).
Most single-family residential homes, condos and townhomes are eligible for ZeroDown’s program. Duplexes, triplexes, commercial buildings, modular homes, log cabins, mobile homes, manufactured housing and mixed-use properties are not eligible for the program.
Eligible houses must also be used as your primary residence, located off paved roads and be in good shape. These houses must not be under construction, need major rehab, need any major repairs or replacements and/or have the mechanicals exceed their life expectancies. If it’s found the home has major structural, roof, electrical, HVAC, plumbing or foundational problems, ZeroDown reserves the right to not agree to purchase and lease the home on your behalf.
Additionally, eligible homes cannot have items or features such as glass-ceiling sunrooms, above-ground or vinyl pools, primary-heat-source propane tanks, or be on a well or septic system for water.
Furthermore, ZeroDown will not allow you to use your home as an AirBNB or VRBO property while you’re leasing it. You cannot sublet your home as well.
There are other specific guidelines which apply to all and specific locations, but it’s best to reference ZeroDown’s property guidelines for more specific information (5).
Eligible ZeroDown Locations
As of May 2022, ZeroDown is not available in every city across the United States. It previously used to only be available in San Francisco, CA; the greater Austin, TX-area; the greater Seattle, WA-area; and the Dallas-Ft. Worth, TX-area. Now, ZeroDown is available in over 100 cities across the country. Some of these additional locations include:
- New York, NY
- Las Vegas, NV
- Charlotte, NC
- Phoenix, AZ
- Los Angeles, CA
- Nashville, TN
- San Antonio, TX
- Orlando, FL
- San Jose, CA
- Denver, CO
- Philadelphia, PA
- Boston, MA
- Henderson, NV
- Atlanta, GA
- Tampa, FL
While searching for a home in any of ZeroDown’s locations, you can learn more about the area to ensure you truly want to live there by researching the city and its housing market with ZeroDown’s helpful cost-of-living, city and neighborhood reports.
(1) — ZeroDown.com
(4) — ZeroDown’s FAQ Page (FAQ answers vary by location)
(5) — ZeroDown’s Property Guidelines (guidelines vary by location)