When you co-own with Ourboro, buying a home is only the beginning.
When we close on your new home, together we’ll sign a Co-ownership Agreement, the legal document outlining both of our rights and responsibilities to the property.
When Ourboro began building our Co-ownership Agreement in 2019, we decided that the agreement should last for 10 years, at which point the co-owner could choose to sell the home or buy out our share if they hadn’t done so already.
Ourboro is excited to share that, as of February 2023, this timeline has been extended to 30 years for all new co-buyers.
Why are we making this change?
When we originally decided on a 10 year term, we did it for three main reasons.
First, we recognized that, statistically, most first-time home buyers sell their home within 10 years. While Ourboro is not limited to working with first-time buyers, they do make up the large majority of our co-owners.
Second, we ran the numbers and noticed that, if a co-owner decides they want to remain in the home long-term, it makes the most financial sense if they buy out Ourboro’s share before the 10 year mark. Put simply, the longer we own the home together, the more expensive it may be to buy out Ourboro’s share.
Finally, the funds Ourboro uses to co-buy homes come from our investors, and those investors need to see their returns on an agreed upon timeline. We found 10 years was a long enough term for investors to see growth, while meeting homebuyers needs.
But, over the past few months, changes in market dynamics, regulatory guidelines, and feedback from homebuyers made us rethink our decision.
Given recent market conditions, many homebuyers expressed nervousness around the 10-year deadline. Increased anxieties around property appreciation can make it more difficult to confidently determine the best time to buy or sell, especially if you’re trying to plan years in advance.
This led us to exploring the idea of giving homeowners more flexibility and, ultimately, stretching our co-ownership term from 10 to 30 years. With a longer co-ownership period, you have the freedom to choose the best time to sell your home and maximize the appreciation you receive. This ability to time your sale benefits both you and Ourboro, ultimately furthering our goal to create aligned incentives for homeowners and investors.
How does this impact you?
Ourboro’s current co-owners with a 10 year Co-ownership Agreement will remain at their original term length, though there may be options to extend at the end of 10 years if they wish.
Moving forward, all new Ourboro co-buyers will be able to co-own with us for up to 30 years, giving them more flexibility to make the homeownership decisions that best serve their needs.
In our analysis of first-time homebuyers, from 2007-2020 in the Greater Toronto Area , 96% of buyers sold their home within the first 10 years. Since the length of our co-ownership term only impacts co-owners that choose to remain in the home, it’s extremely likely that you won’t feel the impact of this change.
It’s important to note, whether our agreement is for 10 or 30 years, co-owners are always free to sell the home or offer to buy out our share at any time.
How long should you co-own your home?
Co-owning with Ourboro works best for buyers looking for their starter home, not their forever home. While Ourboro is now able to co-own your home for up to 30 years, our co-ownership model is still best suited for those that are looking to sell around the 10 year mark.
When it comes to selling, you should put your co-owned home on the market whenever it feels right to you. Whether it’s time to upsize, downsize, move to another city, or you just want to move down the block, the choice to sell is entirely yours.
So what about buying out Ourboro’s share?
If, at any point, you decide you want to live in the home beyond our 30 year term, it is in your best interest to buy out Ourboro’s share as soon as possible.
While Ourboro’s investment in the home will always grow at the same rate that yours does, the length of time we co-own the property will impact your return on investment. Historically, the longer you own a property the more it increases in value, and higher property appreciation means it will become more expensive to eventually buy out our share.
If you co-buy a home with the intention to live there long-term, we strongly encourage you to do the necessary planning to ensure you will be financially prepared to buy out Ourboro’s share, especially at an appreciated home value.
As general advice, we encourage homebuyers to look at Ourboro’s model as a stepping stone. Use co-ownership to get onto the property ladder sooner than you could by saving on your own. Then, when you’re ready, sell the home and use the proceeds to help make a larger down payment on your next home.
Ourboro is excited to give our co-owners the additional flexibility that comes with a longer co-ownership term, while helping to maximize their, and Ourboro’s, investment in the home.