Real estate fund to aid first-time buyers through co-investment
Timothy Harleth, former White House chief usher under then President Donald Trump, has raised approximately $100 million for a new real estate fund aimed at assisting first-time homebuyers with down payments, Bloomberg reported.
The fund, named Generational Equity Labs (GEL), is based in Washington and plans to utilize a technology platform for “equity sharing,” enabling potential homebuyers to connect with institutions that co-invest in properties.
This new method offers a solution to the challenges Americans face in financing home purchases, especially with rising interest rates making mortgages less affordable. Harleth’s fund offers an alternative to traditional debt financing, allowing Americans to tap into the estimated $30 trillion wealth in home equity.
Tomasz Piskorski, a real estate finance professor at Columbia Business School, sees this as a good business opportunity.
“From Wall Street’s perspective, it’s an enormous amount of home equity that is illiquid that they might help households access,” Piskorski told Bloomberg. “Even if you get just a small portion of this, it’s a pretty substantial business opportunity.”
The program allows buyers to partner with an investor for a larger down payment, resulting in a smaller, more affordable mortgage. The investor, in turn, shares in the property’s future appreciation.
“GEL is building a marketplace that will enable homebuyers to finance their house using both equity and debt,” the company said in a statement. “This process will result in responsible and sustainable homeownership while reducing debt and providing significant affordability for homebuyers.”
After obtaining a mortgage from an approved lender, the homeowner and Generational Equity would enter into a shared-equity agreement, with the firm’s real estate fund paying its portion of the purchase price at closing. Investors can buy and sell shares in the fund that holds the home-equity stakes through Generational Equity’s technology platform.
Generational Equity’s initial focus will be on investing in homes in Ohio, a state where the affordability of housing has paradoxically attracted big investors, contributing to rising rents and a shortage of moderately priced homes.
Read next: What down payment assistance is available?
Harleth, previously the director of rooms at the Trump International Hotel in Washington, initiated Generational Equity following his dismissal from his White House role on Jan. 20, 2021. Harleth cites his family background, including his grandmother’s journey from homelessness to being housed on a Native American reservation, as a driving force behind the creation of the fund.
Marcia Lee Samples, Trump’s former director of White House Management, is also listed as a shareholder of Generational Equity. The firm’s consulting staff includes former Trump administration officials and Ohio Republican Party executives.
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