Real estate prices are growing at a pace in Southeast Asia that has many wondering if homeownership will ever become a reality for many of the region’s rising middle class. According to new proptech firm Homebase, Ho Chi Minh City’s apartment market has seen a 22.7% year-on-year increase of prices in 2019.
Many are now increasingly looking to the technology industry to produce solutions. Homebase is a Vietnam-based prop-tech startup providing customized co-investment plans, where home buyers, notable millennials, can pay the portion they can afford today, move in from that moment, and then buy out all or part of their stake at a later time when they are ready.
After raising its pre-seed funding round, led by venture capital firms Antler, Iterative VC, and several strategic angel investors, Homebase’s Phillip An, one of the founders, opens up with us about how his team is gearing up to solve one of the biggest challenges facing today’s younger generation: homeownership.
What’s the motivation behind starting Homebase? What is Homebase’s mission?
Our mission at Homebase is to help anyone realize their dream of homeownership in the way that works best for themselves. We started Homebase because of our first-hand experience with unaffordable home financing in Vietnam. After wanting to buy a home and going to banks, we were shocked that the interest rates here are as high as 15% a year with required 30% down-payments – intuitively, comparing against “normal” 1.8% rates in Singapore or 3% in the US for a 30-year mortgage, we were in utter disbelief on how anyone could afford to buy a home.
After speaking with hundreds of millennials in the market, we realized that the lack of financing was forcing many to defer their home purchase and to build up savings in the next five to ten years. It seemed crazy that essentially no affordable alternatives existed and the best solutions to such a massive pain point were to either 1) save up for 10 years or 2) be lucky enough to have wealthy family members that can lend money. From this frustration, the initial seeds of Homebase were born.
Why start a business in Southeast Asia, specifically Vietnam? As an American, why not in the US?
I’ve personally spent a large chunk of my personal and professional career in Silicon Valley and Wall Street in the US, however I’m extremely excited about Vietnam and the opportunity to build a industry-defining company in this region that can fundamentally change millions of lives through tackling real user needs that were previously unmet. Opportunities and moments like this one happen for a country only several times in a lifetime. It would be foolish to waste it.
One of the investors we’ve been lucky to have aboard is Brian Ma, who has written extensively about the potential that SEA and Vietnam represent here. He’s also the founder of Divvy Homes, one of the most innovative and successful PropTech companies in the world that recently raised $43M from Singapore sovereign fund GIC and VC fund Andressen Horowitz.
Meanwhile, my co-founder JY and our leadership team at Homebase are intimately familiar with Southeast Asia and Vietnam. They have started and operated venture-backed technology companies in the region. I feel extremely fortunate to have a team that can successfully navigate the local nuances of the market.
What does the proptech scene look like in Vietnam? And what makes Homebase stand out among other proptech companies?
The Vietnamese PropTech ecosystem is quite nascent but one that is extremely exciting and quickly emerging as there are many unique opportunities in the market. We’re in a really crucial and interesting time in the development of Vietnam where you have an inflection point in the country’s growth, greater overseas interest in the country, an emerging, tech-enabled millennial middle class who have a high historical appetite for real estate. These macroeconomic changes accompany fundamental shifts in consumer behavior in culture, society, and of course, home-ownership – these moments of change are where technology companies like Homebase truly thrive.
We’ve seen many players trying to tackle traditional models imported from other markets, like property listing, co-living/co-working, short-term rentals, etc. At Homebase, after talking to customers and doing extensive research, we saw that it was actually financing property ownership that was in fact the largest and perhaps most difficult problem to solve. In spite of this challenge, we’re set on tackling this huge opportunity, establishing product-market fit and letting our customers’ feedback guide us towards success.
Guide us through the process of buying a home on Homebase.
Buying a home with Homebase is quite easy as we simply help finance your home – everything else is the exact same. The process looks something like this:
- Find a home – find a home you like, or we can help you find one.
- Co-buy it – put in the portion you can afford, we buy the rest.
- Move in – move in or even rent it out from Day 1.
- Buy back our portion – buy back the portion of the home we own at your own pace.
And that’s it!
What are the qualifications needed to join Homebase?
Our goal is to help anyone who wants to own a home realize their dream – that being said, we do have a brief qualification process to use the Homebase program. The first step is to fill out the interest form at: http://homebase.com.vn/. Afterwards, we look at some financial factors like your household income, savings and other debt to determine the amount we can help you finance – and then can instantly start shopping after that!
On average, how long does it take a buyer to fully buy a house?
The process can be as fast as a week, solely depending on the buyer’s home search process and paperwork completion. From our experience, the property search process varies greatly depending on the buyer and Homebase can provide almost instant financing and closing once the buyer decides on a home.
Homebase uses data science and valuation algorithms to determine that the property we buy together will make sense financially and the Homebase portal allows us to automate and significantly speed up the home buying process.
How do you align incentives and flexibility between customers and the real estate agents and banking partners that you’re working with?
Homebase helps with the financing of your home – meaning that you have flexibility when it comes to choosing a home you want to buy, or what to do with it after you’ve bought it, similar to a normal buying process.
So far, we have seen that customers buying a home with us really do appreciate the input that we give to them on choosing the right homes as our incentives are truly aligned with theirs at the end of the day. Unlike a traditional real estate agent, we want you to pick not only any home, but the best home that will increase the most in value as we put our money in your home as well – this reassurance that Homebase has “skin in the game” makes sure that we have your interests at heart.
From your time building Homebase, what are you most proud of?
I’m most proud of the speed that Homebase operates. Starting a company is extremely difficult especially in the intersection of technology, finance, and real estate and operating in an emerging market but regardless of these hurdles, we’ve been able to iterate quickly and push through these difficulties.
In a short period of time, we’ve been able to transform an idea shaped by a frustrating personal experience to a product helping real customers buy their homes, and were recently recognized as one of the “Top 50 PropTech companies in the World” by Silicon Valley VC Plug and Play.
What are the greatest challenges for growing Homebase in Vietnam?
One of the largest challenges we face in the market is attracting rock-star talent to continue building our team. At Homebase we pride ourselves on bringing on a A+ team first and foremost and we’re lucky so far to assemble a team that is a diverse mix of local Vietnamese, Viet Kieus and expats coming from institutions like Harvard, Goldman Sachs, McKinsey, Microsoft and Cisco. However, the amount of effort and due diligence required to hire even one requisition is astronomically high.
Right now, we don’t see as many highly talented Viet Kieus from Silicon Valley or financial centers like London or NYC wanting to return home for the opportunities in Vietnam but I’m hopeful that as the technology ecosystem grows, we’ll see more and more people returning, analogous to the “sea turtles” of China in the past several years.
That being said, we’re always looking for highly talented and motivated individuals to join us on our journey. If you’re interested in joining the Homebase team, we’re actively hiring!
What’s next for Homebase?
Our north star goal is to allow anyone across Vietnam and Southeast Asia achieve their goal of homeownership and Homebase intends to be an integral part of making that journey possible.
We’re proud to be one of the region’s fastest growing companies, disrupting a traditional trillion-dollar industry, and backed by some of the world’s leading VC’s and prominent Angel investors. We want to continue to rapidly scale, develop amazing technology, build out a rockstar team, and change people’s lives.