Home > Uncategorized > Can I take my new house public??

Can I take my new house public??

September 6, 2007 Leave a comment Go to comments

I’m far far from being a financial genius except for the fact that I have done my finance courses reasonably well in IIM. And when it comes to my work, my business strength is in understanding the big picture and where the economies are moving and most importantly, on how to provide value to the clients I work with… by setting the right expectations and then exceeding them.

I hope ya have already realized that this was just a polite way of saying “I’m not a details guy”! I needed to talk about this since there is this famous saying of “the devil is in the details” and what I am proposing now… even I have no clue on how this can happen. At the same time, I have no tacit or explicit knowledge of any specific laws or market dynamics that rule out this idea of mine as plain stupid. Who knows. However, out of curiosity to see how this would work, I thought there is no better way than to have it posted on my blog…. to see what others have to say about it. So here it goes.

Talking of the residential options in the real-estate arena, when it comes to buying, it is simple… you pick the house, negotiate a price, then agree to a transfer contract. And when it comes to payment, again its pretty straightforward.
(1) Pay in cash
(2) Pay whatever you can and borrow the rest – in short, take the financing route

However, the problem with the second option is that, when things go wrong in terms of paying back the borrowed amount, it can only prompt a binary response…
(1) Watch your house being sold off in an effort to make your financier happy
(2) Make your financier happy in some other manner

This binary characteristic has led to the advent of sharks in the business. We dnt call the houses we live in as “assets” but we call them homes. They are very personal and important to us… and so when this very home seems to be getting out of our hand, we take measures that might not be the best thing to be done. Therefore, there has to be some other way to safeguard our interests during those tough time.

Trying to take a closer look of the financing process of individual’s home purchase and the funding in the corporate world… it again boils down to 2 options:
(1) Take a debt
(2) Go public and raise money through equity shares

The first option is as binary as in the real-estate market… and so most firms in business go for the second route. And then my brain starts popping up this question…

If I have to buy a house, why can’t I take my house public and sell some equity in my house?? And if there is no stock exchange that permits it, why not create one exclusively for the same?

Taking my new house publicAnd if I have to define the rules of the game, they can be:
(1) Get the house evaluated by an appraiser – authorized by the exchange
(2) Assuming a par value of 10%, there would be 10 shares available. However, at no point in time should more than 4 shares be sold… again to avoid hostile takeovers (sounds so corporatish…)
(3) And the pricing of the shares is driven by the market dynamics… either above par if the market is attractive or maybe below par if it is not so
(4) All the revenues generated through sale of shares have to be used for paying to the borrowers

This forms the crux of my concept… However, there are a number of things that I haven’t thought of… and these could either make or break my concept. But, to me, the concept in its nascent stage, seems quite sound. And one thing that I can be sure of about this concept is… it will definitely reduce the ups and downs in the real-estate market and thereby its direct impact on the economy!!!!

Are any VC’s listening??? I can think more, if someone is ready to buy my idea…. 🙂

  1. Shaila
    September 8, 2007 at 10:24 am

    Bro, you are simply mindblowing. ‘Sup these days? I am visiting India in december. Dying to meet you all.

  2. Psycho
    September 9, 2007 at 6:56 am

    Oye dude, yahan par bhi fin fundae! Why don’t you leave this consulting job and join i-banking? As it is, u slog out wherever u work. So, it doesn’t make any difference.

  3. Piya Basanti Re
    September 9, 2007 at 8:03 am

    hot dude, family planning started already? Chalo sahi dost, first ghar phir biwi and then bacche. Jaldi invite karo sab ko apne milestone celebrations par

  4. September 9, 2007 at 9:07 am

    @ Shaila
    wow awesome… mom was telling me about it sometime ago. wud b great fun!

    @ Psycho
    arey yaar, aisa kuch nahin… general timepass!!

    @ ??
    who the hell are ya? 🙂 LOL

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