It might seem too good to be true–upgrading from renting to ownership without choking on the down payment or being saddled with skyrocketing monthly payments. William Stratton suggests that he has a way around it. Stratton, whose background includes stints at Lehman Brothers and Morgan Stanley, is executive director of the Philadelphia-based nonprofit American Homeownership Initiative. With a focus on workforce housing, AHI plans to acquire rental assets—either fully or in JV with current ownership—upgrade them and sell the units to prospective occupants struggling with the upfront cash needed to buy a home. His slogan is Smart, Green and Affordable—three goals aided in large part by partnerships AHI is creating with the likes of Verizon Communications Inc., Lowe’s Home Centers, H&R Block and Whirlpool Corp. But the crux of the plan comes in an installment sales agreement that is designed to provide transfer of equity title without a deed. Stratton admits that he has yet to start renovations on any projects, and while he’s in final negotiations for startup capital, as we go to press, those funds are yet to be secured. Regardless, the plan is bulletproof, he says, and with the corporate support he’s gotten to date, he’s eying an ambitious 2,000 units within a year. Here’s the plan: How long has AHI been around?

Stratton: It was born in the past year, but the concept was actually first applied back in the ’90s in the days of the RTC, when values were dropping significantly. About three or four years ago, I got together with Sam Bradstreet, who ran the program back then and is our senior consultant, with the idea of trying to start this up again. The timing now, of course, is perfect because of the subprime fallout. Gone are the days when two kids making $40,000 each can go out and buy a $700,000 home with a five-year balloon and no documentation. The number-one reason why people can’t bridge the gap between renting and homeownership is the down payment.

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