- 09:58: Ownify allows first-time buyers to purchase homes in fractional shares, making homeownership more accessible.
- 10:44: The Ownify program helps buyers avoid the burden of large down payments while building equity over time.
- 12:06: Investors can support local communities by investing in the Ownify Home Fund, which provides returns through home price appreciation and rental income.
- 13:17: The program is designed for the “missing middle,” individuals with good incomes but limited wealth, such as teachers, nurses, and public sector workers.
- Website: https://ownify.com/
- Instagram: https://www.instagram.com/ownifyhome/
- Facebook: https://www.facebook.com/ownifyhome
- Twitter: https://twitter.com/ownify
- LinkedIn: https://www.linkedin.com/company/ownifyhomes/
- Contact Number: 843-619-3005
- Instagram: https://www.instagram.com/exitstrategiesradioshow/
- FB Page: https://www.facebook.com/exitstrategiessc/
- Youtube: https://www.youtube.com/channel/UCxoSuynJd5c4qQ_eDXLJaZA
- Website: https://www.exitstrategiesradioshow.com
- Linkedin: https://www.linkedin.com/in/cmelette/
CORWYN:
Do you want something more? More meaningful moments, opportunities, deeper relationships, and memorable experiences? Do you want to make a difference? If you said yes to any of that, a career in real estate could be the opportunity you’re looking for. Guiding people through one of the most important decisions they ever made. The purchase or sale of their home can be both rewarding and lucrative. Exit Realty’s revolutionary compensation model, training, and technology provides you with the tools you need to start and build your successful real estate career. Call Exit Realty Lowcountry Group today at 843-619-3005, that’s 843-619-3005 or visit join.exitlowcountry.com and make your exit today.
Good morning, good morning, and great morning to you guys. Welcome to another fabulous episode of Exit Strategies Radio Show. Hey, I’m your host, Corwyn J Melette, broker and owner of Exit Realty Low Country Group in beautiful North Charleston, South Carolina. Hey, if this is your first time listening to this show, you sir or ma’am are in for a treat because our mission, yes, we have a mission. Our mission here at this show is to empower our community through financial literacy and real estate education, guys, with legacy building. That is what we do. You know how we always lay it out to you. We always explain, look, we want to make sure that you’re telling people, you’re letting people know that you’re working on your legacy as you’re doing certain moves and doing certain things as you’re making investments and things that people understand and realize that this is not just for today, but this is for your family on tomorrow. So we want to encourage you in that because that is what our word tells us to do.
So guys, look, we have been having an amazing run of guests. We have been getting the best, the brightest, the greatest that have been joining us on this platform to share their wisdom and knowledge with us. Today is no different. So I’m going to give you just a moment to grab pen and paper. As a matter of fact, y’all need to get in a routine with this. Keep it by the radio, pen and paper, because you’re going to want to take down these nuggets today. Now, every now and again, the wind blows just right and gets the curtain back just enough so we can see who’s behind it. And today we have an amazing guest, quote unquote, who’s behind the curtain with us today. We have none other than Frank Rohde with Ownify. Now Ownify is completely turning real estate on its head. Now I got a ball here. So I’ll be going to rub the rest of that out there. But Frank has been working in this space, has been in the mortgage and the real estate industry for a number of years and has worked to tackle the affordability challenges that we face in this realm. So I’m super excited for this conversation today. His company is a leader, a leader in a revolutionary space. So I want to leave that little tidbit and nugget right there as we introduce Frank Rohde with Ownify to the Exit Strategies Show. Frank, how are you doing today?
FRANK:
I’m good. How are you, Corwyn? Thank you for having me.
CORWYN:
You are quite welcome. Thank you so much for taking time out of your busy schedule to be here with us today. Now, Frank, look, you had a background. So before we delve deep, start peeling back some of the layers on this platform, Ownify, I want to talk through and get a little bit of who’s Frank for our listeners. So Frank, tell us about yourself. What got you here? And let’s talk about Ownify.
FRANK:
All right. Thanks, Corwyn. So just to start, I have exactly the same hairdo as Corwyn. So for those of you who are not watching this, right, we’re both full our hair out through the journey in real estate. But my journey started in Germany, actually. So I’m originally from Germany, came here to the U.S. for college in my late teens, early 20s, went to college, eventually made my way to the West Coast. So I’m actually dialing in from San Francisco and have worked in a number of different jobs over the years, starting in consulting, and then I started an online insurance company. Eventually I made my way to FICO, the credit scoring company. So learned a lot about credit risk and underwriting and lending in particular. Then I started and ran a company called Nomis, which is a software company that basically developed the pricing engine for a lot of the large mortgage lenders in the U.S. and Canada and abroad. So got really deep into the bowels of mortgage pricing, which is fascinating. So spent about 15 years building that company, eventually sold it. And as part of that, learned a lot about how mortgages work and how real estate works and how consumers leverage the mortgage product. And we do have a really unique mortgage product in the U.S. It doesn’t exist anywhere else in the world, but a 30-year fixed rates guaranteed by the government and all that. And so generally that’s a great product.
But one of the things I saw in this journey with working with the big lenders in the U.S. was that more and more first-time buyers are being left behind. And that really got me to this point about two years ago where I said, look, what I’m doing here is great. I’m helping big banks and lenders make more money, but at the end of the day, that can’t be what it’s all about. How do I create real solutions? You mentioned Corwyn empowering the community. How do we create real solutions that help folks who need a little bit of help, who need a leg up, who are being left behind by the system as it exists today? So that’s been the mission of Ownify for the last two years in building this company.
CORWYN:
So Ownify, let’s go. Tell our listeners, Frank, I’ve been checking it out. So I’m super intrigued and I’m loving the concept because what is unique to me about it is that, again, as you said, as an echo of it empowers someone into home ownership, otherwise would be completely challenged and not be able to participate or possibly not be able to participate in home ownership as well. So tell our listeners about Ownify. What is it? And let’s delve into what makes it unique.
FRANK:
So let’s start with the problem itself, right? And the problem in the U.S. is that house prices have gone up over a long period of time, single family homes in particular, but really any type of property. And the reason for that is that we’re short housing.
Depending on what you read, two and a half, three million units in the U.S. and depending on which markets you look at, it’s even worse. So we have a shortage of housing, we have high house prices. We now have higher mortgage rates, right? Mortgage rates have gone back to where they will be and where they have been for the long run, right? We might see rates coming down into the sixes, maybe the fives, but they’re not going to go back into the twos and threes.So you have this kind of affordability problem in terms of house prices are high, mortgage rates are high. Lots of folks have student debt, big problem out there. You have a lot of buyers out there who are being out-competed by cash purchasers, whether that’s other individuals or quite frankly, Blackrock, Blackstone, some PE company coming in, buying up homes and turning them into rentals. So it’s hard for first-time buyers to compete in that market. And that’s really the challenge we’re trying to solve and look at. And so what we challenged was this notion of why do you need to use debt to buy your home in the first place, right? The way we’ve traditionally bought houses in the US, most of us, unless you’ve been blessed with an inheritance or family wealth, right? You go out and you borrow money, you get a mortgage, you buy a house, and then you pay back that mortgage over some period of time. And so the challenge that we were asking, the question that we were asking is, why do you need debt to buy a home in the first place? Why can’t you pick a home and then buy equity in that home over time? So this notion of, could you buy your house brick by brick or stick by stick, depending on where you live? And so what we’ve done with Ownify is we’ve created a structure where we allow first-time buyers to pick a home. And generally, these are starter homes. So think of houses in the $250,000 to $500,000 range. But the sweet spot is really in the threes and fours, right? Houses that should be affordable as a starter home. And what we allow customers to do is pick a home. And what we do with Owneefy is we fractionalize that home into 10,000 bricks. So imagine a home that’s $350,000 divided by $10,000. Each brick costs $35 on day one. And that’s the, let’s call it the entry price. And so what our customers are able to do is pick a home, move in, live in the home. And every month they make a payment that buys them more bricks and at the same time pays rent on the bricks that they haven’t bought. So rather than a mortgage where I have a principal and interest payment, what we’ve structured is a fractional ownership or an investment agreement where the ownee, as we call them, the customer living in the home, enters this five-year program. They start with 200 bricks. That’s the down payment, if you will. So relatively affordable, 2%.
And then every month they buy roughly 13 bricks. And I say roughly on purpose because the number of bricks varies based on the house price in any given month. And if you do that over five years, and that’s the way the program is structured, we get the ownee to roughly 10% ownership in the home. So a thousand of the 10,000 bricks. And at that point, they can use that as a down payment for a traditional mortgage. And so what that allows the ownee to do, our customers to do, is jump over that down payment hurdle, right? Get started with only 2% down, build equity along the way, live in the home, treat the home as their own, and it removes the need to save for a big down payment, which accelerates the purchase of the home or gets you into the home faster.
And then it has a couple of other advantages along the way, right? We take care of maintenance and repairs and property taxes and insurance and all of those things. So as an ownee, it’s almost we’ve created an on ramp for first time buyers that protects them from some of the unforeseen costs that might happen when you buy a starter home. So let me pause there and see whether that makes sense.
CORWYN:
It does. So basically what I just heard, Frank, you guys designed a model to allow people with investors to basically crowdfund a purchase. That’s what it sounds like. I mean, it’s not the same thing, but you basically are breaking down a home into increments or pieces and a group of people with the person that’s going to reside in the property all buy into this home. And then over time, the person who is residing in the home is buying more pieces in with their payments and basically accumulating pieces from the other people over time. Does that sound about right?
FRANK:
That’s exactly right. So you’ve already jumped to the second side of the business, right? So Ownify sits in the middle. We have customers on one side. We call them Ownees. And then we have investors on the other side and investors come in and effectively invest in the bricks that the customer hasn’t bought. So back to the example, 10,000 bricks, 200 are owned by the Ownee on day one. They build up to a thousand over five years. What about the other 9,000 bricks? Those are sold to investors as part of the Ownify Home Fund, which is a fund that investors invest in and the fund in turn then buys the bricks across all of the homes that are in the portfolio. So for an investor, there’s built in diversification. And what an investor gets is home price appreciation on the portion of the home that they invest in and the rental income on that portion as well. And so for an investor, as an accredited investor, it’s a relatively safe investment in a portfolio of single family homes designed to help first time home buyers in your local community. And so our strategy so far, we launched in Raleigh, we’re adding Charlotte, we’re getting qualified in South Carolina because Charlotte kind of dips into the bedroom communities. So we’re going to come back to you in Charleston relatively soon.
And so it’s a regional strategy where we look to the investor pool in a given market and say, you can invest in your local community and you can invest in first time buyers, right? Qualified first time buyers to make that leap into ownership. And at the same time, we’re activating the agents, the realtors in the market, and then obviously home buyers who are looking to make that leap into ownership.
CORWYN:
So I’m going to ask you this question, who is it for? But I do want to spin around and also pivot on, forgive the pun, but exit strategies. What does this look like? But who is this for? Who is this program ideally for?
FRANK:
So the design is really for what we call the missing middle. These are folks who have good incomes, but they’re not wealthy. So they make right around the area median income, maybe a little below, maybe a little above. So think of teachers, nurses, public sector workers, folks who might have non-traditional income, 1099 income, commission-based income, gig workers. We have one customer, a woman named Brenda, who is an influencer on Facebook. So her income is coming out of Facebook and it’s somewhat variable, but we know how to underwrite that. And so the core focus, the target market for us are folks who have decent income right around the median, maybe a little below, maybe a little above, but who haven’t been able to save for the down payment and who should, with their income, be able to afford that starter home and want to build that starter home. And so when you look at the portfolio, a lot of young families, folks who are either just gotten married or they’re married, maybe they have their first child or two, lots of couples that are at the beginning of their career. We have a number of folks who still have student debt.
So that’s slowed down their ability to accumulate a down payment. But it’s really been that persona who hasn’t been able to save for the down payment. And then we have folks who are looking at this product as truly an alternative to a mortgage, folks who could get a mortgage, who would qualify, but who look at this and go, I don’t know that I should be taking on all this debt. But at the same time, I do want to build equity and I do want to pick a home that’s on the market for sale. I don’t want to be constrained to just rental properties. So we’re helping them pick a home. We’re allowing them to build equity without taking on this huge debt obligation that they have to pay down over time.
CORWYN:
So the exit strategy on this, I mean, obviously any variable, I mean, a number of different scenarios can happen. I mean, someone can, you know what, I changed my mind. I want to be somewhere else. I want to be here forever and anything, quote unquote, in between that. What does this look like for the consumer? So can they exit the property early or, and also can they let’s say they decide, okay, you know what, I want to pay the home off or I want to take out a mortgage and buy out the rest of the shares and own it myself. Is that possible as well?
FRANK:
Yeah. The way to think about it is we’ve built this program as the golden path is really someone who stays in the program until they’re ready to get a mortgage. And that could be in three years, could be in five years. It could be in seven or eight or 10 years. Right. So they can renew. It’s a five-year program initially. And the math is dialed in such that you have 10% down payment. You build up your credit. You probably going to increase your income a little bit over that horizon. And then you have the ability to buy the home with the mortgage. That’s the golden path. Obviously there is life that gets in the way. So you have an inheritance or a big bonus. You want to buy the home earlier. You can, right. You can buy it at any point during the five years from the rest of the investor pool. So there’s a built-in purchase option that you can exercise at any point. You can also decide to walk away and say, well, maybe my job moved. Maybe I met someone I want to move across the country. What have you, life happens. And I’m not buying that house. In that case, we will buy back your accumulated equity at market value, but we will charge you a relisting fee. And the relisting fee is the equivalent of, as you well know, the brokerage fee that a seller would incur it’s we cap it at 2%, but there’s a little bit of a penalty built in to say, if you want to walk away, we will buy back your equity, but we charge you a 2% relisting fee. And so those are the two exit scenarios with the design really encouraging the Ownee to build up enough equity, then go out and get a mortgage and buy the home outright in the traditional way. Now where the innovation here is that, you know, there’s a lot of rent to own companies out there. And my co-founder was COO at one of the largest rent to own companies. And we really looked at this and said, how do we innovate to create true ownership for the Ownee rather than saying you’re going to rent, rent, rent, rent, rent, and then eventually you can buy, which is what a lot of companies have done. And so what we’ve done structurally to help the Ownee is we put each home into an LLC, a limited liability company. So the bricks that I mentioned earlier, this notion of 10,000 bricks per home, the bricks are actual shares in that LLC, in that limited liability company. So the Ownee, the customer is a shareholder of a company that holds title to the home, which means that the interest and the equity, right, the bricks that you’re building is a true representation of ownership in that LLC. And that gives you the ability to build that equity, track it, value it on an ongoing basis and potentially sell it down the line.
CORWYN:
That’s amazing. It’s almost like he was making, laying up a cake there. And then you went across it with the frost in there, man. At the end, it was okay. That is amazing. The concept initially when we began talking, exploring and kind of breaking it down, Frank, one of the things I was looking at is okay, with this essentially kind of looks like a more functional, a more appealing rent to own type structure because in a rent to own structure, you don’t have, you don’t participate in the equity of the home. So let’s say that you get into, you become an Ownee, home price is 200,000. We saw values in certain markets skyrocket, quote unquote, doing as some people like to say around here, the cold bead, but we saw that happen. So if you were an Ownee at that time and your property value went from $250,000 to $300,000, you’re a participant in that. You have some equity in that. So to be able to complete a transaction and have that equity share, or you know what, I’m gonna move on to something else and to be able to participate and be bought out of the home instead of just pushed out of the home, that’s a game changer, God.
FRANK:
Yeah. We really tried to build this in a way where the Ownee has the exact same participation and equity rights as the investor.
So if home prices go up, the Ownee shares equally with the investors. If home prices go down, the Ownee sees their share depreciate by the same amount as investors. But one of the interesting things that this also creates, we call it evergreen equity, is this notion that if home prices go down as they could, your share goes down proportionally, but it can never be underwater the way a low down payment mortgage can be. So think about it. If you buy a $300,000 home and you put 5% down, that’s 15K, right? You have a $285,000 mortgage. That house price now goes to 250. Your home is worth less than the mortgage you owe. So your equity is actually negative. And this happened back in 2008, 2009, 2010. I’m not saying it’s going to happen again and knock on wood, it won’t. But if it did, we’re protecting the Ownee by saying, well, in an equity based program like Ownify, you own 5% or 10% of the equity in the home. And if that home price goes down, well, your 5% and 10% might go down a little bit, it goes from $30,000, let’s say, to $27,000, but it can never be zero. It can never be negative. And so in a way, we’re protecting the Ownee by creating this equity-based ownership rather than a debt-based path to ownership.
CORWYN:
So the investors are hedging the risk.
FRANK:
They’re sharing the risk, correct. We’re all in this together. And I mean, at the end of the day, real estate doesn’t go to zero.
So without debt in the equation, it really protects both the investors and the Ownee from variations and swings in house prices.
CORWYN:
That is amazing. Amazing. So your platform, Frank, is up. People can go visit, they can log in. So where can people get this information that may have questions or interests in trying to explore and see whether and if they qualify for this type of a purchase?
FRANK:
So come to ownify.com, O-W-N-I-F-Y.com. If you’re a first-time buyer, you can qualify.
You can go through the underwriting process. It’s an online process. It takes five minutes, doesn’t impact the credit score, and you will get a house price budget. We will tell you, here’s how much you’re qualified to buy. If you’re an investor, go to ownify.com as well, and there’s an investor tab and you can explore the Ownify Home Fund, which invests in single family homes right now in the Raleigh-Durham-Chapel Hill area. We’re adding Charlotte. Eventually we’re going to add South Carolina. So that’s a regional investment strategy that might be attractive. Right now we’re open to accredited investors. We’re working on an exemption with the SEC to open this up to any investor at some point down the line, but right now it’s accredited investors. So either as an Ownee, as an aspiring homeowner, if you’re in the community, come check us out. And if you’re an investor, come check us out as well.
And then obviously always feel free to reach out to me directly, Frank at ownify.com. I’d love to make connections and speak with you and see how we can help.
CORWYN:
Frank, man, look here, my mind is blown. My mind is blown behind this because it’s like the marriage between what was helpful, useful, or beneficial in one arena and what is beneficial in the other. So basically you put the best of two worlds together to create this platform. Rent-to-own became as prevalent as it was because people were struggling with affordability and the challenges some people faced in getting into homeownership. So it became a bridge, if you will, over that. On the other end, investors have always been intrigued by this, but the rub in the middle was either people not completing or the person, the consumer feeling they didn’t have, they weren’t participating in the equity or didn’t have any ownership of the property. And in turn, there was no benefit for them really to do that type of transaction. So this kind of, to be blunt, it builds a much bigger and better bridge over that in order to get them to a much better location, a much better opportunity. This platform I’m very intrigued by it. I can’t wait to see it in action here in this market. So thank you for sharing all that information. So Frank, I’m going to ask you the question. You did a lot of things before you got here. So using mortgages, using that financial realm, what is your ultimate goal with Ownify? Like is this, okay, look, this is my contribution to the world and we’re going to work to eliminate or address this particular problem. What does this look like for you? Like big picture, what’s the perfect world that you would like for Ownify to address?
FRANK:
So we want to help a hundred thousand people get into home ownership over the next 10 years. And if we can do that for folks in that missing middle in particular, or folks who you want in the community who are currently being squeezed out because of home price appreciation, who can’t afford it, teachers, nurses, public sector, employees, firefighters, all of those folks, gig economy workers, right? I mean, if you’re a software engineer and that’s perfectly fine too. So if we can help folks who currently don’t have that path into home ownership, that’s the core mission. Because at the end of the day, that builds wealth. It builds security. It helps local communities. It increases the tax base. It improves schooling. There are a number of benefits to home ownership and not everyone has that path. And if we can build that path for more people, then that’s what’s core to our mission.
CORWYN:
Awesome. Awesome. So Frank, I want to thank you for being on the show with us today. We’ve covered a tremendous amount of information. We, I believe we’ve left our listeners with something useful, another quote unquote tool in the toolbox, another hat in the feather that they can use or otherwise apply to you. So they can get into home ownership and not remain wherever they may be or wherever they are. So I want to thank you for taking time out of your busy schedule today to tell us about Ownify.
FRANK:
Thank you for having me, Corwyn.
CORWYN:
You’re welcome. So for our listeners, guys, look, this has been a great show. Y’all got some good information. Write them notes. Make sure y’all go to the website, check Frank out. Most importantly, explore and ask questions, guys. Don’t just take it for face value and don’t just knock it down because you don’t have, if you will, that understanding, seek greater understanding, seek first to understand before seeking to be understood, guys, you’ll get much, much further in life. So guys want to thank you again for tuning in. Y’all know how I feel. Y’all know what I say and always put the two of those things together. And I give it to you this way, which is I love you. I love you. I love you. And we’re going to see you guys out there in those streets.