We discuss how Ownify’s model allows first-time buyers to gradually purchase homes through fractional ownership, bypassing traditional mortgage hurdles.
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Transcription
Introduction to the Home Buying Journey
Frank Rohde: I’m on the journey to buy this home. I’m going to take care of it. And so net that ultimately benefits the investor pool.
Ben Fraser: How would you compare this to another single family rental fund? That’s just investing in rentals.
Frank Rohde: You have a cash flowing asset because you’re generating rental income, but you’re marrying that rental income and cash flow with all the characteristics of owner occupancy, what we’re trying to do is structure the property.
Products such as behavioral shifts ultimately benefit both parties. And because the investor owns 98 percent going down to 90%, most of the benefits obviously accrue back to the investor pool. You can’t build a mousetrap and an on ramp and a better solution for the consumer and market rate capital, not just impact investors, but folks who look at this and go, it’s actually a sound investment.
That’s going to earn me a solid return. And therefore I’m going to put money into this. And that’s what we’ve seen with investors coming in. They like the mission, but they really like the returns because of that alignment of incentives and behavior.
Welcome to the Invest Like a Billionaire Podcast
Ben Fraser: Hello, Future Billionaires! Welcome back to another episode of the Invest Like a Billionaire podcast and a really fun show for you today.
Meet Frank Rohde, CEO of Ownify
Ben Fraser: I brought on Frank Rohde. He is the CEO and Co-Founder of Ownify. Ownify is a really cool venture that he started a couple of years ago that is looking to help create an on-ramp for people to buy their first home. As we talk about in this interview, it’s becoming increasingly more difficult for people to save enough down payment to make that first jump into homeownership.
So they’ve got a really cool model, I’m excited for him to share about it here and can learn about how they’re bridging this gap for a lot of people that have good incomes, but don’t have the down payment yet and want to get into homeownership, but it’s not a clear path to do that. And then really how they do that from an investment standpoint, how they create this matchmaking between investors and.
And the homeowner. So with that, you’re going to love the episode. He’s a really great interviewee and has a lot of good things to share as with anybody I bring on the show that may be raising capital. I always have to give the caveat and disclaimer that if you are interested, you want to learn more, make sure you do due diligence.
I’ve not done any due diligence. This is more just an interesting concept. I bring people that I think are interesting. They’re doing interesting things. And so this is by no means a stamp of approval from a due diligence standpoint. You got to do that yourself. If you are enjoying the show, if you’re getting a lot out of this, always appreciate it if you can leave a review, share with a friend and get the word out for us.
So we help us bring on great guests like Frank. And continue to keep the show going. With that, I hope you enjoy it.
This is the Invest Like a Billionaire podcast, where we uncover the alternative investments and strategies that billionaires use to grow wealth. The tools and tactics you’ll learn from this podcast will make you a better investor and help you build legacy wealth.
Join us as we dive into the world of alternative investments, uncover strategies of the ultra wealthy, discuss economics, and interview successful investors.
Frank. Thanks so much for coming on the show.
Frank Rohde: Hey, Ben. Thanks for having me. Excited to be here.
Ben Fraser: For those that don’t know much about you or Ownify, give a little background on yourself, your kind of career and what led you ultimately to, to launch Ownify.
Frank Rohde: All right. Going back all the way to the beginning.
So I was born in Germany and grew up there. I was Lucky enough to spend a year in the U. S. as an exchange student, fell in love with America, and came back to go to college. So did my undergrad degree at Penn Wharton, got into finance early on, and then spent a couple of years as a consultant, Oliver Wyman, working with financial services.
I started an online insurance company. I spent a number of years at FICO, getting deep into credit and risk and how the analytics work around consumer and consumer financial services. And then started and built a company called Nomis which is a software company that built the pricing engine for a lot of the large mortgage lenders globally.
So I spent about 15 years of my career in the bowels of mortgage math which is a super fascinating topic. But that led directly to Unify and starting this company. So about two, two and a half years ago, I sold Nomis. And then started Onifi, really to help first time homebuyers with a better on ramp into ownership really as an alternative to the mortgage, right?
And trying to overcome some of the hurdles and problems that, I’m sure everyone is aware of anecdotally. And so that in a nutshell is my career arc and trajectory. Always financial services and now really focused on this challenge that I believe is a big generational issue that we’re facing in the U. S.
Ben Fraser: Yeah that’s awesome.
Understanding the Housing Market Challenges
Ben Fraser: Talk a little bit about the thesis for why this is an opportunity, right? Cause I think a lot of people. Myself included, I got lucky enough to get into the real estate market early on and have always owned a home. And I think like your point, the gap is becoming wider, it’s becoming more difficult.
And, for a lot of our audience that are maybe a little bit older have done very well for themselves. It hasn’t been an issue, but it’s becoming a bigger issue. Can you map out, how has that happened? And what are the bigger hurdles that are making it more difficult for this generation to purchase homes?
And it was maybe for a generation or 2 ahead.
Frank Rohde: Yeah, it’s a great question. So there’s a couple of things that are coming together and they’re all coming together at the same time. And the 1st, 1 is. Just that we’re short housing, right? And depending on what studies you read, we’re short somewhere between 2.
5 to 4, maybe 6 million units. And that’s true across single family homes. It’s true across condos, right? But basically, we’re short housing in the U. S. And the impact of that is that prices continue to go up. So the median price for a single family home is the highest it’s ever been. So you’ve got the first thing, which is just.
Prices are high, right? The second thing is that mortgage rates are now back to what I would call their long run historical average, which is somewhere between 5 and 6%, right? There’s still 6 and a half days left. We’re going to come down a little more, but they’re not going to go back to the twos and maybe even threes that we saw, 2 and 3 years ago.
So these. This abnormally low interest rate environment that we live through that’s probably gone for the foreseeable future. So you have house prices and then you have the affordability of if you can get a mortgage, you’re paying 5 or 6 percent in interest and that’s significantly more than it was in the past.
So that’s the 2nd thing. The 3rd thing is that there’s a lot of Corporate investment in real estate, right? Corporate buyers who show up as cash buyers and they’re basically buying single family homes to turn them into rentals. And so if you’re a first time buyer and you show up and you’re looking at that 400, 000, single family home, which is where the starter home is priced today.
You’re actually competing with private equity money from Wall Street investors who show up with cash offers. So that makes it even harder. Then you have student debt especially for first time buyers in their late 20s, early 30s. Everyone is sad, or not everyone, but a lot of folks are saddled with student debt which prevents them from saving.
And then the tax deduction for first time buyers is largely gone because most people who have a, 250, 300, 000 mortgage. They take the standard deduction. They don’t itemize. So what used to be this kind of subsidy from the federal government by virtue of a mortgage interest tax deduction, that’s no longer applicable as well.
So you take all these things together and basically compare it to maybe when you bought your first home or when I bought my first home, 10, 15 years ago. It’s gotten a lot harder, a lot more expensive, and that’s a real generational challenge, right? And whenever you have a big problem like that.
Everyone is aware anecdotally that this creates an opportunity for new solutions. And that’s really where we saw an opportunity to rethink what it means to own and how we enable that path into ownership for first time buyers.
Ben Fraser: Yeah, that makes a lot of sense and you alluded to it, but 1 of the other parts is exacerbating supply is when you don’t have enough new construction happening, but you also have all these people that currently on homes with super low interest rates that don’t want to move and have to go get a new mortgage at the higher interest rates.
And to the extent that rates don’t come back down to those super low lows, it’s going to continue to restrict supplies. People don’t want to move. And so it’s continuing to create fewer options for people. And I don’t have the stats in front of me, but I know from seeing them that wage growth has not kept up with appreciation of home prices, over the past several decades.
And, not to mention all student debt and other things that are saddling. The income people are generating.
Ownify’s Innovative Home Buying Model
Ben Fraser: So it makes a lot of sense, talk about the model a little bit. How have you guys set up this model and how does an investment in real estate actually help people get into home ownership?
Frank Rohde: Yeah. Yeah. So the question we posed really was Why can’t you buy your home over time at the way we buy real estate and homes in the US has been the same for, 70, 80, maybe 100 years, which is if you have a bunch of cash, great, you buy a house, you get the title but most everyone else gets a mortgage.
And so you go to the bank or mortgage lender. And you borrow a large amount of money and you have your own down payment as your contribution and then you pledge the title to the bank effectively over the next, let’s say, 30 years while you’re paying down that principle and eventually you own the home free and clear.
So you buy effectively 100 percent of the home. On day 1, but you incur a large amount of debt to do that, right? And that’s the kind of standard way of buying a home. So the question we ask is why can’t you buy your home brick by brick or piece by piece over time? And so what we did is we looked at what does ownership really mean?
And it turns out ownership is actually no single definition, right? It’s defined through legal frameworks at a state level and to some extent at the county level, but there’s a bunch of components that I think everyone agrees to. And 1 is the ability to utilize space, right?
Live in space. The other 1 is the ability to sell and hypothecate, transfer and all that. So we looked at ownership. We took it apart and we put it back together. In a structure that allows the customer to go out and pick a home. And then utilize unify to buy that home, place it into an entity and fractionalize the value of the home or the equity of the home.
And so what we do with Ownify is we put a home into a limited liability company and that LLC issues. Membership interests or shares, right? Which we call bricks. Each home gets fractionalized into 10, 000 bricks. And a brick is a membership interest or share in that LLC that holds title to the home.
We can’t fractionalize a title, at least not today in the U. S., but you can fractionalize the entity that holds the title. And what we allow the customer to do is have a long term lease. On the property, which gives them the right to occupy the property over a five year period. And at the same time, we allow them to buy those bricks over time.
And effectively become a shareholder or a member of the entity that holds the title. So it’s a unique structure where the customer on the one hand is a tenant of the LLC that holds title to the home and on the other hand, also as a shareholder of that entity. And the way the product and the math is dialed in is that we say to the customer, you can pick the home and on day 1, you contribute 2 percent to the purchase price, or effectively you’re buying 200 bricks, right?
And so for a 400, 000 home, that would be 8, 000 as a down payment. You’re buying 200 bricks at 40 each, right? 10, 000 bricks, 400, 000 purchase price. And then every month you make a payment and that payment effectively does two things. One a fraction of your payment pays rent on the bricks that you haven’t purchased.
And another fraction of the payment buys incremental bricks. So we’ll get to the investor in this equation in a second, but basically what that math allows the customer to do is live in the home and rent the fraction that they haven’t bought. While increasing the fraction they own. And as they increase their fraction, they’re stacking their bricks right from 200 to 300, 400, 500, all the way up to a thousand.
At the end of five years, the rent that they have to pay on the balance, the bricks that they haven’t bought, goes down as their ownership stake increases. And so, I mentioned 200 bricks to start or 2%. And the way the program works is that over five years, the customer builds up a thousand bricks or 10%.
Of the value of the home, and the reason we get them to 10 percent is that’s sufficient to now use that amount of equity, right? That value that they’ve built in the home as a down payment for a traditional mortgage. And so at the end of 5 years, or at whatever point they get to that 10%, they can get there faster.
They can use that 10 percent and now buy the home from the LLC. At whatever future market value. And so if you take those 3 components together the lease agreement, the equity share, the ability to buy bricks is bona fide membership interest and the purchase option. We’ve created an on ramp.
Into home ownership that allows the customer to jump over that down payment hurdle, build equity, live in the home, right? Make changes to the home, have all the rights of ownership, but not have the obligation to pay off that huge mortgage balance that they would have in a traditional fashion until later down the line until, three or four or five years from now.
Ben Fraser: Got it. So it sounds like in this model, the type of customers that you’re working with or borrowers Would the hurdle not isn’t necessarily be income, right? But it’s more the down payment and the savings for that kind of big lump sum chunk. Is that. Really what you’re solving for a forced savings program, so to speak, but they also get the benefit of the home.
Now, they’re having to wait for 5 years. Is that kind of thing?
Frank Rohde: That’s exactly right? If you look at our target customer and the persona that has engaged and the folks who are in the portfolio and living in and own 5 homes today. They tend to be what I would call the missing middle, right?
They have solid incomes, good incomes. They’re teachers and nurses and creative creative types, but they’re not, they’re not Google engineers. They’re not PE, executives who have a ton of money. So they have a solid income. They have good credit. So our average FICO credit score in the portfolio is about 740.
Really good credit, but they haven’t saved the down payment. And when you dig in and you ask them why haven’t you saved the down payment? You get all the answers that we discussed earlier, which is I have student debt. I just started working. It’s expensive to live here.
So someone who’s just 28 or 30. Hasn’t saved 30, 40 grand for a down payment, but has all the other characteristics. That’s the kind of target audience that we’ve been able to help. And when you look at the job categories, those are folks that you want in the local community, right?
You want to be able to have them by and be part of the community, rather than, displace them further out into the suburbs and excerpts. We then have to commute to their job, right? So there’s a net positive for the community. And that’s actually a big part of the investor value proposition on the other side of the equation is to say, you can invest in this and help local homeowners, or aspiring homeowners live in your community by funding the path to home ownership for them. And at the same time, earn the return on that investment.
Ben Fraser: No, I think that’s such a cool piece of it, if you’re creating a tangible way. For investors to earn some level of return, but also have an impact on what you’re doing.
Investor Opportunities with Ownify
Ben Fraser: So talk about, this kind of seems to be part of what led the initial idea to start on the FI, but talk about the investor side of this. So how does this work, right? If you’re investing in the membership interest of LLC, what’s the give and the take when you’re purchasing this property?
And one more quick. nuance here. It sounds like you said that the homes that are being purchased are being pulled from the potential borrowers. Are you guys going in, pre buying a portfolio of homes that then you try to get people excited about and to purchase, or is it the other way around?
Frank Rohde: It’s the other way around and actually that’s so the way that works is that the customer comes in the only way we call it comes in. And the 1st thing we do is we qualify the customer. So that’s credit and income underwriting. We’ve automated that to say, are you qualified? Do you have the income?
Do you have the credit characteristics? And so assume you’re qualified. The next step is we partner you with an agent and you go out and look at homes that are today on the market for sale on the MLS, right? Okay. And the benefit of that is that we don’t buy a home that sits empty and then try to market it to a tenant or an owner or a customer.
And while we’re holding the home, it doesn’t generate income. We only buy a home once we have a customer committed to that home, right? So the customer and the agent go out, they select a home, we re underwrite the home, we do evaluation, inspection, appraisal, all that. To make sure it meets our investment criteria.
And then we buy the home as an all cash offer. So one of the big benefits to the customer is, you could be put 2 percent down, you have an affordable monthly payment, but you get a cash offer. So you can compete with the wall street investors and the cash buyers that are out there, and that makes your offer a lot more attractive out in the market.
Now then to your question, what happens to the investor? So the investor. Or the pool of investors on the other side of the equation invest in a fund on if I home fund and that fund buys the bricks that the customer hasn’t bought. So on day 1, as I mentioned, the customer puts down 2 percent or 200 breaks.
There’s 9800 breaks left. That’s what’s funded by the investor pool. And those bricks. Are held over a five year period. So as an investor, you’re effectively putting money to work for five years. And during those five years, you’re getting two things. One, you’re getting rental income because keep in mind the bricks that the customer has involved that you as an investor are holding effectively through the fund, those earn rental income.
So you’re getting that kind of passive income and you’re getting the home price appreciation because of the customers. Transfer of equity and the way they’re buying the bricks, they’re buying bricks at current market value at any given point. So on day 1, that 400, 000 dollar home, the brick was worth 40 a month later.
It might be 40 and 50 cents. And a year later, it might be 42 or 43 or 44 dollars. And so as home prices increase the investor benefits from that appreciation alongside the rental income of those bricks, right? It’s like being a landlord. However, you’re a landlord for only the bricks that the customer hasn’t bought.
And we manage that whole process. And so as an investor, why would you do that? One, you’re helping some homebuyers, but two, if you think about the structure, you’re investing in single family, real estate, single family homes. Okay. where you have zero vacancy, right? You don’t have the lease up cost.
You’re only investing when the home is actually bought. You have a guaranteed five year lease. So the customer, you don’t have turnover and we haven’t seen turnover in the portfolio. You’re getting tenants and customers with a high FICO. So we haven’t seen a single late payment in the portfolio.
And you’re getting people who are co owners. Who own a small fraction and an increasing fraction of the home and 1 of the really satisfying things we saw over the 1st, kind of 18 months or so was that the maintenance cost in that portfolio is about 60 percent lower than industry average for a single family rental because folks look at this and say I’m, I’m on the.
Journey to buy this home. I’m going to take care of it. I’m going to repair things. I’m going to fix things. I’m not going to call the landlord every time something happens. And so net that ultimately benefits the investor pool in the form of a higher rental yield, right? Because you have lower maintenance costs.
You don’t have a vacancy. You don’t have delinquency. You don’t have turnover. All of those things that you normally have in a single family rental portfolio.
Ben Fraser: Yeah, interesting. That’s to me from an investment standpoint, what it seems most akin to is investing in a portfolio of rental units.
But what’s different is 1, it’s. You’re not leveraging the underlying assets. I’d be curious if you have fund leverage we can get that to a minute and then two your argument for You have a higher buy in, right? These are not just renters that have a 12 month lease. These are people that have picked this home specifically because they want it they understand, you know the contract for the five years and Are effectively owning the home and taking care of it more than a A tenant would, and I would assume because of the way you structured it, it creates an incentive to want to keep making those payments because it’s clearly defined.
You’re buying more bricks or more ownership of the asset over time. And so it’s a naturally built incentive to want them to keep making payments. Am I thinking about that right? What are some others, like, how would you compare this to another single family rental fund that’s just investing in rentals and getting the yield off that income?
Frank Rohde: Yeah, you got it. You got it exactly right. You have this underlying asset, which is attractive, right? Which is a single family home. You can’t guarantee that they’re going to appreciate, but we know that they’re not going to depreciate massively, right? They’re not going to lose all their value. So the first thing is you have a safe asset, right?
You have a cash flowing asset because you’re generating rental income, but you’re marrying that rental income and cash flow with all the characteristics of owner occupancy, right? Which is people taking care of the property. No vacancy, no turnover, right? Better behavior or ownership type behavior rather than tenancy type behavior.
And so compared to investing in an asset, a single family rate or a single family portfolio, right? What we’re trying to do is structure. The product such that behavioral shift ultimately benefits both parties, right? The only for their fraction and then the investor for their share of the home and because the investor owns 98 percent going down to 90%, most of the benefits obviously accrue back to the investor pool.
And that’s important because. You can’t build a mousetrap and an on ramp and a better solution for the consumer if you can, at the same time, attract capital, right? And market rate capital, not just impact investors, but folks who look at this and go, It’s actually a sound investment that’s going to earn me a solid return, right?
And therefore, I’m going to put money into this. And that’s what we’ve seen with investors coming in. They like the mission, but they really like the returns because of that alignment of incentives and behavior.
Exploring the Financial Mechanics
Ben Fraser: So how do you price this for the borrowers, right? Is it based on a net yield?
Is it based on the average rental income in the market? Are you trying to solve for a number for the, for your investment? How does that work?
Frank Rohde: Yeah, the answer is a little bit of all of that, but one of the interesting things here is we look at the rental yield in the market, right? And basically look at, you have to be somewhat competitive on the rental yield to offer a value proposition to the consumer.
However, one of the interesting things when you talk to renters in particular, the thing they like the least is the fact that the landlord can increase rents every year. And so you have this ever increasing payment and somewhat unknown payment. And so 1 of the things that we’ve done is we’ve gone back to our customer base and he said, look, we’re going to fix your rent for 5 years.
You’re not going to get that anywhere else. You’re going to have a fixed payment for 5 years in return. That payment, or the rental component of that payment is going to be a little bit above market today. But it’s not going to increase. So for the investor, you’re getting a higher yield. In return for certainty that you’re giving to the consumer by saying, we’re not going to increase your rent, right?
We’re not going to increase the yield in the 2nd year, and that’s a fair trade off that the consumer understands, right? And that benefits the investor. To answer your question, we look at the market rents that are out there for single family homes that are comparable in that market. We price above that today.
Because we know that those rates, those rents that are competitive for standard SFR rentals are going to increase over time. And because we have this fixed offer over 5 years to the customer is okay with that. Plus they’re getting the optionality of picking the home. It’s a home that’s for sale, not for rent.
It might be in a better school district, all of the things that provide incremental benefit. And that’s why that math actually works for the consumer as well.
Ben Fraser: We’re in a unique environment right now too, where the spread between the average rental cost and the average mortgage is as wise as it’s been in a very long time.
So it’s actually much more expensive than it has been historically to pay a mortgage at current rates. And so if you price slightly above the average rental market, you’re somewhere in between right now.
We’re.
Frank Rohde: Yeah. All in where actually our customers pay less than they would with a mortgage.
Interesting. Today,
right? And there’s still, and there’s still a good amount of room there, right? Even as mortgage rates fall. And so that’s this interesting missing piece that didn’t exist in the market. It’s to say, it’s better than renting because we give you ownership. We give you the ability to build equity.
We give you the ability to pick a home, all of that. But it’s cheaper than a mortgage and you don’t have the big upfront down payment. And today with a monthly payment at, whatever, six and a half percent mortgage The monthly payment is a little lower as well.
Ben Fraser: So how do you define, you mentioned that you’re valuing the asset every month to, for the purpose of buying new shares, how do you value the asset every month?
Is it just based on the ABM models out there and some kind of average of that?
Frank Rohde: That’s exactly right. We use third party ABMs, right? Because we don’t want to be. We don’t want to have a conflict with our customers or say that you guys came up with the value and I don’t know how you did this.
We said we use these 3 3rd parties. We throw out the outlier and we take the average of the other 2 and that’s our valuation model. And so that’s what the customer used to value the bricks every month. And it’s also the valuation mechanism for the purchase option that the customer has to buy the remaining equity.
Right? And. Because we publish that there’s a portal, each customer can see their valuation of breaks over time because that’s an ongoing valuation model that is visible. There’s also not going to be any surprises when the customer comes back, in 2 and 3 years and says, I want to buy this home.
What is it worth? It’s worth what it was last month, right? Plus or minus a small amount because they don’t really jump all that much month to month, but you’ve seen the walk, exactly how we got to this price, right? From wherever we started.
Ben Fraser: Interesting. You need in one scenario, if house prices crash and prices are down 30%, all of a sudden they come into some money.
Could they buy you out at that price at a low valuation from what was originally purchased at? Or do you have some type of right of refusal or something?
Frank Rohde: There’s a floor in the model that basically says the customer has the right to purchase the home at market as long as it’s 5 percent above the entry price.
Because we want what we need to protect the investor against is the customer coming in saying, okay, I bought it at 400, right? The AVM says it’s 350. All of a sudden. Now, I’m going to swoop in and snap it up 6 months later. We obviously need to protect the investor. Right?
Ben Fraser: Yeah, I think I bought a A house in a newer development a year or so ago and it’s funny as a VMS, as soon as 1 cells or sometimes they did, they fluctuate all the time because it’s a newer markets trying to figure out what the price is because there’s land being purchased and there’s, so it’s an interesting, but okay.
And then at the 5 years, so the goal is they have. 10 percent equity but it’s theoretically, they could have more or less based on the valuation of the bricks over time. If you get about 10%, that gets them potentially to qualify for more financing options. At that point, is it, you guys are prepared for them.
They’re ready. Everything’s good to go. And it’s pretty easy for them to get well. So you would do it for a couple of years. You haven’t gone full cycle with some of these, but what does that look like? If someone theoretically doesn’t have quite 10 percent and or lenders pull back and, 1st time on our programs or, less aggressive, how does that take out?
What does it look like? Can you just basically make a point? Sorry, we’re not going to extend this. Yeah. This loan or what happens at that point was the takeout.
Frank Rohde: Yeah so the golden path is exactly the one you’re describing, right? Which is the customer builds up their 10%. They work up to 10%. They now have the down payment.
We know they have good credit, so unless something bad happens, they will have good credit because they started with good credit and most likely they have the same or better income. So they should be mortgage qualified at that point. And the option to the customer is by the home. Go get a mortgage, right?
We have a partner lender that understands what we’re doing and understands how the program works, who can qualify you, and then you can go get a mortgage and buy the home. So that’s the golden path and that’s the ideal path. And let’s say you’re not exactly there. You’re at 9. 8 percent or 9. 5 percent because you haven’t, home prices went up too fast.
So you haven’t built up to 10%. You can always extend by a month or 2 or 3, right? To get you to that 10%. So that’s not an issue. The second path is one where the customer says I don’t really want to buy the home. I’m happy living in it. I’ve built my equity. This is working for me. And so at that point, we offer the option to extend for another 5 years and stay in the same program.
And basically, the customer builds from 10 to 20 percent equity over the next 5 years. The investor pool either stays the same or we swap it into a successor fund and continues earning rental income and appreciation over time. And then the 3rd scenario is, and that could happen at any point along the way where the customer says don’t want to buy the home and I don’t want to live in it anymore because I’m moving to the other side of the country for work reasons or what have you.
And at that point we will buy back their accumulated equity. And we will charge them a relisting fee to then put the house up for sale and that returns capital to the investor and the relisting fee again is similar to the kind of the floor buyout is a protective mechanism to make sure that, the investor base is protected and we cover any costs that we might incur by listing the home and selling it.
Ben Fraser: Got it. Okay. Last question. So it’s interesting. You don’t use any leverage at the asset level, which obviously, you know, if you have strength, I’ll never return where you don’t need it. But do you use leverage at the fund level or anticipate using leverage there?
Frank Rohde: We do. We do. Yeah, and so today we have about 55-60 percent leverage at the fund level.
We’re being fairly conservative, as interest rates come down, we may increase that a little bit really to make sure that ultimately, it’s a, it’s still cash flowing and it’s still generating passive income to the investor base. But that’s, that’s ultimately kind of a.
A provision we’ve put into the fund docs that we look at on a periodic basis to say what’s in the best interest of the investors. And how do we maximize returns? I don’t think we’ll ever have a huge amount of leverage here, especially not with where interest rates are today. And also, quite frankly, from a perspective of protecting the investor base, right?
And making sure that you can’t have negative returns.
Ben Fraser: Very cool.
Conclusion and Contact Information
Ben Fraser: Frank, thanks so much for coming on. This is a really cool concept. And I love how you said you’re solving the gap in the market here for home ownership and definitely a very unique model. Congrats for getting off the ground and excited to see where you guys go from here.
What’s the best way for people to learn more about Ownify if they want to hear more about what you’re doing?
Frank Rohde: Check out the website https://ownify.com/ or ping me directly. frank@ownify.com, OWNIFY. And happy to answer any questions, dig in deeper, figure out how we can help other folks expand into new markets.
Yeah.
Ben Fraser: Awesome. Great. Frank, thanks so much for coming on. It’s really fun.
Frank Rohde: Ben, thanks for having me. It was a pleasure.
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