Home Equity Contracts
Today's guest founded a company that provides a really interesting approach for homeowners to unlock the equity in their homes. And coming soon, investors can invest through this platform as well. The overall concept is called Home Equity Contracts.
Matthew Sullivan is the CEO and founder of QuantmRE he's a serial entrepreneur. He's also the founder and president of a Crowdfunding real estate company called crowdventure.com. He's the author of headfirst, a roadmap for entrepreneurs, and the host of hooked on startups podcast.
Matthew is a man on a mission to help homeowners get cash from their equity with no interest or monthly payments. He has helped hundreds of homeowners use their home equity to pay off expensive credit cards, remodel, pay college tuition fees, etc. without taking on extra debt.
In this episode we’re discussing…
· [2:34] His background and his beginnings as an entrepreneur
· [3:32] How he started and launched QuantmRE
· [4:44] What means House Rich and Cash Poor?
· [7:15] What are Home Equity Contracts?
· [9:57] How exactly works and the advantages as a homeowner (differences from a loan) and to the investors
· [13:01] The agreements and flexibility it provides to the homeowners
· [18:51] The process and how long it takes to get the contract set up
· [20:46] The type of properties they work with and the ones they don´t
· [23:38] How this industry is growing and the huge future market they could get
Matthew’s Top Tip’s
· “We sort of referring to that as being house rich, but cash poor. In other words, okay, I'm wealthy, I've got half a million dollars worth of equity in my home. But the challenge for me is, I can't spend any of it, you know, I can't go down to the local supermarket with my home equity and spend that.”
· “Now, until Home Equity agreements came along, pretty much the only way you could unlock that would be to borrow money. And that takes you back into that sort of spiral of monthly payments or, you know that that additional burden of debt.”
· “So, it's not a tenancy in common, there's no transfer of ownership, that's one of the key things to get across, you're not selling some of your home”
· “The way that the investor gets paid, is if your house goes up in value when you sell it, or if you decide to refinance the agreement. When you do that, if the house has gone up in value, then they take a share of that appreciation instead of charging interest. So, their return is an equity return as opposed to being an interest payment”
· “The people that are interested in these agreements are interested in long term appreciation of a real estate asset. So typically, the investors that we see today are pension funds, endowment funds, multifamily offices that have a long-term investment horizon. We plan on creating a secondary market, and we plan on creating more accessibility for smaller investors”
· “These Home Equity agreements provide a great investment that satisfies that credit criteria, because it's asset-backed, it is not inflation-proof”
· “If you miss an interest payment on a loan, the lender has the right to foreclose and potentially take your property back. It's that fear that the bank is always there, and you're just sort of a few months away from losing your house, absolutely cannot happen in our situation with a home equity agreement. Because we have no right. If there are no payments, so you have nothing to miss.
· “Depending on the equity that you have, we can be incredibly flexible. So, we can provide you with a cash lump sum with no monthly payments, even though you have a very poor credit score, and may even be in foreclosure. So those situations do not prevent us from enabling you to unlock your capital”.
Resources from Matthew
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ABOUT MATTHEW SULLIVAN
Matthew is the CEO and Founder of QuantmRE, serial entrepreneur, Founder and President of crowdfunding real estate company crowdventure.com, author of “Headfirst: A roadmap for entrepreneurs” and host of the Hooked on Startups podcast.
He also spent a number of years working alongside Richard Branson and the Virgin corporate finance team in London, UK, where he was appointed a director and Trustee of Virgin’s London Air Ambulance
After studying Law at Birmingham University, he pursued a career in finance and stockbroking. He then chose an entrepreneurial path and founded Europe’s first internet billing application service provider. Over the years, he has founded and led companies in the United Kingdom, Australia, the United States in the finance, telecommunications, technology, and real estate sectors.
Matthew Sullivan is a man on a mission to help homeowners get cash from their equity with no interest or monthly payments. He has helped hundreds of homeowners use their home equity to pay off expensive credit cards, remodel, pay college tuition fees, etc. without taking on extra debt.