This week on the show I welcome back a good friend of the podcast, Matthew Sullivan. Matthew was first on the pod over 4 ...
Homeowners can only access their home equity by getting deeper into debt
Over 14 million Americans have a valuable asset that can be converted into cash to meet their financial needs: the equity in their home. In the US, total home equity hit a record $18.7T in 2019. However, home equity is an illiquid, non-financial asset. It can't be used to buy goods or services.
The problem for all homeowners is that the only way to access their equity is to take on more debt.
At a time when many families need funds more than ever, there needs to be an alternative financial tool for homeowners who are house rich but cash poor and are unable, or unwilling, to take on the burden of monthly payments and additional debt.
Get cash from your home equity with no interest, no monthly payments, no added debt.
QuantmRE is a real estate finance platform that originates and funds Home Equity Agreements. This new financial tool enables qualifying homeowners to get a cash lump sum from their home equity with no monthly payments, no interest and no added debt.
A Home Equity Agreement is an equity based solution - it's not a reverse mortgage, it's not a loan and it's not a line of credit. Instead of charging interest, we take a share of the current equity together with a share of the appreciation if the value of the home goes up. We also share in the potential downside risk if the home decreases in value.
People who have been turned down for a loan or mortgage can still qualify for a Home Equity Agreement and get cash from their home equity, again with no interest and no monthly payments. In many cases the homeowner has up to thirty years to sell their home or to refinance the agreement.
Our plan is to help unlock hundreds of millions of dollars of equity for homeowners, providing them with much needed cash with no interest, no monthly payments and no added debt.
The QuantmRE platform has also been designed to enable a wide range of investors to fund these Home Equity Agreements, including retail investors. Our platform has been designed to be a secondary market exchange where investors can build, model, manage and trade individual portfolios of fractionalized Home Equity Agreements (note: this exchange is subject to regulatory approval and is not immediately available).
Making home equity accessible, investible and tradable
We originate Home Equity Agreements. We also plan to act as the platform that links homeowners and investors, providing homeowners with access to debt-free financing and investors with access to investments in prime residential real estate.
The QuantmRE platform has been designed to make home equity accessible, investible and tradable.
Equity Freedom for Homeowners
The homeowner receives cash, they maintain all rights and privileges of ownership, and they can settle the agreement anytime by selling their home, refinancing or renewing the agreement. During the agreement period, which may be as long as 30 years, the homeowner does not have to pay any interest, there are no monthly payments and there is no added debt.
At a time when many families need more funds more than ever, our Home Equity Agreements can provide a much-needed alternative source of capital.
Invest in US residential real estate without the hassles of being a landlord
The patent-pending technology behind the QuantmRE platform is designed to enable homeowners to sell, and investors to buy a portion of the equity in single family residential homes. Our longer term objective is to enable a wide range of investors to fund these transactions, and to create a secondary market for fractionalized Home Equity Agreements, giving investors the chance to build, model, manage and trade personalized portfolios of this previously untapped asset class.
The image above represents a part of the website that is currently under development and is intended for demonstration purposes only.
Tradable - creating a secondary market for Home Equity Agreements
We plan to use some of the proceeds from this Offering to continue the development and build-out of our trading platform, which we call 'Active Portfolio'. Built on blockchain technologies, it has been designed to operate as a marketplace for fractionalized interests in Home Equity Agreements, giving investors a smarter way to invest in US residential homes. This includes seeking regulatory approval for the exchange, which will require significant time and expense.
The image above represents a part of the website that is currently under development and is intended for demonstration purposes only.
Using our patent-pending technologies, each Home Equity Agreement can be fractionalized and split into $1 units. These units will be offered to investors via our exchange, enabling them to build, model, manage and trade their own portfolio of investments in individual residential properties.
Note: This exchange will require approval from federal and state regulators and non-regulatory bodies, which the Company anticipates could be time and capital extensive. A portion of the proceeds of this Offering will be used for such purpose. If the Company is not successful in obtaining the necessary approvals, the fractionalization and transferability of these Home Equity Agreements could be limited. The image above represents a part of the website that is currently under development and is intended for demonstration purposes only.
Peer to Peer transactions
Once the QuantmRE platform has been established and trading volumes begin to grow, our plan is to enable homeowners to raise capital directly from investors, on a peer to peer basis, without the need for an intermediary fund (similar to the way Prosper and Lending Club operate).
Part of the proceeds from this Offering will be used for the technological build required to enable a homeowner to offer their home equity to potential purchasers who can transact with the homeowner via the platform, without the need for another capital source. This direct investment model will enable us to offer a more diversified range of Home Equity Agreements which will also be fractionalized and traded on QuantmRE's secondary market exchange.
Note: This platform will require approval from federal and state regulators and non-regulatory bodies, which the Company anticipates could be time and capital extensive. A portion of the proceeds of this Offering will be used for such purpose. If the Company is not successful in obtaining the necessary approvals, the ability to use peer to peer funding for Home Equity Agreements could be limited.
Over $1.5M capital paid out to homeowners. $3.5M+ pipeline
The Company started accepting customer applications on its platform in October 2019. Building on an effective, scalable online and offline marketing strategy, we have been able to generate revenues by originating agreements, arranging for the payment of capital to homeowners, and growing the business month by month.
These transactions represent Home Equity Agreements that have been originated by the Company on behalf of its capital partner as well as transactions that have been brokered to other Home Equity Agreement companies
We have also generated a significant amount of press interest with our innovative approach to home finance:
Customers and case studies
Our customers fall into three main categories:
The homeowner can use the funds for any purpose:QuantmRE's debt-free Home Equity Agreements can provide short term solutions or implement longer term financial strategy:
It's true. You can unlock the equity in your home without taking on more debt.
Revenue generating with a highly scalable product
We currently generate origination fees based on the amount of cash a homeowner unlocks when they complete a Home Equity Agreement.
As demand for Home Equity Agreements increases, we anticipate being generate an additional 'gain on sale' for Agreements that we originate, in addition to the fees paid by the Homeowner. This may increase our overall potential earnings to approximately 5% of the cash value of each completed Home Equity Agreement ($5,250 per completed Agreement based on the current average contract size).
Built on blockchain technologies, our secondary market platform has been designed to operate as a marketplace for fractionalized interests in Home Equity Agreements, giving investors a smarter way to invest in US residential homes and delivering revenue streams from the following potential activities:
- Annual membership fees
- Technology fees to buy, sell and trade units in fractionalized Home Equity Agreements
- Portfolio modeling
- Real time real estate transaction data
- Portfolio balancing
Note: This exchange will require approval from federal and state regulators and non-regulatory bodies, which Quantm.One anticipates could be time and capital extensive. A portion of the proceeds of this Offering will be used for such purpose. If Quantm.One is not successful in obtaining the necessary approvals, the fractionalization and transferability of these Home Equity Agreements could be limited. The image above represents a part of the website that is currently under development and is intended for demonstration purposes only.
Tapping into a rapidly growing $18T addressable market
Over 14 million homeowners in the US are 'house rich' - their homes have 50% or more equity. In the United States in 2019, total home equity hit a record $18.7 Trillion.
Image: Q4 2019 Equity Rich Properties by ZIP. Source: Attom Data Solutions
We are currently focused on originating Home Equity Agreements in California, and will use part of the proceeds of this Offering to expand the number of states where we operate.
Leveraging direct-to-consumer marketing and existing channel partnerships, we plan to achieve $50M in originations over the next 12 months, or approximately 476 completed Home Equity Agreements at the current average value of $105,000.
Our marketing strategy uses a combined approach of direct to consumer, via digital and social media advertising, and a channel partner network.
Our social media advertising strategy is currently yielding a 5x return on advertising spend and provides an efficient, highly scalable method of new customer acquisition.
Part of the proceeds from this Offering will be used to increase our digital marketing ad spend which we anticipate will drive significantly more customer traffic to our website.
Our team is seasoned and experienced
Our management team is comprised of pioneers in the shared equity space who have helped over a hundred and thirty homeowners release millions of dollars of equity in their homes, giving them the freedom to turn their equity into cash and take back control of their finances.
We are making investments in home equity available to retail investors
There are currently four other product companies in this market - Unison, Point, HomeTap and Patch Homes - all of whom are backed by major venture capital firms, institutional investors, insurance and endowment funds. They do not allow retail investors to participate.
QuantmRE is similar to our competitors as we also link homeowners to investors to provide debt-free financing options.
Unlike the other companies in this sector however, QuantmRE's diversified investor base potentially enables it to offer a wider range of Home Equity Agreements to a broader range of homeowner customers.
This table shows the estimated capital raised by the Company's competitors together with the estimated capital commitments for investments into Home Equity Agreements
- QuantmRE is the only platform designed to provide institutional and individual investors with access to fractionalized equity investments in owner-occupied residential real estate
- The only platform aimed at providing secondary market trading for fractionalized home equity
- QuantmRE is not tied to specific capital sources - offers a wider product range to homeowners
Join the Equity Freedom Movement
Our vision is to solve a major problem for homeowners who want to access the equity in their homes without taking on more debt.
We also want to open the doors for small investors so they can build, model, manage and trade portfolios of a unique residential real estate asset class that, until now, has only been available to venture capital funds and large institutions.
Our approach has been designed to solve a major financial problem for homeowners, while at the same time creating liquidity and tradability for one of the largest untapped asset classes in the country.
Timeline of recent and anticipated future events
From March 2018 to date, QuantmRE has raised $1.825M in investment capital from a combination of angel investors and venture funds.
The capital raised has been from a combination of the sale of $1.1M in equity (through the sale of common and preferred shares), a convertible share offering ($25,000 raised) and $699,000 raised through the sale of platform Membership Tokens through a SAFT (via a Regulation D offering in March 2018).
Membership Tokens are cryptographic tokens issued on the Ethereum blockchain. Subject to regulatory approval, the Company intends to accept these Membership Tokens on the QuantmRE Platform in lieu of payment for membership fees, whereby each Membership Token can be redeemed for $1 worth of membership fees. Membership Tokens will be destroyed as soon as they have been redeemed on the Platform. Membership Tokens confer no rights, privileges or ownership of shares in the Company. The Company has no obligation to convert Membership Tokens into cash and they can only be used as payment for platform membership subscriptions.
You can bet on our team to innovate, execute and scale QuantmRE. Our team is comprised of pioneers in the shared equity space who have helped homeowners access millions of dollars of equity in their homes, giving them the freedom to turn their equity into cash and take back control of their finances.
Matthew is the founder and full-time chief executive officer of QuantmRE. A serial entrepreneur, he is the founder of Crowdventure.com and co-founder of two real estate funds. He 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.
Matthew went to Westminster School in London, UK and studied Law at Birmingham University before pursuing a career in finance and stockbroking, specializing in the South East Asian markets. In 1997 he chose an entrepreneurial path and founded Europe’s first internet billing application service provider. Since then he has founded and led companies in the United Kingdom, Australia and the United States in the finance, telecommunications, technology and real estate sectors.
Now living in Orange County, California, Matthew is the author of 'Head First - A Roadmap for Entrepreneurs', host of the 'Hooked on Startups' podcast, and holds a private helicopter pilot's license.
Robert is the Chief Finance Officer at Quantm.One, Inc and is also the founder and president of Good Steward Capital Management. He is an investment advisor registered with the SEC and has significant experience in providing securities and investment services to the real estate and real estate financing industry, including investment management, capital management, loan servicing, fund administration, and mortgage brokering. Robert's full time position is with Good Steward Capital Management. He currently works part-time with the Company and dedicates an average of one day a week to his position as CFO and director.
Dave Sterlitz is a co-founder of the Company and serves as its Compliance Advisor. Mr. Sterlitz was previously General Counsel and Chief Compliance Officer for EquityKey, one of the first companies to enter the shared equity market. Mr. Sterlitz has served in senior legal roles such as Managing Director and Chief Legal and Compliance Officer for nearly two decades at some of the largest financial institutions in the world, including MUFG Americas, HSBC and Wachovia Bank.
An acknowledged expert in the field, Mr. Sterlitz has been involved in the equity share sector since its inception. Mr. Sterlitz is an Executive Member of the Board of Directors for Junior Achievement of San Diego and holds a Juris Doctorate degree from Emory University School of Law.