Turning Your Home Into a Long-term Investment When You Move Out with David Friedman

David Friedman Entrepreneur with experience launching and growing several companies from idea to profitability. Experienced manager and team leader. Results-oriented product manager and internet marketing strategist. Metrics-oriented sales manager, strategist, and coach.

Specialties: Leadership, Strategy, Sales management, product management, startups, entrepreneurship, web technologies, online marketing, direct marketing, consulting.

Episode Highlights Here:

David:

How much money is the household make? And then, if you have a lease already in hand on the home, you’re moving out of that sort of acts like I’m using air quotes here, as you have more income than just your W two.

Pierce:

You got leadership skills, and you got super high math grades. So so so we’re on here. So let’s bring this into the analytics. So what does your platform do

David:

Sure. So if you’re moving, we make it incredibly easy to keep the home you’re moving out of as an investment property and still buy your next home. So to do that, we’ve brought a bunch of pieces together, first of all, financing. So to qualify for the mortgage on your next home, you need a few things. First of all, you need a down payment. So we’ve created a financing product that allows you to get access to the equity in your home. For that downpayment, turn the equity into cash. You can do that, either with a conventional HELOC or what we call a keep loan. So the locks are great. But if you’re moving out, you don’t qualify for a HELOC. If you’ve already moved out, you don’t qualify for a HELOC on that property we’ve created we call a keep loan that gets you access to that equity for the downpayment or for Do ready work or what have you, your home, the equity in your home is not trapped once you moved out. The next thing is to qualify for that next mortgage. You often need a lease in hand to qualify for the mortgage. So the bank, when they’re looking at your income versus your debt payments, your debt to income ratio, they’re gonna say, Okay, can you support both the mortgage on the home you want to buy and the mortgage you already have on your old home? They’re gonna say how much money the household makes. And then, if you have a lease already in hand on the home, you’re moving out of that sort of acts like I’m using air quotes here, as you have more income than just your W two. So Knox has created a master sub-lease product to make that qualification easier. And then we make the rest of this transaction simple, we find you the right insurance, your homeowners insurance on your old your homeowner’s insurance doesn’t apply anymore, you need a landlord insurance policy, what’s known as a DP three policy, we place a tenant, we take over collecting rent and paying maintenance expenses, etc. And you step back and become a passive owner of the home you used to live in, and you move into your new home, and you’ve got both the investment and the primary residence, and you’ve got all the best investments available to most households

Pierce:

Okay, so let me see if I understand this. So you provide financing for people moving out. And then you provide the master lease, which is the lease that they need an order that qualifies them to cover there, you know, expenses so that their DTI isn’t screwed. So they can go out and buy the next home. And then you turn around, and you sublease it right to a tenant. Take the arbitrage, I’m assuming. And then. And then you go ahead and put all the other brokers, insurance brokers, and whatnot in place so that it’s just a seamless symbiotic move from one thing to the next.

David:

That’s right. What each customer needs is very much based on their financial situation and their financial goals. We don’t always put in a master sublease. Sometimes, we just do it directly. So if you don’t need help qualifying for your mortgage, sometimes we just do the purchase mortgage. They don’t need to access their equity. They’ve saved up the downpayment. They can make it work. But depending on what each customer needs, we bring these financial tools and services into an offer we presented to you, and you say, you know, or here are a couple of options and say that’s what I want. We’re off to the races.

Pierce:

So let me ask you this. Let’s say I have an investment property that I’m renovating. Yep. Can I do a keep loan with you guys?

David:

Absolutely. Yeah, to do a keep loan, you do have to put your home on our property instead of on our platform. So what we’ve done is created a HELOC for an investment property without going into too many details—very hard loan to find. Find a few credit unions and local folks, and they’ll do it. We’re doing it on a large scale, and the reason we’re able to do it is that we have intimate knowledge of each property on our platform, including the cash flow. So we know that when we collect rent, there’s cash flow to pay that loan. So we’ve de-risked the loan, and therefore the market the capital markets will allow us to lend capital to landlords to property investors.

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About David Friedman

Specialties: Leadership, Strategy, Sales management, product management, startups, entrepreneurship, web technologies, online marketing, direct marketing, consulting.

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