00:00hi everyone welcome to the a 6 & Z
00:03today's episode is another one of our
00:05FinTech conversations this one is on
00:07rethinking the largest asset class in
00:09the United States owner-occupied real
00:12estate joining us to have this
00:13conversation which is moderated by a 16z
00:15deal and investing team partner angela
00:17strange is general partner Alex Rempel
00:19they cover all things FinTech and beyond
00:21we have Eddie Lim CEO and co-founder of
00:24point which aims to address a system
00:26skewed by debt financing by letting home
00:28owners sell fractions of equity to
00:30unlock wealth in their home and finally
00:32we have atif me on professor of
00:34economics and public affairs at
00:35Princeton University who also
00:37co-authored with Amir Sufi the book
00:39house of debt how they and you caused
00:42the Great Recession and how we can
00:44prevent it from happening again in this
00:46episode we cover everything from the
00:47evolution of the mortgage market and its
00:49relationship to the macro economy from
00:51their mortgage crisis then beyond to the
00:53role of government as de facto
00:54subsidized ur of certain home finance
00:56products but we begin with the
00:58difference between equity versus debt
00:59exposure and why that matters so right
01:02now when you want to find a place to
01:04live you've got two choices you can rent
01:07which means you own zero percent of your
01:09home or you can buy which means your own
01:11a hundred percent usually with the help
01:13of a mortgage from a bank but why
01:15couldn't you own 80% or 85% not only
01:19would this make owning way more
01:20affordable it would also mean that you
01:22wouldn't have like three hundred percent
01:24of your net worth tie it up in this
01:25asset which is completely against all
01:28standards of diversification there's
01:30eighteen trillion dollars of equity
01:32locked up in u.s. residential real
01:35estate and there's no solutions
01:38available to consumers except for debt
01:40leverage on the home everything about oh
01:43six oh seven that was a massive over
01:46leveraging of our economy with equity
01:49solutions like point we can actually
01:51take money out of homes put it back into
01:53the economy through remodels through
01:56renovations through small business
01:58investments and help create that look
02:00lady so how is that different than the
02:03solutions that exist right now like
02:05taking out equity loans in the stock
02:07market there's equity everyone's
02:09familiar with buying and selling stocks
02:12Google and there's corporate bonds and
02:14what doesn't exist in residential real
02:17estate is this ability to buy and sell
02:19effectively shares Mero so let me just
02:22talk about the housing market in general
02:24and especially how it links to the macro
02:25economy I think if you take the
02:272007-2008 episode in the u.s. one way to
02:30describe that is that the housing market
02:32kind of took the entire economy as a
02:34hostage you know there the boom and bust
02:37cycle in the housing market had
02:39implications very strong implications
02:41for the broad macro economy particularly
02:43on the downside when house prices fell
02:4520 30 35 cent which points that led to
02:49large layoffs in the population and one
02:53of the key reasons for that was that
02:54people who were underwater on their
02:57homes they felt that they had to cut
02:59back on their spending and that cutback
03:01in spending had strong negative effects
03:04on the overall economy now the point to
03:06keep in mind is that what we saw in the
03:08u.s. is not a unique episode if you look
03:11at the rest of the advanced economies
03:14you see similar patterns over and over
03:17again which is that the housing market
03:19seems to lead where the rest of the
03:23economy is going and that's not
03:25necessarily a good thing and so the
03:26question is what are some of the things
03:28we can do to remove some of these close
03:32linkages between the housing market
03:34through these negative feedback cycles
03:36and one area to focus on in this regard
03:39is the role of financing the typical
03:42contract is the sort of debt based
03:45contract it works very well in general
03:47but the problem with that kind of a
03:49contract is that in the event of a
03:51downside the borrower which is the
03:53typical homeowner he or she is left
03:56holding the bag so to speak so the
03:58entire loss on the downside if not
04:01entire but even large proportion of it
04:03it has to be borne by these levered
04:06homeowners the things can get even worse
04:09if they go underwater and so then they
04:11don't have sufficient equity and they
04:12might just hand back the keys and walk
04:14away which leads to this passive
04:16foreclosure problem and so the question
04:18form from the finance side is can we
04:20think of an alternative arrangement
04:22where instead of the borrower facing all
04:26the downside risk can be shared the
04:28downside risk with other segments of the
04:31economy that may be better able to
04:32withstand those shocks and that's where
04:35I think some of the more innovative
04:37products and player all innovative
04:39products one of the ways that we segment
04:41the FinTech space at Andreessen Horowitz
04:44is think about it there's things that
04:45banks do which is they lend money they
04:48send money they help you save money and
04:50then there's a whole class of things
04:51that banks don't do and that's often
04:54where you can find some really
04:54innovative products that can have big
04:56impacts yeah I mean there are many
04:59different things that banks don't do it
05:01kind of runs the gamut many of the
05:02things that we look at are related to
05:04esoteric areas of lending that banks
05:07just don't want to play in because it's
05:09hard for them to structure them hard for
05:11them to understand it from a housing
05:12perspective it's very important when a
05:14bank underwrite some mortgage to
05:15understand the valuation of the home but
05:18once they underwrite the mortgage they
05:19own the debt they have a lien on the
05:21property and that's kind of it for them
05:23as opposed to them being on your side
05:25from an ongoing basis if you're late on
05:28your payment their recourse is they
05:30foreclose on the property and then they
05:31take over the house then they kick you
05:33out they're not gonna say hey we think
05:35you should leave us and go refinance
05:36your Wells Fargo mortgage with Bank of
05:38America whereas if you think about a
05:40co-owner of your property it's almost
05:43establishing a neutral Switzerland like
05:45partner that says hey you know we own
05:47effectively five or ten percent of the
05:49house with you we want it to go up in
05:51value and one of the things that we
05:53think you should do is maybe refinance
05:56your mortgage and has a better rate it's
05:58something that the banks themselves
05:59would not do because they're locked into
06:01this notion of we own the debt we want
06:04to own the debt I wouldn't say it's
06:06necessarily an adversarial relationship
06:08but they're not going to necessarily act
06:10in the same interest as the homeowner
06:12because they want to get the coupon from
06:14you remaining in that house for a long
06:15time and they want you to be levered up
06:17this is where we think of ourselves as
06:19that kind of co-owner or the guardian of
06:22the deed where we want to optimize not
06:25just financial health but also property
06:27health in terms of use cases there's
06:29really three broad categories wealth
06:31transfer renovations and debt payoff so
06:35wealth transfer can include things like
06:37putting money taking money out of your
06:39to put into investment property selling
06:42equity to invest renovations right
06:44that's kind of a like a reinvestment
06:45back into the home and then you have
06:48debt payoff where a homeowner who's
06:51taken on some expensive debts high
06:53interest rate loans we can come in and
06:55pay those off what's the catch there's
06:58no catch really the great thing for
06:59homeowners is anybody that's optimizing
07:02for diversification of their assets
07:04lower monthly payments yeah this is a
07:07great solution the really radical thing
07:10here is there's alignment with the
07:12homeowner alignment between the investor
07:14and the homeowner where when the
07:16homeowner does well when their home goes
07:19up in value that's when the investor
07:21does well and that kind of alignment
07:23doesn't exist for any other kind of
07:25products out there for consumers to know
07:26if you have perfect credit and you're
07:29really rich and you're a really nice
07:30house and you want to take out a HELOC a
07:32home equity line of credit and you want
07:35to make monthly payments then great take
07:37out a HELOC but what if you have very
07:39high monthly payments you don't want to
07:40make any more monthly payments and you
07:43don't want to take out a HELOC or
07:45there's a broad group of people that
07:46can't get a HELOC because their credit
07:49isn't good enough so what do they do
07:51there's no such thing as a free lunch
07:52here but you know what I like about it
07:55is that it just empowers a lot of
07:56individuals that either for whom a HELOC
07:58is not appropriate and I would argue for
08:01a lot of people it's not where they
08:02can't get a HELOC you don't know your
08:04house is going to go up 10x and value it
08:06could go down by 90% you're convinced
08:08your house will go up 10x in value in
08:09the next year you should go take out
08:11debt equity is more appropriate for
08:13certain situations bonds are more
08:15appropriate for certain situations and
08:16it's just it's another option it's one
08:18thing to have different types of
08:20contracts but I think if you talk to
08:21many homeowners there's a lot of
08:23skepticism or shellshock from what many
08:26people had to endure during 2008 and
08:29their home prices you know really
08:31dropping precipitously how do you think
08:33we can go about educating consumers or
08:35potential homeowners to these these new
08:37methods that are where investor
08:39interests and consumer interests are
08:40much more aligned from an education
08:42perspective like 10 years ago nobody
08:45woke up and said I'm going to rent out
08:47part of my home right now now it's a
08:49thing same idea here nobody wakes up and
08:52I'm gonna sell some of my equity to a
08:55third party so it's important for our
08:57set of a consumer hasn't even looked to
08:59some of the other options out there
09:00maybe a HELOC is appropriate for them
09:02maybe a private loan maybe a lending
09:05club loan we encourage them to look at
09:07their other options none of our folks
09:08work on Commission if we can help you
09:10right find a great refinance partner if
09:12we can help you with a better more
09:15comprehensive insurance policy that's
09:17lower cost let's lower risk for us it's
09:19win-win for everybody
09:20let me talk about something related
09:21which is the question of insurance let
09:25me just use the insurance in that in the
09:26auto industry the government mandates
09:28insurance that in some sense and the
09:30argument for that is that if I'm driving
09:33around and I don't have insurance and if
09:35I hit someone I caused a loss and it but
09:37if I don't have insurance I may not be
09:39able to pay that person for the loss
09:41that they have to incur because of my
09:42actions I make this analogy because
09:46there's I think it's relevant for the
09:47housing market as well and in particular
09:50when we talk about homeowners that are
09:53getting into sort of potentially over
09:55leveraging situations so think of
09:57someone who has a loan to value ratio of
10:01more than 80 percent for example they
10:04can either take out kind of a standard
10:06low on a standard sort of debt but the
10:08problem with that is that in case house
10:11prices go south that person might go
10:14into foreclosure they might cut back on
10:16their spending in a serious way and both
10:19of those actions actually impact the
10:21neighbors and the economy at large so
10:23what I'm trying to say here is that
10:25there is an insurance argument that
10:28suggests that for at least for sort of
10:31leverage beyond a certain threshold
10:33maybe it's 80 percent maybe 75 percent
10:35that leverage beyond that should be is
10:39insured in some sense which again is the
10:41same notion that the downside risk needs
10:44to be shared with the homeowner by
10:47outside investors and that's for
10:49healthier arrangement as opposed to a
10:51situation where the homeowner has to
10:53bear the entire brunt which typically
10:55these kind of homeowners who have to
10:57overstretch to buy a house in the first
10:59place they are not in a good position to
11:01withstand those sharks the point from
11:03sort of macro perspective that I want to
11:05is that it's not just a question of what
11:07is good for that home owner I think from
11:09a policy perspective we need to think of
11:12this insurance motive as well and in the
11:14wider implications of the individual
11:16decision just think of think of a dark
11:18day we need to protect their neighbor
11:19neighbors from the potential
11:21foreclosures that might happen in their
11:23neighborhood yeah if you think about the
11:25housing market in the u.s. in general a
11:26lot of the reform arguments are focused
11:29around you know either privatizing
11:31Fannie or Freddie or various things
11:32around that degree so there's been a lot
11:35written on the 2008 crisis but what I
11:38really liked about your bucket if in the
11:41subtext subtitle is how they and you
11:44caused the Great Recession and how we
11:46can prevent it from happening again
11:47you talk a lot about just the general
11:50role of debt and how we need to think
11:52about debt more broadly and how the
11:54trouble is that with a debt contract you
11:57don't really share the risk between the
11:59borrower and the lender and then you
12:00even went so far as to propose kind of
12:02an interesting solution that can link
12:05your housing payments to the price of
12:07what's happening in the city you talk
12:08about ideas around how you would
12:11actually enable the debt enable the
12:13sharing of the risk between the lenders
12:15and the borrowers and in this side the
12:17reasons for recommending goes hina
12:18policy is again this idea that risk
12:20sharing is really important in the
12:22economy the specific proposal that we
12:25had was called shared risk mortices
12:27and/or shared responsibility market is
12:29rather and the idea there is that the
12:32payment your mortgage payment is linked
12:35to the value of your house and it
12:38doesn't have to be literally your house
12:40it could be the value in the
12:41neighborhood that you live in so the
12:43value of the city or it could be the
12:45value of housing stock in the zip code
12:47that you live in and so your mortgage
12:49payment is partially linked to those
12:51indices specifically in the event of a
12:54downturn that doesn't happen all the
12:55time so typically your mortgage contract
12:57will just look like it looks today but
13:00in the case of a housing bust that's
13:03where this insurance aspect of these
13:05contracts kicks in and if the house
13:09price generally in your neighborhood on
13:11your city goes down by 10 percent then
13:14your mortgage payment also automatically
13:17goes down by 10 percent
13:18and that's because the principal value
13:21basically goes down by 10% pills linked
13:23to the value of the housing collateral
13:25that that relies the mortgage and if you
13:28if you do that basically you know there
13:30is a lot less incentive for the
13:33homeowner to declare or default and
13:35declare foreclosure because they
13:37naturally automatically get a reprieve
13:39we argue in the book that if we have
13:42those kind of arrangements a significant
13:44or substantial portion of the
13:46foreclosures and the resulting economic
13:48losses from those foreclosures could
13:52sharing equity really great alignment
13:54for consumers it also provides
13:56interesting opportunities for investors
13:58like if I want to invest specifically in
14:01you know insert Metropolitan Area real
14:03estate it can be difficult to do that or
14:06particularly expensive through various
14:09there are a lot of different asset
14:10classes that investors just don't have
14:11access to so typically once you get
14:15beyond a certain size you might
14:16diversify outside of just like bonds and
14:18stocks so if you look at large
14:21endowments they might buy Timberland in
14:24the northwest and Yale kind of
14:26popularized this model of alternative
14:27investments that have a longer duration
14:29holding period because a lot of times
14:32these things have an illiquidity
14:33discount piece if you're holding on to
14:35something for ten or twenty years that
14:37might not fit for somebody that has a
14:39you know 12 months CD like
14:41characteristic around the investment
14:43that they want but it might be great for
14:44a pension plan where having a 10-year
14:47hold period is a feature and not a bug
14:49because they're able to get better
14:51returns likewise if you look at
14:53residential real estate we've spent a
14:55lot of time looking at say the hard
14:57money lending space where it's 75
15:00billion dollars a year and how do you go
15:03invest in this category of people buying
15:06houses fixing them up and selling them
15:09and this is not like flipping condos in
15:11Miami or Vegas in 2007-2008 this is like
15:14you know real real estate entrepreneurs
15:16they can't go to a bank again it's a
15:18kind of a thing that a bank doesn't do
15:19there's a lot of demand for secured
15:22assets I mean Lending Club kind of
15:24tapped into the demand for
15:26higher-yielding unsecured debt and then
15:28there's there's still ample demand
15:30for higher-yielding longer durations
15:33secured debt and if you think about
15:35housing stock right now if you go to
15:37your local neighborhood and you say okay
15:39what are the rental properties and where
15:40they located and what are the owner
15:42occupied properties and like how are
15:44they different in many cases like the
15:45owner occupied properties might be a
15:47better long-term investment but how do
15:49you buy into that and the answer as you
15:50can right now the option for an investor
15:54is you can invest in a residential read
15:55which is rental properties so like this
15:57this just unlocks an 18 trillion dollar
15:59market that right now is closed off to
16:01investors and of course it's closed off
16:03to consumers in terms of all these
16:05different things around diversification
16:07and whatnot I think the beauty of these
16:09kind of products where you have an
16:12alignment with consumer means you can
16:14build off of that relationship whether
16:16it's their financial health their
16:18property health other kinds of finance
16:19products whether that's the alternative
16:22to reverse mortgage the purchased
16:25product for millenniums getting on the
16:27property ladder HELOC products and many
16:30more so many different angles in terms
16:32of people that it would help from my
16:34next-door neighbors that bought their
16:36house sixty years ago that didn't have a
16:38mortgage anymore there was a product
16:40called a reverse mortgage which tended
16:42to be I don't want to call it predatory
16:44because maybe there is a good one out
16:46there just waiting to be unleashed upon
16:47the world but you II just wasn't clear
16:49to the consumer what they were getting
16:51these would target older people not to
16:53target them like in a we're going to
16:55target old people and take advantage of
16:56them but if you think about who has a
16:58hundred percent of the equity in their
16:59house that wants cash out on a regular
17:02basis because they have no income well
17:04that does tend to be elderly people but
17:06what the heirs of the elderly people
17:08didn't realize if they had sent it for a
17:09reverse mortgage is that when the
17:12elderly person would pass away maybe
17:14they would own zero percent of the house
17:16the children get nothing and that wasn't
17:18really anticipated because the interest
17:20payments got very very high as opposed
17:22to saying okay I am elderly I would like
17:25money right now I'll sell ten percent of
17:28my house and that's the case where you
17:30know that there is no L in the LTV
17:31because the person doesn't have a loan
17:34anymore I mean there's no such thing as
17:36a sixty year mortgage like my next-door
17:38neighbors paid off their mortgage
17:39literally thirty years ago so there are
17:41a lot of use cases like that where it
17:44equity without producing this that the
17:47downsides of leverage and the opacity of
17:50just is this indeterminate interest rate
17:53that you might have in other products I
17:55agree that there is investor interest in
17:58appetite for getting exposed to housing
18:01risk on the lender side and I think they
18:03are open to those kind of suggestions
18:04but there remains one big problem before
18:08financial products of this sort can
18:10really proliferate at a macro level that
18:12it can have an impact and that
18:14bottleneck is regulation so currently
18:17the housing finance market is heavily
18:21regulated let me give you three examples
18:22I mean starting from the big gear sees
18:25you know Freddie and Fannie their first
18:26order impact is just in terms of
18:29defining what is a conforming mortgage
18:31and what is not a conforming mortgage
18:33now any mortgage that falls in the
18:36within the definition of a conforming
18:37mortgage that automatically gets this
18:39kind of subsidy right this insurance
18:41subsidy that the government provides so
18:43if you are coming with an alternative
18:45financial arrangement and even if that
18:47arrangement is actually better for the
18:49overall macro economy you are kind of
18:52the summit stand fighting an uphill
18:53battle against this sort of subsidized
18:55products in a way so I think we need to
18:57think seriously about what kind of
19:00products the government should be in the
19:01business of subsidizing if it is to do
19:03anything in this market at all the
19:05second example I would give is taxation
19:07if I take out a mod cage and when I pay
19:10interest on that market I can deduct
19:12that at the time I file my taxes so that
19:14gives again a standard sort of debt
19:17based financial contract and advantage
19:19compared to other more equity based
19:22financial contracts now that's just an
19:24artificial advantage and it sort of goes
19:27against the economic value of the
19:29alternative which is that you know more
19:31risk sharing contracts more equity like
19:33contracts actually are better for for a
19:35macro economy so we have the tax side of
19:38it kind of has it backwards which which
19:40needs to be addressed and the third
19:42example I will give on the regulation
19:43side is a sort of Basel regulation which
19:46which are the regulations that are
19:47applied to the banking sector if I'm a
19:49bank for example I mean I'm a lender and
19:51the business of financing the housing
19:54if I lend you money in the form of a
19:58tract and I can get good rating on that
20:00I don't have to hold much equity much
20:02capital against that but if I gave you
20:05the same loan in the form of an equity
20:08contract then all of a sudden my capital
20:11requirements are a lot higher now we
20:14might think that this makes sense from
20:15an individual banks perspective but it
20:18actually does not make much sense from
20:20an overall system wide perspective
20:22because from a system-wide perspective
20:24it is actually the more equity like
20:27contracts that are much more stable that
20:29have much more beneficial qualities as
20:31opposed to the characteristics of the
20:34typical debt based contract so again
20:36from a regulation perspective I think we
20:38kind of have many of these features
20:41backwards and there is an important
20:43issue of revisiting the way we regulate
20:46this entire market that's in a sense is
20:49a bigger problem that I that that needs
20:51collective action that's where the
20:52government needs to get involved the
20:54irony of my trial Schwab account right
20:57is as soon as I go do margin trading I
21:00get all these warnings in my account
21:02somebody calls me and asked me do you
21:04know what you're doing Reagan that's
21:05that's really you know kind of adding
21:06debt to my account but it's a fair point
21:08right half of the regulations that the
21:11CFPB has put out are around mortgages so
21:14we understanding all the safeguards
21:16there I have incorporated many of those
21:19into our product we have created
21:21disclosures and other kind of materials
21:24for homeowners that you know going above
21:26we follow the waiting periods of
21:28rescission periods and we go
21:31state-by-state in our roll out you know
21:33getting licenses making sure that we're
21:36abiding by all the regs but it's a
21:38interesting point because this product
21:41doesn't actually exist so we would love
21:43nothing more than for new regulations
21:46and procedures to be created around this
21:49there is a new direction in the
21:52marketplace that we did not see before
21:54this idea that the outside investor is
21:57willing to take an equity position in
21:59someone's house that's sort of a new
22:01idea that is getting more and more
22:04traction other people have thought about
22:06this before but they have largely been
22:08proposed as kind of these conceptual
22:10theoretical constructs
22:11there are now actual companies that are
22:14trying to do that so that's one major
22:16change that I see that's coming from the
22:18private market side the second change I
22:21want to highlight is that this old model
22:23where the government was heavily
22:24involved in backing or insuring this
22:28market that that may not be it's the
22:31best way to do it going forward
22:34particularly coming more to the surface
22:36in in places that at this point are in
22:40danger of overheated housing markets
22:43I'll give you one example of Canada in
22:45the Canadian housing market obviously
22:47house prices have been rising very very
22:49rapidly especially the foreign capital
22:52coming in and so on and next to it is
22:55the fact that most of the mortgages or a
22:58large fraction of the mortgages in
22:59Canada are actually insured by a
23:01government agency so the Canadian
23:04government is at this point very
23:06interested in thinking about alternative
23:08ways of insuring these products without
23:12the government having to be on the hook
23:15essentially they are interested in
23:18outside investors or private capital to
23:21share that insurance risk that's where
23:25those two things coming together can
23:28lead can actually lead to sort of
23:29substantive changes that can that can
23:32change the landscape of how we currently
23:34view a housing finance and the other
23:37thing that's interesting is as interest
23:39rates have gone and plummeted to zero or
23:41in some countries negative which is a
23:43very very hard concept how can you have
23:45a negative interest rate like if
23:46interest rates were to suddenly tomorrow
23:48go to 20% and that's what you had to pay
23:50to get a house your your mortgage rate
23:52was 20% demand would plummet and
23:54likewise if interest rates go down that
23:56means one thing for asset prices they go
23:58up so that's the other thing like
23:59investors it's hard for them to get a
24:01good return in an era of zero interest
24:04rates there are two really interesting
24:05things about this kind of shared equity
24:08investment one is it's a great inflation
24:11hedge for lots of investors out there
24:13right let's take insurance companies I
24:16want to hedge against their liabilities
24:17residential real estate exposure has
24:19been one of the best inflation hedges
24:21historically the other real interesting
24:24is there all these investors out there
24:27that buy mortgages their mortgage hedge
24:30funds mortgage REITs the real estate
24:32investment trusts and what's interesting
24:34is like all they've had exposure to and
24:37buying these assets is debt right so
24:39they never had exposure to the equity
24:41side and so this kind of investment
24:44allows them to actually combine those
24:46together and have a single vehicle or a
24:49single pool that has both debt and
24:50equity characteristics what that means
24:53is you get exposure to not just the debt
24:56characteristics but also the equity
24:59alpha the equity upside and downside I
25:00think what's really exciting from the
25:02consumer angle is thinking about the
25:03populations that don't own homes yet and
25:06with rising home prices so many
25:08consumers of all ages are just
25:09completely locked out of even having the
25:11option to own a home if you don't have a
25:13rich uncle what do you do and now with
25:15products with equity home ownership it
25:17can make the option of owning a home
25:19much more affordable and an opportunity
25:21for a broader set of population you can
25:23imagine more portability if it's more
25:25liquid I mean more liquidity is good for
25:28portability real estate is an illiquid
25:30asset class but it's also binary right
25:34now like you either own it or you don't
25:36imagine that real estate is wholly
25:38liquid you can sell one share of your
25:41house and there are a hundred shares of
25:43every home and maybe you can't sell all
25:46hundred shares at this point in time
25:47which would enable you to leave and move
25:49somewhere else but you could sell fifty
25:51seven that would make it easier for you
25:53to make the down payment on the next
25:55house that you buy the Bay Area is this
25:57like crazy crazy sub area of real estate
26:00but that's not like the rest of the
26:02world a lot of the world works where I
26:04want to go buy a house and then I'll
26:06play scan there are contingencies on
26:08that actual purchase contract one is
26:11getting a mortgage so you'll submit an
26:13offer but it's obviously contingent on
26:15the bank financing the property as well
26:18which is very very common it might be
26:20contingent on me selling my current
26:22house so imagine you're the seller and
26:25you get this offer that says okay this
26:28particular buyer needs financing and
26:30hasn't been approved yet or is in the
26:31process of being approved I think they
26:33can make the down payment but the bank
26:35still has to come through with the funds
26:37they have to go sell their existing
26:38house and I don't know what the chances
26:41of that are so a lot of people get
26:42caught in this limbo just takes a long
26:44time for them to sell 100% of their
26:46house because that's the only option
26:47right now for liquidity and they're
26:50caught in this other limbo of like until
26:52that happens they can't move somewhere
26:54else so if you if you get a great job
26:56prospect then you want to move 2,000
26:58miles away and the company's not going
27:00to pay for your relocation and you've
27:02got this giant illiquid asset that you
27:04own 45% of right now like what do you do
27:07I think what gets us really excited
27:09about these types of solutions is at
27:11scale you can create you can make
27:14residential real estate efficient and
27:16create that liquidity and help prevent
27:19the boom and bust cycles that have
27:22really defined residential so most
27:25homeowners they have most of their net
27:27worth tied up in their home that's like
27:29having a stock portfolio with a single
27:31asset and we would love to help be part
27:35of this wave of changing that kind of
27:37behavior and this idea of distribution
27:41of home price risk wealth
27:43diversification we would love nothing
27:45more than to there to be an ecosystem of
27:47companies that allow consumers allow
27:50homeowners to take money other home use
27:53it for many of these use cases but one
27:55great use case that it could actually be
27:57diversifying you know back into the
28:00ecosystem real estate as an asset
28:02classes is just very interesting in
28:04general in that if he were alive 300
28:06years ago in Britain and the South Sea
28:07company was started in 1711 that's where
28:09Isaac Newton famously lost a lot of his
28:11money you know you could have invested
28:14in the stock market but companies are
28:15changing all the time and likewise with
28:18corporate bonds you know the sometimes
28:20they're great until they aren't the nice
28:21thing about real estate is it means
28:23called real estate for a reason it's
28:24real and it's an estate it's actually a
28:26part of the ground how do you invest in
28:28the equity of that for a considerable
28:31long period of time and it's hard to
28:34it's been one of the best performing
28:35asset classes of all time because you
28:37have human population growing you have
28:38this migration to cities and that's
28:40driving up the asset I mean this is this
28:42is bad for many of the Millennials it's
28:44harder to get on the home ladder because
28:46there is more demand and when demand is
28:49up in supplies constant like that
28:51one thing for prices they go up I just
28:53think this idea of unlocking this asset
28:56class in a long-term fashion it just has
28:58so many so many disparate benefits and
29:01it's not even just about like the idea
29:03of buying into a property and then you
29:05know diversification or whatnot from the
29:06consumer perspective it's also what you
29:09can do as a co-owner it's almost like a
29:11personal financial manager for your
29:12house this idea of if I am an owner with
29:16you of your property what can I do to
29:19help you because we're now aligned thank
29:21you very much Alex Eddie and atif
29:23awesome thanks for having us here thank
29:24you thank you very much
