Leveraging Equity without Gaining Debt with QuantmRE's Matthew Sullivan

0:00
Josh Elledge: Welcome to The Thoughtful Entrepreneur Show. I'm Josh Elledge, Founder and CEO of UpMyInfluence.com. We turn entrepreneurs into media celebrities, grow their authority, and help them build partnerships with top influencers. We believe that every person has a unique message that can positively impact the world. stick around to the end of the show, where I'll reveal how you can be our next guest on one of the fastest growing daily inspiration podcasts on the planet in 15 to 20 minutes. Let's go.

And with us right now, we've got Matthew Sullivan, Matthew, you are the Founder and CEO of QuantmRE, which is a fascinating concept. And it's it seems to me a fairly new concept in how homeowners are able to leverage the equity they have in their home and It looks like a really great opportunity for investors as well. So first off, I kind of stole your thunder there.

1:06
Welcome. Thank you. Thank you, Josh. It's a pleasure being on

1:10
now. Matthew, um, you know, before we kind of get into explaining exactly how QuantmRE works, you know, obviously I want to talk about, you know, your growth, your business, you know, kind of how you got there. But your background, you actually had the opportunity to work with the Sir bridge, the Sir Richard, how did that come about?

1:32
It's a very strange set of circumstances going back a number of years now. But the guard we had a small corporate finance company in London. We used to work just up the road from Sir Richard. And one of the assets that we owned was a hot air balloon company by Lynn strain balloons. You know, of course, every corporate finance company has to have a hot air balloon company. So my my boss, and friend Rory McCarthy wrote a letter to Richard Branson saying The last great adventure is to travel around the world and a hot air balloon. We've designed a balloon, we think you'd be an ideal pilot. What do you think? So he wrote back saying dear Rory, why not. And so we then from that point, ended up getting closer and closer to Richard. So Richard and Virgin Group, and we became the gatekeepers for a number of their corporate finance deals and had, you know, three or four years years of a very interesting experience being, you know, a close member of the inner circle.

2:32
Now, as you know, and again, I'm not sure how much you know, you personally got to kind of work in his space, but, you know, thinking of his life and his success, what are some of the things that you've been inspired by or lessons from Sir Richard, that that have guided you in your business success?

2:54
I think the answer to that really is that the underlying feeling that you Get when you work with Sir Richard and I used to work pretty closely to him. I mean, you know, we would be in meetings together frequently is the sense of positivity, and that things can happen and things will happen. So there is the sense of,

3:20
of

3:21
control. So rather than having the approach saying, Well, you know, if we get all this right, and this thing might happen, what Richard always had was this sense of inevitability. In other words, I don't know how it happens, but if he wanted something to happen, then somehow magically it would, that's that sense of positivity and control of your environment somehow, is something that's really you know, stuck with me that sense of, you know, what do they say that success is 5% inspiration and 95% perspiration so that sense of, you know, making things happen pure dogged determination. I think those are the critical things that I took away from my time with him.

4:03
So he's, he's an idea person, and I would imagine that he probably works hard to attract great managers and operators.

4:12
Yes. Yeah. And I was surrounded, or I worked with some of the smartest and actually some of the scariest people. Yeah, in terms of their, you know, the the sharpness of their mind and their ability to see way beyond in anything that I as a sort of young lad, you know, was able to comprehend. And, yes, but he's not just an ideas person because, you know, their ideas, people that like butterflies as they were, you know, he's absolutely not like that. I mean, he will have a vision and this desire to get into a particular business, and then the people around him, help him do that. And so, you know, this this idea of ideas, people, they tend to be sort of dilettante in some respects. Right? You know what, you know, the success of the Voting group is all about following through is all about those. Imagine a swan that is serene on the surface, but underneath, there's always this mad paddling, you know, to actually move forward. So, you know, there's an enormous amount of hard work, determination. And you know, success comes from that rather than just the idea.

5:22
Now, Matthew, you are involved in a few different companies. And so you have multiple streams and you've started multiple companies. How do you manage that?

5:33
They're all related. So the company I have at the moment are all in the same space, which is really real estate and online real estate trading. So they're all really variations on the same thing. Now I'm My my, my day job, which takes up 99.37% of my time, is running QuantmRE, which is a company that helps as you said at the beginning, homeowners unlock the equity in their homes, that without taking on more debt, so it's a new financial tool, even though it's been around for about a decade, it's really coming into its ascendancy. The other businesses. Thankfully, again, I have some great partners. And so what I play my role, I have a small sort of management role. Now, I've transitioned away from those, but they're all related businesses. So that really helps, you know, build a foundation for the business that we have today.

6:27
With QuantmRE, Was this something that you came in and bootstrapped or did you attract investors or how did you What work did you do to actually get this off the ground?

6:42
Well, we've raised just under $2 million so far in right venture funding, which is a combination of small venture fund and private investors. So the important thing really is, you know, we put the business plan together the model is something that really solves a major problem. I mean, there are nearly 15 million homes in the US where homeowners have 50% or more equity. The only way that they can access that equity is to borrow money. So we have a solution that allows them to cash out or pull out some of that money without going into debt. Now, that solves a real problem. So the biggest thing that we had and have going for us is that we have a real business that solves a real problem. And once you can articulate that, then you become quite investable. And so, you know, we've, we've raised money, we've built a platform, we're now revenue generating and we're now growing

7:42
the business. Yeah. So, go ahead and explain how QuantmRE works, both from a homeowners standpoint and then the investor standpoint.

7:55
And you're right there. So there are actually just those two critical pieces to the equation. And the equation is that a homeowner has equity and needs cash. And an investor once has cash and want some of the equity in someone's home. Oh, sure. And if you take an example of someone that has maybe a three or $400,000 home, they may have spent years paying the mortgage off. So they'll find themselves in a position where they have a $200,000 loan, and $200,000 of equity. for that person, the equity in their home is a single, concentrated, non financial non cash flowing asset that basically sits there and it might appreciate and the only way they can realize the value of that equity is to sell the home or to borrow more money against it. For many people that can't borrow money or don't want to borrow money. There's no other option. So the asset just has to sit there gathering dust when the homeowner could really do with $200,000. Right. So about 10 years ago, a company called equity key in San Diego came out up with a type of option agreement that enabled investors to buy into some of the current value of the home and share in the appreciation of the home rather than being paid interest. And that contract has developed to the point where about a billion dollars a year is now invested into Home Equity contracts. So that means about a billion dollars a year is now going to homeowners to help them access their equity without going into debt and that that investment capital is growing at about three to 400% a year. So what we do is we enable investors and we have our own investor pools which which is growing all the time. So our job is to put or to find homeowners explain to them how this new financial tool works, get them comfortable with it, and then originate the transaction so that it can then be purchased by the investor. So the investor wins because they Get a share of a home that is not for sale, and they get to buy into the equity of a home and sharing that appreciation over the next 1020 or 30 years. The homeowner wins because they get cash with no monthly payments, no interest and no added debt. Wow.

10:18
Well, so I wonder what the math looks like, under two scenarios, right? Where if someone has, let's say they have a home worth, say, 600,000 they've got 200,000 of it paid off. And they say well, we'd like to, I don't know, you know, we'd like to take $100,000 of that and pay off debts and or maybe pay for college or something like that. Compared to you know, taking $100,000 he lock or something like that. What would you imagine? And let's say the home sells for I you know, I don't you know and again timeline can mean what are the rough numbers I know this is maybe a little bit more complicated.

11:03
No, it's a question that it's a frequent question that we get. In other words, how much is this going to cost? Yeah. And well, the first thing is, is it's difficult to compare it with a healer, because this product is really designed for people that don't want to go into debt. Right? So we'll answer that at the end. But in terms of costs, there are different flavors of contracts. So there are five different companies in this in this space, including ourselves. And each of these companies has a slightly different way of pricing that agreement. But important, what happens is, if you take your example of a $600,000 home, the rule of thumb is that all of the companies in this space will go up to or most of them will go up to a maximum 80% what we describe as combined lien to value and lien to value includes the amount that the investors put in together with the amount of the existing mortgage. So the first thing to take into count that there are some caps because the important thing is we want you to maintain a minimum 20% ownership in the property, you've got some skin in the game. And then really the equation is, again, the next rule of thumb is the maximum that we will invest is 20% of the current value of the home. So in your $600,000 home example, the most it's between 17 and 20%. So that's around about 100 to $120,000. Wow. So that's a sort of amount that you can get out as a maximum. If you add that hundred thousand dollars to your mortgage, as long as it's less than 80% of the value of the home then you you're good to go as far as the pricing is concerned. And the companies really work slightly different but differently, but the the best way to describe it is when you sell your home which can be up to 30 years from the date of the contract. You pay back the original investment out of the sale proceeds. And then you look at how much the house has appreciated over that 30 year period. Now, if you released 10% of the current value of your home, there's a multiple that's attached to that. So that when you sell your home, the investor gets their initial investment back. And rather than just getting 10% of the appreciation, they'll get between 25 and 40%. So they get that bump, they get that magnified return, so they get more of the equity, right, it would have done if they were just a partner. And that covers the risk. Because if the house doesn't go up in value, then you know with with some of the companies, they don't stand to make any money at all right, how significantly goes down in value, then they're on the hook potentially for some of that loss as well. So it's very different to a loan in that respect, because it's much more of a sharing partnership arrangement. Rather than something that stands alone,

14:03
so from a homeowner's perspective, like who would be an ideal homeowner to say, Oh my gosh, this is a dream come true. Besides not wanting to take on debt,

14:15
our customers typically fall into three buckets. The first bucket is people that have equity and cannot borrow money. So those are people that may have problems with their credit scores. They may be different, it may be difficult for them to prove their income. They may be perfectly bankable people but they simply don't fall into the categories that the banks want to be able to lend the money so they have loads of equity but simply cannot borrow money. Yeah. And people use the money for all sorts of different purposes. Everything from credit repair to, as you said earlier, college fees to divorce settlements to home improvements to diversification. So, the next bucket then is people that are Have the equity are able to borrow money that are unwilling. So in other words, I've spent my life paying my mortgage down. The last thing I want is to go back into debt. So if you're offering me a loan, a mortgage or a reverse mortgage, you know, forget it, I'm not interested. This is very different. Because there's no debt, what we're doing is we're helping you or allowing you to sell some of your equity. And the third bucket are people that want to diversify, because they see the equity in their home as an asset. And they don't want to have all of their eggs in one basket. So they say, Well, if you can help me sell some of my equity for cash, and the amount of money you get is tax deferred, by the way, so you get 100 cent dollars, even if there's a potential capital gains tax liability on your house when you eventually sell it. So it's a great way for me to diversify. I'm going to sell some of my equity and I'm going to put that money into shares or stocks or bonds or some other cash flowing instrument. So the three buckets, unable or unwilling, or people that want to diversify and yeah, within those three groups as whole range of different uses, because there's no restriction on how you use the money.

16:13
Wow. So as a company, Matthew, what do you do to I mean, what are your major visibility activity that you do to let people know that you exist?

16:26
Well, because of the, the size of the problem, it's we are a great candidate for social media, and for digital marketing. Although we do have local seminars and we do you know, work on a sort of local mano a mano basis, a major drive is in digital marketing. So we have a very active Facebook, Twitter and LinkedIn presence. We run a lot of Facebook ads and the message really is if you're a homeowner and you're looking for a way to pull equity from your home without monthly payments, then take a look at our free guide. So really, it's a step by step sort of, you know, slow process to explain to people how this works. But because there are so many homeowners, we find that digital marketing works really well for us. And it's very easy to have very predictive and measurable results.

17:20
Oh, interesting. So I work primarily with social media ads, Facebook ads, Google App

17:24
prime, primarily Facebook ads, because it's difficult to run ad words because you're then competing, right? The reverse mortgage Oh, yeah, that's a big

17:34
industry.

17:36
But But again, but with Facebook is great because, you know, we can we have images we have people can take their time. And, you know, we find that very successful. So that's something that really does work for us.

17:47
And I would imagine the E book is, I mean, you've designed it to be fairly valuable.

17:52
Yeah, it's, it's a great pace. So in other words, it's an interesting concept. So the reason I want to download the E book is you know, you've been piqued my interest. What is this? What is this thing about right now unlocking equity with no debt? The ebook is, you know, we wrote it to explain how this works and what the context is, and how this product has developed, where it's going. So it's not it's not a sales document, it really is an explanation of, if you're a homeowner, you probably don't know that you have an asset, because for you, it's just equity. It's sitting there doing nothing. And so this is an explanation of how you can actually do something with that asset, how you can monetize it, even if you thought that it was something that was, you know, a closed door to you.

18:41
So, Matthew, looking forward, then, you know, obviously, this this is a product that has, I mean, it has amazing potential, and I think it's just an education thing then.

18:52
So I think it is essential education is a function of the growth in the market. So yeah, all of the players in the markets are growing tremendously. I mean, Cutler raised 100 million dollars each last year. So yeah, big capital coming in, there's the potential that the market could be similar in scale to reifies. And reverse mortgages and P locks, you know, comparable, I wouldn't say it's gonna be the same size. But there's $15 trillion worth of equity in single family homes. It's an enormous asset class. It's untapped. So I think we're at the beginning of very interesting and exciting phase for this type of product, because it It serves investors Well, in other words, there's a good return is the ability for investors to get a share of someone's property that's not for sale. And that's the that's a huge advantage. So there's a lot of reasons why this is growing and why this will continue to grow. And I think it it does benefit homeowners tremendously. So it's very exciting. Remember, this is about this is 10 years old, this product so it's through that that learning curve. Yeah. It's approaching sort of early adolescence as it were so nice. Now he's on I think, hopefully all the pimples will have gone by now.

20:08
Well, Matthew Sullivan, you're the Founder and CEO of QuantmRE. So it's it's QuantmRE, Q U A N T M R E.com. And you've got the free book that people can download, they can read, really exciting. And I think that, you know, you, you know, this product has the ability to help a lot of great people who again, I agree with you, like I'm, I'm not real big on consumer debt, but, you know, if there's an opportunity to reallocate interest bearing debt that consumers may already have them do so in a way that you know, can reduce their risk and, and they're, you know, just be more smart about their liability. I mean, whether it's in a way, it's you just going to stay with somebody that's, that's, that's amazing. Well, that's great. You have a heart program.

21:01
Yeah, we do we do. Absolutely. We you know, we're building channel partnerships we work with, funnily enough, we work with mortgage originators, so people that are turned down for mortgages, they pass that information that there's people to ask. And we work with CPAs attorneys. We also work with debt consolidation, loan modification companies. And we're looking further forwards to work with some of the bigger home goods stores because if you think about it, if they send customers to us and then a few weeks later we send them back with a couple hundred thousand dollars in the pocket Yeah, that's a valuable customers particularly for you know, for remodeling and okay me proven so it's exciting because there's no debt. And again, it's not money for nothing. You're selling some of your asset that's, that's the bottom line is, this isn't too good to be true because you're selling something that you own to a ready fire. It's a very straightforward transaction.

21:59
Very cool. Very cool. Matthew Sullivan, thank you so much for joining us again, Founder and CEO of QuantmRE. Thank you, Josh. My pleasure.

22:07
Thanks for having me on.

22:09
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