Einstein's Disease (Aired 04-16-2025) Unlock Home Equity Without Loans or Monthly Payments

[00:00:00] Speaker A: Welcome to Einstein's Disease. Through real world insights and powerful conversations with industry leaders, we help you break past limitations and rethink success. Are you ready to push the boundaries of what's possible? Hello, my name is Greg Ellers and I'm the host of Einstein's Disease, where we explore challenges and overconfidence and stagnant thinking in the professional and personal life. Our mission is to give the individuals that are watching our show tonight the ability to understand a new problem and some solutions that come with that problem to potentially get you over a hurdle that you are experiencing in your personal life or at work in your professional life. Today's challenge that we're going to be talking about today is connected consumer financial distress. Many of you listeners and viewers were fortunate to receive interest rates on your mortgage somewhere between 2 and 3%. But over the course of the last few years, we've experienced higher levels of inflation. Cost of living has gone up, and the traditional method of being able to extract wealth from a home to be able to pay for your exceedingly higher expenses has gone by the wayside due to the fact that many people don't qualify for those. My host today is, or my guest today is, I'm the host, Steve. My host, my guest today is Steve Hotteback. Steve is a. Our relationship goes back many, many years. Steve is a pioneer in an area called home equity sharing agreements, where people are able to extract wealth from their home. And we're going to talk about that today in the second block as a solution. But first, I'd like to introduce Steve. Steve, welcome to the show. [00:01:52] Speaker B: Thanks, Craig. Glad to be here. [00:01:54] Speaker A: It's good to see you, Steve. It's been a while. You know, as I laid out in the beginning, consumers and businesses for that matter, have seen the cost of their capital go up materially over the last few years. And maybe it's abated a bit over the last medium term here, two to three months. But overall, the cost of capital is significantly higher, putting a real challenge to the consumer and to business owners. And I want you to kind of share with the audience a little bit of how you see this as a big challenge relative to past history, specifically with respect to being able to roll down the curve, if you will, and be able to cash out refi for a mortgage or for a business. [00:02:43] Speaker B: Sure. Well, as you mentioned, it's been, I don't know, I would say it's been about a 40 year run where we've been able every, every year, homeowners have been able to always Kind of tap into that trapped equity, right, for 40 years because interest rates really haven't moved. Okay? So it's, that's, that's a historical event economically. So if you look at the household, the majority of households have the majority of their net worth. Homeowners trapped in equity. It's the largest asset class in the world. The good news is the two biggest assets that most households have is that, as you mentioned, that first, that low first mortgage and then a stockpile, an unprecedented level of home equity. The problem of the last two years has been as interest rates have gone up, okay, accessing that through traditional means, which is either taking out a cash out refi or a heloc, a home equity line of credit that's been kind of shut down because the homeowner basically can't get access to it without refiing that first. So what really has happened, you have a scenario where more than ever homeowners are what we call house rich, but cash poor, put a big strain, maybe. [00:04:10] Speaker A: Touch on a little bit with respect to what you see with the consumer, because we, you know, they were fortunate during the pandemic to be able to lock in, in a low interest rate. Steve. But subsequent to that, we've seen higher levels of inflation. And do you see people that they've, I mean, the statistics would show that credit card debt is at an all time high. So people are paying much higher rates. But yet at the same time, has their, have their credit scores been affected by this, Steve, Is that part of the challenge that some of these consumers are seeing? [00:04:44] Speaker B: Absolutely. And as you know, and most people know, but just as a refresher, there's something that's called utilization. So the utilization percentages have gone up significantly. And as utilization, you know, if you have 10, 20, 30%, these high utilization rates actually adversely impact your credit score. So where you might have, for our. [00:05:10] Speaker A: Listeners on that utilization is, is that where I may have a credit line of a thousand or five thousand dollars and I use that and carry a balance, Is that how the utilization is determined? Steve? [00:05:21] Speaker B: That's, that's exactly right. If you had a $5,000, say, credit available and you use 2500 of it, you would have a 50% utilization, which is very high, which actually would push your credit score down. And you're seeing utilization rates now much higher than they've been in the past years. [00:05:40] Speaker A: Got it. And when we talk about credit scores and being able to access a home equity line of credit or a cash out refi, there's specific credit Scores that are required for those, Steve? [00:05:55] Speaker B: Sure. And I'm not an expert on, you know, mortgages and credit lines so much as I am on the equity side, but you really need to have at least 680, and it's usually more in the 700s to access, you know, home equity lines of credit. So at the same time that house wealth has grown, credit lending standards by banks have actually gone up. Okay. So it's actually tightened. So exacerbating the issue. [00:06:27] Speaker A: And, and they've tightened subsequent to the increase in interest rates. Have, have you seen that tightening. [00:06:33] Speaker B: Correct. [00:06:34] Speaker A: Standards gone up the last two to three years? [00:06:37] Speaker B: Yes, everything. So interest rates went up and the availability of credit got tighter by banks and lending. That's exactly what's happened. [00:06:45] Speaker A: Wow. So what, I mean, the kind of mosaic you're laying here is that everybody, many people may have been first time home buyers or moved up into a home during those low interest rates, that low interest rate cycle, which was a generational low, I think. Right. That when you were getting a 3%. We haven't seen that since the 60s. It's been quite a while. So what you're, what you're saying is they were able to get themselves into a situation, but be it property taxes or other costs, those homes have gotten expensive and now they've run up their utilization rate on their credit cards and they're kind of in a quandary. Is that, is that a fair way to say it, Steve? [00:07:26] Speaker B: Yeah. You literally went from tailwinds from the homeowner, as you're describing, between low interest rates and the ability, the ease of borrowing to full blown headwinds. Right. And then you look at even insurance costs. Right, right. In the state of California and in a lot of states. So the cost of money has gone up, but the cost of, you know, even taking care of that property, anywhere from insurance, you know, to debt coverage has gone up significantly. [00:07:56] Speaker A: No, I hear you. So when, when you talk or when, when your team speaks with people that are in this situation, what type of, I mean, they, they obviously have a problem. So you're conversing or your team's conversing with these people. What is there a. Are they educated on their credit score and their utilization? Are they educated on, on the absolute expense? I mean, where is a home equity line of credit relative to a mortgage? Is it considerably higher? I mean, are they, talk to us a little bit about that, the level of education that are, that these people that you speak to every day or your team speaks with to. Every day. [00:08:43] Speaker B: Yeah. Generally speaking, they're not quite as educated as you would think, but they're getting educated. The harsh reality is they're, they're actually looking to pay off credit card debt. So they're going to their bank or a lender and they're looking at it, maybe a cash out refi. That's usually the first stop. And then when they find out that they would actually have to renew their first mortgage and to get additional capital, that's not attractive. Right. Who wants to go from a 3% to a 5, 6 or 7%? Then the next step that they'll go through is a HELOC or home equity line of credit. And then they'll find out that things such as credit score and a ratio that's called dti, which is debt to income, that those ratios need to be lower than what most households are carrying right now. And it basically is just an extrapolation of, say, credit. We talked about credit utilization at a larger level at the household. You look at all of your debts, meaning how much you have, your car payment, how much you have on maybe loans, maybe house loans, etc. How much you have a disposable income and demonstrating your ability to repay. So these conversations happen every day with homeowners that are finding themselves either unable or unwilling, quite frankly, to take on the burden of additional debt. Right. [00:10:06] Speaker A: No, for sure. One last thing I want to touch on. I don't want to spend a lot of time on it before we end this block, but what's your, to the, to our viewers out there that find themselves in this difficult burden and maybe looking at credit consolidation where they stop paying their credit cards, they stop paying their high interest in their, their credit score falls materially. Do you have, what's your, what's your opinion on that, Steve? I mean, how, how does that, how does that square with what's going on? Are you seeing more of that, Is that, is that a good way to go? What do you think? [00:10:47] Speaker B: Yeah, well, it's not a good way to go, but I think a lot of folks don't understand the long term impacts of, you know, kind of destroying or, or wrecking, if you will, your credit, and they don't really know where to turn. I think there's a lot of, there, there are other options out there, such as the products that we use, but the word's not really out on them. But I would always stress to homeowners not to let your credit get in that position. Right. And I think with most homeowners it's too Little too late. You get that you run up in the utilization and they cannot keep up with the payments. [00:11:28] Speaker A: Absolutely. And we're going to be back in a few minutes with Steve to move on to some of the solutions and specifically a solution that Steve and his company offers. And with that we'll cut away to a commercial. Thank you very much, Steve. We'll see you in a minute. [00:11:46] Speaker B: Thanks, Greg. [00:11:46] Speaker A: You break past limitations and rethink success. Are you ready to push the boundaries of what's possible? Hi, this is Greg Ellers and we're back with our guest today, Steve Hodebeck, founder of Barristone Inc. A interesting company that we're going to learn a little bit more about because it is one of the solutions that we would like to share with our viewers with respect to the problems that they're facing due to higher interest rates, higher levels of debt. Steve, welcome back to the show. [00:12:20] Speaker B: Thanks, Craig. [00:12:22] Speaker A: Steve, why don't we, let's get into your solution here. Let's understand what your solution is. If you can give us a high level but easy for our viewers to understand what a home equity sharing agreement actually is and what it accomplishes and most importantly, do they qualify? Because we talked about before high DTI, high usage, etc. So if you can just kind of get into that and I'll probably jump in with a few questions, but we're interested to hear this. [00:12:57] Speaker B: Great. Thanks, Greg. Yeah, I call this, we've been doing this for about a decade now. I call it the 10 year overnight success story. But so the roots in this product and earlier on they were called a couple different things like you mentioned, they were called equity sharing, they were called real estate participation agreements. Kind of fast forward over the last decade as these products have started to take hold. They're now referred to as home equity investments or home equity agreements, HEIs or HEAs. And one of the best ways to just get the uninitiated familiar of what these are is to describe what they are not. So they're not alone. They're not a line of credit and they're not a reverse mortgage. They are an equity based solution for homeowners. So that means that the homeowner is able to basically access trapped home equity without having to make, without having to qualify for a loan, without having to make monthly interest payments. Okay. And without incurring the burden of additional debt. [00:14:06] Speaker A: Do they, do they pay their mortgage still, Steve? [00:14:08] Speaker B: So they, so they always have to pay their mortgage. These products normally are in a second lien position, meaning that they'll have a mortgage and then they'll use a home equity investment or a home equity agreement to supplement or to access that trapped equity that so many people are having difficulty accessing now. [00:14:28] Speaker A: And you said there's no monthly payments. Kind of explain that. How is this in forever? I mean, when do I have to pay back? [00:14:37] Speaker B: Yeah, so it's. Well, a lot of people say, oh, this sounds too good to be true. What's not free money? It's basically think of it as an equity advance. Okay, so the homeowner, we like to say that household wealth begins with the home. And as we mentioned a little bit earlier, a lot of homeowners now are sitting on a large amount of equity. But home equity is a non financial asset, meaning you can't take it down and use it to buy goods and services. And so what a home equity agreement does is these contracts between the homeowner and an institutional investor, they basically will advance a payment. It normally is anywhere between 10 to 20% of the home's value in exchange for sharing in a future value, a percentage of the home. Some of the contracts last for 10 years, some can last as long as 30 years. And so it's a lump chunk payment that the homeowner receives in exchange for sharing a percentage of future value in the property. [00:15:44] Speaker A: So when you call it an equity agreement, does that mean it's. If I have a credit score, I'm a bit impaired like we kind of described in the first block, Steve. My credit score, I'll say, let's say 630. So I don't qualify. I think you said 680 above 700 for a HELOC. Do I qualify for a home equity investment? [00:16:07] Speaker B: Provided that there's enough equity in your home, the answer is yes. So because it's based on the amount that you have and it's, I like to say that it's not based on your ability to repay. It's, it's based on your ability to stay in the home, which means that you need to make your mortgage payments, you need to keep your insurance, but that chunk of equity that you have, the investor is going to advance you a cash payment. You're going to agree to share in a certain percentage of that value in the home. And what you're going to do is more often than not, you're probably going to pay off that credit card debt. And a lot of people will use this to improve their credit, lower their debt to income, kind of get themselves back onto a better footing financially. [00:16:50] Speaker A: So it sounds like you're offering a lifeline to people that want to change their financial behavior. Right. Credit scores, 630 or 640 and my utilization or my DTI are bad numbers. And I can't go to a traditional lending institution or my income doesn't allow it. You're giving me the ability because you said this is not a debt instrument, this is an equity investment investment. So that means it wouldn't affect my credit score. So if I was actually lowering my debt outstanding, my credit score is going to go up because the credit agencies don't see this as debt. Is, is, is that the way to look at it, Steve? [00:17:32] Speaker B: That's, that's correct. It will. Normally it has a positive impact on your credit score because normally folks will improve their credit score because they're going to pay off that expensive debt. But it does not report as a loan. Okay. So when you have, if you get $100,000, it allows homeowners or households to, as you said, a lifeline, I call it a course. Correct. It allows them to actually get things back into balance where they're not so debt laden. Right. [00:18:03] Speaker A: And now this is, this is for a homeowner. Can, I've got three rental properties. Can I do a, one of these on one of my rental properties if I've got equity because I might want to expand my portfolio. How does, how can, what are, what are some of the ways these are being used and what's the limit? [00:18:24] Speaker B: Yeah, that's a great question. We get asked that quite a bit. So these can be used for owner occupied, meaning your primary residence, and they can also be used for non owner occupied. And I like to tell people that it kind of, it, it really is for the, the kind of a slice of, slice of America. Right. It's, it's really homes, condos, town homes. It's not used for commercial buildings, it's not used for like giant apartment complexes. But for homeowners and rental property owners, it's often used as, as a, instead of using debt, let's say that you wanted to buy an additional condo and you couldn't qualify. Right. You might use equity in combination with lending in order to have a solution. So it's a very, very powerful tool, you know, for, for owner occupied properties as well as rental owners. [00:19:24] Speaker A: Yeah. Now Steve, you mentioned earlier that you've been at this for a, for a, about a decade. Talk about the product itself. I mean, it sounds interesting. It sounds like it solves a lot of problems, but yet at the same time it really doesn't sound like it's that well known across the country. I mean, tell us a little bit about where this product kind of falls. What are your challenges in terms of building a business like this with respect to the consumer? And is it, are you seeing things change? [00:20:02] Speaker B: Sure. That's a great, you know, I, I think you never, you never understand, you know, what is. Hindsight's always 20 20. Right. So looking back and you look at all the different steps and all the things that we take for granted in, in this country as mortgages. Okay. We have a very efficient mortgage business. As you know, when something new comes out, that's not a mortgage that doesn't fit in the box. It's kind of all the infrastructure, it's hard for people to get their minds around how, how, how, how does this work? I've never heard of this before. Yet when we look at the commercial lending business, there's mezzanine finance and there's equity buyers and there's also debt providers. So if you look at this industry, this industry Maybe was doing $50 million a year, which is nothing to where it is today. It's probably about $250 million of origination per month. There's about six different companies. There will be more players. And probably the most notable is that in the last year, starting in 2024, there have been securitizations and what securitization means that these are packaged and then they are sold to insurance companies, etc and this is really going to grease, grease the wheels and get things moving much faster. You will see this become more and more mainstream because it is a real estate product. It is very adjacent to the mortgage industry, it is very complementary of the mortgage industry. And I think you're going to see more people incorporating equity based solutions along with just traditional debt products. [00:21:39] Speaker A: So, so do I, I, I'm in a bad situation and, and, but I qualify for one of these and you give me the money that I need. How do I, can I pay you back in a year? Can I pay you back in six months? What, how does it work? And then, and then you know, what happens if it gets to whatever the length of the contract is. I think you said 10 years. What happens if it gets to the end and I don't have the money? [00:22:05] Speaker B: Yeah. So the, so using your example, on a 10 year product, the advance, there's no debt service, it doesn't report on your credit. You need to maintain your mortgage payments, you need to keep insurance on the property. So kind of fast forward, depending on you can the homeowner maintains all rights and privileges of the property, meaning that you can pay this off at any time. At the end, the contract ends when one of the following happens when either the last surviving homeowner, you know, passes when the term is up in the case of a 10 year agreement or if there's an event of default. So an event of default can be you didn't make your mortgage payment, then the investor actually would have the ability to foreclose. They basically no different than, you know, a, a loan, but it's not a loan. Right. They would actually step in and basically it has the same privileges and securities that a loan does. But you do not have to make the interest payment. You brought up the question what happens if the homeowner does not have, you know, in 10 years they either have to refinance. Okay, they will have to. And a lot of people might go and do a reverse mortgage. They might do a consolidate, they might even roll it into another HEI or home equity investment or they'll need to sell the property. But it is due on at the 10 year. They'll need to take that one of those steps. [00:23:37] Speaker A: But if I sell the house, do I still owe you money or does it end when I sell my house? [00:23:42] Speaker B: When the property is sold, the agreement just like the loan that you have, if you have a loan that'll have to be paid off and the home equity agreement will need to be settled when you sell the home. [00:23:52] Speaker A: Got it. That's great. Well, that's a great way to close out this segment. Steve, like to have you back for the next block and spend a little bit more time on home equity investments. Steve, thank you very much. And we'll be back after we hear from our sponsors. Great past limitations and rethink success. Are you ready to push the boundaries of what's possible? Hi, this is Greg Ellers from host of Einstein's Disease. We're back with Steve Hodebeck, founder of co founder of Baristone. Steve, welcome back to the show. [00:24:27] Speaker B: Thanks Craig. [00:24:28] Speaker A: So in the last block we got to spend a little bit of time understanding what your solution is for homeowners being able to get cash for equity up front, be able to improve their credit situation, their financial situation and be able to stay in their home. And I think we kind of went through that pretty well. What I'd like to really do in this next block here is let, let's talk about some of the other things that we talked about off screen about some of the benefits from the capital gain standpoint our viewers are sophisticated people understand short term and long term capital gains. This because it's an equity investment or an equity transaction. There are terms to this that are different than there are for debt, isn't it, Steve? I mean, you correct, you're going to find yourself in a position where you might be able to have a better tax benefit. So it'd be great if you could, you know, without a chalkboard, give our viewers a little bit of a, a little bit of an education on what that actually means. Because I think you mentioned off camera you're paying back money at 60 cents on the dollar, which to me sounds pretty appealing. [00:25:47] Speaker B: Yeah. So let me just walk you through, just quick example. It's kind of like our favorite exercise that we use for homeowners or, or would be candidates for this is to describe, and I mentioned early in the show what it is and what it is not. So obviously, because it is not a loan, not a line of credit, it's not a reverse mortgage. There's no interest that's actually computed. It's a percentage. Okay. Of the home's value at settlement. That's kind of driven by the, the ending value of the home. So put simply, if you, the homeowner gets an advance payment, let's just use a round number of say $100,000. So if that, that $100,000 is paid to you, there is no, it doesn't record on, it does not report to your credit. And let's just walk forward and say you use that money to go pay off your credit card debt. Okay? So let's say you had $50,000 of credit card debt, you paid that loan off and then now your credit score is up, your DTI is down and you say, I kind of want to pay this off or refinance it. Maybe you took the other $50,000 and you launched the business, things are going well and now we want to close that transaction out. So when we close that transaction out, one year, let's just say it's one year and a day. The amount that would be due is normally a percentage of the home's value or they'll be subject to what's called an APR cap. Now, now, these APR caps or IRR caps is to the benefit of the homeowner because the homeowner decides when he or she is going to close this transaction. So let's say that that cap were say 20%. That's normally what they'll run 18 to 20. Now that sounds expensive, but it's usually a cap for shorter term, in a longer 10 year product, it'll go to percentage of sale. So what will happen is you will owe the lower of the percentage of the home's value or subject to the cap. So in this example, you would owe $120,000 to close the transaction out. You got a hundred, now you have 120. That $20,000 that you pay back is going to be, and I'm not giving tax or accounting device, you need to check, this is just from experience, will normally be considered a $20,000 capital loss. Okay. So if it's over a year, that'd be long term capital loss. If it's under a year, it'll be long short term capital gain. Now the benefit of this, as you know, is a lot of people have other moving parts. They might have losses or gains in stocks, portfolios, etc. And allows those to be kind of capital efficient, if you will. [00:28:32] Speaker A: Does that make sense? Yeah. So what you're saying is the money that a homeowner has to pay back because it was an equity investment, they've just lost, in your example, $20,000 in an equity investment, Correct? [00:28:49] Speaker B: Correct. Because that's the settlement amount. Yes. [00:28:52] Speaker A: Right. So when they look at that, if they, and it's a long term capital loss, if it's over a year, then again, we're not CPAs or IRS or anything like that, but you can find that anywhere. What you're saying is that long term loss can go against other gains. [00:29:13] Speaker B: Correct. [00:29:13] Speaker A: So that makes you more tax efficient from that standpoint. What about the basis of the home? Can, can you use that to increase the basis of your home? Yeah. [00:29:26] Speaker B: So there's two ways that we've seen these settle. One, sometimes when they're settling the estate, it'll change the basis because the transaction of the home equity agreement will reduce the basis. Right. Or sorry, it'll be rolled. Think of them as collapsed together. Right. So if you owed 120,000, that 20,000. So these can be folded together or they can be dealt with separately, meaning that you can close this transaction out without selling the home. Okay. So there are many people that have 800 credit scores that are self employed. Okay. So you could have a 800 credit score and still not be able to qualify for a loan, but you can get a home equity agreement. Okay, that's nuts. That really happens a lot more than you think. And when they. One last thing is you cannot deduct interest, okay, On a home loan or a reverse mortgage or a HELOC unless you use those Proceeds to actually improve the home. Very few people actually use those for those purposes. They normally use it for other things. That's why in a home equity agreement, when you look at the tax status, because it is a real estate investment, okay. It's not a loan. It's very attractive. It takes a next level of understanding, but there's a wide range of uses and practicalities. [00:30:47] Speaker A: And talk to us a little bit about your team because obviously they're not ex IRS agents or CPAs. I can't imagine. But I mean how, how hard is it? Do you have literature that you share with your prospective clients? I mean, how do you educate people on this? Because it is, even though it's been around 10 years, it sounds like there's a little bit more of a challenge that might be in place to help people. And maybe that's part of the reason that the product hasn't become more widespread. [00:31:18] Speaker B: We always start off with about a 10 minute introductory call because you really want to craft it towards the homeowner understanding what his or her situation is, understanding what their financial savvy level might be. Okay. So somebody might say, I don't really understand finance very well. I, you know, they have to give a basic understanding. But within the agreement, it, the agreements are very, very consumer friendly. It's spelled out very clearly what this is, what it is, not what it will cost you just in order to settle this. So we, we normally do take a homeowner through a 10 minute introductory answer any questions they may have and then walk them through the process, depending on what he or she is trying to accomplish. Got it. [00:32:06] Speaker A: And so what is the process? Steve, you have this 10 minute introductory call. You've had it with me. I'm interested in one of these. I, I need it for my financial situation. What. Walk, walk me through the next steps, how long it takes, what is it that you're going to ask for, etc. Etc. What. [00:32:24] Speaker B: Sure. [00:32:24] Speaker A: What, what, what will disqualify me? [00:32:28] Speaker B: So the, so we normally walk people through what, what the underwriting process is. So there's just simple, you need basically driver's license, passport, if you have a loan, which most people do. Statement of your most recent statement, proof of insurance. There's not a lot on the income side because this is equity based. So there's about three or four things that we look through. We will pull a credit, normally we'll do a soft pull on the credit, make sure that the, there's normally a credit requirement of at least 500 to 550. There are some restrictions if there's any bankruptcies. But generally speaking, the process from start to finish can take as little as, you know, two or three weeks. Normally takes maybe five to six weeks if the, the homeowner is pretty diligent in getting things back through. We'll normally use an appraisal or an avm which is an automated valuation to come up with the value of the property. And based on that, that's how much that homeowner will be eligible for. The homeowner can elect to take anywhere between 10 to 20% of the home's value, provided they have enough equity in the home. [00:33:40] Speaker A: One thing I caught that you said is there's no income verification. So this for touches on a lot of different people that might want to access this where they don't have this type of income verification. Maybe they're self employed or maybe they're between jobs or retired and maybe they're going to sell their house in three to five years, but they need some money. Talk to us a little bit about that. When you say no income verification, what does that actually mean? [00:34:13] Speaker B: Well, you, you, you hit on pretty much every. Because it's based, because home equity agreements are based on what we call your ability to stay. This is not a loan. So there's not really debt that needs to be serviced. You just have to have enough equity. So it's an equity based solution. So as you, as you expressed, people that are self employed, maybe they're in between jobs, maybe they're retired, they could have, you could have a retired couple that really has a lot in savings, wouldn't qualify for a loan, but they would qualify for a home equity investment. So you really aren't concerned with determining the ability to repay because you already have that ability to pay, pay this back because it's backed by the equity that you already have built up in your home. [00:35:05] Speaker A: No, that makes sense. So as we close out this block, it's interesting to understand not, not only the, the, some of the benefits you talked about from a tax perspective, but we obviously tell all of our viewers seek, seek professional advice on that. But it makes sense from a long term capital loss from, for that and then it really seems like a pretty easy process. Is that much different than it takes to get a mortgage or a heloc? You know, anywhere from, you know, five to six weeks. Is that a pretty standard number? Are you in the same ballpark? [00:35:41] Speaker B: Yeah, it's, it can be even faster. But we try to, you know, understate and overperform if you will. I think because the documentation, there's only three or four things and it's all equity based, can be much faster. Probably the gating item is making sure that the homeowner understands and oftentimes they'll talk to their accountant, attorney, et cetera, for them to get familiar. Or there might be other people that are involved in the decision making process. That, that's, that is, that's probably the, the bigger challenge is making sure the homeowner understands what it is and what it is not. The documentation is not very difficult. [00:36:20] Speaker A: I got you. With that, we're going to cut away to our sponsor. Steve, like to have you come back for the last block and finish this up. It's been a very insightful show so far and I really appreciate you being here. And with that, we'll be back shortly. You break past limitations and rethink success. Are you ready to push the boundaries of what's possible? Hi, this is Greg Ellers, host of Einstein's Design Disease. Tonight we've been honored to be able to have Steve Hodevac, a longtime acquaintance and one of the co founders of Barristone Inc. A home equity investment company. Steve, it's been great to have you on the show today. We've really been able to get some good insight into the potential ability for people to access their home equity in a way that they may not have been aware of. And I'm really, really enjoyed the conversation today. [00:37:17] Speaker B: Great. [00:37:19] Speaker A: So as we close this out, I mean, there's, there's a couple things I want to want to touch on before we end all this. You know, we, we went through what the problem was. We provided a solution and, and a little bit of a timeline to be able to access that equity, provided they're able to, talking to your professionals, access their equity because they qualify. But let's take a little bit of a step back to our viewers because many of them are entrepreneurs. They're looking to start their own business or they've got one and they've had challenges in their daily life. And so let's pivot away from the product and let's talk about the challenges of being starting a business like this. You've said you've been in it for 10 years. I mean, Einstein's disease, you think you know everything and you just keep making the same mistake over and over again or you're customers don't want to listen. So you've definitely felt that challenge being in this because as you said, the product's manifesting itself now, but for a long Time it was kind of a desert out there for you. [00:38:20] Speaker B: Absolutely. Greg. I always, I recall one time we were describing to a couple of bankers what this product was, and the bankers said, well, why don't they just go get a loan? And it's like, well, that's easy to say when you don't have any issue getting a loan. And then I had another conversation, and I'm in Northern California, which is, you know, kind of the haven for venture capital. And we were talking to a venture capitalist and they, they said, what do you do? They said, why would a homeowner do this? Why wouldn't they just go and get a loan? And I said, you know, well, let's look at what you do. Your venture capitalist, you put equity investments in. Why doesn't everybody start a business, just get a loan? Right, right. So there are, there are just situations where just, you cannot do everything just all debt based. Right. And I think slowly you're starting to see people say, yeah, why can't I, you know, it's my equity. Why do I have to go to the bank to ask for them to get access to what is actually mine? Right. And so I think that we've never had a bad conversation, but as you can imagine, you do. You know, people just get used to thinking a certain way and it's always been debt. And I think that's starting to change. [00:39:40] Speaker A: Yeah. No, and I think maybe, you know, what, what do you feel? I mean, we talked about the different age demographics, but are you seeing some of the younger potential clients or people that you have? They're much more comfortable with this product. It doesn't really scare them as much because they have a little bit more sophistication. Or is, is that, am I jumping the shark there? [00:40:05] Speaker B: No, I think you. That's exactly what is it. Will they say invention or necessity is the mother of invention. Right. So you have this product and all of a sudden people are finding they're starting to look at it, Greg, as home equity is not just is. What if you thought of home equity as an accessible and manageable asset? And that's really the mindset that's starting to happen with not only younger buyers or younger homeowners, but even retirees. They look at, why do I want to do a reverse mortgage when I could just access some of the equity? They might, you know, in a reverse mortgage, you, you can't leave the house and you got to pay off that, that first mortgage. Right. So here you can actually keep your low first mortgage. You can get a Lump chunk of money and you might move somewhere else and rent your house out and turn it into a cash flow. So there's a lot of different ways that people are looking at managing this asset that we call home equity. [00:41:05] Speaker A: No, that, that's great. So from the element of, of my show, Einstein's Disease, you run into a lot of prospective, I guess, bankers or investors, and then also people that call in, they believe it's too good to be true and they think they're getting hoodwinked. And then the, the investors or the bankers are. Why, they just don't understand the difference. So you've got a, a challenge to, to bring those people around, don't you, Steve? [00:41:36] Speaker B: We, we do. My, one of my favorite stories is 10 years ago we were doing this and a client, a homeowner, was very excited to do it and he brought it to his attorney, his attorney looked through the documents. Then we talked to an attacks person and, and it was three or four calls, Greg, that we went through. And the last call that was, he said, you know, I've been looking at this. He said, I was talking to my wife. He said, do you guys do condominiums? Right. So he basically he went from being a skeptic to actually one of one. A great referring client and a user of the product. So that's kind of how it goes. [00:42:11] Speaker A: Yeah, that's fantastic. So appreciate you sharing that because, you know, a lot of business owners face these challenges being able to get over that hurdle. And I think you've given us a little bit of insight there and I appreciate it. So what's next for Barristone? What's next for Steve in this business? And how do you see your career advancing? You're obviously an entrepreneur. A lot of our viewers are entrepreneurs. What do you, where are you going from here? [00:42:45] Speaker B: Yeah, great question. I think right now we, we really are having major tailwinds behind this. It took a long time to get there. But the combination of high amounts of trapped home wealth, higher interest rates, and a lot of economic uncertainty. Right. So I look at those three setups and we look towards the mortgage space. We believe that this business is very complementary now because it's not a mortgage. It'll take a little bit longer for larger mortgage companies or, or folks to incorporate home equity agreements into their product offering. But we see, we see being a complementary and adjacent business to the mortgage space. So if you look at Rocket Mortgage and you look at United Wholesale, those are ones direct to consumer. That's right now so far, that's how most of this product has been sold directly to the consumer. And we think that there's a big opportunity to open up channel partners, whether those be, you know, solar companies, whether those be adu, accessory dwelling companies, mortgage companies, Realtors, we look to partner with those people to bring this, this asset class to empower their clients. [00:44:01] Speaker A: So, so as a, as a business owner and an entrepreneur, I mean what, what are you spending most of your time talking to bankers and investors? I mean you've got a, you got a team of people. What, what, what, what, what Steve do every day? [00:44:18] Speaker B: Yeah, yeah. Trying to make the complicated simple. Right? Whether, whether it's talking to the homeowner and educating them or the investor, there's just a tremendous amount of communication that needs to happen. The capital markets are becoming more and more accepting of this. So most of my time is spent probably talking more on the investor side. The rest of our team, a lot with the homeowners and channel partners. But there's there I can tell you that they've always been very, very good and it's a good topic. Right? We've, I've never gone to a meeting where they said, oh, this is a dumb idea. And that's rare. Okay. After doing this for a long time, these are, is a fun topic because I think it touches on a lot of, a lot of, it solves a lot of problems and it's a win, win for both the homeowner and the investor. It's got to work for both sides. [00:45:18] Speaker A: No, absolutely, that's, that's great. So in the last few minutes that we have, I mean, as you said, and well, I, I kind of called it the desert for 10 years for you. I don't mean to be disrespectful, like you didn't work hard, but the challenges were clearly there because you know, you've now you've got securitization and credit ratings. That kind of happened in the last, what, 24, 36 months. You know, give our invest. Give our viewers out there, you know, the entrepreneur people that are facing different challenges in terms of what they're doing. Right. What, what, what would be your advice? What would you say to somebody out there that, you know, their potential clients have Einstein's disease or somebody they work with does give us a little, give, give our viewers a little bit of advice there. [00:46:06] Speaker B: Well, the one thing that I, you know, if you kind of have one line of what is my, what's my vision of what we want to do? I would say we want to make home equity an accessible investable and a manageable asset. And I would say to any entrepreneurs that are out there or any homeowners not to look past a powerful asset. Like I said, it's a manageable asset. But we like to say for entrepreneurs or other folks, if you have home equity, you have options. You really do. It opens up an entire different level or of, of opportunity for those entrepreneurs self employed to be able to tap into something like this for something that can advance your personal, you know, career. [00:46:56] Speaker A: Yeah. And, and the, the second part of the question was any some advice to our viewers out there that are like you, that are an entrepreneur starting a business? I mean, it's been a long, it's, it's been a long road. Yeah, but you've stayed with it. I mean, is it passion, is it belief? I mean, what, what can you, what kind of advice can you give? [00:47:17] Speaker B: I think, you know, good things always take time. It's always going to cost you twice as much and it's going to take you twice as long. But I think it's really the journey, if you enjoy what you're doing and you can see the progress that is, there's the economic rewards but there's actually the sense of fulfillment. I think that's why entrepreneur, that, that is why you're, you're driven. So I, I think anything worth doing is going to be probably worth doing for a long time and putting a lot of effort behind it. So. [00:47:50] Speaker A: No, I, I absolutely hear you. The, the, the, the fulfillment to, to your end user being able for them to be able to stay in the house or, or. [00:48:00] Speaker B: Yeah, I mean I've done this. I've, this is the most exciting project I have ever worked on, so. [00:48:08] Speaker A: Well, that's great. And so customers can get to you or prospective clients, people that are watched our show that are interested in this. How do they, where do they go to get. To get to you, Steve? [00:48:21] Speaker B: Yeah, the easiest is they can go to baristone.com b a R-A-S-T-O-N-E.com. just a very simple website, but there's principals and any member of our team, they can always reach out and ping us on that. [00:48:37] Speaker A: That's a great picture. How come you're not in it, Steve? Listen, we'll end it there today. Steve, it's been great to have you on the show. Love to stay up with your progress and maybe have you back one day. [00:48:50] Speaker B: Great. Thanks so much, Greg. [00:48:52] Speaker A: You're very welcome. This is Greg Ellers, host of Einstein's Disease and We'll see you next week. Thank you very much. [00:48:59] Speaker B: This has been a NOW Media Network's feature presentation. All rights reserved.