Animal Spirits Podcast - Talk Your Book: Help With Your Down Payment From Unison

Episode Date: May 27, 2019

On today's Talk Your Book we sat down with Brodie Gay of Unison to discuss the difficulty of coming up with a down payment on a house, why it could make sense to share in the upside of your home, the investment opportunity in residential real estate, why real estate will play such a pivotal role in most people's retirement plans and why leveraging the roof over your head can be so dangerous. Find complete shownotes on our blogs... Ben Carlson’s A Wealth of Common Sense Michael Batnick’s The Irrelevant Investor Like us on Facebook And feel free to shoot us an email at [e-mail] with any feedback, questions, recommendations, or ideas for future topics of conversation. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits Talk, your book is presented by Unison. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. Michael Battenick and Ben Carlson work for Ritt Holt's Wealth Management. All opinions expressed by Michael and Ben or any podcast guests are solely their own opinions and do not reflect the opinion of Ritt Holt's Wealth Management. This podcast is for informational purposes only and should not be relied upon for investment decisions. Clients of Ritthold's wealth management may maintain positions in the securities discussed in this

podcast. Okay, Michael, I have a quiz for you. Is it ABCD? No, no letters for you. Let's say you wanted to save for five years to buy the median house in San Francisco. Let's take away interest and any earnings on the savings. So over five years... What's the median home? Is it 15 million? So the median home price is between $1.3 and $1.4 million in San Francisco. How much would you have to save per month to get that down payment in five years? Are you investing that money? Let's assume no growth on the money, but even if it was, it wouldn't change things very much. Are you asking me to do $1.4 million divided by 60 monthly payments? You want me to just tell you the answer? It would be like $4,500 a month. That's a lot of money. They'd have to save. If we're talking New York City,

which the average or median price is closer to like $700, you'd have to save about $4,000. You'd have to save about 2200 bucks a month. Isn't 4,500 bucks approximately what a mortgage cost on a $1.4 million house? Okay. Let's assume that, but also assume if you're not a homeowner, you're probably paying rent too. So it's like a double whammy. And the $4,500, not that, not that you ask, but that probably doesn't even include taxes. Yeah, true, which are probably much higher in all the other ancillary costs. All right. So what's the punchline, Ben? So the punchline is, especially in those types of areas, one of the hardest things for people to do, especially young people these days is saving for a down payment. And on today's talk your book, we actually have something

of a solution for this. So this is a company called Unison that has an idea that is, we think, is really interesting because a lot of people don't have a hard time paying for the monthly stipend for what their mortgage payment is going to be or the taxes. Obviously, it can be a stretch for some people. But the problem is getting to a down payment and getting to, say, like a 20% or 10% or 15% down payment, because you have to save a lot of money. We gave some extreme examples in New York and San Francisco, but overall, the country, the average price of a new home is close to $350. Even then, you'd be saving roughly $1,000 a month for five years to build up that way.

And some people don't want to wait that long. So to your point, mortgage payments can be fairly equivalent to rent, maybe a little bit higher, but it's really hard to save for a, down payment. So to add a mortgage payment onto your rent payment while you're trying to save. That's really difficult for most young people. Exactly. And we've got some numbers here from some different sources on the housing market that say the median home buyer today will borrow 95% of the home's value at purchase, which makes you extremely leveraged. Then you also have to pay private mortgage insurance because if your loan to value is not 80% or less, then you have to pay that

private mortgage insurance because the bank is giving you a huge loan on that asset and giving you a lot of leverage on it. And so that's kind of why 20% is typically the standard down payment because that gets you over the hump for that private mortgage insurance, which you probably end up paying for about, I think on average, it's like seven to 10 years you pay for that before you get to that 80% loan to value if you put 5% down. So when you first told me about this company, I think we both thought what a brilliant idea this was right off the bat for the reason that we just mentioned. One of the things that we didn't think of that Brody mentioned, and it's so obvious, is that to your point, when you have so much invested in a house,

it becomes people's biggest asset disproportionately so. So even if you had the money for a down payment, would it make sense to work with Unison so that you cannot be all in your home? And I think the answer is probably yes. So Brody is the one we're talking to on the show today from Unison. And so the idea with unison is, which we'll get into more in the interview today on Talk Your Book, but they help you out with the down payment. And it's an interesting business model because they're not giving you another loan on this. So the typical way it would work, and they have some examples on their website that will include in the show notes, but let's say you have 5% for your down payment, which is the typical median again.

They would give you the other 15% to get you to that 20% hump. and what this would do is not only would it decrease the leverage you have in your home, but it would decrease your monthly payment as well, because obviously the payment on a 95% mortgage is much higher than a payment on an 80% mortgage. So, and you're not paying that PMI every month. So they looked at a few examples in here, and they said the purchase price on, say, a $500,000 house, your monthly payment is more than $500 lower if you get a little help from them on the down payment. And the idea, why don't you explain how this sort of works because it's not like you're

even taking a loan out from them? Why don't we, you know what? Why don't we let Brody do that? Okay. So we'll go into the interview and then we'll kind of have some other numbers on the other side. So we have Brody Gay today from Unison, which again helps people with down payments. We think it's a really interesting idea.

And especially for young people who have a hard time get into that savings level, this is something that we think is going to be potentially huge for this sort of market. So here's Brody. We're sitting here with Brody Gay, VP of Research for Unison. Brody, thank you for joining us. Hello, good to be here. So why was Unison founded? What is Unison?

So Unison is an alternative financing for real estate. We wanted to provide homeowners the ability to get capital for their home without monthly payments, without more and more leverage. So this is really a new way to buy a house or a new way to extract equity from your home if you own it. And yeah, we give you money today. and you don't pay us a cent until you sell it. And so walk us through that a little bit because it's a great idea.

So you essentially give homeowners part of their down payment or a full down payment on the house. Usually not full, so up to 15% and then they'll put 5% down. Right. So the person who's buying actually has to have some skin in the game. That's right. Yeah. And then you guys take a percentage of the profit when the home is sold. That's right.

Exactly. And then if there's a loss on the sale, your share goes down and you don't make as much and you may even lose money. That's right. So we'll share in the downside as well, which is. great to help us take risk off of the portfolio for a homeowner. And I think that's really the best thing that we provide for homeowners in this world of very high leverage. You have to take so much risk on a house if you want to live in a home. What we can do is we can take some of that risk off your portfolio, diversify it, and give it to someone who wants that that risk factor.

So that's a good idea because, well, for a few reasons. But one is that somebody's home is usually by far and away their single largest asset. And this allows you the opportunity to diversify away from your home because you can only put up, say, if you're buying a house for a million dollars, which is obviously a lot of money. But if you only had $100,000, you could borrow from 100 from you and use that money to do something else with it. Yeah. When you look at a homeowner's portfolio, you'll see it's like 85% of their net worth. But I go even further than that because it's 85% of their net worth times the leverage that they're taking. That's like the real risk of the asset. So you have people who, I mean, just consider you have a financial advisor who tells you

all right, let's, you know, we're going to invest in the stock market, but I'm going to give you five to one leverage on everything you own, you know, take all that money and put it on black. And then it's the roof over your head. Exactly. I mean, it's your home. It's more than this. Where can I find this? Like, we heard this idea and, and we were like, this makes someone, especially for someone like Michael in New York City, who knows people here, where that first home, even if it's a starter home, is probably going to be expensive. And so not only is the home your biggest asset or investment, whatever you want to call it, but you're probably, you're probably, deferring money that you would be saving for retirement.

So it's almost like you're going in the wrong direction in that way, too, because you're only saving for a down payment for a lot of people because they don't have the room of their budget for other things. Right. And you're immediately undiversified now because you've maybe pulled it out, liquidated your brokerage account, taking it out of stocks and bonds. So is that, are the big cities the ones you're targeting? Like, who are those customers that you guys are trying to help here?

We're in 30 states. And what we want to deliver our investors. So the other side of the company is providing residential. real estate risk factor, residential real estate investments to big institutional investors, like sovereign wealth funds, endowment funds, pension funds, long patient capital. So you're probably not looking to get into the retail space? No. Especially for the terms that we have, the 30-year term, it's best to be with this more patient

capital. So we want to talk about that, but let's just stick with the down payment thing. Sure. So the problem for a lot of people, especially in bigger cities, it's not necessarily the monthly mortgage payment because oftentimes the mortgage payment can be equivalent to rent. It's the down payment. Right. So is that, is this usually provided to first time home buyers? Like, what is your typical sort of client look like? So we've done thousands of deals now. I think our portfolio is up to about 400 million. How is that? 400 million of what? Invested capital.

Okay. So the homes can be worth multiples of that. Yeah, that's right. Exactly. And so the reason I say that is we've had a huge distribution of different customers. So there's no typical There's no, exactly. It's not necessarily typically the first time home buyer. A lot of times someone who wants to get into a step up home. Just to answer the question before is because we're diversified across 30 states, we want to get a diversified portfolio. So it is not just the coast or it's all over. It tends to be just because of the nature of the transactions are, there's more real estate transactions and more equity, more home equity in California, in New York. So say somebody's been in a home for 15 years, their homeowner, they haven't used

do and they want to buy a second home. And they say, you know what, I already have pretty much my entire net worth tied up in my one home. I don't need more leverage. I don't need more real estate in my portfolio. But I do want a vacation home. And I'm happy to make the payments, but I can't, I don't really want to put $200,000 down or $50,000 down or whatever it is. Do you provide loans to people buying a second home as well, or is that something that you don't do? We typically like to stick with the owner-occupied first home. So in that case, someone could do a homeowner deal with their current home and use that money then to invest in the vacation home. Could you explain that a little? Sure. So the home buyer program is the one that helps with

the down payment, but a homeowner program is if you own a home already, then we'll get an appraisal of the home, third party appraisal. And we'll give you, say, 10% of the value of that home for a share of the future appreciation of that asset. That's actually the majority of our business. Oh, really? So it sounds like a refi to pull out some equity. That's right. Exactly. So that's the perfect analogy of the purchase mortgage and refi mortgage. This is the homeowner and home buyer. So banks must not like what you guys are doing. I think, see, I think they will, they do like what we're doing because especially on the purchase side, getting people to 80% LTV is critical. Nobody likes paying this private mortgage insurance that has to be paid above 80%. Can you explain what that means exactly. So private mortgage insurance is a type of insurance that you pay if you take more than 80% leverage on your home. So if your down payment is less than 20%. And this is just a regulation now that you have to pay this amount. And it's quite taxing. It's a lot of money every month.

out of the pocket of the homeowner. And this is to build up capital reserves to ensure against these kind of catastrophic losses that we had in the crisis. I mean, when you have, when you're taking so much leverage and you have so little skin in the game, you know, now that the 97% mortgage LTVs is commonplace. Right. So the banks feel better about their loan portfolios now because you're putting down to down payment and helping them. Exactly. So if we can get people out back to that 80% LTV, now you're a few standard, you know, you're a few standard deviations away from going broke on the deal. And LTV is what for people?

Loan to value. I'm sorry. We get indoctrinated. So the other one that we talked about a little bit, which is kind of interesting, is let's say you do have that person who has saved 20% or maybe they get it from their parents or whatever, which we're talking in New York, that's probably the standard is that young people aren't saving, but they're getting it from someone else. So let's say they do have enough for a 20% down payment, wherever they're getting those

funds from. But then they don't want to put that down. And you guys can come help them even when they have that money and they can use it for something else. Absolutely. I think even if you do have the down payment, The house is not something you should be putting all of your money in. Harry Markowitz's classic statement that diversification is the only free lunch in finance.

And homeowners, especially first-time home buyers, are immediately undiversified once they buy that home. So can we talk about how that works in terms of, so let's say that there's a $100,000 house and the person is putting down $10,000, you're putting the other $10,000. That's right. What piece of the future upside do you now own, or the downside, quite frankly? So for this $100,000 house, if we give you $10,000, then we'll share in 35% of the change in value of that home. So if we run through an example, I guess if the home goes up, let's say the home goes up to $10,000, and you sell it at $110. So we'll get our $10,000 back, plus then 35% of that $10,000 change of value.

So $13.5. But that's a sliding thing. So the more you use, the more you borrow from unison, the more unison takes in the future profits, obviously. Linearily. Exactly. Exactly. Now, do you see this as having repeat customers? Say someone buys a home, a starter home. They use you guys to help for the down payment. Then they want to trade up a little bit. Let's hopefully the house went up a little. You guys make some money. The homeowner makes some money. Everyone's doing good. Do you see that as a repeat situation where they're going to move up a little bit now to a higher, you know, higher priced home? Absolutely. Is that the hope? Yeah. And I mean, we are relatively new product. And so most, most of our customers are, you know, are still in the homes that they use originated in agreement with us. for, but we've, we've definitely had repeat customers. And I think, we think this is the new way of buying a home. I think that this has a place on almost every homeowner that doesn't have just millions and millions of dollars saved. Should be using this. Ben and I saw this. This is like a terrific product and we're sort of looking for like, what are we missing here? Like, how is the consumer like

getting screwed? But it seems like this is really a win-win for all sides involved. From you guys point of view, from your investors point of view, the fund, the borrowers, this just seems like a great sort of deal. So how does this work in terms of the process? So are you doing credit checks? Like, how does that sort of thing work? Yeah, it's very, very similar to kind of the mortgage industry. We'll get a credit check. We want to check your assets, make sure, you know, check your income and these sort of things. So it's just, if you've ever gotten a mortgage, it's basically the same process. So is it sort of duplicative? In other words, do the borrowers need to get a pre-approved before they approach you? You can get pre-approved. So we'll get pre-approved on the

credit side, also on the property side. So we're interested in which properties we want to invest in in most properties, like 75% of properties will get approved, but we need to avoid things like a, you know, geodesic domes. So that's actually one out of four doesn't get approved. That's, that's hard than I would have thought. What are the, what are the, usually the reasons why? So typically, if it's just way out in the countryside, we can't expect a good, you know, good appreciation. We like high density areas with high and robust wage growth. And, typical homes for the area. And typical just means that, again, not like a geodesic dump. So maybe we could kind of back up a little, you're kind of getting into the research side of

thing. So that's your job. It sounds like. So you could talk a little bit about your role at unison and what you do and why you came to the firm. Sure. I studied at Berkeley. I did my master of financial engineering there with another one of my coworkers, Brad Lookabaw. I specialized in exotic derivative pricing and then portfolio optimization with illiquid assets. And that's what I did my thesis on. And I was actually really interested in this problem of, you know, how homeowner portfolios have so much exposure to this extremely illiquid and, frankly, an asset that doesn't return that much. And it just didn't make sense to me. It was almost horrifying that this was still going on. And so I was thinking about ways that you could, you know, remove that kind of

risk exposure from this asset, allow people to kind of rebalance their portfolios and get that get that money back into liquid stocks and bonds, which is much healthier. I mean, if you have like a medical emergency or you have a one-time expense, it's like, you don't want to have to go through the process of borrowing from your home. Having liquid assets is critical. And so I stumbled upon Unison. And I thought it was in 10 or 15 years, whether or not Unison's successful, this will be a thing. Like, this will be how people finance their homes. And so, and I met with Thomas Bonholz and Brian Elbogan at Unison. And I thought the team was just really sure. sharp and I thought this is where I have to be. This is the future. You spoke earlier about the terms of

these deals being 30 years. Does that mean that your investors or Unison wants that money back in 30 years? And if so, what happens if somebody is very happy in their home? Do they have to move? Do they have to sell? How does that work? Yeah. Obviously, we haven't gotten to that point yet. 30 years is. I know it's a long time. And only about 5 to 10% of people will still be in their homes after that amount of Yeah, we were curious what the percentages are on that usually. Yeah, that makes sense. At least from the turnover modeling that we've done, we're looking at those numbers.

And by then, the investors has been paid back. So what do you guys have as the average? Is it five to seven years typically? So, yeah, seven to ten has been the median. It's been a little bit, it was a little slower through the crisis. People don't like to sell their homes at a loss. But, yes, seven to ten for a median holding period. And then, yeah, once we get to the end,

I think it'll be kind of a case-by-case situation. By then, people will hopefully have built up a lot of equity and paid down their mortgage, so there's flexibility. And it sounds like you guys have a patient investor base that's willing to take this longer-term view because they kind of have to in this type of asset. I think to understand why, to your point about it being like, what's the catch here? I think the critical thing to understand why the homeowners and home buyers can get such a good deal out of this capital is to understand how much demand there is for residential

owner-occupied real estate in the institutional space. It's the biggest asset class in the world and they can't get it on their portfolio. Residential real estate is. Owner-occupied, single-family home, residential real estate. And they can't get it on their portfolio. And they should have market exposure to every valuable asset. And so the demand is there. We just have to find a way to get it to them. So what's the danger from the, from the Barr's point of view in terms of what if Unison isn't around in eight years? Like, who gets the money out of the house? How? How does that work? Sure.

I mean, just like mortgage securities, they're not tied to the company that's operating and originating them. We like to hold them in our portfolio because we can, you know, monitor and service them the best. But, you know, someone else can foreseeably come in and service these agreements. I mean, really, the homeowner should be indifferent to that because they have this silent agreement because of a silent partner who's not going to bother them. And then when they sell their house, it's just like, you know, mortgage lien.

You pay off the mortgage. You pay off all the other lien holders. and then you get what's left. Are there banks you won't work with? Are you agnostic on who the lender is? Yeah, we want to work with every bank if possible. Maybe you could walk us through a quick example. We talked about the upside.

Everyone wins and there's a profit. Let's walk through a scenario where maybe someone is forced to sell during a downturn. What happens if someone actually sells their house at a loss? Sure. How that math works. Yeah. So we talked about if the home went up by $10,000. $100,000 home. So if a crisis hits and you have to sell for $90,000, then instead of

giving us back our original $10,000 investment, you'd give us back the $10,000 minus 35% of the changed value on the downside. So in that case, $6,500. So the homeowners paying back less than they actually took from you. Exactly. And that's exactly the kind of the risk reduction aspect of it, is that we're really buffering you on the downside in exchange for some of that upside. Can you maybe just walk us through what are maybe one of the most interesting use cases that you've seen? Is there anything that really stands out to you or not so much? I think retirees, people who are approaching retirement, I think this is where we can make a huge impact. Because these are people who need to reduce the risks of their portfolios.

They want to make their capital last as long as possible. How could this supplement or differ from a reverse mortgage? So the problem of the reverse mortgage is that one, it's very expensive. There are a lot of closing costs there. But no matter how your home performs, if it does, you know, if it's not increasing at the same rate as the reverse mortgage is interest rate, which are typically very high, then that debt is going to eat away the entire equity of your home. And you're going to leave, you know, nothing but a liability to your heirs. And so with, at least with unison, we can get you that money today. And it will at most take a certain percentage of your home's value.

and we'll always leave you with some percentage of the home. So we're not banking that, or you don't have to bank that your home is returning six or seven percent per year to have some equity at the very end. So how exactly does that work where you would lend the retiree money? Like let's say that the house is paid off. So they want the house free and clear. The house is worth $100,000. And they want to take $20,000 out of it.

How does that work? So yeah, in the case, I think we would do up to 17 and a half. But let's say 20% for arguments. sake. And yeah, we would share in that case, because it's a homeowner deal, it's 80% of the change in value. So if we give you 10%, it'll be 40. If we give you 20%, it's 80% of the change in value, which means there's no situation where you wouldn't have at least 20% of the equity in your home at the end of it all. Whereas a reverse mortgage, if your home doesn't increase in value and you take that same amount, there's a certain point where that principle is going

to grow and the principal on the reverse mortgage is going to eat up your entire equity stock. Actually, that retirement thing, I mean, the huge percentage of middle class, right or wrong, have the bulk of their savings in their home, whether they know it or not. And I totally agree that we talked about this in the podcast before that something like a reverse mortgage is going to have to come in because you can't spend your house. You're going to have to tap that in some way. Right, right. Actually, and there's another point here that I think your audience would appreciate which is that the home, the home's a lot riskier than people think. And I still read research papers that when they want to figure out, you know,

what's the volatility of this asset to compare it to other assets and maybe optimize a portfolio of a homeowner. They still use the case shiller, which is a real estate index. It's kind of like the S&P 500 or, you know, the Russell 2000 for real estate. But that's not technically right. I mean, it's like saying that the volatility of Amazon is the same as the S&P 500. So it's messed by a group of, by portfolio. Exactly. Exactly. And so I, so when I ask people who are even, you know, have been studying real estate finance for a long time, like, what's the volatility of a home? It's a very hard question to answer because you don't have prices every day. We've estimated it to be about 15%. So on part with stocks. Exactly. And so if you think about it, I mean, now go back to our fictitious financial advisor. I mean, that's a wild idea to take five, 10, 30 times leverage on a 15 volatile.

asset. That's quite the roller coaster ride. And that's why you have some people who do extremely well with a home investment. And on the flip side, you have people who do horribly bad, lose everything on their But it's also people who don't really understand how compounded interest works. So you hear all the time, my parents bought their house for $200,000 and now it's worth seven. But it's like, yeah, but that's 35 years ago. Yeah, right. Exactly. So just so we're very clear, you provide part of the down payment. Are there any upfront costs or anything? Like, how does it? Does that exactly work? Yeah, there are any fees in the transaction in terms of frictions and getting it set up?

Sure. Yeah, we charge for the home buyers, two and a half percent of the amount that we give you. And then for a homeowner deal, it's 3.9, I think, currently of the amount that we give you. All right. So, let's flush that out a little bit. So it's $100,000 house. Somebody is putting down 10 percent.

You're giving them the other $10,000. So it's a $250 fee. Yeah. Is that a one-time fee? Just one time, right, right then there. Okay. So it's going. We have to do an appraisal.

was to do a home inspection, these sort of things. So the other example from your website, which is probably not going to happen very often, is you have a home that over whatever period you're in, it doesn't appreciate or depreciate at all. You buy it for $100,000, you sell it for $100,000. You're getting your $10,000 back, and it's effectively an interest-free loan.

That's right. Exactly. Yeah, which obviously, again, that's probably not a big use case, but that's kind of the middle ground. Yeah, just provide, and we just want to provide, the homeowner, that capital that's not tied to a specific interest rate, no matter how the house performs. Right. All right. So on a $750,000 house, it's 1875 would be the upfront fee, which is pretty reasonable, I think. It's on par with mortgages. I mean, if you think about

mortgage closing costs are, the percentages are a little bit lower than ours, but the principal amounts are significantly higher. And they hide fees in the rates. So is this a product, we like to ask people about like eating their own cooking type of stuff? Is this a product that a lot of unison employees use. Yeah, we have a unison employee program, and I think we've done six or seven deals with the unison employees. Okay. Yeah. That's good to hear. Yeah, we think that the idea is it's very, it really piqued our interest. And so we'll be definitely paying attention to you guys in this space. And yeah, we think it's something people should consider. So it sounds like you guys are hyper-focused on what you're doing best. Is there anything else in the works, anything coming?

Yeah, we've been working with, on the topic of employee programs, working with universities, schools and potentially the police departments, hospitals, these sort of things, to get their employees a, let's say more competitive share in the appreciation or depreciation. And maybe the company will also, instead of giving them a bonus that gets taxed right up front, that bonus goes directly as an investment into the home, as an investment into them to be able to live closer to the institution, reduce commute times. And so like someone who's a doctor who's just coming out of school has a ton of debt and wants to live close to the hospital. I think it's a great solution for them. What's cool there is the hospital's liabilities, you know, the amount of money

they have to pay in wages goes up and down with increase and decrease in housing costs, really whether they like it or not to be competitive. And so now they have an asset on their portfolio that goes up and down with housing costs. So they've kind of hedged out that liability a bit. And when someone leaves and let's say sells their house, that might, that typically would be correlated to some new person getting hired so that capital is recycling at the same time. So someone sells their house. They have a new employee. They can take that capital that maybe has gone up in value, reinvested in the next home for the next employee. So there's both an asset liability matching and cash flow timing matching that could occur. I really like that. I think

that machine would work really well when we figure it out. Cool. Well, Brody, thank you so much for being on. Good to be here. Thank you for coming on. Really appreciate it. Good stuff. Thank you, Brody, and thank you, Unison, for coming on the show today. So we spoke on the show about how it's also a potential investment opportunity, not for retail just yet. But the total market value of the S&P 500 is around $24 trillion. The total value of residential real estate is $27 trillion. So they are potentially unlocking an enormous opportunity, not just for people that are using them to borrow, but for investors as well. In our chat with him afterwards, we said, man, wouldn't it be

great if you had the opportunity to invest in a retail real estate ETF or something of that ilk, which would be kind of hard because you'd have a pretty big asset liability mismatch in terms of liquidity. But still, this is an enormous market that no one is truly diversified in most cases unless you're a professional real estate investor. And even then, you have to own a lot of properties to become diversified. I am very curious to see where this goes. I think that this is just, you know, you and I were talking about this. Like, what are we missing? Right. We tried to poke holes in this argument. And I'm sure that we will get some in the emails, you know, maybe something that we hadn't thought about. But it's a true partnership. The closing

costs are pretty, you know, are pretty de minimis. Obviously, I mean, maybe some people forget about how hard of a struggle it is to get a down payment. And then when they sell their home and say 10 or 12 years and they do have a decent profit on it, if they do, maybe there would be some regret down the line because maybe they'd forget how hard it is again to save for down payment. I could see that being the case, but either way. But the other thing is that most homes in a normal environment don't have like this gigantic appreciation. What is it like? It's pretty much inflation, right? Plus maybe 100 basis points depending on where you are. And you know, if if you are someone who has been wait, like I have friends who live out in the Bay Area who waited years and years

and years because they were going to wait for the market to pull back there and it just hasn't happened. and the housing prices there have just continued to skyrocket. Definitely not economic. Definitely not. Right. But the people that weighted and weighted, like if you think that you can somehow time the housing market, which I don't really think people can,

but let's say you do and you have waited, isn't this a great way to do it? Because if you think the prices are going to go down and you get some help on your down payment and lower your monthly payment, and you think that it's going to be lower, that's going to take away their profit when they sell, it actually makes it easier to buy if you think housing prices are a little over-extended, don't you think?

You lost me. So let's say you go into a housing market that has just gone bananas. Like a P.E. of like 32? Yes, the K-Ratio of Las Vegas real estate. But you think that it's overpriced, so you've sat out the last five years and watched all your friends' housing prices go crazy. And you've been slowly saving, wouldn't it make sense to take some risk off the table and have unison partner with you on that? And so if the housing price goes down, then actually the risk for you is even, the risk is more on them if the price goes down than it is on you in a lot of ways.

So now apply this to the stock market. Are you advocating for leverage ETF in a high cape environment? If someone's going to give me the money for the leverage, in that case, you actually have to take on a leverage yourself. No one's backing you with money. So I think that's what makes this sort of a unique proposition. Did we just come up with a new business idea? Yeah. I don't know how many investors are going to have lining up for that one.

So anyway, again, this is something that hits home for a lot of people. So we think it's an interesting idea. We'd love to hear some feedback on this because, again, we think for a lot of people, that the biggest problem in getting into a house, especially for a young person, is unlocking those down payment savings. And unfortunately, not everyone has their parents that are available to help them. And the other problem is, which you're probably learning now moving into a house for the first time, is there's a lot of other costs involved when you move. Yes. Furnishing a house is expensive.

So it would be nice to hold some of that down payment back to spend on other stuff. Yeah, for all of those reasons, we think that this is a really interesting opportunity for unison and for borrowers. So we will link to all of this in the show notes. Again, thanks to Unison and Brody for coming on, and we'll talk to you soon.