A Fresh Approach to Fractional Homeownership with Frank Rohde, Founder and CEO of Ownify

Nate Smoyer (00:01.396)
Frank, welcome to the show.

Frank Rohde (00:03.63)
Hi Nate, thanks for having me.

Nate Smoyer (00:05.14)
Excited to have you here. It was very great to meet you at IAMN in Miami to see you there. You said the show was pretty successful for you. It was a good reception.

Frank Rohde (00:18.126)
Yeah, it was great. Lots of good meetings, connections. I actually think the content at that one is pretty good too. So the panel discussions were insightful. And generally, I've been coming back to those.

Nate Smoyer (00:28.596)
as a panelist would say themselves.

Frank Rohde (00:30.606)
No, not just our panel. Generally, you know, most people you kind of go to the panel and you have a couple of nuggets of takeaways. So I thought that was that was worth

Nate Smoyer (00:39.252)
If you get a few nuggets and a few takeaways, I think it makes it worthwhile. It's hard to expect all, you know, 30, 45 minutes to be nothing but bombs dropped on you. Well, for everyone listening here, I've got an exciting guest. Frank wrote, he is the founder and CEO of a company called Ownify. Ownify has been working on rebuilding the path to home ownership through fractional ownership platform. Partners, savvy investors with qualified first time home buyers.

to buy their home as they put it, brick by brick. And Frank has got, I think, an interesting path to PropTech founding. He was a consultant for Oliver Wyman, started an online insurance company, spent four years at FICO, and worked at a company called Norris, which is a premier founder, excuse me, premier provider of pricing analytics software. Grew them from just under two million to 25 million in annual recurring revenue before selling it.

And that's not the most interesting thing to me, Frank. I want to talk about wrestling rattlesnakes. Can we...

Frank Rohde (01:39.246)
Ha ha ha!

I thought you were gonna comment on my beard, but you know, I gotta give you the props, Nate.

Nate Smoyer (01:46.332)
You used to wrestle rattlesnakes?

Frank Rohde (01:49.614)
No, that was just a, I did actually have a rattlesnake come after me and I whacked it with a rock and it died. So I didn't wrestle it. I just, you know, got rid of it. And I was 16 and everyone in Germany thought that was like the coolest thing ever, right? Who knows someone who killed a rattlesnake, especially growing up in suburban Germany. So that's, it stuck with me and some people use that as a nickname. And so I figured, you know, why not put it in my LinkedIn? You know, short of other accomplishments.

Nate Smoyer (02:18.228)
I love it. As someone who's constantly looking for rattlesnakes while on the trails out here in South Dakota, that one's going to stick with me. But I think we're going to have an exciting conversation here. Fractional ownership being one of those conversations and discussions we've had a handful of times. I think PropTech has tried a few different variations of this over the years. And kind of starting, I want to start there for just a second. You know, we were talking in the pre -show, real estate right now is hard.

And in fact, it's always kind of been a hard industry, simple in many ways, but very difficult to get momentum and to build. Isn't breaking up ownership and the ability to buy a home into bits and pieces just making it more difficult?

Frank Rohde (03:06.638)
It does. I think the difficulty is not so much in the technology and the actual process of fractionalizing real estate. The difficulty really is in the consumer and maybe even industry education around what does fractionalization really mean? How does it work? How can it be an alternative to the way we've traditionally owned homes? And you mentioned my prior company, Nomus.

We built a pricing engine for a lot of the large mortgage lenders in the US and abroad. So I got pretty deep into mortgage pricing, how does the product work, and all that. And when you talk to consumers, one of the things that's interesting is no one really understands how a mortgage works. If you ask people how much an interest they're paying, how does the amortization work, how much principal have they paid down, most people don't understand this. But they know the mortgage has been around for 70 years. Your parents had one.

Nate Smoyer (04:01.3)
Mm -hmm.

Frank Rohde (04:02.542)
Your grandparents probably had one. All your friends have one. The government says it's OK. And short of the mortgage crisis a dozen years ago, it's generally worked pretty well. So it's a little bit like the electric vehicle. Everyone loves it, drives it, don't necessarily understand how it works. But it's fine. And so what we're facing on fractional ownership is a little bit of the same challenge, which is there is a product and a solution here.

that is really powerful, but you have to explain it and you have to really go through the consumer education. And in my mind, that's probably the hardest component of fractional ownership. It's just that consumer education, the realtor agent education, the industry education to make people understand here's how this is different than the traditional way in which we've bought homes for 70 plus years now.

Nate Smoyer (04:49.62)
So to me, the obvious big follow -up question is why? Why go a more difficult route if you already acknowledge and know that this doesn't necessarily make upfront, especially for you, if for you it doesn't make anything easier. So why pick the more challenging route here?

Frank Rohde (05:07.214)
Sure, so I saw this in working with the lenders a number of years ago that more and more first time buyers are getting squeezed out of the market. And this is a global phenomenon, but we're seeing it in the US. And you probably hear it anecdotally from friends and your community. And you have this confluence of things happening where one, house prices keep going up. They maybe took a breather in the last year or two, but they're back on the 5%, 6 % track pretty consistently.

You have mortgage rates now reverting to what is their long run average, right? In the probably fives and sixes, right? Coming down from where they are today, but let's say in the long run, they're in the mid fives to six. You have student debt weighing on people. And then you have cash buyers, right? Competing with first time home buyers. And cash buyer, whether that's a qualified second or third time buyer or, you know, PE, institutional investors coming in, buying up single family homes. And so all of those things are coming together. And when you look at the win rate,

Nate Smoyer (05:49.108)
You can only hope.

Frank Rohde (06:06.766)
of a first -time buyer, i .e., the likelihood that their offer is accepted in a competitive situation, it is less than 15%. So on average, people make eight offers before they actually get their home, their bid accepted. And those are the folks who can qualify for a mortgage, have the down payment, can afford the monthly payment. So I saw this problem in looking at the data with the mortgage lenders when we were running Nomus.

and eventually sold Nomus and said, there's an opportunity here and there's a big problem, right? A societal problem. So let's figure out how we solve this. And so the genesis really wasn't, we want to fractionalize real estate and then figure out what that allows us to do. The genesis was, let's solve the first time buyer problem, right? Let's create an alternative on -ramp to home ownership. How do we solve for that? And as we leaned into this and then started building and thinking through solutions,

Nate Smoyer (06:57.46)
Hmm.

Frank Rohde (07:03.278)
That's where we came up with fractional ownership the way we define it. And really what we did is we said, well, what does ownership mean? And it's really interesting. Ownership doesn't actually have a definition. There's no standard definition of ownership. There's actually no federal definition of ownership of real estate. Real estate ownership is defined at the state level, and sometimes even at the county level.

Right? And it's, it's realtors call it the bundle of rights, right? So you have possession, you have use, you have transfer, encumbrance, enjoyment, and you can take that bundle, you can kind of pull it apart and rethink what do each of these components mean, and then put it back together in a different structure. And that's really what we've done with fractional ownership. We said, you know, there is a structure here that allows us to solve the challenge for the first time buyer in a new way, right?

by giving that buyer a lower down payment, a lower monthly payment, giving them the right to use, enjoy, and change the property, right? But not all the rights that they might have in the traditional way in which we've used to purchase homes, right? By holding title and pledging it to the mortgage lender, right? And so that's really how we came up with fractional ownership for Onifi to define something that's an on -ramp and a different path to ownership to help solve this first time buyer.

Nate Smoyer (08:27.572)
That was much better than I hoped for. As an answer, honestly. I think some of your experience probably lends to being able to see this from multiple angles, which is, I think, required if you're going to go down this path. And I think you pointed out some of the trends that are demonstrating it's not necessarily going to get easier for the next wave of buyers, even though if you lump millennials as one lump category,

Frank Rohde (08:29.454)
Hahaha!

Nate Smoyer (08:57.332)
which we millennials will probably reject. There are older and younger millennials and we need to recognize the difference between those. I think that's the largest buyer's pool. If I remember one of the last I saw it was like 38 % or so of, of purchases, but Gen Z is like 3 % of, of, of purchases. And it's the cards are stacked against them. Interest rates are not moving.

Frank Rohde (09:23.022)
Mm -hmm.

Nate Smoyer (09:24.564)
anywhere, anytime fast. Like we've already had cuts this year said like, if that does not sound like they're going to be making any meaningful cuts, you know, that idea of like, seeing that 5 % interest rate come back, it feels very far away. And so maybe we need to rethink this. And, and I actually, you know, for those who are like, well, we don't need to reinvent the wheel. Well, actually, if we, if we look back at it, homeownership proliferated in the U S because we reinvented the wheel.

Frank Rohde (09:40.366)
Yeah.

Nate Smoyer (09:53.748)
because we looked at things, just the 30 year mortgage itself. So I think that there's opportunity for that. I'd like to get into practically a little bit here. I know we're very high level. So let's bring it, actually, before we get into that, there's another topic I wanna touch on, because I think this will help set the stage here. We were talking pre -show about PropCo and OpCo and how you're having to live in the dynamics of both of those. Can you break that down a little bit, first of what you mean by PropCo and OpCo, and then also like,

What sort of like opportunity and challenges does that present for you as a founder building up a new startup?

Frank Rohde (10:34.51)
All right, Nate, now I did lose you. I think, yeah, you said propco -opco and what that means and then it went blank.

Nate Smoyer (10:36.852)
shoot, okay.

Nate Smoyer (10:41.972)
Got it. So I want to get into a topic here that we talked about in the pre show. the idea of like prop co or op co, you know, you having to live in the dynamic of both of them. So if you can maybe break it down a little bit of how you define prop co and op co, and what it means for you as a founder building a new startup, having to kind of live in both of those sides, if you will.

Frank Rohde (11:06.318)
Yeah, yeah. Yeah, I think that the traditional, call it V1 model of prop tech was you raise venture money and then you get a large amount of cheap debt and you use that to acquire real estate and do whatever you do with it. So the need for a separate prop code really didn't exist while we were in the Zorp environment, right? It was because it was cheap and easy to raise a ton of debt. That has changed. And so the world we live in now is that we look at the capital,

and the ability to attract capital really is one of the core things we're building, right? And one of the key components of the offering here. And so what the separation here for us is that the opcode is the marketing engine, the underwriting engine, the ability to fractionalize the real estate. So there's software and a business process that we've built around the ability to underwrite the customer, underwrite in value and asset, i .e. a single family home.

put the two together, and then manage that process. And the way we've built that is really designed to be independent of the customer channel. So that could be a particular community. It could be online marketing. It could be sourced through realtors. It could also be through an employer, for example, bringing first -time buyers to the table and independent of the source of capital. And so that's where today,

We have a prop co, we have the Ownify Home Fund, which is our vehicle to raise equity money, equity dollars into a fund that purchases homes. But we've purposefully built the prop co and the op co such that we could plug the op co into different sources of capital as well.

Now, what does that mean on a day -to -day basis? Well, one, on the Opco side, it means that we're dogfooding our own, we're eating what we're building here, right? Because we're building the fund using the underwriting and marketing engine of Onifi. It also means that from a fundraising perspective, I live on two worlds, right? Or in two worlds. One is raising venture dollars into the Opco with a risk return profile that is much closer to a venture profile, right?

Frank Rohde (13:16.654)
And then I'm raising real estate investment dollars into the into the fund Which is you know a five -year -old period with the 15 % target IRR So very different risk return profile but investing in single -family homes effectively and holding them through the duration of the of the program and and so

I don't want to say it's schizophrenic, but I definitely have to put in my different hats depending on who I'm talking to and who I'm pitching. And there's this interesting emergence of players that are actually looking at both, folks who want to put money into a prop co and also have some exposure to the op co, real estate investors, funds who are interested in the exposure to real estate, but like the upside within reason, within limits of investing in the op co as well.

Nate Smoyer (14:08.212)
I mean, it seems to make sense, right? If I think that, hey, what you're building here is dependent on the success of the investment and management of the real estate, then wait a minute, maybe I'd want to invest also in the operations company here behind the scenes, because then obviously, like, the kind of goes hand in hand together, which you normally wouldn't get such an opportunity in a traditional fund or syndicate if you were investing as a real estate investor.

Frank Rohde (14:24.942)
Yeah. Yeah.

Nate Smoyer (14:38.356)
it certainly gives you also an opportunity for something that if you have a, a pension for higher stakes, game, but also, you know, it's upside potential here is, is different than what you normally would get. all right, let's, I want to get into some practicality here. I want to talk through the consumer side and then we can get into the investor side. Walk me through, here's your profile. I'm going to give you the same profile as me. That's 29 single.

Frank Rohde (14:50.03)
That's exactly right.

Nate Smoyer (15:08.308)
looking to buy my first property. I've got a little bit of debt, but I've got a decent decent score. I'm ready to qualify for a home and I come across Onify. Ownify. do I do? How does this work?

Frank Rohde (15:17.934)
Yeah, yeah, cool. I mean, you're exactly the persona we're marketing to. College educated, student debt, maybe haven't had time to save, but you have good income and you have good credit. So that is actually the persona we're going after. And if you look at our current portfolio, the average buyer has a 740 FICO, and they make somewhere around $100, $110 ,000 a year. So actually, strong income, strong credit.

but they haven't saved the down payment. So that's how we're helping them. And so you come across Ownify in two ways. One is you find us online, either word of mouth or search or ads, or your realtor introduces you to Ownify. And so we work with realtors as really the number one channel to acquire business. Your realtor introduces you to Ownify. And so the first step is you qualify yourself. So we've built an underwriting engine that qualifies you based on credit income and effectively,

It's all online, it takes about 15 minutes. We hook up to your bank account, we look at your income, your expenses, what you have left over every month, and we establish effectively a budget. And that budget says, congratulations, Nate, you're qualified for a $450 ,000 home, for argument's sake. At that point, we partner you with an agent and you go out and find the home. So we don't buy homes ahead of time, we allow the customer to qualify and then go out and search for a home. And so what Ownify then...

presents to you as the value prop is a couple of things. The first one is a low down payment. So you can get started with 2 % down. So for your $450 ,000 home budget, that would be $9 ,000. The payments on a monthly basis are actually lower today than the equivalent mortgage payments. And we basically put you into a five year program. Now what happens during those five years?

are really three things in parallel. And it's important to understand. Ownify is not debt. It's not a mortgage. It is an equity partnership or fractional ownership, right, as we discussed earlier, where the customer, you in this case, pick the home, you contribute 2 % to the purchase price, and you become an investor and a member in the entity that holds title to the home. So...

Nate Smoyer (17:22.356)
Mm -hmm.

Frank Rohde (17:37.422)
We set up an LLC for each home. The title is held by that LLC. And the LLC issues 10 ,000 membership interests or BRICS, as we call them. Think of them as shares, right? That entitle you to one basis point of the value of the home. So 10 ,000 BRICS. On day one, you buy 200 BRICS. And over the next five years, you buy more BRICS, roughly 13 BRICS every month, while renting the BRICS you haven't bought.

And so what that does is it allows you to increase your stack of bricks from 200 to 1 ,000, so 2 % to 10%. At the same time, investors hold the balance of the bricks and they go from 9 ,800 down to 9 ,000 bricks. And while you're building equity, your rental payment, the number of bricks that you have to pay rent on, effectively goes down, right?

Now you do this until the point where in five years you've built up 10 % of the equity. And at that point, or arguably at any point before that, you have a purchase option that allows you to purchase the home from the LLC with a traditional mortgage. And so really the golden path and the way the program is designed is that it allows someone to pick a home, live in it, build the equity required for traditional mortgage down payment. Once they have that equity, get that mortgage.

buy the home in a non -competitive buyout, right? So they have the exclusive right to do that, meaning they're not competing against anyone. You can take whatever time you need to get mortgage ready. And then you can own the home the traditional way, if that's what you want to do, right? With holding title and pledging the title to your mortgage lender. So along the way, it's the low down payment that's attractive. It's the lower monthly payment. It's the fact that we provide a cash offer.

Nate Smoyer (19:07.252)
Mm -hmm.

Frank Rohde (19:28.398)
And during those five years, we take care of repairs, we take care of property taxes, insurance. So there's no surprises, right? And if you think about a first time buyer, a lot of times folks are worried about not just the down payment and the monthly payment, but the surprises that can happen along the way. So we cover you against that by saying, don't worry, we take care of everything else. So it's really kind of an on -ramp to homeownership.

Nate Smoyer (19:43.444)
Sure, yeah.

Frank Rohde (19:53.198)
Or sometimes I call it ownership on training wheels that is specifically designed for the first time buyer to get into the home and kind of build their equity along the way. Let me pause there and see whether that makes sense.

Nate Smoyer (20:06.964)
Yeah, I'm tracking here 100%. So the buyer, so I move in, maybe I live there for, let's say I live there for five years, I've been doing well in saving, so I've got enough for an additional 5 % down. Now I can go and get a conventional mortgage. So I can call up any mortgage company and essentially refinance out of. Now, what I'm curious though is the purchase price on exit. How was that established?

Frank Rohde (20:33.262)
Yeah, so the bricks are transferred every month at the then current value of the home. So if you look at our portfolio, every month we run an AVM automated valuation model. So you run three different ones for each property. We average the three. And we say, here's the price or the value of this property today in this month. So it's June 4th. We just did it three days ago for the end of May.

So each property has a strike price effectively. And let's say you bought that $450 ,000 home. On day one, it's 450 ,000. So a brick is worth $45. A month later, that same home might be valued at 451 ,000. So a brick is now transferred at $45 .10. A month, two months, three months later, the price might actually go down, right? And it kind of jumps around a little bit. And so what happens over five years is every month you're buying 13 bricks.

or roughly 13 bricks, making a fixed payment, and the value of the bricks gets recorded. And so that's the ledger that builds up your fractional ownership. It's almost like if you think about it like a cart for a house, right? Where you're building that equity ledger. And so at the end of five years, or at any point where you say, now I want to buy the home, you're basically just buying it at the strike price that is equivalent to the last month valuation, right?

So we have a track record then and a history of here where all these prices were struck. There's no surprise here. There's no, I don't know what the house is worth, or I don't know how much I'm going to have to pay for the remaining, effectively the remaining 9 ,000 bricks. So the customer has the purchase option to buy them back. The customer also has the opportunity or the option to say, I want to sell my equity back to Ownify and not buy the whole.

and move on and do something else. In which case, we buy the equity back. We charge a 2 % relisting fee in that scenario because at that point, we're going to sell the home. But because the equity is traded in both directions at the same valuation, that's an inherently fair process, an inherently fair valuation engine. One of the things we thought long and hard about is we use third party valuation providers. So it is not Ownify saying,

Nate Smoyer (22:32.276)
Mm -hmm.

Frank Rohde (22:50.286)
Here's the value of this home this month, right? It is three reputable sources that are industry standards effectively.

Nate Smoyer (22:57.652)
Gotcha, gotcha. Now, one curiosity I have here is, and I know you have some exposure to this, is insurance. How do insurance companies feel about this? Because if you're an investor, just purely as an investor in a property, you have one type of property insurance versus when you're a homeowner. They look at these as different risk profiles on how to ensure the safety and the future investment value of the home. So how do they respond to this sort of model?

Frank Rohde (23:05.742)
Mm -hmm.

Frank Rohde (23:27.214)
Yeah, so for an insurer, it's actually a pretty clean transaction because we have landlord insurance on the properties. So there is liability and property coverage on each of the properties. And then we mandate that the customer actually has renter's insurance on their contents while they're living in the home. Now, the customer, if you think about it, legally, the customer is a tenant of the LLC that holds title to the home.

Nate Smoyer (23:35.188)
Mm -hmm.

Nate Smoyer (23:57.268)
Yes.

Frank Rohde (23:57.518)
And the customer is also a shareholder or a member of that LLC with equity rights. And so that structure means that if there, let's say there is a total loss and the house burns down and the insurance company pays out the claim value, the replacement value, that value goes back fractionally to the ONI, the customer, as a shareholder or a member in that LLC. Now, realistically, obviously, we're going to...

try to work out a different scenario there. But from an insurance perspective or an insurance underwriting perspective, they're looking at this as an SFR structure, right? And the insurance coverage we've gotten is that of a landlord.

Nate Smoyer (24:35.508)
Mm -hmm.

Nate Smoyer (24:39.156)
That makes sense to me. I mean, but yeah, I was curious how that would work. And then one more thing here on the side, and then I'm gonna talk a little bit about the investors for a minute. So, you know, in the US, we have multiple different like mortgage products. It would seem to me like trying to cater to buyers who potentially qualify in like conventional or future down the line, you know, get into a conventional, because that's how they would likely exit.

into this, but there's also like some thought into like maybe the house, right? So my first buy was a 1930s house and from a maintenance perspective, it was very fun the first few years playing on that. And it's still like, so throwing me some surprises here and there versus the house I have now, which was built, I think eight years ago and almost nearly maintenance free other than the

the hail damage we get on an annual basis, but how do you look at the house? You're underwriting the buyer, but how do you look at the house and are there any sort of like criteria or cutoffs or things that you're not gonna touch as you're essentially managing a fund to invest in that?

Frank Rohde (25:39.598)
Yeah, yeah.

Frank Rohde (25:50.894)
Yeah, yeah.

Yeah, correct. So one of the big drivers obviously is not just the rental income on the bricks that go back into the fund and to the investors, but also the appreciation, right? Which as the home appreciates in value, that appreciation gets shared between the investors and the only living in the home. But if you think about just the cashflow component and the appreciation component, right? Cashflow component is largely or a big chunk of it is driven by maintenance and repair costs, right? So obviously we underwrite homes towards making sure we don't have excessive maintenance and repair costs.

And that means we like newer builds, we like new builds. We generally don't do anything with the pool, for example. We don't do anything that has larger than two acres. So there's an underwriting by box that we have that we've worked through. And my co -founder has bought 5 ,000 homes in his career, so he knows.

how to run that process. And he's really the expert on that. So there's a buy box that we established. And so far, we've accepted about 50 % of the homes that customers come in with and propose, right, or kind of submit for underwriting, right. And when you look at the ones that we didn't accept, it's either because the purchase price was too high compared to our valuation, right. So we didn't want to go in at an inflated purchase price, or there was structural, you know,

issues or too much repair needed, too much exposure to potential future repairs. And so those are the reasons why we would turn something down. And so the really interesting thing that then happened is first -time buyers really appreciate having that partner who tells them, this is maybe not a good idea. And here are the reasons why you shouldn't buy this house. And contrary to what maybe the industry wants you to believe,

Frank Rohde (27:41.198)
The buyer's agent is not often that partner, right? Because the buyer's agent ultimately gets their commission when they close the deal, right? And they don't get a commission when they say, no, don't buy this house, right? So having someone who actually puts money into the home with the first -time buyer as an investor partner, and someone who comes in and does a professional valuation and a professional inspection, right? And then says, hey, this one might not meet your needs or might not be a good investment.

First -time buyers really appreciate that, that kind of guidance along the way. So what we're looking for from an underwriting perspective are really properties where you have cashflow potential. So we underwrite towards a five cap rate today. And you have appreciation potential in markets where...

we see home price appreciation above the national average. And then in particular, homes within those markets that we believe have the potential to appreciate because they're in good neighborhoods, right? There is investment going into those areas. So that's what we underwrite towards is that split roughly of 5 % cashflow, 5%, 6 % annual home price appreciation. And that then generates a 15 % target IRR for the fund, for the investor pool.

Nate Smoyer (28:59.508)
Got it. And so, and then lastly, the investor side of this business, right? So talking to real estate investors, what are some of the criteria's you're looking for in those investors? What are the options they have to both, you know, put money in, take money out along the way, and maybe walk through a little bit about, you know, and I don't know if this is just like a standard type of fund scenario, or you have additional layer of technology here that enhances experience or.

the interaction with those investors along the way.

Frank Rohde (29:31.982)
We haven't built anything unique or super cool on the investor experience itself. I think what we have built, and this is really the opportunity if you think about it as an investor, is we've created an opportunity to invest in the closest thing to an owner -occupied single -family home that also has cash flow. And if you think about where can you invest in owner -occupied home, today you can invest in mortgages, a mortgage rate or a mortgage pool, and the return you get is interest.

and eventually you get your principal back, right? But there's no upside. And what we've created is the opportunity to invest in the equity component of a single family home, but also have cashflow, right? Because you do have equity investment opportunities where you can invest in owner occupied homes, but they're all pure appreciation bets, right? So the equity extraction opportunities that are out there. What we've done is we've created an investment that is equity. So it generates...

cash income, passive income, and it appreciates over time. And so that's a unique opportunity for investors that doesn't really exist today. And so what does that mean from an investor perspective? Well, we're investing in homes that have 100 % occupancy because we're not buying homes until the customer signs the contract. So you have zero vacancy upfront.

We invest in homes where the average FICO in the portfolio is 740. So far, we've not had a single late payment. These are pristine customers that we're financing effectively. We're investing in homes where the customer has an ownership interest. And what that has resulted in is that they'd

Nate Smoyer (30:59.796)
Mm -hmm.

Frank Rohde (31:09.006)
take care of the home in a much better way. So we've seen about 60 % lower maintenance cost, repair costs, compared to industry average, because people are taking care of those homes. And so you take all of those components and add them up. Ultimately, that's a better return to investors than if you were to invest in an equivalent SFR, single family rental, REIT, or alternative private offering. So mechanically,

What happens is we have the Ownify Home Fund, which is a 506C fund, so it's open to accredited investors. There's a minimum investment of 25 ,000. It's a five -year target hold period with a 15 % target IRR. And that fund invests in all of the homes in a diversified manner. So investors don't need to worry about picking a specific home. That fund today is targeted at the Triangle region in North Carolina, so Raleigh, Durham, Cary.

and kind of the surrounding suburbs, which is a market we really like in terms of its fundamentals right around appreciation and rental yield. And so that's the first fund and the goal for that fund is to own about 70 homes by the end of this year through this fractional ownership structure.

And yeah, so the way I spend my day is talking to investors, bringing them into the fund, and we're raising money at a pretty good clip, and then talking to or onboarding customers, putting them on the wait list, right? And then putting them into homes as and when they're ready.

Nate Smoyer (32:44.084)
Very cool. Frank, we're gonna shift here. We're gonna jump to the bottom of the show for a segment I like to call For the Future's when I get to ask each guest who comes in a show to give their best predictions based on the following four questions. Are you ready to play?

Frank Rohde (32:58.734)
I'm ready to play.

Nate Smoyer (32:59.764)
All right, number one here, what does Ownify look like one year from now?

Frank Rohde (33:04.11)
We have the Raleigh Durham Fund fully funded. We're live in two, possibly three other markets. We will have raised a Series A. We will have grown to, I would say, about 15 people. We're seven today. So, you know, healthy, but not excessive or outrageous growth is my prediction.

Nate Smoyer (33:27.732)
Awesome.

Frank Rohde (33:27.982)
And I think we're going to continue to be in an environment where it's really hard for first time buyers, right? And we're going to continue to see very strong consumer demand for this solution. And hopefully more investor education and acceptance and knowledge around this opportunity.

Nate Smoyer (33:43.636)
All right, number two here, and this is considering as a category, not just own a vibe, but certainly I hope own a vice contributing to how many owner occupied homes will be bought on a fractionalized basis annually the year 2030.

Frank Rohde (33:58.062)
2030.

My best estimate for 2023 was probably about a thousand, maybe 2000 homes, right? And this is across a bunch of players in the industry. And I'm not talking about fractional vacation rentals and all that, but owner -occupied. 2030, so you're adding seven years to that number. I would say we should be at 50 to 70 ,000.

Nate Smoyer (34:18.292)
Correct. Yep.

Frank Rohde (34:28.014)
if we do our job well. And not just us, right? Others, there's a bunch of folks kind of pursuing various versions of this in this space.

Nate Smoyer (34:35.252)
Yeah, well, I mean, that's what 70 times mark is a pretty good growth amount.

Frank Rohde (34:40.59)
Yeah, yeah, yeah. No, I mean, I'm looking at this, right? You mentioned earlier millennials and Gen Z, right? There's about a million new first -time buyers a year. So if you fast forward seven years, right, that's seven million, right? Can you get kind of 1 % of those into an alternative ownership structure? I don't think that's an outrageous number, but it is a very, very nice growth trajectory if we can get it to work.

Nate Smoyer (34:51.444)
Mm -hmm.

Nate Smoyer (35:07.348)
We, we, we buy now pay later on just about everything else. so yeah, I get it. All right. Number three here on for the future. What's one industry trend you think will continue, but you wish would go away.

Frank Rohde (35:11.246)
Yeah.

Frank Rohde (35:23.342)
What's one industry trend that I wish would go away? I think we have way too much structural vacancy in single -family homes. On the one hand, we talk about supply constraint and a supply demand imbalance, and we're lacking 1 .8 million housing units, depending on which economist you read or what numbers you believe, but take that as the average. On the other hand, we have millions of homes that are basically empty, because they're...

second homes, their vacation rentals, their short -term rentals, and they're not being utilized to the fullest extent to solve what is arguably a housing crisis. Now, short of heavy -handed regulation, I think that's a really, really hard problem to solve, but I think that's something that I wish we had a better structural solution for.

Nate Smoyer (36:15.828)
Devil's Lab to get here. There are plenty of homes in Dayton, Ohio. People just have to move there.

Frank Rohde (36:22.67)
That is true. And I think this is where despite work from home, right, people want to be in cool places. They want to be in cities. They want to be in metro areas. They want to be where jobs are being created, where culture happens, right, where the weather is good, where you have access to outdoor and opportunity and all that.

Nate Smoyer (36:40.052)
You're just checking all the boxes of why not to move to Ohio, really, is all I'm hearing. I'm just kidding, I'm messing, yeah.

Frank Rohde (36:42.702)
I have nothing against Dayton. I don't know if anyone has been there. Of course, you can buy houses in a big part of the country for not very much money. It's just not where people want to move to.

Nate Smoyer (36:56.18)
Yeah, totally, totally understood. Yep, get it. All right, the last one here on For the Future, what's one thing you believe will dramatically change or fade away in real estate as a result of tech advances?

Frank Rohde (37:10.126)
I think the purchase process is still extremely cumbersome, extremely paper heavy, takes way too long. So I do think eventually we will get to a much better title registry.

hopefully at, if not at the state level, at least at some level better than county, a much faster process around titling, title ownership, around transfer, around the funding process. I mean, we go through this, right? And we promise people.

Nate Smoyer (37:38.036)
Mm -hmm.

Frank Rohde (37:49.198)
that we can close in 10 days, which in my mind is still way too long, right? And most sellers say, well, I didn't even know I could do this, right? I'm happy with a 30 -day close. And so the fact that there's so much manual process and manual steps involved and still paperwork, it's just now being emailed back and forth. I think that will go away, right? And obviously there's a bunch of investment in components of this process that are getting better, but we're still in the early innings of that.

Nate Smoyer (38:06.324)
Mm -hmm. Mm -hmm.

Frank Rohde (38:19.182)
of that innovation stream.

Nate Smoyer (38:21.684)
Thanks, Frank. Thanks for coming on the show here. This has been a really good conversation and I appreciate you sharing about ONIFY, how you guys are working to create a new path to ownership for first time buyers, as well as a safer investment vehicle for real estate investors out there. For those who want to get in touch with you and or learn more about ONIFY, where do they go and how do they learn?

Frank Rohde (38:46.03)
Go to the website, obviously, onify .com or reach me at frank at onify .com or pay me a text, 415 -549 -1939. Yeah, and if you're an investor or a home buyer or an agent, right, I'm happy to talk to you and figure out how we can work together.

Nate Smoyer (39:05.876)
You might be the first person to throw a text number out there. That was kind of cool. I dig it. Well, Frank, hopefully I'll catch you at the next IMN or will you be at Blueprint this year? All right. Well, we'll definitely see you at Blueprint.

Frank Rohde (39:08.75)
Yeah.

Frank Rohde (39:17.55)
I will be at Blueprint. Yeah, let's catch up then. I'll see if I can catch up to your beard growth by then.

Nate Smoyer (39:23.252)
I believe in you. I believe it's possible. All right, we'll catch you then.

Frank Rohde (39:27.15)
Thanks, Nate. It was great.

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