Innovative strategies for homeowners to enhance savings with Colton Pace - REIA 486

Welcome to Real Estate Investing Abundance, the show for busy, fulfilled professionals like you to learn how to develop financial independence built on solid passive real estate investments. Now, here is your host, Dr. Allen Lomax.

Hello, enlightened investors. Welcome back to Real Estate Investing Abundance. I'm your host, Dr. Allen. As always, I'm delighted to have you with us. Today we're going to take a look at innovative strategies for homeowners and other property owners so that they can enhance their savings to advance their investment portfolios. We have an expert with us today, Colton Pace, and he is the CEO and the co-founder of OwnWealth, and he brings extensive experience in investment and asset management, having handled billions across various sectors, from venture capital to real estate. He identified inequalities between sophisticated investors and everyday property owners, and this inspired him to establish OwnWell with a mission to democratize access to real estate wealth-building tools. Colton is driven by a desire to unite high-performing individuals and foster a Entrepreneurship, and outside of work, Colton enjoys spending time on or in the water. So welcome, Colton. We're glad you're with us today, and if you would just take us into the show and just share a little bit about how you came to be Colton Pace.

Thanks, Alan. I appreciate you having me. Yeah, in a student bio, Thanks for sharing. My background, as you mentioned, is mostly in asset management. My entire career has been spent trying to help people optimize their assets. And really, that's where I founded Ownwell. The way I used to work for a billionaire, the way billionaires manage their assets and their homes across the country or their homes across the world and their multifamily apartment complexes and all different types of assets was not the way my parents or friends or family thought about their home, right?

Yeah.

And the more you think about it, for the majority of homeowners, real estate's the largest asset they'll ever own, right? Their 401 has less than the value of their home in it, and they're using the power of leverage. Power of leverage is incredible in the cash-on-cash returns that we can generate with real estate. And so, that's where OwnWell really came from. This is my entire background was spent on how working for the most sophisticated investors in the world. And now, I'm really excited on OwnWell to try and democratize access to those, to bring these tools, tips, resources, And it's— real estate's very complicated, working with legal documents, with the government, with different things you have to do, different entities. It's really complex. And so, for the everyday homeowner or investor, it's difficult. So, we've tried to bring lots of services and tools and expert tax consulting to those customers through Ownwell. And it's been a 4-year journey now at Ownwell. Hundreds of thousands of properties across the country and want to help even more people.

Well, and Colton, that's, that's why I was really excited to have you with us today, because I know you're absolutely right and correct in that most people, their most valuable asset is their home, and there's a lot of resources in conjunction with that asset and that property that Most people are just totally and completely unaware of, and so it just kind of sits there without being put to the use of the property owner there. So I'm glad you're here with us to talk about these various different strategies. So if you would, just— let's just go into the conversation, and if you would just share with us, just give us a highlight to start off with. of some of these innovative strategies that homeowners have at their disposal, but they're not taking advantage of?

Yeah, the— we founded OwnWell on the back of property taxes, and we chose that very strategically as the first avenue that we wanted to help people with because it's the second largest expense associated with the home after a mortgage or your loan, and 95% of people just pay that bill. pay their property taxes, no questions asked. Yet I saw year after year and time after time us trying to position ourselves to reduce or mitigate a lot of these property tax bills and figure out how to— whether it's pay them early to get discounts or file certain types of, uh, transition the property to a different type of property or into a different entity to try and change how we were being taxed on that property. So Ownwell's first product and really where we help most clients day one is in reducing their property tax bill. Every individual in the country that owns real estate knows that they're going to get a property tax bill. It's based on the value of your home and it's an opinion. So we've gotten really good at tax appeals, protests, grievances, corrections, filing arbitration, even filing litigation. Corporations and large investors do this every single year. to fight the value that's assessed on their home to reduce their tax bill. But people who own single-family homes, they're smaller bills, right? It may not— it's not worth an attorney's time to do this. So we've built a lot of software and tools to help everybody, every type of property owner to file these appeals. And we actually operate on a contingency fee. So we do it entirely free of charge until we save you money, right? If we don't save you money, we don't charge you anything. We want to lower the barrier to entry here again. help everyone, everyone do this. So you could sign up at ownwell.com, enter your address, tell us how you want us to reduce your property tax bill, or you can access all of our resources for free and do it yourself. We encourage everybody to file a property tax appeal or protest every single year to make sure that they're not being overtaxed. And then the second thing I want to mention, also associated with property taxes, is tax exemptions. Depending on whether or not this is your primary residence or you have solar panels, Or you reclaim water, or you have agricultural, types of agricultural on the property, or it's a historic property. There are so many different things and aspects associated with your property that you can get discounts on your property tax bill for. And we have a TurboTax of sorts to qualify our customers to make sure they've filed all the adequate exemptions, again, to reduce their tax bill. And that's where we started and probably the largest sector of help that Ownwell can provide property owners today.

Well, that is, that is interesting. Of course, I knew about these things, but I myself have never taken advantage of them. Is there, I mean, I guess, is there a floor? Like, say, I mean, if you, your property taxes are $250 a year, is it worth going through that process?

Yeah, that's why, exactly. So you go to a tax consultant, they're gonna say, okay, Not worth it. You got an attorney there, not even close, right? You shouldn't even be talking about it. That's why, um, we've automated a lot of these processes. We represent homes that are worth— or properties or parcels that are worth $20,000, and we represent properties that are worth $20 million. On average, we save our customers a little over 5% on their tax bill every single year. And that ranges from the, again, the very small bill to the very large bill. Um, and We've made it as automated as possible, and we work with the government en masse to make sure that, that everybody has the opportunity to address these bills. That said, you're absolutely right, you're going to save less on the $250 bill, and it's up to you whether or not it's worth the— I would say like the 5 to 10 minutes to onboard your properties onto Ownwell. We do see our average customer, or our average property on the platform, is a little over $400,000, so the tax bills are Typically higher than that.

Well, is there such a thing as you, uh, you go through this tax appeal and so you've alerted the tax department to what your assessment is, is there the possibility that once they're alerted to this that your taxes could increase?

Great question. And yeah, there's a little bit of fear associated with, am I poking the bear here? And that's— we have a savings or free guarantee. We, if your tax bill were to go up, we'll pay the difference. We're so confident in our approach. There are cases where we'll say, hey, your property is potentially already fairly assessed or underassessed. We shouldn't move forward with this this year. And, but that said, like, OwnWell's a property tax monitoring program.

We will.

We will evaluate your tax assessment every year. We will take action if we need to. But if not, we'll tell you like your tax bill's fair, you're not going to get a reduction this year. We do more often than not get reductions because of the way the properties are assessed, right? School budgets are always going up. Home values, I guess, over a long course of time are always going up. So your assessments are always changing. But there's inefficiencies in the way things are measured. So you always want to at least review But we do guarantee that your tax bill will not go up.

Well, that's quite a guarantee, but I guess it would be really quite rare that it ever would really go up. I mean, poking the bear, they've got so many properties to look at, they probably really are not that concerned about any one particular property in the first place. So in North Carolina, and each state does their assessments differently, but in North Carolina, each county is on a 4-year cycle. It's not on a state cycle, but the counties cycle every 4 years. So what you said, you do this each and every year, it seems like in North Carolina there really wouldn't be any use to do it years 2, 3, and 4. Is that, is that correct?

Correct. So we're, we're open in 7 states today. That's California, Texas, Florida, Georgia, Illinois, New York, and Washington State. My master's thesis was actually evaluated in every state. for where the opportunity to reduce your property taxes is highest. North Carolina, you absolutely should take action every 4 years, but it is every 4 years. The only difference in that regard would be if you purchase a home in between the cycle, there is a clear data point of what the home may be worth, and your, your tax assessment can change based on different factors. But you're absolutely right, it is state by state, it is county by county. Everything is done at the local— these are local taxes. So everything's done at the local level. So yeah, when I say year after year, Texas year after year, we file appeals for customers. Florida year after year, we file appeals for customers. But it is totally different every single, every single geography and every single year.

So beyond taxes, what are some of the other strategies, or have we covered the taxes? Are there other things you need to mention about taxes before we move on? Yeah.

The only other thing that I would mention is we have a tax payments product, which is when you're a smaller investor, you own 10 properties, right? It's not that hard for a certain individual to pay their tax bill for one home, especially if you're in escrow. But when you start to own more and more homes, it gets more and more complex. And there's specific things in certain geographies. That actually motivate you to pay your tax bill at a different time. So there are up to 3 to 6% early payment discounts.

Wow.

And so we've, we've built the tax payment product to make sure you're taking advantage of all these things. We've evaluated all the different discounts available. And worst possible thing here is every state, if you miss that tax deadline, the penalties are severe. So if you're not in escrow paying through your mortgage servicer or escrow servicer, You want to make sure you're on top of that deadline. So we built a tax payments product to make sure you take advantage of early payment discounts and anything that's available for you. And then we make sure that it's always paid on time. We have lots of customers who are like, I just missed the deadline by one day and it's a 10% fee. 10% fee on a, on a $5,000 bill hurts.

Yeah, for sure.

So yeah, that's the last tax product that we have. So it's tax appeals, tax exemptions, and then tax payments.

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Exactly.

Exactly. And I'm a licensed realtor and it's interesting to me, you know, we have to renew our licenses every year and there are people who wait until the last second to submit that payment and it's like, what if the internet goes down at that last minute?

Hey, you know, government websites are not always the most responsive and quick and, you know, there's lots of stories to be told around some of these sites and payment portals going down.

Well, so, well, let's move on. What are some of the other strategies that homeowners should look out for?

Yeah, we have really 3 other products that we focus on. As all the listeners know right now, like rates are up and to the right, insurance costs are up and to the right. There's actually not much you can do, right? There's not many refi opportunities. There's not much you can do about insurance. Insurance is really painful. So we've actually built an insurance, what we call rate monitoring program, where you give us your insurance information and we will quarterly go and shop across different carriers. So we've connected to 40 different insurance carriers and we can bring back other quotes. So same coverage, should you be changing insurance? The underlying risk within insurance changes every single year, right?

Yeah.

So depending on hurricanes or tornadoes, certain insurance carriers want more risk in Florida. Many do not want more risk in Florida, right? They're, they're almost trading risk and the reinsurers have mandates. Um, so it's advantageous to continue to re-shop insurance, but it's a nightmare. Every time you put in all your information, you get blasted with emails, you get way too many phone calls. We've tried to remove that. So we almost, it's almost like an insurance concierge. You tell us what your current provider is and we'll go look and see if there's opportunities for you to save.

Yeah.

Less than 20% of people ever make a claim on their home insurance. So we see like a lot of price shopping. This is kind of baked in in car insurance, but people don't shop home insurance very often, and you can change it at any time. So we built this insurance product, and insurance is the 3rd largest expense associated with your home. So make sure you're not overpaying on your home insurance or your landlord insurance or your rental insurance. And that's, that's one of our products that has had an uptick recently as insurance costs continue to rise.

Yeah, it's been quite a dramatic increase over the last couple of years. Well, Enlightened Investors, we are talking with Colton Pace, and he is with OwnWealth, and you can find Colton at ownwealth.com. And so, Colton, in terms of insurance rates, you shop for the best rates for individuals without them having to receive all of those unsolicited spam emails and phone calls from from insurance providers. What percentage of owners through this process actually change products?

Yeah, so that's totally up to the individual. We actually don't force— like, we don't, we don't online bind. We connect you with a broker who has the rates in front of them. We're seeing 10 to 14% of people actually getting to that broker, and then conversion is determined on that phone call. And, and we're just kind of giving the options to homeowners. What they do with that is entirely up to them.

Yeah. And, you know, I mean, cost isn't necessarily the only thing. I mean, insurance providers, some are nice to work with and some are not so nice. So there's other considerations other than just price. So that's the property taxes and the insurance. What are the other issues that property owners should be looking out for? Yeah.

So by the end of the year, we want to have a product in every vertical. I will say taxes and insurance are our 2 most popular. Our 3rd one is utilities. And we help customers reduce their, their phone bill, their internet bill, their security bill, and their electricity bill in certain markets. Depending on the market, there's a lot more you can do where you can change your electricity provider, and then there's areas where you can't. So where there are areas where you can change your, your electricity provider or you have multiple options for internet, we have a team that helps make sure, you know, we know what Spectrum or Comcast or Verizon charges for the best account because we have enough customers and they've showed us their bills that we can go and negotiate on your behalf and make sure you're not overpaying for your internet or not overpaying for your cable bill or your security bill. or your electricity bill. Your electricity bill, you can switch providers. And then those other utility bills, we actually have a team of negotiators who are experts at calling in on your behalf and representing you and saying, you know, I know that Spectrum provides this or Comcast provides this service at this price to others. This should be matched. So we're saving people a lot of money just by inspecting their utility bills. And we have a platform where you upload your latest statement And we'll dissect whether or not we can go and save you money on that as well.

Well, that's very interesting. I have never thought of doing that, although it ticks me off when you go to these providers and they give you this special deal for 1 year and then you're off of the plan and you know there's tons of other people who are still getting that discounted price. I never thought of going back to them and Trying to negotiate that, but it would be nice to have a third-party negotiator to to step in there. That would just give the whole process, I think, a whole lot more weight and more significance with the with the providers because they don't know if you're an attorney or if you're backed by an attorney or different things like that. Where if I as an individual, they'll just go. Too bad.

Yeah.

You agreed to the special deal and it's no longer there for you. So yeah. Well, it sounds like some very interesting products here. So the most expensive aspect of owning properties is lending and the mortgage. Tell us about that.

Yep. I mean, that's, that's one where even myself, you know, I purchased a property a while ago and my interest rate's a lot higher than it would've been if I took action a couple years ago. And that's a lot of making sure you have the right lender, making sure you have the right relationships, getting the lowest rate. And we're all waiting, right? We're all watching to see what the Fed will do.

Yeah.

We don't have a product in the, in the lending space, but we definitely get calls from customers constantly asking like, you know, what can I do about this? Unfortunately. If you're getting a new mortgage or a new loan right now, it's going to be a— interest rate is going to be a lot higher than it was 3 years ago. And, you know, I hope the interest rates come back to us at some point. And at that point, we will absolutely have a refi product to help people identify opportunities to reduce their mortgages. But most of our customers actually have loans and interest rates that are well below the current. mortgage offering. So we don't see— if you've recently got a— recently purchased or received a new loan, you should absolutely be waiting. Interest rates could go down. We're watching and staying opportunistic in that regard. But if you have a mortgage from a couple years ago that's less than 4%, hang on to it. It's an asset, not a liability.

For sure. Absolutely. Well, in terms of looking at mortgages, aren't there ways and means actually to— I mean, if you This wouldn't work unless you have a considerable amount of your property paid off and you have a great deal of equity. But couldn't— aren't there ways and means of actually shifting from a traditional mortgage to, say, a HELOC and be able to pay that HELOC off a whole lot faster than you ever could the mortgage?

Yes. Yeah, you're getting onto one of my favorite subjects. When you own enough of your home, there's a lot more you can do. When you have over 20%, we see a lot of our customers that still have PMI, private mortgage insurance, on their property. And that's depending on how large the mortgage is, expensive. And you can get that dropped off if you can show that the value of your home has risen and you own more than 20% of equity. The majority of mortgage servicers will let you out of it. And by law, they have to drop it off at 22%. But you have to do some— take some serious action to prove that your home's gone up in value to show that you own 20 to 22%. So that's one, one area where we encourage customers, and we want to build a product here in helping people get out of PMI. And then there's just escrow, there's mortgage servicing, and you pay a fee for that. Getting out of escrow, and oftentimes these escrow or mortgage servicers take advantage of the time value of money, right? They're collecting from you monthly for annual bills.

Mm-hmm.

We know that you can go place that in a savings account right now and get around 4.5%, 5%. That's serious money on all of your insurance, mortgage, and tax bills month after month. And then, Allen, you're absolutely right. There are definitely opportunities to find whether you want to reinvest in your property or invest in another property that you can go and get a home equity line of credit or home equity loan to capitalize on some of that equity that you've built up. And that is also definitely a very interesting area of home services that people who want to reinvest or take out some of that cash to use it elsewhere associated with their home can definitely explore these home equity lines of credit with their banking provider.

Well, Colton, talk to us about how we can really optimize our wealth through just being more astute managers of our assets.

Yeah.

Pay attention.

Like, number one is like, you know, stay on top of stuff. Look at bills, look for— make sure everything's correct. That's what we really founded Ownwell on. It's like, make sure things are correct. And that's why we tried to make it super easy. You can onboard your properties at ownwell.com and basically we'll review these expenses for you.

Yes.

You'll have to tell us about, you know, who your insurance provider is and tell us about— we can automatically pull your mortgage details, but tell us about your property tax bill, tell us about your internet bill, tell us about your electricity bill, and we will automatically monitor all these things and tell you when you should take action. And that's what we're really trying to build, that platform that makes— that pays attention to all this stuff for you. But should you not use Onwell, just stay in the weeds, don't let it get past you. And every dollar counts. So I'm thinking about return on real estate. And it's the largest expenses every month for all of us. So most important thing to pay attention to as we're generating wealth and building our assets.

Well, Enlightened Investors, as you've been tuning in, I think you're getting the idea that there are a lot of ways and means to utilize our primary asset, our home, to decrease our expenses and In that regard, being able to put more actually into our investments. And so we're actually increasing our wealth really in 2 ways, and that's always a great thing to do when we can do that. And one thing Colton mentioned at first is that he had initially started out working for a billionaire, and he realized working for them that they handle things a whole lot differently. Different than what we do in our everyday lives. And I think there's a number of reasons for that. One is billionaires, to be billionaires, unless they're just trust babies, they have had to manage their money to get to that particular place in time. But I think another reason is that, and I think this is where own wealth services really Come into huge benefit for those of us who are not billionaires, and that is billionaires have the resources to hire people like Colton to look out for these things. And as we've been talking through this today, I think it's pretty clear that yes, these are smart things to do, but most of us are extraordinarily busy people. And staying on top of these things is just one more task to an already busy life. And so, enlightened investors, I think it would behoove you to check out OwnWell and see what they have to offer you and see if they can't save you not only money but perhaps save you time and at the same time help you to save money.

Thank you.

On your resources there. So, Colton, last words?

I think you put it well, Allen. I don't know if I have any last words, but I appreciate you having me.

Well, Colton, it's been a pleasure and very enlightening conversation. Enlightened investors, check out OwnWealth. It will be to your benefit to do so. Thanks for being with us, Colton, and enlightened investors, It's always a pleasure to have you with us. So thanks for being with us. And if you enjoyed today's show, please subscribe and also go to Apple Podcasts. And we would really be grateful if you would leave us a rating and review. Until next time, live abundantly, and we'll see you in the next episode.

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