How To Get Equity Freedom In Your Home Or Residential Real Estate

Hey, it's Mark Podolski, the land geek. He's your favorite niche real estate website, thelandgeek.com and on today's podcast, I gotta tell you, Scott Todd, I haven't been this excited about a guest and they're offering in a long, long time. I mean this is something that's got my brain a little bit scrambled and it's going to solve a lot of problems. It's. You know what the word is, Scott? Disruptive. It's disruptive. But before we talk to our guest, I'd be remiss if I didn't properly introduce my co host. You know him, you love him. The brain, the professor, your flight school sherpa. Scott Todd from Scott Todd.net landmodo.com learn anything about anything investor ninjas.com Scott Todd, are you ready for this?

Look, I've given the website a once over. Ah, let's, let's, let's break it down. Let's go look at it.

All right.

Our guest today is Matthew Sullivan, founder, president and CEO, possibly a genius of quantumre.com Matthew is the founder and full time CEO and director of Quantum One and has held this position since companies incorporation December 2017. Before that he was the founder and president of Crowd Venture llc, Architect, a real estate crowdfunding company. We're going to get back to that. He's also been the director of Secured Real Estate Income Strategies, a real estate fund since June 2016. Has been a co founder and director of Secured Real estate Income Fund 1 LLC since May 2015. He's also the owner and president of Carbon Retirement LLC and has held this position since November 2014. In the late 90s he spent a number of years working alongside you know him, Richard Branson. Yeah, that guy. And his corporate finance team. And was involved in a number of high profile Virgin projects including the Virgin Virgin Global Challenger, the first attempt to fly around the world in a hot air balloon. He's been involved in a lot of the other companies. Matthew Sullivan, you're a big deal. Welcome.

Thank you.

I think I must have sent you someone else's bio there. Actually doesn't sound like me at all.

So Matthew, there's a lot to discuss here but before we talk about you, Scott and I are just curious, what is Quantum Re and what problem does it solve?

First of all, thank you very much for having me on the show. To answer your question, we solve a major problem for homeowners and that is we enable them to unlock some of the equity in their homes without taking on more debt. So what that means is we give you a cash lump sum which you have full use of, where you pay no tax and there are no monthly payments ever.

I both scratch your head.

I'm going to say next, we both.

Are scratching our heads. We're like, look, if something seems too good to be true, I'm going to unlock the equity at my house. I'm not going to go to the bank, not going to get a home equity loan, not going to line a credit. I'm not going to be on the hook for more debt. You're just going to give me a lump sum for my house. I don't have to make any interest payments, I don't have to make any principal payments, I don't have to worry about foreclosure, any of that nasty stuff in the bank. What do I risk by doing this?

Let me explain what our programs are. We are investors, not lenders. We make our money by taking a share of the appreciation of your home when you sell it. So all of our profits and all of the return on our investment is back ended. It's in long way into the future. So what we do is we provide you with a cash lump sum, which is us buying into the ability to share in some of the appreciation of your home. We don't own any of your home. It's very similar to an option agreement. And what that agreement says is in exchange for this option payment, when you sell your home, which can be anytime up to 30 years from today, when you sell your home, you give us back the amount that we originally invested together with a share of the appreciation. And that means because we're investors and we're not lending you money, there is no interest and we are effectively equity investors. It's a type of program that is very much in use in commercial real estate where you have all sorts of different types of funding. You've got junior debt and senior debt, mezzanine and equity funding and preferred equity. With a residential home at the moment, the only real option you have is debt. So you don't have any equity options. So even though you may own all of your home outright, the only way you can unlock that at the moment is to go back to the bank and borrow money. So what our programs are, they're not loans, it's not debt, it's not something that is debt pretending not to be debt. It's something completely different. And we make our money by taking a share of the amount that your house goes up in value.

Scott Todd.

Did that answer Your question?

Okay, so, all right, I get that. I don't think I would do this. Maybe as an investor I might do it. But to have somebody on my house with me, why would I do it? Why would I do that unless I absolutely, definitely needed the money today? Like, I'm not, like, I don't know, I guess I'm just skeptical. And maybe, maybe this is the problem that you have with disruptive technology is that, I mean, do people do this?

They do. In fact, there are a number of companies, there's about half a dozen companies that do what we do. Home equity agreements, home equity contracts, and about a billion dollars a year. We're forecasting that in 2021 this year, about a billion dollars will be invested through all of us into home equity agreements. But what you say is important because there are a number of people who don't like the idea of sharing in some of the future or potential future increase of their property. Now, what is very important is we do not go on title as co owners. So we're very much a silent partner. We don't own any of your property. What we have is a right to share in some of the appreciation. And again, what that means is if your property goes down in value significantly, we also get paid less and we also run the risk of possibly losing money. So because of that, it is much more of a partnership than it is the sort of thing that you get from a loan. But your point is very important because the biggest objection we get or the biggest stumbling block we have is people conceptually giving up something that they don't have in exchange for something that they can have today. And it is a psychological issue, but once people get over that, then it becomes very compelling because they can unlock equity from their home, so they're able to access equity that they own without monthly payments, without the burden of debt. And if you don't have debt and you don't have monthly payments, then as Mark said earlier, you don't have that risk of foreclosure or of missing payments or of credit score impact. So the important thing to remember is this is a very different financing structure compared to a loan. And because of that, it comes with different criteria. And those are the things that people have to get their head around.

Okay, as an investor, sorry, Mark, but like, let's just say I was going to do this as an investor, right? Like, I'm going to. Mark's going to go, and Mark's going to like, unlock this. And I'm like, you know what? I'm going to go and I'm going to invest some of my money so that I have some ownership percentage, future percentage of Mark's house sale, which happens at some point in the future. Now I go and let's just say, let's just throw a number out there. I put in $100,000. Mark takes that $100,000. He's happy. Go, lucky man. Mark's happy. He buys all these new toys that he wants to have. And over the next 30 years he does nothing to his house. In fact, it gets condemned by the city. What happens to my investment?

So you're talking about an edge case. Now obviously what we want to do is protect the investors investment. So one of the critical components of the agreement is if we're going to invest in your home, then you as the recipient of the investment have an obligation because we're partners now. So you must maintain your home. You may not allow your home to become condemned and you must pay your taxes, you must pay your, you know, your mortgage on time, otherwise that is a breach. Now if there is a breach, then we have certain rights because you've broken the agreement. So what you're talking about is very much an edge case. But in order to protect the investors from that, we're very cautious about homes that we work with and the amount of equity that they have. So after our investment, you will have a minimum of 20% equity yourself left. So we don't allow homes to be sort of leveraged or we don't allow you to sell all of your equity. So there is immediately or there is a maximum amount of equity that we will invest. In addition to that, depending on the program, we may discount the value of your home at the beginning of the agreement. So that builds a further cushioning. So there are a number of things that we do for the investor to make the investment attractive. And remember, there's a lot of money chasing these investments because they have a good return, they are asset backed. And it does allow investors to buy into properties that are not for sale. Those properties are maintained, owned and managed by the owners. On the other side, it has to be attracted to the homeowner. So we have a number of different programs, different durations, 10 year programs, 30 year programs. So it is a balance between what's attractive to the investor and what is good for the homeowner. And as underwriters, we have to make sure as far as possible that we're picking homes where, in places or with homeowners where we think there's a likelihood that that asset will perform.

The way I think about Matthew and tell me if I'm thinking about it wrong. It's if I had a company and let's say my company was worth a million dollars and that equity is locked up. So I go to a private equity group and they say, Mark, here's $500,000. We're going to recapitalize your company, but we're going to also participate in the growth of your company. We're going to do all these things to help grow the company. And then in five years, when you do want to sell, so you get two bites of the apple, you get money now and then you get money again. And we all participate in the appreciation. The difference in a company is it's active where a house in a housing market, let's say where I live, I mean right now it's nuts, but let's just say the typical housing market that might appreciate 4% a year. Well, in an interest rate arbitrage environment, if I can take out money that's locked up in my house and then you make a higher percentage than 4%. Am I thinking about this correctly?

You are exactly. Because this is what equity is. Shares in a company is equity ownership in the company. And again, it's the same process. If you want to access the equity in your company, you either sell shares or you borrow against the shares in your company. It's an illiquid asset. Unless your company is on a stock market somewhere. The only way you can sell shares, the only way you can access capital is to do that. So your analogy is perfect. And what you're doing is you are, or rather what we're doing is we're enabling you to create liquidity for what is essentially a single, concentrated, non financial, non cash flowing asset. And we're doing that. We're not buying it from you, we are participating with you as partners. So one important thing that you said is when you sell your company or when you sell your home, you also get to share in the appreciation. We don't take all of the appreciation, we take some of it. So, so you as the homeowner take the rest. So you also get to participate. But most importantly, you have capital available today that is not loan capital, it's equity capital. And that means there are no monthly payments attached to it. So you are then free to invest that in whatever you want. And the net result, if you're successful at investing it, is that you will make more money from that capital than it will cost you. In addition to that, you have control over it and you have the ability to it's more liquid. So you can do with it as you wish because it's not locked up in your home.

Yeah. So Scott, see that solves a problem for people listening to this that want to do a land deal and don't want to do a home equity line of credit. They don't want to do debt because let's say maybe cash flow or maybe a larger deal. This solves that problem because if we're averaging 300 to 1,000% on our money, well, why would we have our money sitting growing at maybe 4 or 5% a year illiquid in our home? But where it gets really interesting, Matthew, is the blockchain component of this. Explain to Scott Todd where the blockchain component comes in.

Well, this really comes back to your initial question, Scott, which is what's in it for the investors? One of the biggest problems for the investor is the liquidity of the instrument. So let's use a 10 year agreement as an example. So as an investor, if I invest in your home through a home equity agreement, I may have to wait 10 years before you sell your home. If it's a longer term agreement, I might have to wait up to 30 years. So some investors are quite happy with that. They have capital allocations that are designed for long term capital appreciation where they don't need that money back. Most investors, particularly smaller investors or retail investors, need that liquidity. So we have created a marketplace that enables us to fractionalize and trade home equity agreements. We use blockchain technologies to enable us to do that because the blockchain and as a distributed ledger technology is ideally suited to chopping up these home equity agreements into little places, into little pieces, and keeping track of who owns those little pieces as they move from owner to owner. So what that means is on one side of our platform, if you're a homeowner, you can unlock equity. On the other side of our platform, if you're an investor, you can buy into these home equity agreements, which means that you can pick and choose homes that you like in Newport beach or in San Francisco or in Phoenix, Arizona, for example. And you can say, okay, I've always wanted to own some property in Phoenix or in California, so I'm going to put $500 into this property and 500 into that. And what we're enabling you to do is buy into the economic benefit that that those home equity agreements give the investor. And our platform has been designed so that you can sell your interest once You've purchased it. So once you've bought it and held onto it, if you see the price going up in the market, then you can find another willing buyer in our marketplace and you can sell your investment. Now, there's a little bit of work that needs to be done from a technology perspective and from a regulatory perspective on our side, but we're a few months away from launching that in anger as it.

Wait, Matthew, I think we lost your audio for a second. Did you hear at the end?

No, he faded out on me.

I don't know.

Mark.

Oh, yeah, you kind of faded out, Matthew. But let's get your audio back. But Scott's got some thoughts.

Yes.

Okay.

He can keep going.

Mark.

I was just going to fill in the gap.

Okay, so wait. But I just want to get your thoughts, Scott. Todd, at this point.

Okay, I mean.

Again.

Maybe I'm just a Neanderthal here, but I don't like it. I don't like it from the on my own house. I wouldn't like that. Maybe I'm just old school. I don't know. I don't think my.

Again, let's put this into perspective. There are. And again, is my audio back? That's the first.

Yeah, your audio's back.

Yes. There's $18 trillion of equity in residential homes in the United States. There are over probably over 17 million homes where the owners have 50% or more equity. It's entirely logical, appropriate and absolutely fine that this does not work for you, Scott, because you're probably in a position where you are able to borrow money. But put yourself in a position where you're a retiree, for example, where you don't have income yet you've paid off your mortgage because that was the right thing to do. You're sitting on hundreds of thousands of dollars of wealth, yet you are unable to access it because you can't borrow money, so you need to sell your home. Or conversely, you could be in a position where you built up equity. Something has happened, maybe a health issue or something has come out of left field that has impacted your credit, that has put you in a position where you can't borrow, or you may simply not want to borrow money. So again, this is not something that is a solution for all people, yet it does provide a real benefit to a very large number of people who either cannot borrow money, don't want to borrow money, or see their home simply as a real estate investment, and they want to diversify. So my final point is think of it as a diversification strategy where your home is an asset which has a lot of your capital invested, this is a way for you to diversify. There's a cost of capital involved.

Sure.

But if you can make significantly more, then it makes logical sense to do this. Even though emotionally you may be quite attached to this, to the equity in your home. Right.

Look, I don't disagree with you, okay? Like, I don't disagree. I just think, okay, like, in my situation, I'm going to have to sit down. I'd have to sit down and explain it to my wife. Right. And my wife's going to be a lot like I am right now. Like, I don't know about this whole thing. It's new, okay? Like, that's all. That's a hard sell. Even if I was 100% on board with it, I'm like. Which I like. I me, I'm just being honest. Like, me personally. You're right. I'm probably not the model for it. But. But here's. Here's the other thing, too. And this is. This is what's. Like, I am interested in the investor side of it, too. Very interested in that piece. But what you said does scare me. I'm just gonna be honest with you. It scares me. What scares me is that I've seen firsthand the retirees that need to unlock their income, the people that can't go get the loan. Honestly, when that happens, and maybe I'm just being idiotic here, but, like, those are the people that can't afford to maintain the house. And then you're pulling out all of the equity, or maybe not all of it. You're pulling out the equity, and then, like you said, they're not able to go get a loan. So if that house needs a new roof, roofs in Florida are like $30,000. So, man, does my roof now on a home that I'm now an equity owner in as an investor, does that roof need to be replaced? It causes more damage, and then the house becomes dilapidated. And, you know, you can tell the homeowner, hey, you got to maintain it. But if they don't have the money, what are they going to do?

You're right. And again, these are all risks that we take as real estate investors. However, the people that we come across when we do an appraisal, so the first thing is, before we bring on a property, we'll send someone out and we'll have a full appraisal. At that point, you can normally pick up if the property is likely to be invested, and we come across all sorts of properties in all states of repair or disrepair. By the time we come in, if someone was going to have a problem with the roof, it would normally have happened quite a while beforehand. So we can, in pretty much every case, because of the experience of the appraisers, we can pick up when there's likely to be a problem. And we see all sorts of things. We see people that hoard, you know, stuff in their homes. Their homes are stuffed floor to ceiling with cardboard boxes. So we'll decline that one. We'll see properties where owners have started to try and repair stuff themselves. So from an investment perspective, it is a risk, but we mitigate that risk by using appraisers, by looking at the property, by thinking, do we really want to do this? Because we don't have to do it if we don't want to. So we are quite picky about the properties. And again, remember, there's always that equity cushion. So land value itself in many cases is, you know, is significant. But also, most people tend to stay in their homes for seven years or less. So in other words, the risk is there, but we try and mitigate it. So it's not a major risk. In other words, it's, you know, there's going to be a few edge cases, but overall, you know, we're pretty confident.

Okay, now can I do this with, does it have to be my primary residence if I'm the homeowner, or could I do it with a rental property that I own?

The great thing about our programs is you don't have to be the homeowner, you don't have to live there. So if you have, and we work with a number of people that have small portfolios that they've had for a number of years where they build the equity up but they can't access it, they can't borrow money because they're up to their debt to income limits. We can work with you if you're a lander, if you're a property owner, if the property is rented, as long as the equity is there.

So if I own, let's say I owned a condo that I own, like free and clear, that could be, that could be something. Equity on that.

Yeah, subject. We don't obviously have to take special attention to the roof in your case just to make sure that you are maintaining. Yes, but no, in all seriousness, yes, it's subject to underwriting. So we just need to make sure that it's in an area where we can operate, where we provide investments. We need to make sure that it's a four unit or less. So we only go up to four unit apartments. So there's a number of criteria. But yes, the answer is normally yes, we can, as long as it's a small building. But that would be an ideal situation where you can unlock capital and then put it to work.

Okay, all right. All right, we found something there.

Do you know, it's funny. One last story, Mark. Most of our conversations start, why would I do this? Most of them end, why wouldn't I do this? And it is when you see that it's the logic because we're just using something that is used every day in the commercial world. So I just thought I'd casually throw that in there.

So Matthew, I'm thinking about my market, Scott's market, just different markets. So being in Phoenix and the fact that our market tends to swing really high and then really low, I would be more apt to not want to give up equity. That being said, if I lived in Iowa and I could participate in the appreciation of a Phoenix or Tampa Bay or a Maui or la, that sounds very.

To me that is precisely the sort of mission or the underlying design of our platform is to enable people to buy into properties that are not for sale in areas that see high growth. Because you're not a property owner, when you're buying into one of our agreements as a fractional owner, you don't own the property, you get the economic returns of the increase, but you don't have that same cost associated with owning a property, maintaining a property, renting it out, collecting the rent and all the issues associated with, you know, the toilets, tenants and trash. We know that so well. So it does allow you to benefit from real estate increasing real estate prices without the cost and the implications of being an owner. We don't offer these agreements to all states, so we're only working with states where there is likely to be significant house price appreciation. So the there are a number of states where we're not ever going to see that. So we won't invest there or we don't invest there. So again, that's what separates it from a loan.

Okay, so how much equity would I have to give up?

Well, again, it depends on the program. So there are two types of agreements. One is a 10 year agreement and the other is a 30 year agreement. They work in slightly different ways, but the methodology is the same. I'll give you an example of a 10 year agreement. Now, 10 year agreement is really very simply a discounted trade. So for every 10% of the value of your property that we invest. When you sell your property, you give us 16% of the value of your property at that time. So let's take a $500,000 house. If we invested 10% of the value of your home, which is $50,000, when you sell your home, you would give us 16%, which is $80,000. You've got 10 years to use that $50,000 before that contract becomes payable effectively in the early years, in years one, two and three, if you sell your home, we cap the maximum return that we can make at around 18%. So that means that if you were to sell your home in years one or years two, we wouldn't charge you the full 1.6 multiple, we would charge you a lot less than that. So there is no prepayment or early payment penalty. In fact, it's the opposite. It. So we provide you with a discount if you settle the agreement early. So from our perspective, what that means, or from the investor's perspective, it means that they are investing in your property. They have effectively an in the money option, which means that they have protection against the value of your property going down. Because it would have to go down quite a lot for them to actually start losing money from you As a homeowner. You get cash today and you know exactly how much you need to pay. The only thing that we don't know is what the value of your home is going to be in 1, 2, 3, 5, 10 years time. As you say in Phoenix, it could be a lot more, it could be a lot less. So that's the risk that we take on both sides.

Scott. Todd, I see the, I see the wheels turning.

I don't know, man.

Like, like, I mean, yeah, okay. I see it from an investor standpoint. I see it from, I don't know, I mean, if it's a billion dollar business.

Wow.

That's all. I gotta say I'm shocked that people do this. But again, I guess I'm not the target ideal customer, which is okay. But I guess I wouldn't mind investing because things are going to go up in value. We know real estate's going to go up in value in a 10 year period.

Yeah, okay, exactly.

All right.

I like the liquidity stance. From an investor standpoint, I think Scott and I would be more on the investing side of it than we would be on the equity side of it just because of our own personal financial positions. But in the world of investments, let's just say on average we can make 8% in equities. Over a 10 year period. Why would we invest in residential real estate?

Well, first of all, it's a very well understood asset class. There's lots of research. It's a very simple instrument in the sense that what you're doing is you're buying into the potential house price appreciation. So it's something that people can get their heads around. There's very little cost involved in the agreement. So we don't have the layers of cost that you traditionally find in REITs where you have all of the management companies. You can pick and choose the investments that you go into. So you can buy into specific areas to specific properties. And also subject to regulatory approval, etcetera, you will be able to trade out if you find a willing buyer. So from an investor's perspective, it gives you access to a previously untapped asset class. So you cannot today buy into the equity of someone's home if they own it and live there. If it's a rental property, that's fine because you can probably buy some of the ownership of a fund or that particular property. But if someone is an owner occupier, then you cannot buy into the equity of their home. You could buy a strip of some of their debt maybe, but not the equity. So this does unlock an exciting untapped asset class and it's very big. It's an $18 trillion asset class. So not all of the homes in that $18 trillion will qualify. So obviously we need to narrow it down a bit, but there's still plenty to go around. So that's why this is interesting and compelling because it's new, it's untapped, it's not a me too product. It's something you couldn't do before. And it's something where with the amount of research that's available, the average investor can get a pretty good handle on where they think they might like to invest, which could be in their street, it could be in their neighborhood.

Scott Todd. It's pretty compelling. I really like it.

Let's go to the geeky side here because you know, I had to break out the financial calculator, right? So. All right, so let's just run this scenario, this 10 year scenario. All right, so the house is worth, the house is worth half a million dollars. We're going to sell 10% of our equity there. 10% of the value. So we're going, we're now we're going to invest $50,000 in this deal?

Yes.

For 10 years. In 10 years now, 10 years. That's the limit. So we have to plan for the 10 year mark. Let's assume for a minute that that half a million dollar house grows at 4% a year.

Yeah, that's fair enough.

Yeah, 4% a year. So 10 years from now, I'm just. Break out the calculator.

Yeah.

For those of you that are wondering what I'm doing, I'm going to the good old financial calculator, I'm plugging in these numbers and 4% is my yield there.

Okay.

So boom, we're going to do that. So Mark, my house, my half a million dollar house 10 years from now would be around $750,000, $745,000, that's growing at 4% a year.

Okay.

So now as an investor, as an investor, I pop down 10%, I put in the $50,000 to buy that piece and I get 16% of that future value.

Yes.

So now instead of my future value being $50,000, my future value is 16% of the $750,000. So when I take that 16% in there, so my future value is about just under $120,000. So I turned 50,000 to $120,000 over the course of 10 years. Wow, that's really good. Right? That's really good. And then let me just take my $50,000 initial investment and plug that into the present value so I can calculate it now to look at my annual yield. And my annual yield on this thing is 8.72%. And as we all know, yield is relative. Right? To some people that might be a great yield. Other people it's a terrible yield. Yield is all relative. But when I look at this, and this is now, I'm just. Matthew, again, I could see the value here, but when I look at this, there's funds that are yielding, not even funds. There's like private equity I can do as an accredited investor, making 20%. Like how, how, how is this, like how is this going to grab the investor dollars? I guess when it's like on average in that scenario, 8%.

So let's, let's change it in the same way that when you take out a 30 year mortgage, very few people run that mortgage for 30 years. So what we're seeing is with our programs, they have an average duration of three to four years, years before the home is sold or before our agreements are refinanced to typically buy another mortgage. So if you change your numbers and say 10 years is the maximum. So the other important thing is it gives you downside protection. So if the house value does not go up or in fact house prices go down, you still have a positive yield, that's one thing. But if you look at, let's say four years, so I'm not sure if you have a moment just to change the duration from 10 to say four years, which is the sort of duration that we're seeing, then you'll see a very different picture.

Okay, so let's look at this because I am interested, right? And this is what I do. Like I compare investments all the time. So if I take that same half million dollar house still growing at 4% a year for four years now, okay, so my future value of that house is now $586,000.

Yes, exactly. Okay.

And so as the investor, I'm going to get 16% of that, so 16% of 500. So now I'm getting about 80, $94,000. I'm getting 93, 8. So let's run with that. So I'm going to get about 93, 8 in four years and I'm going to turn my half million into 93.

I'm sorry, I'm going to turn my 50,000. Sorry, I'm going to turn my fifty.

Thousand into about 94,000.

Okay.

And so then over a four year period, let me plug in my $50,000 in here. So then my yield on this is 15.8%.

Not bad.

But again, as an investor you're always looking at the yield. And again, I know that there's a lot of investments available to accredited investors. It's 20. Does that impact you guys? And that's before your fees too? That's before your fees, yeah.

And again the fees are around sort of 1 to 2%. So they're pretty minimal. Again, it's all about diversification. So in other words, there are other investments in real estate that have, and it's a very complex equation. We're talking about estate, real risk reward, we're talking about risk, balance, yield. So this is an in the money option where the homeowner is in occupation of their own home. It's a real estate investment. It is distributed across multiple single family and multifamily homes where the equity is very high compared to and the cost of managing that is very low. So there are all sorts of benefits, this type of investment compared to the other investments which give a higher yield where there is a much higher associated risk. So the risk to get your 20% yield in some of these other investments and having been in that business for a number of years, I know that things don't always go according to plan. But with this type of investment.

It.

Is much more defensive yet it has the sort of return profile of an investment that should have a much higher risk profile. So it is a blend, it is part of a balanced portfolio. We're not suggesting that anyone put their last dime into this. But if you are a real estate investor, it's a very interesting asset class and it does give you that pretty attractive yield. And for most investors, I think a 15% return wouldn't be too shabby really, particularly as it's asset backed.

Okay, one last question I have. I've monopolized this whole thing.

No, no, no.

How do you. If you're not on the title with me or the deed with me, how do you secure the investment with the county so that when they go to refinance or sell, there's that record of this agreement on there.

The agreement is recorded with a lien on title. So we do not take ownership of the property, we don't go on title as owners. But the agreement itself is recorded as a performance deed of trust. So the language is very similar to a deed of trust. It just means that we can the performance of the agreement, we go through the escrow process and we, as the lien holders are paid, are paid for. So the agreements are protected by lien on title.

I think it's brilliant, Matthew, for a lot of different reasons.

Thank you.

And you talk about diversification as an investor. I would like the opportunity because I can't go and buy million dollar homes in Hawaii. But now with a little bit of money I can get fractional ownership in these homes and participate in what I think will be tremendous appreciation and get an attractive yield on the other side of things. I know lots of people my age that love the fact that they paid off their home as fast as they could. They are so proud of the fact that they are debt free and now they are house rich. And they don't. They want to do things. Yes, but they don't want the debt. And now you've got a really novel solution to give up some equity. But they don't have to get debt, they don't have to deal with the bank, they don't have to deal with cash flow issues, all that stuff. And then you've got on the liquidity side of the blockchain for the investor. I love it. I love it. I'm seeing this in a lot of different areas now. Masterworks, you see this in the art world. So what's disruptive is these asset classes where it used to be only for the wealthy is now coming to.

The investors. Exactly. It is that. But also it's assets that previously could not be traded now can. So the concept of trading a fraction of a Van Gogh, Van Gogh could not happen until these technologies. And what that means is that when we're talking about equity in residential homes, the technology doesn't make it happen. It just makes it possible out of a cost that is not prohibitive. So to build these types of systems wouldn't be possible in a traditional way. But using blockchain technologies, you get that. The ability to build it and you have the ability to distribute it and have it trading in a manner which actually makes it work. It is a combination of regulatory, of market technology and demand. So all of those things, and we've been working on this for three and a half years and I think today is the moment when all of those factors come together and make it compelling for both the homeowner and for the investor.

Okay, well, we are at that point in the podcast now. Matthew, your mentorship has been so enlightening.

Thank you very much.

And I really appreciate. You've been very good natured about Scott Todd grilling you.

No, I appreciate it. It's great to have these questions. I mean, we love these questions because anyone that's listening to this will have the same question. And it's great to have them because now they have answers.

Exactly. So I'm going to put you on the spot one more time and ask you for your tip of the week, a website resource, a book, something else actionable for the art of passive income listeners and prisoner businesses improve their lives. What do you got?

Well, I'm a great fan of this chap called David Allen and I picked up his book the other day. He wrote a book, I think it's called Getting Things Done or Getting Stuff Done, something like that. And it is just. And for all of those, those of you who sort of lay awake at 4am on a Sunday night thinking about all of the things that you got to do in the following week, it's a great book because it basically tells you to stop doing that and start writing stuff down and create processes so that you don't clog your brain up, you know, trying to turn it into some sort of large organic filing cabinet and allow it to do the things that it's designed to do, which is to be creative. So that book really just, you know, I was reading, thinking, gosh, you're absolutely right. Why have I Been so stupid all these years. And so I picked it up again because I sort of moving stuff around in my office. And so I would recommend it heartily to anyone who wants to figure out how to be more productive, but without the usual sort of mumbo jumbo, you know, psycho babble that you get with most of the other books. This is just very straightforward and digestible and very common sense.

Yeah. Getting Things Done. David Allen is a classic. I actually have it right over here. I'm going to dust it off and revisit it.

There you are. It is. It is. It's the gift that keeps on giving.

Fantastic. Scott Todd, before we go to your tip of the week, I just want to remind the listeners that today's podcast is sponsored by Flight School. Learn how the next 16 weeks can literally transform your life. Start building up passive income without any headaches, and have Scott Todd be your Sherpa. He's done it thousands of times. He'll take you up that mountain quickly, safely, efficiently. And that tuition is not going to cost you anything, guaranteed. You'll make back that money 180 days or less. Just show us your work. Learn more. Go to landgeek.com training okay, Scott Todd, what's your tip of the week?

Look, before we get to my tip of the week, I just want to know, like, which you have that book, right, but which bin is it in? Back there?

Yes. Not.

Not you, Matthew.

No, I was gonna say. Yeah, yeah, yeah.

Oh, in my Star wars band. In my Star Wars. Ben.

Just kidding. Just kidding.

Yeah. For those of you who aren't. Who are just listening and not on the video, my background is star. Is a. I'm in a Star wars chamber.

For those of you watching in black and white. Yes.

Looks. Looks. I mean, I just maybe have some of those bins back there. And I might have been stalling for some time to get my tip of the week, too.

Mark.

Hey, check this out. Mark, you know, people, there's. There's some things that people always try to change. You know, they always try to change the toilet. You know, everybody, these inventors, they come up with new toilets all the time. They also want to change the addresses. What three words? And check if you're into that stuff about changing the way that the address system works in America or the world, I should say. Here you go, Mark. This is right up your alley. Smart address. IO have you seen this thing?

No. I love this.

Basically, what happens is, I mean, I could kind of understand, you know, what. Three words, if you will, but essentially this is very similar to it, but at the same time, what's interesting is that they use more of a bigger block system than every little word. So you actually get a, I guess a real address or something that looks like a real address as opposed to, you know, these three words that nobody knows what to do with. So in this case, I just randomly clicked on a place and it's, you know, it tells me that the address is at 7558 Ivory Mill 2. Then the city and zip code or city address and zip code are listed there. So it's really more designed to bring a real address looking thing to the system. And again, you can map everywhere on earth this way. And you're going to ask me, well, why not use what three words? And my answer is, I don't know. It's like, let's just create a new toilet system too while we're at it. So with that, this is my tip of the week, like it or not. There you go.

I'm going to reserve judgment, but okay, my tip of the week is going to possibly disrupt everything. Check out quantumre.com/ Then the letter M as in Mary R e as in realestate.com. it's a phenomenal website. Even if you have no interest in this asset class, even if you have no interest in giving up any kind of equity in your home. The site in and of itself explains what is typically a very difficult concept. Very, very simply, just for marketing purposes, you should go and check out quantumre.com it is just a phenomenally laid out website. And well done, Matthew Sullivan.

Thank you. It's very kind of you. So thank you very much indeed. It's very much appreciated.

All right, well, are we good, Matthew?

I think I'll quit while I'm ahead.

All right, Scott. Todd, are we good?

We're good, Mark.

I want to thank the listeners and remind them the only way we're going to get the quality of guests like a Matthew Sullivan is if you do us three favors. Follow us Rate Review the podcast, send a screenshot of that review to support@thelandgeek.com we're going to send you. And I'm personally going to send you a signed copy of the book Dirt Rich. And so please do it. It really helps. All right, Scott, let's do this. One, two, three. Let freedom ring. Matthew's like, not sure if I would.

No, no, no, I wasn't. I'm always when I do, you know, you know, when you're, when you're sort of singing hymns or something. You're always like one word behind or something, so. Yeah, yeah, you know, I'm using. I'm sort of mouthing, pretending that I knew what you were going to say there. We can. You can always overdub in the edits, though, couldn't you? Exceptionally generous.

Exactly. All right, well, thanks, everybody.

Thanks for listening to the Art of Passive Income Podcast. Start your journey at www.thelandgate.com and www.scotttog.net. read and review the podcast and email supportthelandgeek.com your screenshot for a free Passive Income launch kit.