Frank Rohde, CEO and Founder of Ownify

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Episode Transcript

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iHeartMedia Raleigh presents CEOs to Know,where we shine a spotlight on decision makers
from all corners of the Triangle,showcasing the leaders and companies that drive our
local economy. Welcome into CEO's toKnow. I'm Trevor Marini, Thanks for
listening. Excited to welcome this week'sguest CEO and co founder of a company

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that Jess launched right here in theTriangle this week. The CEO's Frank Road,
and the company is on a FI, a startup that wants to help
you buy a home without a mortgage. Frank, thanks so much for taking
the time, especially with the busyweek. I'm sure you're having. Thanks
for having me, Trevor, andnice to be here. So tell us
about On a FI in your company'smission. Why do you do what you
do? Yeah, So there's abig problem that I think most everyone is

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familiar with as a first time buyer. You know, you graduate from college,
you have student debt, you havemaybe a good income, you have
good credit, and eventually you startlooking around and say I want to buy
a house right and in the Raleighmetro area. As you know, a
big thing that people do as itis all across the country. And the
challenge at first time buyers have isthat in a competitive market, and it's

(01:07):
still a competitive market out there,your financing options are limited. Right.
You have the traditional mortgage, whichhas been around seventy eighty ninety years,
the same product your parents use andeveryone else uses. And the challenge with
the mortgage is that you know,as a young buyer, you're taking on
a huge amount of debt and youneed to come up with this very large
down payment, right ten twenty percent, And if you can stretch into that,

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that's great, But more and morepeople can't. And the reason they
can't is that they haven't had thetime to save for the down payment,
largely because the student debt, becauseliving here is expensive, because of inflation,
a whole number of reasons. Right, So what ended up happening over
the last couple of years is thatmore and more people either get pushed out
of the housing market altogether and haveto wait, right. And what we're
seeing in the statistics is that theaverage age of the first time buyers now

(01:53):
thirty six, right up from twentynine some ten years ago. It's the
highest it's ever been. And soyou have people waiting or people need help
from families. Right. And theother fascinating statistic is that today fifty percent
of first time buyers actually borrow moneyfrom their families. Right. Usually it's
parents, sometimes it's other relatives.And that's great if your family can help

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you, but not everyone has thatluxury, right. And so when we
looked at this problem, we said, there has to be a solution here,
Right. It can't be that halfof buyers get money from their family
and the other half just keep waiting. Right, Why isn't there a solution
here? And so my background isin software and analytics, and the last
company around built the pricing engine fora lot of the large mortgage lenders.

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So it's really deep into mortgage pricingand how does that product work? And
you know, how does the consumerperceive it? How competitive is that product?
You know, as when you're lookingto use it as a first time
buyer. And so about a yearago, got together with my co founders
who are actually customers of ours,and we said, let's build a company

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that solves this problem the right,Let's build a company that helps first time
buyers get into the housing market ina better way, more competitively. Right,
and so the way we think aboutown a FI is really it's an
on ramp for homeownership. Right.It's an alternative path to homeownership that doesn't
involve debt. Right. And it'sreally a new concept that hasn't been put

(03:20):
out there for first time buyers.And so we're excited to launch this week.
In reading up about on a FIand about you, I read that
you had to borrow money from yourparents in order to buy your first home
as well. So would you saythat's the biggest driver for you co founding
this company? Yeah, I meanit was a personal story, right,
fifteen twenty years ago when I boughta condo in San Francisco, right,

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And and I had had a goodjob, I had good income, I
had good credit, but I couldn'tafford the don payment, right, And
so yes, I did borrow moneyfrom my parents, and that was great,
and you know, I'm still thankfulthey helped me do that. And
I didn't really think about it atthe time, but when we then looked
at it, you know, anumber of years later, realized that's a
personal story that almost everyone has.Right. You ask people how did you

(04:04):
buy your first home? It's eitherme, it took me a long time
and I saved or you have ayou know, really good personal story or
your parents helped you, right,And so there was that personal kind of
story. Only at the time,fifteen years ago, I didn't think about
it. And now it came backbecause like and when I talked to my
co founder or customers or agents,this story is you hear over and over
and over again, and I'm onthem on the other fifty percent that it

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took you know, four years tosave up for a down payment. In
in that four years the house theprices went up. So I wish that
on a five was around when Iwas buying my first home. This is
this is really the trade off,right. You can wait, right,
but while you wait and save homeprices keep going up. Right, So
you're kind of you're kind of runningafter this finish line and the finish line
keeps moving away from you. Right. Um, So is there a path
where we can get you into thehouse earlier, help you start build equity?

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Right, and that's al we've built. You are launching here in the
Triangle this week. Why did youchoose the Triangle to launch this company?
So a couple of reasons, andI'll explain how our product works, and
that'll kind of there's a two sidedvalue proposition here. But the thing we
really like about the triangle is greatfundamentals, right, job creation, employment,

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the household formation. Right. Youknow, you have a really really
strong fundamental basis for the housing market, and that means increasing home prices,
increasing housing values, home equity,right. And so from an investor perspective,
that's a really good solid fundamental basisright on which to invest in the
market. At the same time,that also means that the market is very

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competitive for first time buyers, andfirst time buyers are getting squeezed out right
by either other cash buyers or institutionalbuyers. That's a problem. We really
like rally because of the universities right, highly educated population research triangle and the
feeder universities right. So you havea lot of young people who are smart,
who have good jobs, great incomes, and who are looking for homes

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right. And so on the onehand, we looked at it kind of
subjectively and really liked it, andthen we also ran all the numbers right
and looked at three hundred different marketsin the US and said Raleigh is the
right one to start with. Right. So yeah, so we hired a
couple of people here, right,and most of the companies dittributed across the
US, but we get together hereevery couple of months to work together and

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obviously to launch. So talk aboutONAFI and how it works. You talk
about brick by brick, that's kindof your thing. What does that mean?
Yeah, So the question that wewere asking and the challenge we were
posing ourselves is why do you haveto take on this large amount of debt?
Right historically with the mortgage to buya home? Right, And the

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way historically this works is you borrowninety percent or eighty percent of the purchase
price and then you pay it backover thirty years. Right, That's how
the traditional mortgage works. So youhave to come up with this big down
payment, right, and there reallyaren't any good ways around this down payment.
So we said, well, whydo you have to buy one hundred
percent of the house in the firstplace. Why can't you buy you know,

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a small portion and buy a littlemore every month. So imagine if
you could turn your house into tenthousand bricks, right hypothetically, and then
say well, on day one,I'm going to buy two hundred two percent,
and then every month, I'm goingto buy more bricks. Right.
So if you think about that concept, what would you do, Well,
you'd have to find someone who buysthe other bricks, right, because you

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have to buy the whole house,right, otherwise you can't live in it,
right, So you have to pareyourself with investors, right. And
then what you would probably do isyou'd come to some agreement where you say,
well, the bricks I buy aremine. The bricks I haven't bought,
I'm going to pay rent on,right, That's how you would do
it. Let's say you and yourbest friend bought a house together, right,

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and then you split it fifty fiftyand you lived in it. You'd
probably figure out what what's the rentalvalue of the other half, and I'll
pay rent to my best friend forthat half. Right. But then as
you buy more bricks, your rentgoes down, right because you own more
of it. And that's exactly whatwe're doing, only we're doing it in
an institution fashioned, right. Sowhat we've done is we created a structure

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where we take a house, wefractionalize it into ten thousand bricks. We
allow the first time buyer to putdown two percent, So buy two hundred
bricks and then every month over thenext five years, So that's the commitment.
You're in this program for five years. At a minimum, you buy
more bricks, right, roughly thirteenfourteen bricks a month, and that's an
affordable payment. And at the sametime you pay rent on the other bricks

(08:28):
that you haven't bought. So ifyou think about this, right, your
equity stake goes up. And theway the math is dialed in is such
that at the end of five years, you'll have ten percent of the bricks,
right, And so at the sametime you are a rental payment.
The number of bricks that you haveto rent goes down during those five years,
and so at the end of fiveyears, you have ten percent of
the equity in the house and youcan use that equity as a down payment

(08:50):
for a mortgage. Right. Sothis is really an on ramp where we
say at the end of five years, or at any point before then,
if you want to, let's sayyou have a big bonus or you know,
you get a gift from someone,or all of a sudden, you
have enough cash to make up thatdown payment. At any point along the
way, you can buy out theremaining equity with the traditional mortgage if that's
what you want, right, oryou can stay in the program at the

(09:13):
end of five years, renew,stay another five years, and just keep
building equity that way. And so, because it's equity rather than debt,
it actually creates a couple of reallyinteresting things for the first time buyer.
One, it reduces the risk becauseyou don't have this risk of being upside
down on your mortgage. Right.And if you remember two thousand and nine
two eleven, you know twenty fivethirty percent of the US housing stock was

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actually underwater in the sense that thehomeowner owed more to the bank in mortgage
value than the house was worth.Right, So all of a sudden,
your your equity is negative, right, And with the product we've built,
that can't happen because you don't oweanything. You're building equity over time.
And let's say house prices fall,right, your equity the number the bricks

(10:01):
that you hold are worth less,but they can't be worth zero, they
can't be negative, right, Andso it reduces the risk for the first
time buyer, which makes sense becauseit's the first time buyer. You don't
have a huge amount of savings andassets, right, so you don't want
to concentrate too much. So fromthat perspective, it makes sense to diversify
and not put all your eggs inthat basket. And the flip side of

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that is that you're you're also leavingsome of the appreciation on the table because
you're as a buyer, your appreciationis on the bricks you own, right,
and the appreciation on the bricks you'rerenting goes to the investor. And
I know, if you're listening allthe number it's confusing to listen to all
the numbers, But there's a greatvisualization on the oni Fi website if you're

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interested in learning more, so Iwould definitely check that out. It compares,
you know, buying with the onnaFi program versus you know, getting
a mortgage versus the cost of renting. I would check the oni Fi website
out for sure. Yeah, juston that point. I think one of
the things that you know we're workinghard on at onify is explaining how all
this works, right and using theseanalogies of a brick and the calculators that

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you can find on the website andthe stories of our first couple of customers,
right, to make sure consumers understandit because it is a complex product,
right, And that's one of thereasons we're launching here. You know,
every having smart people come in andlearn about this helps, right,
and eventually this will become a moreaccepted way of buying homes. Right.

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And this one of the challenges.Right. No one really understands how mortgage
works, right, all the oneright, And it's okay because you know,
your parents had one, everyone elsehas one. The government says it's
okay. It's been around forever,right, so short of the mortgage crisis
ten years ago, it's like it'sa pretty good product, right, but
it is tough to understand. Butit is tough to understand. And so

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we're building a new product that worksdifferently, We've got to explain it,
right, And so one of thecore values for us is transparency, right
and really explaining how everything works sothat the consumer who gets into this product
right doesn't any surprises. But yeah, way, I would say the education
materials on your website on the onA five website super helpful and really quick
to grasp the concept. Take soaway from the office, what would you

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say some of your hobbies are,well, I have three kids, so
that squeezes the time for hobbies alittle bit. I have four year old
twins. They take a lot oftime. So yeah, I mean hobbies
spending a lot of time with family, kids, Biking. I have this
huge cargo bike that they both fiton and sometimes they take a friend.
So you know, if you ridethrough San Francisco up and down hills with
three kids on the back, that'sjust an adventure and tons of fun.

(12:37):
Running. I do a lot ofrunning, and have been running marathons for
fifteen seventeen years now, so that'sthe other passion. And then a lot
of reading, right, But youknow, honestly, there's not a lot
of time out in the day.Is there a mentor that's helped you get
to where you are now? Somebodythat you look up to from a professional
standpoint? There? You know,there really isn't an individual single mentor.

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I have a great network of supporters, friends, investors, partners that I've
worked with, and folks I gettogether with on a regular basis, right,
and we talk about business in lifeand family and and so we kind
of grab things and insights from abunch of different places, but I've never
had a single mentor right over aprolonged period of time. I do mentor

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folks myself, and I think thatis an important piece in a way.
I'm I wish I had more ofthat, right um, but it just
didn't work out that way. Andso I have a network of people that
I rely on. And what areyou excited about in the next twelve to
twenty four months for on a FIUthe launch here, working with you know,
the local network of realtors and realestate agents, um, really making

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on a fi more of a householdname, getting the early adopters, the
first customers, you know, throughthe product and successfully into home. So
we've got the first couple of familiesalready living in houses. That's super exciting.
And you know, and you know, what's I think about it is
we're so focused on our product andhow this all works in the math and
the bricks and you know, butat the end of the day, it's
about a family being in a houseand they're so excited, right you can

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tell in they're like in the kitchenputting the glasses away and then in the
garden playing with their kids. That'sjust you know, it's really exciting.
So I want to see more ofthat. You kind of lit up when
you started talking about the families andthat, Yeah, because you know,
homeownership is um is so core toyou know what every family is looking to
build. Right, It's I mean, it's safety, it's security, it's

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it's a financial investment. But it'salso about where are you going to spend
time right with your loved ones andwhere you're going to make all those memories,
right And like I remember that housewe have. You know, there's
a little notch on the doorframe forwhen the kids are getting taller, right,
and so you that's part of homeownershipthat's so important. So part of
what I'm excited about is seeing that, right, Um, and seeing that
with the first like the first customers, we all know their first names and

(14:52):
we know exactly what they look likein their kids names, and so that's
really exciting, right, um,growing at in in Raleigh, right and
you know, generally, I mean, as I'm sure your other podcasts you
know guests tell you, building acompany is just super fun and exciting and
you know hard and nerve wracking atthe same time. Um, But that's

(15:13):
what I'm excited about where can peoplelearn more about dot com ownify dot com
um. If you're yeah aspiring homebuyer, if you're a renter today,
come check us out. If you'rein Raleigh, the Greater Triangle area,
if you're anywhere in North Carolina.You know, more markets to come soon,
so back to next twelve twenty fourmonths. Obviously, expansion beyond Raleigh

(15:35):
is on the horizon, so we'reexcited about that. Anything else at all
that you want anybody to know abouton a FI, UM, give us
a shot, right, take thetime to understand, learn right, um
and figure out whether this product worksfor you. And if it doesn't,
that's okay, right um, Andif it does, we'd love to help
you, and you know, lookforward to seeing you on FI dot com.
All right, Frank Road, CEOand co founder of FI, thanks

(15:58):
so much for stopping by today,Thanks for having me. CEOs to Know
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