Ownify Creates New Path to Home Ownership Through Innovative Equity-Share Model

Written by:

Rudi Davis

Date:

03 Dec 2024

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In a housing market where first-time buyers face increasingly steep barriers to entry, Ownify has emerged with an innovative solution that reimagines the traditional path to home ownership. The company’s unique equity-based model offers an alternative to conventional mortgages, allowing buyers to build ownership gradually while avoiding many of the initial hurdles that keep young families out of the market.

The genesis of Ownify stems from CEO & Co-Founder Frank Rohde’s deep experience in the mortgage industry. Having previously built Nomis Solutions, a pricing engine used by major banks and lenders worldwide, Rohde witnessed firsthand how various factors were squeezing first-time buyers out of the market. Rising home prices, student debt burdens, conservative lending practices, and competition from institutional buyers have pushed the average age of first-time homebuyers to 36 years.

“The mind-blowing statistic is that today, 50% of first-time buyers get help from their parents,” notes Rohde. “If you have rich parents, great. They can help you with a down payment. But if you don’t, you’re kind of at the back of the line.”

Ownify’s solution revolves around three parallel agreements that create a new ownership structure. First, customers sign a five-year lease with declining rent payments. Second, they enter an equity share agreement where homes are divided into 10,000 “bricks” – with buyers starting at 2% ownership and gradually increasing their stake through monthly purchases. Finally, a purchase option allows them to buy the remaining equity at market value when ready.

The company’s innovative legal structure places each home in an LLC that issues 10,000 shares (the “bricks”), allowing for true fractional ownership while avoiding the complications of fractionalizing actual property titles. This structure enables buyers to build equity at their own pace while being protected from unexpected maintenance costs and property taxes during their initial five-year journey.

Currently operating in Raleigh-Durham with plans to expand across the Southeast into markets like Nashville, Atlanta, and Knoxville, Ownify targets single-family homes and townhouses in the $200,000 to $750,000 range, with a sweet spot around $300,000-400,000. The company has completed ten homes and aims to reach 200 properties by the end of next year.

In a notable innovation for the industry, Ownify has introduced a “two plus ten” commission structure for realtors – paying 2% of the list price plus 10% of any negotiated savings. This approach, particularly timely given recent NAR settlement discussions, aligns agent incentives with buyer interests by rewarding price reductions rather than the traditional model that favored higher prices.

The platform serves three key constituencies: first-time buyers seeking an affordable path to ownership, investors targeting 15% IRR through the company’s home fund, and realtors looking for new commission opportunities. By balancing the needs of all three groups, Ownify aims to create a sustainable marketplace that addresses the structural challenges of home ownership.

“We wanted to rethink how we structure the transaction to create real benefits for buyers while providing market-rate returns for investors and maintaining a role for agents,” explains Rohde. This approach recognizes that solving the housing affordability crisis requires innovation not just in financing, but in the entire transaction structure of home buying.

As housing affordability continues to challenge markets nationwide, Ownify’s equity-based model offers a promising alternative to traditional mortgage-based ownership, potentially opening new paths to home ownership for a generation increasingly priced out of the market.