Lenders earn more with Shackfolio while reducing their risk!
Even though Shackfolio saves buyers money on their individual home-purchases, it actually generates higher returns for our partnered lenders. Believe it or not, this is 100% possible. When it comes to making money in finance, few things are more important than staying ahead of the velocity of money. Shackfolio does save buyers interest on individual property purchases, but does so by accelerating their time to ownership. If a buyer pays $46,000 in interest over 6 years, rather than $232,000 over 30 years, the time-value is preserved. Shackfolio acts as an investment vehicle and portfolio manager for buyers, providing them the tools and encouraging them to build their portfolio of income-generating AUMs after owning their initial home. We automate this process, and integrate the buyers’ cash-flow, providing additional lending contracts which compound for the lender, as the buyer builds their portfolio. This means the lender might make $46,000 in over the first 6 year term, $92,000 over the second six year term and $184,000 over the third 6 year term, yielding a total profit of $322,000 in 18 years from a single buyer, far better than $232,000 over 30 years. This means lenders make more money, by investing in the wealth growth of buyers! Feels good doesn’t it…
By providing liquidity to buyers, buyers are less likely to become over extended, or illiquid, meaning that when they need cash in an emergency, or for unforeseen circumstances, they are less likely to end up in default. By alleviating the over-all burden of debt, Shackfolio alleviates the financial anxiety faced by homebuyers, meaning they can confidently make their payments, and allow Shackfolio to assist them in paying off their debt faster. By reducing the time spent paying off a mortgage, the risk associated with time is mitigated, a buyer is less likely to encounter a financial emergency or default over a shorter period of time, than they are over a longer period of time.
High IRR & Compound ROI
Shackfolio provides a net-benefit to buyers, reducing long term interest, and total cost. This means we are able to carry a larger upfront interest rate, over a shorter period of time, providing lenders a strong IRR and annual return, on each contract, whilst still saving buyers money. For example, a lender can yield 6% per year for 10 years, rather than 3% for 30, but the home-buyer would still pay 33% less total interest over their term. At the same time, by making home-ownership more accessible, and building larger portfolios of AUMs, Shackfolio drives a larger volume of buyers for lenders, and compounds multiple contracts as buyers build their portfolios, this means a larger deal-flow, and a larger long-term ROI from each customer.
No change to your existing model
You don’t need to change anything about your product offering or business model, Shackfolio utilizes products and financial instruments your institution already uses, we just leverage them in the most efficient possible manner for home-buyers, automating the entire process, reducing the discipline, diligence and financial literacy required of buyers to be highly effective with their finances. Our system acts like a super-charged team of CFOs for all parties involved. IF anything, we save you energy, and paperwork, increasing your efficiencies and reducing your OPEX.
So where does the Money come from?
Strictly speaking, the buyer’s own money is put to work for them, but in a way that provides liquidity and relieves anxiety. Our Algorithms help the buyer more efficiently put their own money to work. That said, it still might seem strange that a buyer can save money, whilst a lender earns more. This is a result of one of the effects our system has. By accelerating the time to full-title ownership, properties are taken off the secondary derivatives market (CDOs/BTOs etc.). This means the wealth transfer happens from secondary and derivative market speculations, to the PRIMARY lending market, and households. In-turn, Shackfolio creates a stronger and more stable market, protecting buyers, lenders, and real estate investors from the type of dangers which led to the 2008 housing crisis.
We offer solid Downside protection to lenders, ask us about our AUM & Backing plan.