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Keith examines the opportunity cost of paying off a mortgage early and why homeowners with substantial equity may still feel short on cash, alongside observations on Manhattan's distinctive residential towers.
He speaks with Michael Gifford of Splitero, a mortgage and real estate executive, about home equity investments (HEIs) and how they exchange an upfront payment for a share of a home's future value.
They compare HEIs with HELOCs and cash-out refinancing, including differences in qualification, monthly payments, fees, and repayment timelines.
Keith and Michael discuss a practical look at how homeowners might weigh access to equity against the costs and trade-offs of sharing future appreciation.
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Complete episode transcript:
Keith Weinhold 0:01
Welcome to GRE. I'm your host Keith Weinhold. The opportunity cost of owning a home free and clear. New York City has some of America's most interesting real estate. Then, with an HEI, you can access cash in your home without refinancing. You don't make any monthly payments or pay any interest. Does it sound too good to be true? We're learning about home equity investments today on Get Rich Education. For years, I've sent listeners to Mid South Home Buyers in Memphis, and for years, I've heard the same thing back. Keith, there's a wait list. Well, not anymore. Mid South has grown into three markets: Memphis, Little Rock, and Dallas, with its classic renovations and now brand new construction. For the first time in years, there's enough inventory to buy today, and they've picked now to roll out their best terms in their 25 years, it's called the triple five, 5% property management for five full years, half their standard fee, and Mid South buys your mortgage rate down as low as 5% for qualified buyers. If you're paying all cash, ask about the forever five. That's 5% management for as long as you own the property plus special cash pricing, with 6200 homes under management, Mid South is the place to turn for turnkey real estate. Book your free investment strategy session@midsouthhomebuyers.com. That's midsouthhomebuyers.com.
Speaker 1 1:42
Your list. to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.
Keith Weinhold 1:58
Welcome to GRE from Manassas, Virginia, to Manhattan, New York, and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to Get Rich Education, and I'm in Manhattan today. More on that later. I've been well known for talking about how your rate of return from home equity is always zero, and how that fact can drive your investor decisions, even if you're a homeowner and don't own rental properties. So then, what are you going to do with your dead equity? And I practice what I preach. I own a lot of properties, and I could pay them all off, but I have mortgages on them all out of choice, and in fact, I have never owned a single property free and clear out of choice as well. Well, with what we're talking about later today on the show, for the first time in some detail here, home equity investments or HEIs, you can get access to part of your equity in the form of a lump sum payment, 10s or hundreds of 1000s of dollars, without paying any interest or having to make any monthly payments at all. This is because it is not a loan; it is an equity sharing agreement. This way, if you're one of those people with an ultra-low pandemic-era mortgage, well, you can keep those terms in place and get access to cash and have it all. Now, you know, last month a publication as mainstream as USA Today they published an article and it was titled "Why Paying Off a Mortgage Early Could Be the Wrong Move. At that time, I shared a link to that article with you in the "Don't Quit Your Daydream" letter that I write to you every week. That article let us know that, according to Rocket Mortgage, about one in four mortgage holders make extra payments on their loans. Well, you might not find that part surprising because Americans are not very well educated on financial matters. But here's the part you may very well find surprising: per the Rocket Mortgage Report, those that make extra payments are most prevalent among those with the lowest rates. I mean, those people then are really paying an opportunity cost if they're speeding up the retirement of a pandemic era three or 4% rate. For almost everyone that's doing that, it is probably a rather gross misallocation of capital. All at once, they're losing scale, leverage, arbitrage, liquidity, and rate of return. USA Today says older Americans-they're the ones that are really interested in. Idea of being debt free. Younger homeowners, when they come into money, they're more interested in investing it rather than paying down their mortgage. Okay, that is what they have found, and that's all for takeaways from the USA Today article on rethinking paying down your mortgage. I am telling you, it is one of the biggest financial lessons people once learned that they need to unlearn. Rushing to pay off your mortgage-that is financial malpractice. You're told it's the responsible thing to do. It is not. It is equity jail. Your cash gets trapped in 2008 during the global financial crisis. Banks foreclose first on the homes with the most equity because it was the easiest way to recover their money. Liquidity is protection. Don't lose it. You pay opportunity costs. That money could be creating cash flow. You don't want to pay another $400 in interest this month. Well, how about losing the opportunity to create another $1,000 this and every month? And with inflation, you lose the advantage of paying back the loan with cheaper dollars. Mortgage payoff and accelerated mortgage paydown is a wealth-killing trap, and now I recently had lunch with the CFO of a publicly traded communications company in Anchorage, Alaska. Sharp guy, we got into a discussion about this. He is in the free and clear camp. He likes a free and clear home for peace of mind. Although, because he is a chief financial officer, he knows that it is a poor allocation of capital. One thing he said to me is what I hear some other people say. Well, if you lose your job, then you're sure gonna be happy that you have a paid-off home? No, you won't be. You're making my point for me. In most cases, it's just the opposite. If you lose your job, you're going to need money.
Keith Weinhold 7:11
You're sure not going to be able to get it if it's trapped in the home. And one thing is for sure: a bank is not going to give you another loan if you don't have a job, a paid-off home is one of the few places where you increase your risk while you simultaneously decrease your return. So keep your equity separated, liquid, and hopefully earning a return. Now, as we're talking about HEIs today. Don't confuse that with a loan, just because I've been discussing mortgage loans here. An HEI, again, home equity investment, is an equity sharing agreement, not a loan. Like I mentioned earlier, I am in terrific New York City this week as a real estate show, let me tell you about some of the interesting urban real estate that I'm interacting with this week. As I'm bringing you the show from Midtown Manhattan today, 31st Street between Fifth and Madison, about three blocks south of the Empire State Building. Besides the sights that everyone knows about, like the Statue of Liberty, the World Trade Center, Rockefeller Center, and the Brooklyn Bridge, I had the opportunity to do a collaboration with CNBC on Wall Street and in the financial district. Even though I'm more of a Main Street guy than a Wall Street guy, also did you know that some of America's tallest buildings were built here in just the past five or six years. Yeah, all the continent's 10 tallest buildings are in the U.s8. of the 10 are in Manhattan, and three of the 10 tallest buildings in North America are these new pencil towers.
Keith Weinhold 8:58
And you might remember that we've had a guest here on the show, both this year and last year, the star of the A and E show, The Real Estate Commission, Todd Drowlette. Together, we've got a chance to check out what are known as the Pencil Towers. If you're not sure what they are, these are buildings about one 500 feet tall on the south end of Central Park, and they're called the Pencil Towers because they are extraordinarily tall and narrow. In fact, one of them, called the Steinway Tower, is so slender that its height is 24 times its width. It is, in fact, the world's most slender skyscraper, and much of the Pencil Towers area is residential condos now? As far as renting out those condos, I have yet to determine the rent-to-price ratios for you, but I tend to doubt it's as favorable as what you're going to find at GRE Marketplace with our investment coaches here. True. Some of America's most jaw-dropping real estate, with sweeping views of Central Park and into New Jersey and way beyond, and clear day views all the way to Connecticut. Some more cool real estate interaction here. Did you know that nightly, from 1150 7p.m. to midnight, a lot of the video boards in Times Square sync up for a special show. They are not just showing their normal ads during that special short three minutes. That ought to be cool. One of my days here, I'm going to take the subway from my hotel and temporary GRE studio here over to Brooklyn, and then when I'm done, I'm gonna walk the Brooklyn Bridge back to Manhattan.
Keith Weinhold 10:46
So, did you know that the subway then goes under the river? Yes, the subway tunnel goes beneath the East River. The New York subway system has 14 underwater river crossings beneath various rivers, and by the way, that is not a phenomenon unique to New York City. There are also subterranean subway river crossings in D.C. beneath the Potomac, Montreal underneath the St. Lawrence River, and also in London, Paris, in Shanghai. Some really cool real estate here in New York City, there is just so much to do. I wonder if kids that grow up in New York City still say that there's nothing to do here, like I did growing up in my small hometown in Appalachian Pennsylvania. I hope they don't say that here in New York City. They can't possibly say that. Coming up straight ahead on the show, we're talking about how to access cash from your home. You don't need to refinance, and you won't pay any interest or make any monthly ongoing payments with HEIs.
Keith Weinhold 11:50
And this is helpful because a lot of Americans at this time they feel cash poor due to the high cost of living, and yet at the same time they've got all this inaccessible equity locked in their home. This can help solve that. I'm Keith Weinhold. You're listening to Get Rich Education. Let me ask you something. If you've worked hard to build wealth, is your money positioned to actually support your goals? A lot of accredited investors leave capital sitting in cash because it feels safe, but inflation and missed income opportunities can quietly erode its value. Freedom Family Investments offers freedom notes for investors seeking structured income backed by real estate. It's a straightforward approach built on real assets, not speculation. And full disclosure, I'm an investor myself. What I like is that their team walks you through how it all works, so you can decide if it aligns with your portfolio and income goals. Every investment carries risk, and nothing is guaranteed. But with a track record of consistent, on-time investor payouts, they built real credibility. Go to freedomfamilyinvestments.com to book a clarity call or text family to 66866. That's family to 66866. What if you got your mortgage loans the same place I get mine? You sure can at Ridge Lending Group NMLS 42056. They provided GRE listeners with more loans than anyone because Ridge specializes in investment property. They'll help you build a long-term plan for growing your real estate empire with leverage.
Keith Weinhold 13:31
Start your pre-qual and even chat directly with President Caeli Ridge while it's on your mind. Start at ridgelendinggroup.com. That's ridgelendinggroup.com. This is Rich Dad Sales Advisor Blair Singer. Listen to Get Rich Education with Keith Weinhold, and above all, don't quit your daydream. This waste guest is a career mortgage, real estate, and tech exec. He's acquired and sold over 1000 homes across the West Coast, holds a bachelor's degree in real estate, and he's a licensed broker in California. But he's doing something really interesting today that we'll discuss. Welcome to GRE, Michael Gifford.
Michael Gifford 14:21
Thank you. Thank you for having me on.
Keith Weinhold 14:24
Michael, Home equity investments (HEIs) I think they really make sense today for a few reasons. The average homeowner has about 300k in home equity. That's a record high, and about 200k of it is tapable. You've also got the fact that mortgage rates are historically normalized, but they're higher today than they were five and 10 years ago. So more people look for ways to access cash without refinancing, which is something we'll talk about. I brought up home equity investments and described them. To my audience last year, Michael and I basically let everyone know that it's not a loan. Instead, a company gives you a lump sum of cash up front in exchange for a share of your home's future value. A company like yours does that, and for the homeowner, there are no monthly payments and no interest, but you do have to pay back the company later. Did I summarize that about right? And what else should we know?
Michael Gifford 15:29
Yeah, that's right. I would say it's a product that more and more homeowners are seeking, as you mentioned. Right, homeowners now really have two assets. They have their home, but they also have a low-rate mortgage that they want to keep in place. And exploring alternatives to access that equity, you know, you touched on the dollar amount, but most homeowners come to us, and 60% of their home's value is their home equity, right? And so that's a large, large savings account that they need help accessing. And you know, with the interest rate environment being high and qualification for a lot of traditional financial products being difficult, homeowners need alternatives, and that's why Splaterro exists.
Keith Weinhold 16:05
Is this something that can be used only on primary residences or rentals?
Michael Gifford 16:09
Can do both. The majority of folks are using it on their primary residence.
Keith Weinhold 16:15
Okay, what's in it for you and your company? Because of course, you're giving a lump sum of cash to these homeowner borrowers without them having to pay any payments or interest.
Michael Gifford 16:29
There's no monthly payment on product, but we're sharing in their home's future value, right? And so, where home values are today with this much equity, homeowners receive that lump sum of cash. Often, you know, a little less than the numbers you were talking about earlier. They don't usually tap all of their equity that they have available, but then when they refi or sell in the future, they'll pay us back, and we'll get a portion of the home's value at that time.
Keith Weinhold 16:53
Okay, so are homeowners or investment property owners going for amounts more like 50k or 100k in a lump sum that you pay them.
Michael Gifford 17:02
They're usually in that 100 to 150k mark. You know, we're in 17 states. Kind of the average home price that we're working with now is about 650 or so, and of that, people have over $300,000 of equity in that house that they need to access.
Keith Weinhold 17:17
Yeah. Okay. Go ahead and give us an example. Perhaps if someone has a $500,000 home and it appreciates in value, and then the portion of that increase in value or equity amount that you would take.
Michael Gifford 17:30
Yeah. So just say that $500,000 home for number sake. Let's say we gave them 50k, right? So that's 10% of the home value. When they sell a refi in the future, we'll take 20% of the home value, so two times the initial percentage, or we also have a homeowner safety cap. So they never pay more than 17 nine nine annually. So whichever one of those two is less, say in the future their home goes up in value, will take 20% subject to that safety cap. So the homeowner knows that the most they'll ever pay right now is 17 nine nine er year.
Keith Weinhold 18:02
Okay. So if a 500k home goes up in value to 650k—
Michael Gifford 18:09
That be the 20% of the 650 or 17 nine nine on the 50k, whichever one is less.
Keith Weinhold 18:15
Oh, got it. It's 20% of the 650, not of the equity amount of the home's total value.
Michael Gifford 18:21
The home's future value. Yeah.
Keith Weinhold 18:23
Oh, got it. Okay, so we're talking about homes in an appreciating environment, which is typical. What if the property goes down in value? What happens then, Michael?
Michael Gifford 18:34
We still share in the same value, so 20% of the value of the home, whenever they choose to sell a refi or our 17 nine nine safety cap, whichever is less. So home goes down in value. Our investment could go down in value as well.
Keith Weinhold 18:47
Who have you found that's using home equity investments there? Because you know, Michael, I imagine sometimes it might be a person that's trying to create arbitrage and be savvy. But I'm just going to guess that more often you get homeowners that are in trouble and need cash in the short term with the rising cost of living, and a lot of them bought homes with three or 4% mortgages five or more years ago that they probably couldn't even afford to buy if they tried to repurchase it today. So, who do you find that's using HEIs?
Michael Gifford 19:17
Yeah, well, to comment on your last comment before I answer your question, is yeah, that's the case, right? A lot of homes have really appreciated in value and might have outpaced the income that the homeowner has. Maybe they've had some credit troubles. Maybe their debt to income ratio can't satisfy that actual home value, so they couldn't probably buy that house today. Right, but we're working with homeowners across the spectrum. You have the savvy homeowners with great credit scores and great income. They're using this product though still because it has no monthly payment. There are very few financial products where you can receive you know six figures of cash and not make a payment on it the next month. And so they're doing all sorts of things. They're repairing and renovating their house. They're doing the pool that they always wanted. You know, doing the kitchen renovate. They're paying for their kids' college. They're keeping up with cost of living, as you said, is expensive, and so people are looking at their homes now as a large savings account, and that number of home equity and that number in their savings account keep going up, and they want to be able to access it. We also see the other end of the spectrum, right, where you see the homeowner that can't qualify for a traditional product, right? They don't have the credit score. They don't have the income to actually use a traditional product, but they have a ton of equity in their house.
Michael Gifford 20:26
And so, for them, they're often faced with: Do I sell this house or use a credit card? Which are both not great choices with our product and our qualification. You know, not being a bank, there's no income verification requirement. There's no DTI calc on this because you're not making a monthly payment, we can qualify a lot more homeowners, all the way down to a 500 FICO score. A lot of those homeowners are doing the same thing; they're keeping up with cost of living, they're paying off their credit cards. Right? We see people's FICO scores actually increase because they've paid off all their debt with the funds that we give them, and they are actually in a better financial picture. And often, a lot of times, the word that we hear is relieved. Right? They have now the opportunity to use that home where they've gained all this equity to pay off all their debts and give themselves a fresh start. And that's a that's a pretty unique proposition for a lot of homeowners.
Keith Weinhold 21:14
So I don't think of this as a delayed gratification instrument, but sometimes it does not make sense to delay gratification, as I've shared with my audience. Sometimes the expense of delayed gratification is denied gratification. So you're certainly helping meet some short-term needs. And yes, HEIs, home equity investments, they really do occupy this interesting gap in the market. And for some of the reasons that I brought up earlier, it really is quite a timely period for using it here. Tell us more about the qualification and if there are any fees.
Michael Gifford 21:49
Yeah, the qualification process is quite simple. So you can go to Splaterro.com, do our quick application. takes five six minutes. We're mostly qualifying on the home itself and the equity that's in that home, so the value currently, and then the first mortgage, right? We're often behind their first low-rate mortgage that they want to keep in place, so we need to understand that very little, but some borrower qualification actually adds. Where's their FICO score, right? We can go all the way down to a 500 FICO, and we want to make sure people don't have recent bankruptcies or recent foreclosures. But for the most part, it's about the home and the actual equity that's in the home.
Michael Gifford 22:24
We charge an origination fee that's 4.99% and the homeowner pays that at closing, so that's paid at closing. Then they don't make any other payments until they're ready to repurchase their investment. Usually, that's when they are going to sell the house or refi the house. Most people think about this like a bridge product, knowing that in the next five to 10 years, I'm probably going to sell this house and upsize or downsize, and and or you know maybe the rate environmental change, and I'll refi out because often even after we extend funds, we're so low leverage with their first lien that these homeowners still have an incredible amount of home equity available to them after we've given them funds.
Keith Weinhold 23:02
Yes, you need to understand that first mortgage pretty well, like you said, because I imagine if there's a lien on the property, I think you touched on it. The HEI position, which you have, occupies that second or even third mortgage position.
Michael Gifford 23:17
Predominantly we're in second position, and that's because you know most homeowners refined eight to 10 years ago when rates were low, so they do have that three and a half 4% mortgage that they want to keep in place and not change. That's unique to the product that we can you know record behind that, and then they keep that in place.
Keith Weinhold 23:36
So for the you, the listener, as you're weighing HEIs in your head, you probably want to ask yourself some questions, and maybe Michael can help us answer some here, including how long do I plan to stay in this home or own this investment property? How strong is my local housing market? Just how much appreciation could I be giving up? Am I willing to share future equity gains? And I think another germane question is now: Can I comfortably handle monthly HELOC payments instead, and the pros and cons with using a HELOC, a home equity line of credit? Can you talk to us some more about that and weigh those trade-offs, Michael?
Michael Gifford 24:18
Yeah, we tell every homeowner to explore all their options, right? So it's not even just the monthly payment from HELOC, but also the qualification process, right? As we see in very public numbers for mortgages, the higher spectrum of the FICO scores are often the only ones getting originations these days, right? The qualification process for HELOC has gotten pretty strict, so that's certainly first and foremost, where to start. The next is, of course, yeah. How long are you going to stay in the property? The interesting part about our product, to go back to our prior example, is if we're owed say 20% in the future, that never changes. It's always 20% So you know, the home goes up, the home goes down. It doesn't actually change. It never goes to 25 or 30% It's just. Always 20% of that home value with that safety cap. So if you do feel like you're in a market that appreciates rapidly, right, or you could be having rapid appreciation in your home price, we have that safety cap in place. Let's just say your home quadrupled in a year, we have that safety cap in place of 17 nine nine. So you're never going to exceed that on an annual cost.
Keith Weinhold 25:20
You know, Michael, I find it amazing how many homeowners-not so much income property owners, but homeowners-they don't realize that if they have a three and a half percent mortgage and they want to get cash out and refinance it at today, say, seven and a half percent rate, they don't realize that they don't have to refinance the entire thing, and they can even take a second mortgage as a HELOC and leave that majority three and a half percent interest rate portion in place as a first mortgage. But with that being said, some are aware that you can take out a HELOC second mortgage. Talk to us some more about the pros and cons specifically of using a HELOC versus a home equity investment.
Michael Gifford 26:00
HELOC versus home equity investment, an HEI is much easier to qualify for, as the points we've already talked to, right? No income requirement, no income verification. You have a lot of homeowners that might have lower incomes or incomes that can support more debt, or maybe you're a small business owner, right? Maybe you're starting a business. The traditional financial institutions don't really like that as far as lending to you, and so makes qualification difficult. You also often, for many HELOC products, need a 700 plus FICO. A lot of homeowners are in the sixes, so that makes it difficult to understand. The biggest one though across the spectrum of homeowners is you have to make a monthly payment. So as soon as you get funds up from your HELOC, you're going to extract those funds. Some will even have restrictions, like you can't pay it off for six months, or there's prepayment penalties, or something else.
Keith Weinhold 26:47
Right.
Michael Gifford 26:47
ut you have to start making a monthly payment to them immediately. This is none of that. There's no prepayment penalties. You can pay it off whenever you want, and there's no monthly payments ever. So a lot of homeowners look at those two things: ease of qualification and no monthly payments as pretty big factors, no matter what their situation is, and that's why they're seeking alternatives to kind of the few traditional financial vehicles that people usually utilize in this situation.
Keith Weinhold 27:14
It can be difficult to explain why someone would not want a HELOC second, even if they don't draw against it, that way it could be there for access in the case of emergencies. So it sort of has this checkbook ability for you to draw against your HELOC when you want to, or just leave it with a zero balance. Is there any flexibility like that with HEIs?
Michael Gifford 27:37
We don't. You know, we extend the funds at closing, so the homeowner receives them. If they want to pay us back, they can pay it back in full. But that's not the same where it is, you know, a true line of credit as noted in HELOC.
Keith Weinhold 27:49
No, no, you talked before about a disconnect between being house rich and having accessible financial flexibility. Tell us more about that.
Michael Gifford 27:59
Yeah, you know, a lot in our financial system rewards very high income and very high credit score. And if you don't have one or both of those, it's very difficult. No matter how much equity you have in your house, to access it, even at lower leverage rates, right? If you have had some credit troubles, your options slim pretty quickly. No matter how much equity you have in that house, and that and that makes it difficult for a lot of homeowners, right? As costs increase, school tuition, whatever it is, increases. It's hard for a lot of people to make these monthly payments, and so you know, no matter how much equity you have in your house, qualification is still difficult for a lot of products. And as the interest rate environment ticks up, or if you believe it's going to be higher for longer, or even though it's you know not historic highs, it's still higher than it was a handful of years ago, and so that makes qualification even more difficult for folks.
Keith Weinhold 28:49
We've compared HEIs to HELOCs. What about comparing them to home equity loans and cash out refinancing?
Michael Gifford 28:56
Yeah, I mean the biggest one there for sure is a cash out refi. A lot of people want to keep that low rate mortgage in place. So if they have a three or a 4% rate, you know, I wish I had a crystal ball to be able to tell you when that's coming back. But a lot of people want to keep that in place, and so that included what you didn't ask about. But it includes reverse mortgage, right? A lot of people don't realize that you're going to get a reverse. You got to refi your first out. So that is really the big benefit of this as well as you're keeping that low rate mortgage in place, so your monthly payments aren't changing after you receive your funds.
Keith Weinhold 29:30
Tell us more about home equity investments. Some of the pros, some of the risks. Maybe something I have not thought about asking you.
Michael Gifford 29:40
Yeah, I think we've talked a lot about the pros. I think that you know we encourage all homeowners to explore all their options when they're looking to access the equity in the home, and then choose one that's right for them, their situation, and their timeline. Of course, the interesting part that we haven't talked about is our timeline. Right, we're making an investment that's as long as you're. First mortgage. So if you have 25 years left on it, we're going to give you funds for 25 years. Yeah, a lot of time when you use other products, you don't have that same term. If you have anywhere less than 10 years, we'll still give you the funds for 10 years and a max of 30 years. So we do what's called maturity match. We match the first liens maturity.
Michael Gifford 30:17
So when you make your last mortgage payment, you also then will pay us back at whatever point in the future that is, that's definitely a pro, right? There's no sort of short term. Hey, this is you have this money for five years or 10 years, and you might be uncertain. I'm like, I don't know if I'm going to sell this house or move out of this house in the next 10 years. What if the mortgage environment's worse, right? I don't want to refi out into a very high rate in 10 years. We don't know what's going to happen, so that's definitely a pro. I'd say the cons. If you can qualify for a traditional financial product like a HELOC, oftentimes they're a little lower in cost than we're going to be, right? So it could be a cheaper route as far as APR, but there's trade-offs in that. You're making those payments that we talked about. You have to be able to qualify for that product. That's really the biggest con I would say about this product. Outside of that, most people once they understand it and hear about it, they can't believe it exists, and they can't believe they didn't know about it before.
Keith Weinhold 31:08
We're talking with Michael Gifford of Splitero about HEI's home equity investments, where his company gives you a lump sum of cash upfront in exchange for a share of your home's future value, so it's not a loan. And for you, the homeowner or income property owner, there are no monthly payments and no interest. You pay back the company later. Tell us more.
Michael Gifford 31:37
I think that you know in today's environment, and both the real estate and the interest rate environment, a lot of people are locked into their homes, right? They've accreted all this value. They don't want to move because if they move, they have to change their mortgage, and that changes their monthly payment, right? Some call it payment shock. So you have the lock-in effect where they're locked in their house, and then they also have payment shock. And you know, it seems like the weather forecast, where there's a new term for these things every sort of every few years, but because of that, people are exploring alternative options that they haven't looked at before. We're one of those. We've been around for a number of years now. We operate in 18 states, and so we're helping homeowners really see that there are more options to access their home equity than just another you know, traditional product.
Keith Weinhold 32:23
Michael and I are doing a remote interview. He's in San Diego. Over Michael's shoulder on his desk, I can see a Los Angeles Chargers helmet. I was careful not to call it a San Diego Chargers helmet. That was the former home of that team. They have a really good quarterback, and the reason I'm bringing this up is because you have sports partnerships, which is really interesting. Tell us about that.
Michael Gifford 32:48
Yeah, we have a few sports partnerships. The Los Angeles Chargers, as you mentioned, have been great partners for us. We help them build a beautiful content studio where they film a lot of their broadcasts throughout the week, talking to players, coaches, you know, talking to matchups for the coming weeks. Great show there on YouTube in stadium. You'll see all of our assets. A lot of this is because you know a lot of the work that Splatero does is still on homeowner education. People call us. They say I've you know a couple $100,000 of equity in my house. How can you help? You know, I've never heard of you. And so we've had a few partnerships. We also partner with the Los Angeles Kings, which has been just incredible for us. Great organization and AEG, their owner across their plethora of assets. I would say, and so the sports partnerships have really helped us help consumer realize that you know we're a real company with a great offering, and people should check it out. And they've been great partners for us. We're homed in Southern California. I'm in San Diego, as you mentioned. Southern California is a very important market. We want to be able to invest these dollars in our backyard and make sure that homeowners in Southern California have the best options when they're looking to access the equity in their home.
Keith Weinhold 33:55
Whether you're personally helping Chargers quarterback Justin Herbert with his own home equity needs or not, Splitero is the official home equity partner of both the L.A. Chargers and the L.A. Kings. Well, Michael, it's really been interesting learning about this product because it's timely for a lot of people. If someone wants to learn more, what's the best way for them to do that?
Michael Gifford 34:18
splitero.com is the easiest way for them to do that, they can go through our application process. Only takes a couple minutes, or call us. We have our licensed homeowner advisors on the phones. They're willing to and able to explain our product, but also alternatives that we've discussed on this show. All of them have a ton of experience in the mortgage world, and so any homeowner situation, they're able to talk through and help them guide them to the right decision.
Keith Weinhold 34:43
Before I ask you if you have any final thoughts, that is sp l i t e r o splitero.com. Any last things that we should know, Michael?
Michael Gifford 34:55
That's it. I appreciate the time. You know, we're here trying to educate homeowners and help them access. The equity to really better their lives. We talked about relief earlier. We hear a lot of really unique stories from homeowners who came to us because they didn't have any other option, right? Or they're in a really difficult time, and us being able to give them that lump sum of cash allows them to do pretty powerful things. And so we hear a lot of great stories, and we're excited to help more homeowners in our markets.
Keith Weinhold 35:22
This should be able to help a lot of people. Thanks so much for coming on to get rich education.
Michael Gifford 35:27
Thank you, appreciate it.
Keith Weinhold 35:34
Oh, it was interesting to learn more about HEIs. When you initiate one, the lump sum cash windfall that you receive is generally not taxable. Don't expect to pay any tax up front, though you aren't making loan payments since it's not a loan. You still have a financial obligation secured by your home. Splitero records a lien against the property, typically subordinated in a second position, like we touched on there. If you think that an HEI is of interest to you, you'll easily see that you can get pre-qualified in minutes. Or if you just want to check it out further, again, it's there at Splaterro.com. Next week on the show, we expect to hear from a billionaire who is also the best-selling author of the 80/20 principle, also known as the Pareto principle, that ought to be deeply interesting. You've been listening to episode 628 of Get Rich Education. Keep growing your means with me every week to make sure that you hear me again, tap, follow, or subscribe either of those buttons wherever you're listening. It's free, and it helps you catch the next episode of the show. I'm Keith Weinhold. Don't quit your daydream.
Speaker 2 36:57
Nothing on this show should be considered specific, personal, or professional advice. Please consult an appropriate tax, legal, real estate, financial, or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Get Rich Education LLC exclusively.
Keith Weinhold 37:25
The preceding program was brought to you by your home for wealth building, getricheducation.com
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