Navigating Home Ownership and Understanding Value with Sahil Gupta

About Our Host

Louisa Dickins

https://www.linkedin.com/in/louisa-dickins-ab065392/?originalSubdomain=uk

Louisa started her career in property working at a well-known estate agency in London. Realising her people skills, she moved over to Lloyd May to pursue a career in recruitment. She now is a Director at LMRE, who are a specialist recruitment firm driven by PropTech and recruitment professionals, and Louisa oversees their 5 core areas. Louisa co-founded LMRE and provides a constructive recruitment platform to the new disruptors in real estate. Louisa is also on the board of Directors at UK PropTech Association (UKPA).

About LMRE

LMRE believe there is a better way to recruit. LMRE focus on a more comprehensive, client led focus delivering exceptional talent to the right place at the right time. They are passionate about the industry and passionate about people’s careers. LMRE spend time with each client to become and an extension of the business, and their transparency and core values help them grow with the sector. LMRE simplify recruitment and innovate with our clients and evolve the people driven, PropTech community.

About Our Guest

Sahil Gupta

https://www.linkedin.com/in/sahilgupta85/

Sahil founded Noah in 2016, Noah partners with homeowners to unlock the value of home ownership to live the lives they aspire to. Now Noah is redefining traditional finance products by offering home equity financing without the burden of debt or additional monthly payments. Sahil cultivated the passion for solving financial challenges for consumers by working in product development and strategy at Motif Investing, Slice and Mellon Capital, a $400 billion investment, managing investments for large pensions and endowments. He holds a master’s in computational finance from Carnegie Mellon’s Tepper School of Business, and a Bachelor’s in electronics engineering.

Resources mentioned

LMRE website www.lmre.co.uk

UKPA website www.ukpa.com

Noah website www.noah.co

Insights From This Episode

• I think to us, homeownership is not a transaction, it’s a journey –Sahil Gupta
• The best piece of advice that I could share is think outside the box. I think when you think outside the box, when you push yourself to be creative, you will often see answers and solutions that you didn’t think were possible – Sahil Gupta
• Those are the two pillars of any economy in credit or in housing, you have to have access to capital, and you have to make it affordable for people – Sahil Gupta
• At the end of the day, you really have to think of Noah as a digital home advisor, who is there 24/7 working for you in the background. And I believe that is what truly differentiates us from a couple of other companies in the space – Sahil Gupta
• You see technology and the proliferation of data into every single aspect of our lives, I think that the future of housing and housing finance is very exciting – Sahil Gupta
• At Noah as a company we believe in product innovation, and that is why a core part of our philosophy is we are going to solve the underlying problem – Sahil Gupta

Episode transcript

Louisa

Hi everyone. And welcome to the Propcast, my name is Louisa Dickens, co-founder of LMRE and board director of the UKPA, and I shall be your weekly host. Each week for 30 minutes, we will be connecting the VC, PropTech startups and real estate professionals globally, and assist in bridging that famous communication gap we all love talking about. So, sit back, relax and enjoy the show. Today we will be speaking with Sahil Gupta, founder of Noah which was previously Patch Homes, about navigating home ownership and understanding value. So welcome to the show.

Sahil

Thank you for having me here. It’s great to be chatting with you today.

Louisa

Now let’s give a little bit of color to Sahil and give you a bit of background to how we got to where we are today. So Sahil founded Noah in 2016, Noah partners with homeowners to unlock the value of home ownership to live the lives they aspire to. Now Noah is redefining traditional finance products by offering home equity financing without the burden of debt or additional monthly payments. Sahil cultivated the passion for solving financial challenges for consumers by working in product development and strategy at Motif Investing, Slice and Mellon Capital, a $400 billion investment, managing investments for large pensions and endowments. He holds a master’s in computational finance from Carnegie Mellon’s Tepper School of Business, and a Bachelor’s in electronics engineering, so thank you for joining us today. Now, let’s get started hearing a bit more about your journey, so lots of people listening are listening from different industries, whether it’s property, finance, the technology sectors. You started off in finance, how have you found yourself working in real estate technology?

Sahil

Yes, that’s a great question. I actually started my career on Wall Street in February of 2008. And depending on which way you look at it, it was either the best time or the worst time in financial services. And what I saw within my first 30 days on the desk was Bear Stearns go down. And then within my first six months, I saw the Lehman Brothers failed, which was an iconic financial institution. But the thing that struck me the most was that post the financial crisis, Wall Street emerged relatively unscathed. But the lifetime savings and housing wealth for millions of like Americans just evaporated, and it never came back, actually. So that experience ultimately drove me to say, there has to be a better way for people to manage their finances, there has to be a better future I think for Financial Services and real estate as an industry. And I left my job at Mellon and I joined this company called Motif Investing. And Motif was a startup that was empowering everyday investors with the tools and a platform that was normally reserved for the top 1% of investors. And as a venture backed company at Motif we raised over $130 million from Goldman Sachs, from JP Morgan from Foundation Capital. And being part of the team, I helped build a platform that ultimately said, democratise investing for millions of retail investors, and helping them invest like professional Wall Street does.

Through that journey, I saw the biggest secret in US consumer finance, and that is the most consumers are house rich, but cash poor. Now, what does that mean to be house as cash poor. What that means is, for the majority of Americans, 80% of their wealth is locked up in their home equity. And as a result of it, because of their personal debt and a lack of wage growth, they struggle for cash flow, they struggle for affordability and they don’t have any savings. And this is the single biggest challenge that is facing a generation of US homeowners today. And in order to solve that problem, you can’t offer them another mortgage, you can’t offer them another home equity loan, because that is like robbing Peter from one hand to pay Paul with the other hand, right? You kind of have to attack the problem at its core. And for us, that meant we needed to make Home Equity access that much more easy, that much more affordable and that much more debt free. And that is why we started Noah. Noah as a company is built for homeowners who are house rich cash poor. And the way we help them is we allow these homeowners to access their hard earned equity without any interest or without any monthly payment. And in exchange for that capital, we take a portion of the future value of the home essentially. This is a form of equity based investing or partnership based investing, that aligns the financial interests of both the consumer and Noah as the investor.

Louisa

Okay, I’ve got. So your customer could be any every man or woman, the standard homeowner?

Sahil

Absolutely. So as long as you were a homeowner, Noah works with them. And over the past two years, we’ve seen more than a 10x growth in the number of homeowners and a number of places we saw all across the US. And our customers raise everyone from a 33 year old tech employee who has a newborn baby, and wants to do some home improvements to expand his home, to a 78 year old retired woman who’s struggling because she doesn’t have a lot of current income, and is using her home equity to plan for retirement and life after that as well.

So we look at homeowners who are on the spectrum across age and across demographic, but the common thing across all of them is they have anywhere from $50,000 to a few $100,000 in home equity, and are looking to access that equity in an easy, affordable manner. The biggest benefit actually, outside of access to equity that Noah also provides is the monthly savings, right? So when you choose Noah, as compared to a home equity loan, our customers today are saving an average of $1500 a month because that’s the payment you don’t have to make. To date homeowners have accessed more than $30 million from our platform, and on top of accessing the $30 million, they’ve built an extra 10 million plus of Home Equity wealth after partnering with the law. So it’s really about having a true impact on the financial lives and on the bottom line for everyday Americans.

Louisa

So what would you say your big USPs in a market are then? There’s a couple of products out, yours are fairly developed, what are your main selling points, the top three things that differentiates your product?

Sahil

So I saw an article the other day that was comparing I think Noah with a couple of other similar solutions in the industry, and what they said is Noah makes it the easiest across the industry to access your home equity in 15 days or less. And these are not my words, these are words in the article, which I’m more than happy to send you. The thing that we believe is life is stressful, right. And most homeowners are already struggling with cash flow, struggling with life, especially these days with the impact of COVID-19. Our job as a partner is to make it very easy to qualify. So on the Noah platform, it takes you 60 seconds or less to qualify. And it takes you less than 15 days to get access to your money. So that’s one value prop. I think that the second thing is we understand that life happens, which is why we don’t hold you to a certain FICO score, or debt to income ratios and other things. So we don’t use the traditional metrics that a lot of banks and lenders use, we actually use a more holistic underwriting platform that looks at not just your aggregate financial profile, but also looks at your asset, your home and your home equity profile. And the combination of the two things allows us to give you the best pricing terms in the industry. And finally, I think to us, homeownership is not a transaction, right? It’s a journey.

The average American today stays in their home anywhere from six to 10 years. And we think Noah was built to be a partner across that journey in good times and bad, and that is why when we partner with you, you get access to the Noah homeowner Protection Program. Now what that is, is we are the only ones in the in the industry who do this, where after the initial investment, if you face financial hardship where you are unable to pay your mortgage or property taxes or the job loss, Noah provide you with additional capital to pay your mortgage to protect your home and to protect your family. And even that money has no monthly payments. Noah also gives you access to what we call as the Noah Dashboard, which is a centralised portal for you to manage the entire wealth and services for your home. So at the end of the day, you really have to think of Noah as a digital home advisor, who is there 24/7 working for you in the background. And I believe that is what truly differentiates us from a couple of other companies in the space who have who have offerings that may mean deemed comparable.

Louisa

Yes, so quite like a holistic platform. Through different parts of the business you’ve just gone over, it’s almost like you offer a bit of an insurance product. What other partnerships do you look for with maybe other external businesses or technologies?

Sahil

Yes, so for us the foundation of our business is a partnership at the end of the day, we partner with homeowners, as I mentioned, and on that side it is all about giving them access to capital, reducing their monthly payments, and being there for them. So when we look at additional partnerships outside of the core offering, the first thing we’re looking for is, does the company have a similar thesis to us in terms of helping consumers helping homeowners day in day out, right. And a couple of things that come to mind first is insurance. So about 60% of our clients who come to us are underinsured on day one. And one of the things as part of the financing we do for them, is we have them update their insurance. So there are times when we also work with third party insurance companies to say, there is an opportunity to provide better coverage, or the same amount of coverage with better pricing to these homeowners who we believe would be great homeowner partners at the end of the day. So insurance partnerships are something that we’re constantly looking at.

We also partner with debt relief and debt payments companies. We have almost 70% of our customers Louisa, who today are taking the Noah financing and are paying down high interest debt like credit cards, like personal loans, and hard money lenders. So if you are a debt relief organisation, or if you are a company that helps people restructure their personal balance sheet, we’d love to work with you. And let’s find a way that your guidance and Noah’s capitals together can drive successful financial outcomes for everyday Americans.

Louisa

Yeah, I think as a homeowner and someone who isn’t particularly clued up in terms of the insurance space or the debt space, being able to go to a business or platform like yours and have a better partner or saying, Hi, you should talk to these guys, or we can do this for our product, I would find that, personally a better way to do it. Because people want it to be easy don’t they, they want it on one platform. I don’t want to go out to market and choose a insurance company which hasn’t been vetted, I don’t quite understand what service they will provide. Now more than ever, cashflow is an increasingly important factor for homeowners, families, especially during times of hardship which 2020 has been for a lot of people and businesses. What advice would you give to homeowners to relieve some of this pressure, then?

Sahil

In many ways this year, that’s one of the most heartbreaking things that we’ve seen as a company and I’ve seen personally, is how COVID and the impact of that related with job loss and other things has really impacted consumers. And I recently wrote about this as well, where a lot of homeowners, even if they find themselves being house rich cash poor, the top advice I would have is, that there are many options beyond just selling your home or taking on high interest debt. We have seen customers today in the US, who just open up a credit card at 24% APR because it’s easier to get a credit card in less than a day, right. And these are customers who are sitting on more than $100,000 of equity in their home, and they should really have access to a lower cost of capital for themselves and their families. And in many cases, these homeowners are thinking either about selling their home, or renting their home away because of the financial pressure and stress. But I believe selling your home or renting your home away is really that discounter to the American dream. I think the American dream and the global dream to a very large extent, is having a home, having a family and living in that home for as long as you want. And for these homeowners, I think expanding their horizon and thinking in a more innovative way, the equity investment that Noah offers and other companies you mentioned as well, I think that’s a great solution. Because for is not debt, it does not sit on your credit report, it does not count towards your obligations on a monthly basis, and it does not have a payment. On top of it, a lot of the homeowners we worked with, about 69% of the homeowners who used it for debt pay off, about 30% have used it for home improvement, and it really drives successful financial outcomes. It puts the homeowner back in control of their home, and I think that’s the most important thing. You own your home, you should make decisions from a position of strength, and not from a position of financial pressures.

Louisa

If we’re looking at maybe younger couples, those who are looking to get on the property ladder, which lots of people want to get the property ladder before they’re 30, or what’s the next step after you get married. What do you think governments can do to make this process easier? Because it’s not just down to the techies.

Sahil

I’m glad you said that! So I think in order to improve, I think access to housing, at the end of the day, it is about affordability and access. Those are the two pillars of any economy in credit or in housing, you have to have access to capital, and you have to make it affordable for people. And in order to do this, I think what governments in the US, Europe and worldwide can really do is, we need a healthy mix of product innovation and regulatory support as well. You can’t place the burdens firmly on the government, and it’s also not fair to place the burden completely on the private sector either. At Noah as a company, we believe in product innovation, and that is why a core part of our philosophy is we are going to solve the underlying problem. We’re going to solve the no payments, no interest problem for customers, and that’s one way to do it. I think on the regulatory side, I personally am very bullish on the US.

This is where I have a lot of experience, because I saw first hand in the 2008/2009 financial crisis, the US government actually launched many programs to keep homeowners in their homes. And allow me to give you an example of a few. So one was the housing and urban development of the US, they actually launched the Hope program, there was a down payment assistance program, and there was also a program called Community Seconds. Each and every one of these programs actually enabled homeowners to stay in their home, to restructure their debt, in some ways also make equity sharing of part of the transaction where consumers could delay the final payment. And my question is, if the government can do that, in the aftermath of the crisis, what we need from them is the same level of innovation, the same level of support, I think for startups and ideas at a much earlier stage. Because what we are doing at Noah is very similar to the Community Seconds program and the Hope program that the government had, and what they need to do is they need to bring innovative companies into the fold, make them part of the conversation, and at the end of the day that will create more opportunities, I think for both for consumers and for the government alike.

Louisa

And this leads us on to the next question, which is a fairly big question. In the long term, how do you see technology evolving to disrupt the home ownership space for the better? I mean, this could incorporate anything from the government, more homeowners, more technologists, more businesses?

Sahil

Yes. Technology today is impacting everything and anything we do, right. And I have spent the past decade of my working life working at the intersection of technology, of data science and financial services and I really see these three as a unique trifecta of sorts. You see technology and the proliferation of data into every single aspect of our lives, I think that the future of housing and housing finance is very exciting. You can do things today, which were not possible a decade ago or even five years ago, the basic example I’ll give you is home valuations. So if you go back 10 years ago, 20 years ago, it was extremely difficult to value homes because you needed appraisers and it took anywhere from 15 to 20 days to value a home. But today at Noah, one of the things we do is we have this concept of digital appraisals. So sitting in our office in San Francisco, we can value and inspect any home in any part of the country using a mobile app which allows the homeowner to take photos, and the results are available within hours to us. So that is an impact of consumer technology in backup data science, at home valuations are now seen done in a matter of hours, as compared to days and weeks. The impact of this is, you actually can get funding in a week rather than waiting for 40 to 50 days on average.

The other impact now that I think about it is, I remember back when I had a friend applying for a mortgage, he would go home, he would print his documents, he would scan his documents, it will it took him a couple of days to submit his application online. But today, I think companies like Noah and others are allowing for digital applications, which means our customers can link bank accounts, they can link their tax forms, and they can link all of the digital information online within a matter of seconds. Which means they don’t have to upload documents, they don’t have to scan anything, and it is that much more secure. This is also the impact of technology, which is making information sharing and information processing that much easier and faster. So these are two examples in which we use technology.

I think another example we’ve seen is and this is one of the blessings of COVID-19 if there was any, it actually has accelerated digital showings. You can now view any home in the world just sitting from your laptop and from your phone, because every single home has been mapped into a 3d tour viewing. You have a notary, you have virtual tours, so I think all of these trends will make homeownership that much more affordable, and that much more accessible for not just young couples, but I think couples and families and individuals everywhere in the world. And I think this is going to be the norm of the future, you will expect to know and see everything about a house even before you walk into it, you will expect that your housing finance application takes minutes and not days. And you will expect to be approved and funded in a matter of hours and not weeks. And I think this is where I think entrepreneurship is so exciting, that you have these innovative ideas, these products that come in and that utilise technology, that utilise data, and then can distribute those ideas all across the globe.

Louisa

I think from personal experience from someone who when I finished university, my first job was an estate agent, so basically a broker in the US and now obviously I do recruitment, but from being an estate agent to also buying a property and now I’m selling a property, it’s mental to think how technology has changed in the past six years, and how fragmented it is but the huge opportunity to make it slick, simple, more cost efficient which is exactly what your product is doing. There’s so much growth that needs to happen and I’m very excited to see how for your product to hopefully come over here to Europe. So you’ve expanded across various states in the US, and congratulations on that, are there any states or areas you’ve seen more uptake? Or what trends have you seen?

Sahil

Yes, so over the past 15 months, we’ve expanded from our first market which was California. And Noah is now available in 11 different states and covers about 53% of the US real estate market. I think what we’ve seen is, the impact of being house rich and cash flow is the same across all markets. Now in certain markets, like California, or Colorado, or Washington DC, because in those markets the cost of living is higher, what ends up happening is that your mortgage is more expensive everything else included, and so the degree of pain and the degree of financial pressures felt by homeowners in those markets is more than say, parts of the Midwest like Chicago or Texas or anywhere else, for example. It is no coincidence that in places like Colorado, Washington and California home prices are also higher, because of the natural imbalance between supply and demand of housing in these markets. So these tend to be places where we have a lot of our homeowners, and I’ll give you a story, one of our clients recently, she was a small business owner, and because of COVID-19, she was unable to qualify for a small business loan. So instead, she worked with Noah and she got access to about four $50,000 of home equity, and she used that money to start her own small business. And to me that is amazing, because you are now seeing people think outside the box. The capital that we provide is not just for home purposes, it’s for small businesses, it is for retirement and I think that’s story is the story of every single city, every single state in this country.

Louisa

What’s next for Noah in 2021?

Sahil

So I think I think it’s more of the same honestly, I think we are excited about I think what we offer people today. And our goal is that every single consumer, every single homeowner in this country would have a Noah contract, because they should adopt more innovative products. And we are excited to kind of bring our product to more and more people really. On the exciting side, we have a couple of other product features plan as well, which in the next six months, you’ll see us rolling out to fulfill our promise of making homeownership more affordable, more accessible. And some new partnerships as well.

Louisa

Well, I’m looking forward to it. We are coming to the end of the podcast, is there any bit of advice you’d like to leave our audience with, and also the best way for them to connect view and Noah?

Sahil

I think the best piece of advice that I could share is think outside the box. I think no matter what you’re doing, whether you’re looking to buy a home, sell a home, refinance your personal life or your career, I think when you think outside the box, when you push yourself to be creative, you will often see answers and solutions that you didn’t think were possible. And I know that’s true for Noah, and that’s true for me personally. So that is something that I believe in. And the best way to find me is www.noah.co that’s our website and my email, I’m more than happy to kind of share it as well. We’d love to hear from people just in the US but all over the world.

Louisa

Awesome, well Sahil, thank you so much for joining us today on the podcast, and I’ll catch up with you after the show.

Sahil

Absolutely, thank you so much for having me once again, it’s been an absolute pleasure.

Louisa

Thank you for joining us this week on the Propcast and a big thanks to our special guests. Make sure you visit our website www.lmre.co.uk where you can subscribe to our show. Or you’ll find us on iTunes and Spotify were all good content is found, while you’re at it if you found value in the show, we’d appreciate if you could rate and review us on iTunes or if you could simply spread the word. Be sure to tune in next Tuesday, and I’ll catch you later.