Want to Buy With Less Cash and a Lower Payment? With Fred Glick of Arrivva and Jubilee Homes

Here’s a glimpse of what you’ll learn: 

• What exactly is a leasehold—and how does it work?
• Learn how this model lowers the cost of buying a home
• Find out why this model works best in hot markets like LA, San Francisco, and Seattle
• Hear how appraisals, title insurance, and mortgage approvals work under a leasehold structure
• Learn what costs are involved and how leasehold rent is calculated
• Understand what happens when it’s time to sell—or if you want to buy the land later

In this episode with Fred Glick, René Pérez Jr., Brian Elbogen and Mary Lynn Shushunov

Own the house, lease the land?

In this episode of We Fixed Real Estate, Fred Glick and René Pérez Jr. of Arrivva sit down with Brian Elbogen and Mary Lynn Shushunov of Jubilee Homes to explore a surprising model that could change how we think about affordability. 

How does it work? Can it actually lower your monthly payment or help you avoid jumbo loans? What happens when you want to sell? The answers might surprise you. Tune in to hear how leaseholds could open doors for buyers priced out of expensive markets.

Resources mentioned in this episode

• Fred Glick on LinkedIn
• René Pérez Jr. on LinkedIn
• Arrivva
• Mary Lynn Shushunov on LinkedIn
• Brian Elbogen on LinkedIn
• Jubilee Homes

EPISODE TRANSCRIPT

[00:00:20] Drew Thomas Hendricks: Drew Hendricks here. Welcome to another episode of We Fixed Real Estate. Today we’ve got a couple of very special guests on the show from Jubilee Homes.

We’ve got Brian Elbogen and Mary Lynn Shushunov, who really just reinvented the concept of a land lease. Brian, welcome to the show. Mary Lynn. Tell us a little bit about yourself and your company.

[00:00:43] Mary Lynn Shushunov: Hi, I am Mary Lynn Shushunov. I am excited to be here and I lead the agent partnerships team with Jubilee, and this is how I got connected with René and Fred.

[00:00:54] Brian Elbogen: Great. And my name is Brian Elbogen. I’m the CEO and founder of Jubilee Homes. My background has been in creating affordable housing products for scale and really over the last 10 years, something that’s always been at the core of my heart is like, how do you solve for home accessibility and how do you solve for that in markets that are really expensive?

And so the vision of Jubilee is how do we make home ownership more accessible through a particular product we call leasehold, through fair and flexible leaseholds. And so the way to think about a leasehold is something that’s, it seems like a new innovative product, but it’s actually something that’s existed for decades, if not centuries, if not millennia.

And the real concept is that whoever owns the land can be different than the person who owns the house. This is a concept that’s been used for home affordability in markets around the country and around the world. Many countries like Singapore and Israel, most of their entire country is built on top of ground leases where the person who owns the house is different than the person who owns the land.

And even in markets in the US, places like Hawaii and Newport Beach, and even Stanford University. At Stanford University, the professors own the houses on top of the land and they pay rent to Stanford. And the reason that it exists in these various pockets, among others, is that it actually makes home affordability more affordable when you don’t have to buy the land.

And so what we do is we focus on the world, the country’s most expensive markets. If you take markets like San Francisco and LA, and Seattle, these are places where the land share of the entire property value can be anywhere between 50 to 80% of the total property value. And so in these markets, the question is when you buy a house, what are you really buying?

More than anything, you’re buying the land underneath the house. And by having us buy the land so that you don’t have to, we can lower the purchase price, we can lower the down payment, we can lower the monthly payment. And that makes it possible for more people to get onto the path to homeownership.

[00:02:38] Fred Glick: That’s interesting that you say that. So you lower the sale price and effectively that saves massive amounts of in interest, even in the transaction costs based on there’s some things that are like some escrow companies that base the escrow fee on the sale price. So this would be interesting.

But are you, here’s a question, a more technical question before we get into the nitty gritty. Do you get title insurance for the entire amount? Do you require that as the owner policy or the a mortgagee policy? So you’re still buying, let’s say it’s a, we’ll make up numbers here, a million dollar house, 750 is going to the land purchase, 250 to the real estate, but do you get title insurance that they have to buy for the whole million dollars?

[00:03:28] Brian Elbogen: Yeah, so again, because the good news is because ground leases have existed, there’s already a common way for, how do you hold title? How do you get title insurance for ground lease? And so normally for a traditional purchase, there’s two title policies, one for the owner and one for the lender. If you get a mortgage on your property here instead of two, there’s three title policies because there’s two different owners.

I get a title policy for the land, which is what I own. Our customer partner, who owns the house, gets a title policy as the owner of the improvements. And then there’s a third title policy. The lender, if they get a mortgage for their house, just like a normal mortgage, they would get a title policy for the lender.

[00:04:08] Fred Glick: Got it. Okay. So let’s just go through a basic thing. So you’re looking to buy a house in, and we’re in those three markets: LA, San Francisco Bay Area and Seattle. And I got a million dollar house we just put up for a listing and somebody could come and buy it and put, you know, 5% down on a conventional loan, actually.

So what is it that you can do with that million dollar house? Obviously you can make some assumptions on the value of the land, et cetera, but in, you know, a very expensive zip code, you know, how would it all work? What would the numbers generically look like?

[00:04:48] Brian Elbogen: Yeah. So, let’s take, we’ll do that example and then we’ll do one more example, which is a $2 million property, because I think there’s two real unique value propositions that we like to focus on for two different types of customers.

So let’s say you’re in inexpensive market. You’re that first time home buyer and you’re trying to buy that first time home with as little of a down payment as possible, because that’s what we’ve got available. So call it a 5% down payment or $50,000, but when we say $50,000, it’s not really $50,000 because there’s a lot of closing costs too.

You have to prepay your insurance, you gotta prepay your property taxes. You have, you know, maybe an origination fee. And so all in that $50,000 is actually more like called $70,000 of cash to close, which for a lot of people is still a big chunk of money, especially in expensive markets. And so for that type of customer, we have two value props in one, we can both lower the down payment and we can lower their monthly payment by partnering with Jubilee.

Usually you can’t have both. You can kind of pick one or the other. And so here’s how that works. Let’s say it’s a million dollar property and you’re in a market where the land’s expensive. And for this case, let’s say the land is worth about 65% of the total property value, which is fairly common in expensive markets in California.

So in that example, we in this customer are going to buy that $1 million property together. Except we are gonna be buying the land for $650,000. They are gonna be buying the house itself for $350,000. And so a couple things happen when you do this. Number one, at a $350,000 price point, the actual down payment that they need to bring to the table is substantially lower.

Through a traditional Fannie, Freddie mortgage, you need 5% down on a million dollar property, which is $50,000. Well, with us, they’re not buying a million dollar property anymore, they’re buying a $350,000 building. And that $350,000 building means that they can buy with as little as 3% down with Fannie or Freddie, or three and a percent down with FHA.

And it’s three and a half percent down in this case, on a $350,000 building, which is about $11,000. So right out the gate, we’ve lowered their down payment from $50,000 to $11,000. And in both cases, they’ll still have comparable closing costs. But that means we’ve lowered the overall cash to close from probably $70,000 to about $30,000, which means a lot more people can afford from a down payment perspective to get into the house. So that’s number one.

[00:07:12] Fred Glick: Let me just throw in, let me just add to this. If you’re a buyer, and this gives you flexibility to negotiate with a seller, to say, “Look, yeah, this is 350 is what it’s gonna cost me for the land, but let’s put it up to 370 so that you can then cover my $20,000 of closing costs.”

And it doesn’t really hurt in the monthly payment that much. You literally could cut that pay, that amount of cash you need way down. I’m sorry, go ahead.

[00:07:39] Brian Elbogen: The same flexible tools that exist around seller. You know, seller closing costs or agent closing costs, or temporary rate buy downs from your lender.

Like all those same tools exist because this is still being done with a conventional or FHA mortgage. It’s the same tool that fits into the same existing ecosystem. So, we’ve said before, first we’ve lowered the down payment. Now normally you think, “Oh, if I’ve lowered the down payment, that must mean the monthly payment’s even higher. So that’s how I’m not gonna qualify, right?”

Well, in this case, actually you can have your kick and eat it too, because by lowering the down, by splitting the house between the land and the improvements, the house itself, we’ve also lowered the monthly payment in this case by about $500 a month in this case.

And the way that we can do that is that instead of having a big 30 year fixed rate mortgage payment on the entire balance of the entire property, we’re taking a big chunk of that and we’re saying, “Don’t pay a mortgage on that. You don’t even own that part. We’ll pay the cost for that. But what you do need to pay us is rent.”

And just like any rent, you pay monthly rent for the right to use the property. Now, our monthly rent is a lower monthly payment than what you would otherwise have with a traditional 30 year fixed rate mortgage. And why? Well, with us, because it’s not a 30 year fixed rate amortizing mortgage, you don’t have any amortization.

So there’s no principal pay down that lowers the monthly payment. And two, with our rent, there’s no mortgage insurance, especially if you’re at that low price point. And so that also lowers the monthly payment even more. And so we can combine these things, lower your monthly payment and lower your down payment so that that first time buyer who otherwise would need to come up with about $70,000 can now get in the home for a lower monthly payment and a lower down payment, which helps more people qualify.

[00:09:23] Fred Glick: Wonderful. And this is only available everybody for fee simple property. You cannot do this with a condominium ’cause you don’t own the land on a condo. But I just wanna remind you of all of that. We’re also licensed in Texas and parts of Texas are cheap. How does this work, say for somebody looking at a 350 house that that’s the value, does it behoove them to do this?

[00:09:51] Brian Elbogen: What we focus on is where can we have the biggest impact? And it tends to be where home affordability is hardest is where houses are expensive. And why are houses expensive? Well, it’s because of the land underneath that is a disproportionate share. So we are focusing on core, urban, expensive markets.

You’re gonna be in LA and San Diego and Seattle and Austin and Texas. But you know, being in rural Texas or in Iowa, one, there’s just not as much of a home affordability problem for us to solve. And two, the land may be only worth 20%, 30% of the total property value. So even though we can come in and help, it’s just not as impactful as it would be being in a market like LA where it’s 65, 70, 75% of property value, the focus area for us.

[00:10:39] Fred Glick: The other way I’m seeing to use this is the current Fannie Mae limit is 800 and something. I forget the exact number. But if you go, let’s say San Diego, there’s parts of it where, you know, something selling for a million and maybe somebody uses this just to get to that 800 and some thousand dollars mortgage to get out of the jumbo.

That’s another possibility. And will you, and that leads me to the question of will you do a lower amount for the land lease than the actual number as the maximum you come up with?

[00:11:15] Brian Elbogen: Yeah, good question. So let’s start with the scenario, and I’ll even give a more extreme version of that. Let’s say you wanna buy, I love this example, a $2 million house in Irvine.

And when people think, “Oh, $2 million house, this must be a gorgeous mansion.” Like that’s a three bed, two bath, 2003, 50 years old, like that is the starter home of Irvine. And so a $2 million house in Irvine is a jumbo mortgage, right? You need a 20% down, typically jumbo, which is $400,000 in this case, in order to be able to buy there.

And so even if you work, let’s say you work in finance or tech or you have a good job where you can support the monthly payments of a $2 million house, but man, $400,000 may still be a massive chunk of your total savings. Even if you can afford the down payment, aren’t there better places you’d rather put it?

Wouldn’t you rather put it in college savings or retirement or investing in other things? So having the flexibility to own the house that you want to live in without it being the core nest egg of your life, especially if you have other ways of creating wealth, that’s a real opportunity for someone at that $2 million price point.

So with Jubilee, you’re not buying a $2 million property anymore. You’re buying, in this example, a $700,000 house while Jubilee sold the land for $1.3 million. And again, going back to you’re now under the loan limit, you can qualify for a three and a half percent down FHA mortgage on a $700,000 property.

So I’ve lowered the down payment, Jubilee’s lowered the down payment from $400,000 to about $22,000, like 95% lowered down payment because we’ve been able to take a property that otherwise was unaffordable in the jumbo space and make it work in the agency space.

[00:12:53] Fred Glick: I don’t know if you’re gonna know this, but let’s assume you did that transaction and it came to us for a mortgage and we put it through our lender.

The appraiser goes out and does an appraisal and comes up with a value of 2 million dollars. That’s what it is. Does the lender then, I mean, does the appraiser then actually chop up the number within their appraiser appraisal? Which I know they do. They separate it and they get the copy of the contract before they do the appraisal, so I assume there’s some kind of thing we can send, form or a form letter to explain to the appraiser how to get that done. And then the lender just does the land lease and you subordinate to their first mortgage. Correct?

[00:13:42] Brian Elbogen: The good news is, again, it’s one of these beautiful things of we’re not trying to reinvent the wheel anywhere here because leaseholds exist in Palm Springs, in Stanford, in Hawaii. There are place pockets all around the country, and because of that, the agencies have created very specific instructions around, especially appraisals for how do you appraise just the leasehold, just the improvements without thinking about the value of the land. Or more specifically, how do you think about appraising the improvements plus whatever the terms of this lease are because the terms of the lease can influence what the value is of the house.

And because we don’t have to reinvent the wheel, because this exists for things like community land trusts. That’s a model of affordable housing that involves something called a leasehold. Fannie Mae and Freddie Mac have very specific guidelines, which many appraisers have been trained on to say, “This is how you value a leasehold for our community land trust program.”

So it’s the same program, our leasehold program. And so we use the same methodology and we work with appraisal management companies who work with independent appraisers, who have experience doing appraisals on leaseholds because they exist in hundreds of pockets around the country already.

So from that perspective, we’re able to go to an appraiser and say: “Here is, well how we’re buying the house — we’re buying the land, they’re buying the improvements. Here are the terms of the lease; here is the purchase price for each of those. Give us an appraisal for, one, the entire property — just like a normal property — and two, give us the appraised value. Of the leasehold of the house by itself, because that’s what the home buyer is gonna finance with the agencies.”

[00:15:21] Fred Glick: So let’s say I have a buyer who’s interested in the property and you know, they’re already pre-approved, so that’s not a problem. But now I go to write the contract.

So let’s go back to our 2 million and I think you said 750 loan amount. Does an agent write up a contract for 750? Or does an agent write up a contract for 2 million as the sale price?

[00:15:44] Brian Elbogen: Yeah, so one of the things, to make this simple, it needs to be simple for the seller and their seller’s agent because all they want to know is, “Is there a buyer on the other side that’s gonna be able to complete this transaction and do I trust it’s gonna happen?”

And so what we do is we make that offer super competitive and compelling for our partner buyer. And how do we do that? Well, number one, we come to the table with a corporate all cash offer from Jubilee for $2 million house In that example. The two nuances around that all cash offer are that number one, we have the option to assign some or all of the property to our partner, the home buyer.

And number two, we request to use our title company, a title company that understands our process so that we can help make sure this is a smooth closing, but at the end of the day, “This is a 30 day backed by cash corporate offer. Here’s a copy of our bank statement so you know that the money’s real.” And I think creating that sort of clarity and comfort for a seller to say, you know, even if I don’t exactly understand how are they gonna hold title?

Who’s this assignee? What I do know is I’m in contract with a corporate buyer backed by cash 30 day close.

[00:16:49] Fred Glick: Got it. And I assume there’s some methodology, before we submit the offer that you’re making sure that the buyer is approved for a mortgage and all that kind of stuff and a checklist. And, okay, this sounds good. And this will help. So they can close as quickly as the lender can close. So we give them a cash offer, but it still has to be contingent upon finishing up the mortgage stuff. So, you know, we can do 15 day close, but we can go in as a cash buyer, which is a really cool thing, especially when you’re in a multiple bid situation. Sellers love cash buyers.

[00:17:28] Brian Elbogen: Right. Our vision is that not only can we help differentiate by making home ownership more accessible, but we hope that our offer can actually stand out as a more competitive offer than they’d be able to make by themselves because it’s now their partner is a corporate backed, non-contingent bid which brings more certainty of close than a traditional buyer, but we’re doing for their benefit as opposed to some institutional landlord.

[00:17:50] Fred Glick: That’s fabulous. What was the, oh everybody’s gonna ask what are the costs to do this?

[00:17:58] Brian Elbogen: Great question. So, our program makes money in two ways. Number one, we collect rent. And number two, this is an important part, as I mentioned, the customer, when they partner with us, we buy the land, they buy the house, they rent the land from us, and most importantly, they have an option to buy the land back from us at any point in time over the next 99 years.

So they can buy us out without selling the house. Or when they’re ready to sell their house like a normal house, they tell us, “Great, we’re ready to sell the whole thing together.”

Alright, “Well, here’s what the buyout price is.” And we make it really simple. If we bought the land for 65% of the total property value at the beginning, then when you’re ready to buy us out, it’s for 65% of the total property value when you buy us out.

So going back to, we make money in two ways. We make money by collecting the rent over time. You know, you pay us a monthly rent for the land, and two, because we’re sharing in the total appreciation for our share of the entire property, we’re also earning some of the appreciation when the property sells.

So those are the primary ways we make money. We do have a small origination fee that’s comparable to what a mortgage originator would charge, typically 1% of the total land value. But other than that, there are no other fees. This is just a normal tenant landlord relationship where you pay rent, you take care of the property, you’d be a good tenant, you enjoy the benefits of home ownership. When you’re ready to sell, you’re ready to buy us out, you let us know.

[00:19:19] Fred Glick: Got it. I assume there’s recording fee ’cause you’re recording this obviously, so.

[00:19:25] Brian Elbogen: Correct. I would say in the same party customer fees that a home buyer would otherwise be buying.

[00:19:31] Fred Glick: Yeah. Yeah. Got it.

[00:19:32] Drew Thomas Hendricks: So the mechanics, yeah, I do have a couple questions ’cause I we’re getting real deep into actually the mechanisms of buying the house. But for the average consumer, they’re just gonna assume they’re gonna get the house with this lease. How do you, how do you figure out the rent and the monthly costs of this using like the $2 million example where 1.3, you’re actually renting that land.

[00:19:53] Brian Elbogen: So, the first thing that we need to determine is what’s a fair percentage of the entire property value? What’s the land versus improvements? And so to, I think a question that you mentioned earlier, Fred, you know, how do you make that split and can you do something different? Well, today we want to be as fair as possible.

So we use third party data. There’s an independent third party data set. It’s publicly available from a a trade group called a EI, where you can look up by the zip level, by the census level, “Hey, what’s the land share percentage in 94118, or 12345 zip code.” And so we use that information to give clarity to the customer up front.

“Hey, if you’re buying in  94118, our land share percentage is 68%.” Whatever price you wanna buy it, if it’s a $1 million property or $2 million property, we’re gonna come in and say, for anything in that zip code today, we’ll buy the land for 68% of the total property value. So you go find the property that you want.

That helps us determine the splits. The rent that we charge is a cap rate. We look at what our investor requirements are, we look at what the market is, where mortgage rates are, and we say, “Okay, today the cap rate is 7%.” So if I bought the land, just to make the math easy, for a million dollars on a one and a half million dollars house, and I have an investor requirement of a 7%, we call it a rent rate, then the total rent each year, the first year is $70,000.

You know, a million dollar property, $70,000 is 7% on a monthly payment that is about $6,000 a month, and that becomes the initial rent. So we basically look at how much are we paying for the land, what’s the right rent rate that we need for our investors, and that turns into a monthly rent payment. The only other thing I want to highlight is that the rent also adjusts annually based on inflation because this is a 99 year lease where you have control of the process.

So if, CPI is a common measure of inflation, if the CPI index increases 2% next year, then your rent would also increase 2% next year. We have a cap, so it can never go above 5% in any given year as well.

[00:22:02] Fred Glick: I’m thinking about this, and here’s kind of the perfect scenario, and correct me if I’m wrong.

So today you came in, you bought that million dollar property, whatever. You just started a new job. You’ve got the income, you don’t have the assets, and you get a mortgage. It’s, let’s call it 7%. Your land lease is 7% for argument’s sake. And all of a sudden the bottom drops out of the economy and rates are now back down to 2, 2.5.

And you have a better job and you got a few bucks in the bank. So you actually could go out. And because you’re dropping so much in interest rate, you could actually take on more debt in the mortgage side and pay you guys down a bit, is that something that would work making partial payments down to you for the land?

[00:22:53] Brian Elbogen: It’s tricky to do partial payments like a mortgage because, you know, what does it mean to partially own part of the land?

It’s something that we really haven’t focused on our first product, but what some customers talk to us and ask the question, “Hey, if I get some savings or maybe I have some, I work in tech and I have some restricted stock that becomes available and now I have some cash available. Could I do, for example, get a cash out refi on my current mortgage? Because interest rates have gone down and my monthly payments have improved. And I can use the proceeds of that cash out refi to buy you out?”

And we’d say, “Absolutely.” You always have the flexibility to buy us out. And we just figure out what is the appraised value of the entire property. If we had a 65% share, pay us our 65% and now the entire property is yours and you have total flexibility to do that.

[00:23:44] Drew Thomas Hendricks: What if half the market drops 50% and then they decide just to buy you out, so you take the loss?

[00:23:52] Brian Elbogen: It wouldn’t be fair, because you have control of the entire property for us to take a loss because you can buy us out.

So the minimum buyout price is the initial amount that we paid, which in that case would still be cheaper in most cases than a traditional mortgage. But you would still have to pay us back our initial investment amount.

[00:24:08] Drew Thomas Hendricks: What happens with like land, this is my last question. What about land improvements?

Like the person wants to put in a pool, they totally beef up their land, so it’s worth more.

[00:24:17] Brian Elbogen: So the good news is improvements include both the existing house as well as any new improvements that you add to it, which means it wouldn’t be fair if you created all this value, you added all these costs, you spent all this time to make your, the improvements on your property really great.

It wouldn’t be fair for us to share that. And so we have an adjustment at the end. When it comes time to sell your house, let’s say you added an ADU in the backyard, that appraiser who’s gonna come value the entire property when it’s time to value it, we would say, “Hey, they’ve added an ADU in the backyard. It’s a legal dwelling unit that’s clearly added value. Appraiser, go determine how much value that appraised that ADU is worth.” And based on how much that ADU is worth, we adjust the final price to your benefit so that we don’t share in it.

[00:25:03] Drew Thomas Hendricks: Okay.

[00:25:05] Fred Glick: I’m sure I got a hundred million other questions, but the idea here is just to give buyers and sellers the concept and understand that it is available and it’s brand new products. I love it. I’ve always thought about this for just people to do who, you know, know that things are going to appreciate and just hold onto the land for a while.

[00:25:28] Brian Elbogen: You’ve made it easy. And there’s a lot of nuances that we talked about.

But I wanna go back to real basics, like really simple. ‘Cause I think it’s important to make sure it’s simple to understand and that you can connect it to things that you already know about. And so what is this product? You own the house. We buy the land. You buy the land back when you’re ready and you rent the land in the meantime.

So what does owning the house means? It means that you legally own the house. It means that you get a normal mortgage like owning a house. It means that you get the tax benefits for the house that you own. It means you’re building equity by paying down a mortgage and sharing in the appreciation like a normal house.

What does renting the land mean? Renting the land for people who rent an apartment today, they know exactly what rent means, but here’s a little bit different. You pay rent for the right to use the land, but unlike your current landlord, we give you the option to buy the land at any point in time between now and the next 99 years.

So it’s the best landlord you could possibly have. That’s the product. That’s what our intent is. We are trying to make this a fair and flexible leasehold. It’s flexible because you can buy us out at any time, and it’s fair because we’re buying in and we’re going out at the exact same percentage. If I buy in for 65 and you’re at 35, then it’s fair for us to exit 65-35.

[00:26:39] Fred Glick: Got it. Anything to wrap it up with that we haven’t covered or?

I’m sorry guys. Go ahead, René.

[00:26:47] René Pérez Jr.: I’ll just say something just because to the buyers that I’ve spoken to, they’ve asked me, “Well, I have the cash. Why should I do this?”

Well, this is also, based on an act of you being an investor, right? Because we’ve had buyers who entered the market or they were thinking about buying a property back in 2021, 2020, right? Which if they bought in 2020 and they sell 2025, even with higher interest rates, you still could and should have made a profit, right?

Things have still appreciated. But during that same time, you do have stocks like Tesla, Meta, Nvidia, all these stocks who appreciated tenfold to what the appreciation of a house would’ve been, right? So that is sort of the risk that you’re taking where instead of putting all your money into a property, because there’s people who buy a property in cash, is you can say, “You know what? I don’t really want to deal with that. Instead, what I wanna do is put it into stock. Right? So less risk for you as well.

[00:27:46] Fred Glick: Oh, that’s a great idea. And let me add one thing on top of that. You can right now only get a tax deduction on interest for up to a $750,000 mortgage. So the idea is if you’re taking a $2 million house, you’re gonna get a 1.6 mortgage.

Guess what? A lot of that interest is not deductible. So why have it? This way, you know, it’s a whole different story. You’re paying the land lease. Yes. But you’re gonna pay a lower monthly payment, but then you’re stuck in that 750 Fannie Mae loan. You can refinance it any time. Be able to get that to a 15 year instead of a 30 and pay off that part quicker and take the rest of your money and invest it.

So yeah.

[00:28:28] Brian Elbogen: Same, the same concept, which is, you know, I think traditionally we were all told to believe you’re either a renter or you’re an owner and the owning is the most important investment in your life. And maybe, just maybe, there’s room somewhere in the middle to say maybe the right combination is some mix of the two.

Right?

[00:28:45] Fred Glick: Yeah. Rownings.

[00:28:47] Brian Elbogen: Some of the money and use it for other things because that’s how we think about every other type of financial outcome. You don’t wanna make this massive, concentrated bet on literally the one thing that is the roof over your head. This is a different way of thinking about home ownership, which is it has the benefits of living in the home. It has some of the benefits of financial ownership, but you have other flexible ways of solving for what you’re trying to accomplish in your greater financial goals.

[00:29:09] Fred Glick: Got it. Beautiful. Drew, you had…

[00:29:12] Drew Thomas Hendricks: Yeah. Well, so some, they do the land lease and everything’s great. 10 years go by, when someone goes to sell the house, do they, does the lease go with the house or do you just liquidate and you take your profit and they…

[00:29:28] Brian Elbogen: Yeah. The beautiful thing they get to choose, that’s a beautiful thing, is that you can sell your house without ending the lease. The new person buys the house, they step into the lease. In some ways it’s a bit like a, an assumable mortgage.

The lease is assumed in this case, but also what’s probably gonna be more common and typical is a customer says, “Hey, I just wanna sell my house like a normal house.” And a buyer wants to buy it like a normal house. Well, great. Remember, you can always buy us out. And that includes when you’re ready to sell your house.

And so in the same way, let’s say you get a bid for your house for $2 million for the entire property. Well, what do you owe us? 65% times $2 million. You pay us off $1.3 million as part of the closing process, and we kind of look like a mortgage. You pay off the mortgage and the new person owns the whole thing.

Except in this case, we’re actually selling the land concurrent with that close, so they just buy the entire property and we get paid for that sale. So we like to say every house we’re temporarily turning into a leasehold. And you have the option to go back into a normal house at any point in time.

[00:30:26] Drew Thomas Hendricks: So that makes it very clean.

[00:30:28] Fred Glick: Yeah. Super.

[00:30:29] Drew Thomas Hendricks: Can also feel listing a house if it, can you list the house for just 35% of its value?  That would make it look really…

[00:30:36] Brian Elbogen: Very interesting question.

[00:30:37] Fred Glick: That was the first question out of René’s mouth.

[00:30:41] Brian Elbogen: We have had some agents ask us about that and that’s definitely one tactic.

What we have found to be more differentiating and compelling is to really focus on the value proposition as part of the MLS description. So we have some agents who say, hey, here’s this million dollar or $2 million property. Let’s use that example, $2 million property where this would normally require $400,000 in down payment.

Or you can buy this house with as little as a $20,000 down payment with the Jubilee Joint Purchase Program. And so we actually collaborate with other agents. We partner with them on MLS collaborations, on Zillow collaborations, we partner on Zillow showcase so that we can help more people identify this opportunity to qualify for a property that they didn’t even think was possible.

And we can help pre-screen and qualify those prospective buyers on behalf of listing agents.

[00:31:30] Fred Glick: It’s interesting, there’s some parts of the Bay Area, especially in El Cerrito, and we b**** about this all the time, that an agent knows the property’s gonna sell for like 1.8, 1.9, but they advertise it for 1.1 just sucking people in, and giving them a false sense of hope.

And they’re just looking for buyers and they, it’s a game. This is kind of an interesting way to say then, “Look, if you got the income, you know, there’s a way to do this. You can buy this without having to come up with this massive down payment.”

So here’s, you know, I’d like to be able to list it twice. But obviously I can’t. So it’s an idea. This will all flush out and we’ll figure out what the exact process is. I know on my mortgage side, this is something I can go out to my past clients and let them know that something exists. Oh, and we said this before, it is not yet available as a refinance, so don’t even call us about that yet. But, Brian’s gonna work on it eventually.

[00:32:36] Brian Elbogen: It’s on the roadmap.

[00:32:38] Fred Glick: Yep. There we go. Okay. I think we covered it all. My brain is spinning as usual. And we really appreciate having you guys on. Anything else? Last, final words?

[00:32:52] Brian Elbogen: Our pleasure. If you wanna learn more co to www.withjubilee.com.

[00:32:57] Fred Glick: Alright, guys, thanks very much for coming on. We appreciate it. Take care. Bye.

[00:33:06] Drew Thomas Hendricks: And this has been another episode of We Fixed Real Estate.