Point's Eddie Lim: The tourist real estate investors have left the market

Market developments affect proptech investors

At Connect Now on Thursday, moderator Clelia Peters was joined by Eddie Lim, a Silicon Valley-based serial entrepreneur who founded Point after finding himself rocked by the traditional process of trying to access net worth. the property.

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The real estate finance market is moving much faster than most people realize.

Call it alt-finance, proptech or fintech – it really doesn’t matter. What the real estate industry should know is that the most painful and deficient aspect of buying and owning a home is finally changing. But thanks to a slowing real estate economy, changes might be a little slower in coming, a fact that fueled the conversation at Inman Connect Now on Nov. 17.

It’s true that a few major players, Knock and Ribbon, have suffered dramatic downsizing amid slowing home sales. But, the dice are cast. The line of organizations lining up to use it is only getting longer. Nevertheless, declining market activity is seeping into the innovation space.

Moderator Clelia Peters was joined by Eddie Lim, a Silicon Valley-based serial entrepreneur who founded a real estate investment firm called Point, after finding himself rocked by the traditional process of trying to access to real estate capital.

Lim’s main frustration is the idea that the sheer volume of home equity suggests it should be easier to exploit.

“Ironically, in US real estate there is $28 trillion in equity; it’s the largest asset class in the world,” Lim said. “And it has no equity financing.”

Peters pointed out that Lim’s success and collective expertise also provide him with a unique vantage point from which to analyze the proptech market. As someone who has relied on funding to start multiple businesses, Lim knows how the venture capital and funding industry works.

“Many investors are in wait-and-see mode, [but] in the real estate world, many investors are pulling out largely because the securitization markets have closed,” he said.

Lim thinks the tourism investors, the people who stop by the proptech space to see what it’s all about, are gone. It’s back to basics.

Admittedly, “back to basics” may be seen by some as code for “we’re in trouble.” Peters asked Lim about it, citing struggling companies, especially fintechs tied to the real estate market.

Lim did not dismiss it.

“You are right,” he said. “We see pain in many areas.”

Lim said any company that relies on a single financing model — or any lending practice — for real estate should be concerned, noting that Wells Fargo reported a 90% decline in its mortgage business.

Although new money taps are frozen right now, it was August at Inman Connect Las Vegas when Peters herself reminded the industry that there was already a lot of money raised and there should be deployed.

“Smart investors think about what they want to own in two years,” Lim said. “What do I want to buy today knowing where rates are going and where house prices are going two, three, four years from now?”

To get what’s out there, however, Peters said financiers need to be educated on the value of new fintech models and how they will make a positive difference. It starts with knowing the customer.

For example, a Point customer is someone who could simply benefit from having more money in their pocket, whether to pay for education, make improvements, pay off retail debt, or simply have cash on hand. Point customers do not need to repay what they borrow for 30 years if necessary.

“The no monthly payment feature is the big ah-ha moment for customers,” Lim said. “Our landlords, after making this investment, we’re seeing on average their non-mortgage debt go down 20% on our basis, and that’s holding up for years.”

Naturally, compounding home equity poses a risk to the collective future wealth of American homeowners. It’s safe to say that savvy startups have uncovered an astronomically deep reservoir of money and devised clever ways to tap into it. Peters asked Lim about it.

It’s a matter of partnership, he says.

“This environment accelerates the idea of ​​someone being a partner with you in the homeownership stack,” he said, “in the same way that a company goes public and retail investors own shares in the company.

Lim equates this consumer sentiment to why iBuyers has managed to gain a foothold, along with other transaction alternatives filling the market.

Leveraging home equity as a stable source of income during uncertain times can help homeowners better manage during an uncertain market. Credit cards can be paid off, for example, by easing high-interest debt payments while dealing with inflation.

Peters pointed out that the idea of ​​“home” is changing. It’s more than a roof over your head and a long-term wealth creator. It is an active and dynamic asset whose role is constantly evolving.

And it’s an idea that real estate agents can start communicating to their clients.

Email Craig Rowe

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