APEX – Brian Lora believes that the pathway to homeownership is broken, and also that everyone ought to be able to achieve homeownership, if desired. And now, his new company, SocialEquity, is emerging from stealth mode, to change traditional ownership structures and financial systems in order to enable more people who want to own homes to be able to compete in an ultra-competitive real estate market.
Lora, the former CTO of Live Oak Bank, former CIO and chief architect of Sageworks, and former CTO and CIO at Dude Solutions, told WRAL TechWire in an interview that the company has already raised $750,000 and plans to launch a crowdfunding campaign to raise additional capital in the coming months.
“The residential real estate market is $2 trillion per year in the United States,” said Lora. “It’s bigger than the Nasdaq.”
The opportunity to rethink how homes are bought and lived in is vast, according to Lora. And that’s where the new company seeks to disrupt the existing structures and systems in the home ownership marketplace.
Still, SocialEquity is very early – “pre-revenue” -in its mission. But Lora hasalready pulled in a leadership team and developed proprietary technology in order to achieve the company’s vision: “We’ve created an entirely new way to find, group, buy, and secure a home.”
Now that the company has launched, emerging from stealth mode it plans to host community events, and has set a target to help groups purchase “100 homes in 2022,” Lora said. The first one will take place on March 23 in Apex, Lora noted.
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Pooling purchasing power
“What we’re doing is that we’re a technology platform, so we’re doing for homeownership what AirBnB has done for short-term rentals,” said Lora.
“The goal of ownership is getting further and further away from people,” said Lora. In Wake County, noted Lora, 56,00 people relocate each year to the area, and the average price of a residential property has increased to nearly $450,000, leaving some struggling to identify affordable homes.
“The system is broken,” said Lora. People ought to be able to use their purchasing power to acquire ownership interest in a primary residence, he explained. But there are structural challenges in the existing systems, he said, including the existing financial products used to acquire property that still may require an individual to come up with thousands of dollars for a down payment.
So Lora set out to change what’s possible in how people can look for, qualify for, and ultimately purchase real estate.
The company has already built two pieces of software, and according to Lora, is making group purchasing residential property “safe, and structured, and legal.”
Ultimately, what Lora says his company will enable is giving groups of people an opportunity and a pathway to “pool their economic purchasing power to buy a home together.”
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Technology stack
Lora told WRAL TechWire that the company’s technology is based on an existing trend: the ongoing success of dating applications.
“The best dating apps now have best friend distributions, so like on Bumble, if you want to meet a friend who has a shared interest, like playing golf, or hiking, or knitting, you can find them,” explained Lora.
SocialEquity’s community operates like this, Lora said. “Someone finds out about our company, goes in and signs up, goes through background, initial screening, and credit check,” he explained. “Creates a profile, describing who they are.”
Then the company’s software, a proprietary algorithm, can provide recommendations to app users on who might make sense in the community to meet in real life to see whether there might be a match.
But the company has built additional technology, and has developed what Lora described as a patented home loan product.
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Group buying
Once a group forms, they can begin to search for residential property, said Lora. To locate and identify viable properties, Lora said the company has built the technology that identifies on- and off-market properties that would meet the living needs and fall within the financial structure required to qualify the group to purchase, then live in the home.
“We wrote a proprietary algorithm to identify sharable homes,” said Lora. “The algorithm that I wrote identifies homes.”
When a group does seek to purchase a property, they’ll work with a local real estate agent, said Lora, and the company has already cultivated a relationship with a Triangle area real estate brokerage firm that is prepared to work with group buyers.
Once the property is located, and goes under contract, it would be placed in a revocable trust at the time of closing. Should any of the new owners within the group later wish to sell their stake in the property, the other existing owners would have first right of refusal, Lora told WRAL TechWire.
“We believe in financial literacy and we want to help people give them a new option,” said Lora. “Combined all of this with our passion to provide software that provides solutions for people, especially home affordability.”
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A new home loan product
“We have our own home loan, the co-ownership loan, different from a co-borrower agreement,” said Lora. “Combine to create the flexibility and the exchangeability of the property.”
SocialEquity image
Here’s how the company describes its new home loan product, the “Coffee© Home Loan.”
First, “COFFEE” is an acronym that the company website notes stands for “Co-Ownership, Forclosure-Free, Easily Exchangeable.”
This loan product “uses the power of fractionalization to place the power of homeownership in your hands, even if you’ve encountered challenges securing financing before,” according to the website.
Because there is a combination of economic purchasing power, due to the groups that form on the company’s community platform, the company says that it will “help you get your loan approved and get you into a home that might have previously been out of your price range.”
Another benefit? “We also reduce the share of both your down payment and your ongoing mortgage payments to levels that are well below what you would need to pay if you were buying on your own,” the company website notes.
More affordable housing, with equity upside
Lora told WRAL TechWire that in researching the product and the market, he found that there are about 2,400 people per year in the Triangle that qualify for a mortgage of $150,000 to $250,000 but who end up not buying a property because they can’t find a quality home within that price range.
“The way we’ve structured the commercial offering is that we’re a network effect platform company,” he said. “We want to be as frictionless as possible.”
Soon, the groups that form on the company’s platform will be prepared to identify, negotiate, and purchase a residential property in order to live more affordably, said Lora.
“Pool their purchasing power, buy, be out of pocket for no money, and buy and spend the same $1,500 per month, but own,” said Lora. “That’s the value proposition.”
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