Sale-leaseback startup EasyKnock raised $3.5 million in seed funding, the company announced Wednesday — and some of it will go toward building partnerships with the reverse mortgage community, EasyKnock CEO Jarred Kessler told RMD Wednesday.
With EasyKnock’s “Sell and Stay” program, the New York City-based company buys a homeowner’s property and then rents it back to them, with a predetermined buyback option. With this product, consumers can quickly convert all of their equity to cash, minus a 1.5% commission.
Kessler told RMD that EasyKnock has never been in competition with the reverse mortgage market. Instead, he hopes loan originators could look to the company as another option for borrowers who do not qualify for a Home Equity Conversion Mortgage.
“If someone can get a reverse mortgage or a HELOC, we always tell them to do it because it’s better for them,”said Kessler, who added his company currently pays for referrals from forward and reverse mortgage lenders. “Loan officers are looking for new streams of revenue with rates rising. We are not looking to compete with them, but to help them by servicing their turn-downs.”
Kessler said that buying someone’s home and renting it back to them can rapidly improve someone’s finances, like “FICO repair on steroids.” By getting cash from the sale of the home, having the ability to pay down debt, and lastly, improving their credit by paying their rent on time, they should in theory be able to quickly finance EasyKnock’s buyback option.
EasyKnock belongs to a growing cohort of alternative equity-release resources for homeowners who may not qualify for traditional loans, or who simply prefer the terms of a sale-leaseback arrangement.
Aside from fostering reverse mortgage relationships, the seed money will also go toward technology, fueling customer growth, and building partnerships with other mortgage companies to assist people behind on their loans, Kessler said.
The three investors on this latest round of funding are Montage Capital, Crestar Partners, and Blumberg Capital.
EasyKnock, which was founded in 2016, raised $1.2 million in seed funding in 2017, and the company projects to hit profitability in 2019.
Written by Maggie Callahan