David Friedman, CEO of Knox Financial, is a tech entrepreneur who noticed a problem in real estate investing. Homeowners face several issues when attempting to convert their home into a rental investment property. Many times homeowners are unable to purchase a second house without the equity that is locked into their first home. Generating income from a rental property is also alluring, but they don’t want the headache of being a landlord.
Knox Financial offers a solution. This new company uses technology to determine whether a home should be converted into a rental income property. It provides streamlined services that allow the owner to obtain income and appreciation through their first home passively. Listen in for valuable information on rental income properties and how David’s company provides a way for homeowners to become investors on this episode of Real Estate Launchpad.
How to turn your home into rental income
Why would you sell your home if it will continue to appreciate? David’s company, Knox Financial, helps homeowners to maintain ownership of their first home while they buy a second home. His company provides refinancing options so that homeowners can pull enough cash out of their first home’s equity to buy their next home. Knox Financial finds renters and insurance for its clients. Once a renter moves in, Knox takes over the responsibility for paying utilities, taxes, and the mortgage. This allows homeowners to transition to passive owners of an investment property.
Three ideal groups who benefit from rental income
David identifies three ideal groups who benefit from rental income.
- Late 20-year-olds to early 40-year-olds. Their home may no longer fit their lifestyle, and they are looking to move out of a good rental market in the city to a more of a suburb community. They have prime real estate that can be rented and also leveraged for cash on a second home.
- The baby boomer generation. This generation typically has owned a house for decades, with little to no debt on it. They are looking for cash to support a retired lifestyle and preserve wealth for future generations. Rental income allows them to keep their asset while creating cash flow.
- Current landlords. These landlords may have one to multiple rental properties, and they are no longer wanting the burden of the job’s responsibilities. Knox Financial is able to take over their duties, while still providing a return with rental income.
The need for a streamlined process to owning rental properties
David previously owned a condo in Boston. Once he saw his property appreciate $250k, he sold it. Four years later, he heard that his same condo was purchased for $200k more than he had sold it for. He wished he had not sold so soon and began talking with friends about this experience. Everyone had a similar story. Homes they had sold were now worth multiples of what they had been purchased for. His friends wished they had the foresight to hold and rent their homes while they continued to appreciate. However, they worked day jobs that didn’t make being a landlord realistic. From this, David realized that if he could make the process easier for homeowners to keep their homes and rent them instead of selling, then more people could become real estate investors. Knox Financial will launch its services to homeowners beginning in February 2019. Be sure to listen to hear more on how they can help you turn your home into a rental property!
Changing the conversation of homeownership
The conversation on homeownership has always been: own a home, sell a home, buy a new home. However, David hopes to change this. His company makes buying a home and holding on to it an easier process. He thinks the conversation on homeownership should be: own a home, hold on to the home, move, buy a new home. Through this, people would amass real estate properties as investments. He mentions that the long-term investment in real estate rental properties in more profitable than investing in stocks and bonds.
In This Episode David Friedman says…
- [2:10] Who he is
- [2:37] How his company can turn your home into rental income
- [6:37] How Knox Financial operates
- [10:00] Knox’s 3 ideal client bases
- [14:57] The solution to the baby boomer issue
- [17:59] Where the idea of Knox Financial came from
- [20:08] The current state of Knox Financial
- [23:00] What makes an are a good market for rentals?
- [32:43] Areas that don’t work with rentals, and why
- [35:17] The profile of a renter
Resources Mentioned In The Episode
- Jonathan@MultifamilyLaunchpad.com – Learn to be an asset manager and Investor
- Bellwether Enterprise(sponsor) – contact Will Oldham firstname.lastname@example.org