Today, we launch a weekly series that shines the proverbial spotlight on people, companies, organizations and trends with the potential to change how our industry conducts itself. For the premiere installment of this series, our spotlight is on Thomas Ferrier, co-founder and CEO of the start-up Tommie Mac Inc., the Arizona-based company with the motto “Access Your Home’s Equity with Confidence.”
For the benefit of those who aren’t familiar with Tommie Mac, what is your company all about?
We want to change the way homeowners are able to access the equity in their home. I’ve been in the debt side of things forever, and the truth of the matter is sometimes the debt options don’t work for everyone. And you have people who’ve worked really hard to build up the equity, and we think that there should be an easier way for them to access it.
Easier, in what way? What makes you different from other companies?
There are a few different things. Number one is we don’t have any sort of credit check or income qualification. You can imagine someone that’s in a home and maybe they have good credit, but their debt-to-income ratios are really high. So, for them to go out and get an additional loan to tap into some of their equity is just not possible.
We removed some of the guidelines and the barriers in that sense as far as your income qualification and your credit. Another way that I would say this is way easier is with the buyback program. When you get a normal mortgage, there is a big scary man in a bank who’s waiting on you to pay – and if you don’t pay, he’s going to go work your home out for money. With Tommie Mac, our equity share allows the homeowners to buy back equity whenever they want. They can literally never buy it back, they can buy back some today, they can buy back a little bit more next month. It gives them the flexibility of being able to control their equity a little bit easier.
So, how does your business model work?
We join the homeowner as a partner in their home’s ownership. We provide them access to liquidity and, basically, we share the potential upside of the home’s value over time. So, if you need to tap into some equity today, we’ll help you do that with some cash. And then when you go to sell the home, we’ll both make a little bit of profit on the home’s appreciation.
Your company is promoting a product called Equity Solar. Are you specifically targeting people who are interested in solar installations?
Yes, we’ve found that it’s a completely underserved market. And there’s multiple benefits from it.
Solar is an incredible way for homeowners to add equity back to their home, and it also comes with some immediate savings. We help the homeowners go solar – this wipes out their electricity bill in most cases, so it’s a double whammy.
Are you available in all 50 states? Where would somebody be able to tap into your services?
No, we’re only going to be in Arizona initially. However, we are planning on going and branching out to other states within the next year.
If we would have had this conversation one year from now, where do you see the company at that point?
I think that equity share is the future – and there are a few other companies that are doing this. The way you bought and owned a home 50 years ago is not the same way that you’re going to do that today. That’s not going to be the same way that you’re going to do it a year from now. I think the equity share model is here to stay.
And I see it being a lot more dynamic and fluid in comparison to a traditional mortgage. You can imagine a scenario where, let’s say I’m a homeowner and I sold off a little bit of my shares to go solar but now I’m ready to move. Just to kind of show you the dynamics of this – I’m ready to move, but I want to hold on to my remaining shares of equity. With our program, you could absolutely do that – you would move, you would retain your ownership, and then Tommie Mac would default the property into an income generating property. Tommie Mac would rent it out, you’d still have a little bit of your equity, and now you get paychecks every month from your portion of the rent proceeds.
How confident are you that you will be expanding this nationwide in a year, given the overall states of the economy and the national housing market?
From the conversations we’ve had with some of our investors, I think this product is exactly what they’re looking for. No one is speculating – people are wanting out of the bond market and they’re going back to traditional forms of financing that they know and understand, which is real estate. think the way that we’ve designed the structure of our deal for some of our investors, it insulates them from the current state of the market and what’s going on in the world.
I think that we’re going to see a big influx of investors moving into this space and looking for structuring – kind of like we’ve created.
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