This business unlocks home equity without conventional loan obligations

An alternative medicine practitioner, Tracy has partnered with over 100 additional brands throughout her career, representing them on various engagements and helping them find space on grocery store shelves. After a cancer diagnosis in 2014 prompted her to rethink her diet, she decided to create her own healthy snack: sugar-free and gluten-free cream filled cookies.

“My friends were so excited about it,” says Tracy, who withheld her last name for financial reasons. “My colleagues were so enthusiastic about the industry that they encouraged me to make it a product line, especially since I have all of these national connections to bring natural products into retail stores.”

Thus, a company was born.

Earlier this year, Tracy, who lives in Colorado Springs, Colo., Needed money to start her business. She had to design the packaging, rent a commercial kitchen, and ship cookies for shelf life testing, among other pre-launch tasks.

In January, Tracy began applying for a home equity loan, hoping to receive up to $ 75,000 secured against her 3,500 square foot home. Once the coronavirus hit the United States, however, the lender pulled out, along with dozens of others who suspended private equity products.

Left with few options, in early April, Tracy discovered Noah, a company that offers debt-free up-front financing in exchange for a share of owners’ equity in their homes. (The share of home equity required by Noah depends on the amount of the loan.)

“I loved how you can collect money from your home, but it’s not on your credit report,” Tracy says. “There is no monthly obligation [to repay Noah]. When you launch a new brand it’s a very expensive business and I didn’t want to go into debt more than necessary.

Thanks to Noah, she unlocked $ 30,000 of her home equity in addition to $ 1,000 through the relief efforts of the Covid-19 company.

“It wasn’t as much as we hoped, but we were grateful that we got what we got,” says Tracy. “So many other businesses weren’t issuing home equity loans. Noah was definitely a blessing.

San Francisco-based Noah (formerly Patch Homes) differs from home equity loans and lines of credit in that it avoids interest rates and monthly payments. Instead, the business shares the appreciation – or depreciation – of a home, with the loan (and equity amount) maturing in 10 years or at the time of sale.

Noah “solves the central problem, which is a cash flow problem, for consumers,” says Noah founder Sahil Gupta. “It solves the liquidity problem for consumers without adding an additional debt burden, without financial anxiety, and it expands options for homeowners. “

The family inspiration behind Noah

Hailing from India, Gupta first discovered the concept that eventually became Noah in the early 1980s, when his father was building the family home. He ran out of money before he could finish the house, so Gupta’s uncle stepped in, providing money in exchange for part of the house.

“They were co-owners of the house,” Gupta said. “I often talk to my dad and he says the biggest advantage of this transaction was, firstly, that he didn’t have to take out a loan and, second, that he didn’t have to worry about monthly payments. .

“Whatever happens to the house, whether its value goes up or down, my dad has someone who is basically a partner to him. This is the fundamental ethic on which Noah is built.

Noah, however, only appeared when Gupta moved to the United States in 2006, two years before the Great Recession, to work for investment firm BNY Mellon. Observing how the financial crisis and the economic recovery that followed left homeowners strapped for cash but rich in net worth, Gupta founded Noah to address this apparent liquidity problem. Conventional loans don’t do much to address these, Gupta says.

“These are all debt-based products,” he says. “Taking out a loan does not solve the problem. It’s just kicking the box for it. “

Gaining popularity during the coronavirus pandemic

Since March, Noah has seen a 50% increase in new financing requests as well as a fourfold increase in interactions with current clients, many of whom have requested mortgage payment assistance. Through its Homeowner Protection Program, Noah can make mortgage or property tax payments on behalf of homeowners for six months.

“Today, the coronavirus is shutting down entire industries and we are already seeing more and more homeowners turning to Noah for help,” Gupta said. “Noah is committed to being a long-term partner for homeowners by making our products more accessible during this time so we can put even more money in their pockets.”

Requiring an independent appraisal to assess the home’s value, Noah currently operates in 20 metro areas in California, Colorado, Utah, Oregon and Washington.

About Hannah Schaeffer

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