Wealth and Homeownership with Nicole Hamilton

November 01, 2022

Talk-Commerce Nicole Hamilton

In interviews with homeowners, 25% say they bought their home first for an investment and second for a place to live. The other 75% say they bought a house simply as a place to live with little expectation for it to be a good investment. You grow wealth through homeownership.

Nicole Hamilton has made a career of helping others with home ownership. She explains REAFE in detail. A Real Estate Asset and Financing Evaluation is about maximizing the returns you get from your real estate.

Her tip for the episode is to think twice if you want to refinance. If you refinance with less than half the time on your mortgage, you start over with your interest payments!

Show Notes

Personal: 
Company:
Roger Brown

Here are more links that might be of interest to listeners:

A product for people who want to plan for Homeownership: https://www.homeownering.com/the-formula-steps-to-becoming-a-homeowner/

And this is about the financial, real estate analysis I do: https://www.homeownering.com/reafe/

Here is a free equity report we have on our site: https://www.homeownering.com/free-home-equity-report/

Transcript

Brent: Welcome to this episode of Talk Commerce. Today I have Nicole Hamilton. She is the CEO of Homeowner. Nicole, go ahead, introduce yourself. Tell us your day-to-day role and one of your passions in 

Nicole: life. Oh, okay. It’s great to be here, Brent. I’m an entrepreneur in the housing industry. I have a company called Homeowner.

Nicole: It’s very pro home ownership and treating your real estate with the same care that you do your other investments. I’ve had other companies in the sector. I’d say the common thread through all of my ventures is an obsession with real estate, finance mortgages, Home equity appreciation.

Nicole: Home is an investment home ownership and intergenerational wealth. My current company home owning. Is dedicated to getting people into home ownership and then getting them good financial outcomes. So it spans the the life cycle of home ownership from buying utilizing and improving your financial situation through home ownership.

Nicole: And then, selling. and my passion, I guess one of my passions right now is weightlifting, . I go really into it. 

Brent: Wow. That’s great. Yeah. I definitely need to get more into Weightlift as I’m getting older, I realize that my upper body, I run every day, but my upper body is definitely neglected, especially over time and it, I think as we get into our fifties, which I am, you are it’s harder to gain.

Brent: On your upper bodies, you have to work twice as hard as if we were in our twenties. Anyways, we can, we’ll keep moving out along there, but that’s awesome. That’s good to know. I’ve heard more and more people talking about that, yeah. Alright, so before we jump into our content I have a thing called the free joke project, hashtag free joke.

Brent: And I’m just gonna tell you a joke and all you have to do is tell me if it should be free or if we could charge for it. Do I have to? You do not have to laugh. I would appreciate real real feedback on it. All right. But they’re all fantastic jokes. All right, Ready? Okay. My doctor just diagnosed me with a severe lack of awareness.

Brent: It came out of nowhere.

Nicole: Free . 

Brent: Alright. Super

Brent: Thank 

Nicole: you. I actually love, another patch of mine actually is standup comedy. Oh, wow. All right. I will listen to any standup comedy. Yeah, so I, I’m interested in the free joke project and I hope to follow that hashtag and learn more. 

Brent: Yes. I’ve started publishing on Twitter art on On TikTok, Sorry.

Brent: Sometimes they’re on Twitter, but they’re all on TikTok on my Brent w Peterson TikTok channel Anyways. Free hashtag free joke project. Great. So Nicole homeowner I’m I’m also a homeowner and always interested in the subject. Tell us about how you got into it and what was your journey getting there?

Nicole: Yeah I guess the way I got there was Earlier in my career I was a science major and then I went into technology. And then I got very interested in how technology can make people’s lives better. I know sometimes it makes people’s lives worse, but I know that, for me it was, how can I apply this to really helping people?

Nicole: And then the recession in 2008, housing crisis hit, and I really wanted. Help solve a problem. The problem being that a lot of people got loans that they couldn’t necessarily understand were afford, and that caused a lot of foreclosures and immense pain for economic pain, for many millions of Americans.

Nicole: And so I started a company called Tactile Finance. Tactile Finance, Pronunciation. Pronunciation it. And that was a sort of visualization product for banks to use with their clients or non-profits to use with their clients. And it just provided transparency into the market. And that’s where I got super into the math and.

Nicole: And the consumer need and the consumer approach to housing finance. So it’s been about a 12, 12 year journey to where I am now. Which I would say, I wound that company down in 2015, 16, 2016. And it ran its course and I realized that I really wanted to focus on the consumer, not the inter, B2B business, but focusing on the consumer and the consumer needs.

Nicole: And so I think that journey just gave me a lot of insight. I understand, the, a more sophisticated picture. I understand the bank’s motivation. I understand the role of the non-profits, I understand the mortgage industry as a. . And then I guess one of my superpowers is to take really complicated information and make it digestible for people and an enzyme

Nicole: So that’s where my real passion for homeowner came, which is there’s all this sophisticated knowledge out there, but like people. Regular people like you and me can use it to better their situation and understand the complicated aspects of owning a home, selling a home equity, and things like that actually make an enormous impact on your, ultimate net worth.

Brent: Yeah, I think do. So going back, starting with people with on their first home, how do you help them past rent and getting into their first home? What, Do you have a formula or do Yeah, go ahead. Sorry. 

Nicole: It’s an excellent question. Brent . So I actually have a product, it’s called the Formula, and it’s on our website and it’s like $20.

Nicole: It’s very inexpensive and it’s a system which basically gives you. The ability to see all the diff it’s all the different criteria to be a homeowner. So there’s a lot of different known loans and qualifications to get a loan, and it lets you see where you are in relation to those criteria now, and then plot your way to the quickest, most effective path to being a home.

Nicole: So I’ll just give you an example. If you’re refinancing a house or buying a house the lo what the loan officer is doing in the background is they’re trying to fit you in this formula. It’s called a dti, debt to income ratio. And that’s a blah, blah, blah, gobbly go, industry language, but ultimately they’re taking all the aspects of your financial picture.

Nicole: And they’re trying to fit it into a way in which the bank will say, Brent, you can get this mortgage. But all of that is very opaque to a home buyer. And what this does is it just gives you that information that you can see exactly what criteria they’re using, and there’s ways that you can adjust your goals.

Nicole: If your income is too low and your debt is too. Then the house that you can qualify for is gonna be lower, right? So it’s this formula that you massage and say, Okay, over 12 months, if I can reduce my debt by X and let’s say I pick a house price of, 350,000 then I can get to that goal.

Nicole: That’s a achievable goal for me. Whereas if you don’t have that information, you’re just like, Oh no, poor me. I can’t afford a home. So it’s just empowering people. A lot of people get left out of the housing, out of the home, out of home ownership because they lose faith and they don’t know how they’re gonna get from point A to point B.

Nicole: The real issue is that how, being a homeowner is is a known wealth builder, especially for the middle class. And letting more people get into home ownership is incredibly important. I A lot of, public policies are designed around that. So it’s just like a way to distill this information.

Nicole: Create a plan for yourself and be able to actually see how you can get to that goal. So that’s one of the things that kind of came out of, all this work that I’ve done in the last 12 years is how to make information that’s known in the industry, known by, other people. So it can empower.

Brent: Do you feel as though now what? Home ownership got more difficult after 2008 and are banks getting better at helping people to get into home ownership now compared to right after the crash, the home crash? 

Nicole: I think what the crash did is it changed a lot of laws, like the dod Frank laws.

Nicole: It made lending. It made it, it made a lot of good things happen in the industry that prevent consumers from being taken advantage of. So that, I think, was a net positive for everyone, including the banks. In a lot of ways. It made lending safer. It also, we know that we’ve been through very, up until recently, a very, a period of historically low interest rates.

Nicole: We’re not in that right now, hopefully we will be again, sometime I. Yeah, so obviously that made it easier for people to purchase homes and it also drove home prices up too with, demand and everything like that.

Brent: I think my first home was in the nineties and it was, I think we got an arm.

Brent: Or if a five year fix with an arm after. Something like that. Yeah. And at the time it was like 9% interest or something like that, but with the arm it brought it down or something. I don’t know. How you, do you have a formula me, to help people through that? Because I know like my friends in England where every mortgage is an arm and now they’ve said their payments have doubled all of a sudden because of that adjustable rate.

Nicole: Yes. So arms are, I had an. It’s arms, A lot of mortgage people actually get arms, seven year arms and things like that because the interest rate is low in the beginning. But it’s contingent upon the idea that you’re gonna be able to refinance out of that into a better rate. So it’s a, it’s a. So there there’s some risk in that, that you just really need to know what it is. And I actually made a video it’s on my website, but it explains exactly what an arm is. It doesn’t have a lot of viewers cuz a lot of people don’t know, don’t necessarily wanna follow through the whole five minutes.

Nicole: But I do have a video about product, a product review of. Of a ShopVac that, that hits 35,000 views. But the arm video is not as popular as the ShopVac video. . 

Brent: Yeah, I have some Jack Russell videos that are far more popular than any videos that I can post on YouTube. So I think it is funny what people tend to watch.

Brent: Alright, so back to finance. If so, one of the hard parts as an entrepreneur, Is getting a mortgage. One of the easy parts before 2008 as an entrepreneur was a stated income mortgage, which they don’t do anymore. How do you have do you have specific help for self-employed people as they’re trying to get a mortgage?

Brent: And maybe is there a certain amount of time that you have to either show a W2 or show your tax returns to a. 

Nicole: Yeah, so there’s rules for, so there’s, yeah there’s rules for mortgages. Usually the rule is for W two s is you have to show two years of your income. And it’s two years is really a rule too for business income.

Nicole: So a lot of banks will have you submit. Whatever structure your business is. If you’re, if you’re an LLC or whatever, then you submit that income, to the mc if you’re not getting a paycheck, if you’re taking a draw from the company. So there’s different ways to do it but you touched on a really important thing, which is that, for entrepreneurs, it can be d.

Nicole: If you’re in any of these categories or let’s say an Uber driver, you’re getting income from all these different places and you don’t have a w2, there are formulas that banks use to assess what your income is. So it doesn’t mean that you can’t get a loan. But in business the one thing about business income is that they wanna see that it’s going.

Nicole: So , if you have a year that, you know, so that can be a factor, right? If you have a, if you have, 2021 was a good year and 2022 is a bad year, but 2023 is gonna be a better year. There’s some ease of, getting a loan if you’re showing that your business is improving.

Nicole: And there’s also. There’s always leeway too with in the, these areas where you have to interpret, whether something is improving or not improving. There’s always you can ask for, the manager above the loan officer to take a look at it and see if, if you can submit more documentation.

Nicole: Or provide more information about the industry that you’re in. I know that during the recess, sorry, the pandemic, restaurants, restaurant owners, weren’t a great bet, right? So there’s some industries that really suffer, from declined if you’re getting business income from that.

Nicole: But there’s ways that you can, the more you know about it, the more you can help yourself. Just like anything. . 

Brent: Yeah. Especially I think as an entrepreneur, that’s the hardest part is maybe, and I think it’s even harder as a young entrepreneur. So if, let’s just say you’re in your twenties, you’ve started a business and you’re trying to navigate that process of your first purchase because you don’t have a w2 is it better to go to a big bank or a small bank?

Brent: as a new home buyer or as an entrepreneur? Does it 

Nicole: matter? I think it’s great to really go to a lot of different types, so I always recommend that people also put a mortgage broker in the mix. , because they have a access to many different types of loans. If you go to a bank they’ll have their own products, but if you go to a broker, they’ll be able to search more broadly and find banks that are more suitable for your particular situation.

Nicole: So it’s just good like anything else to shop around. 

Brent: Do you ever talk to people about maybe a sec or investment home or a second home, or somebody that’s buying a home just for Airbnb? 

Nicole: So one of the things that home honoring does, which I got into lately, which I think is a really important aspect of investment finance, which is neglected by wealth managers for the most part is analyzing properties for their long term investment potential.

Nicole: in the case of, if you’re someone who’s not getting a mortgage just to get the lowest monthly rate, which is most of us, right? We don’t want to spend a penny more than we need to on our housing, cuz we have a lot of other expenses. But for a lot of people, they do have a little discretion in how they structure their financ.

Nicole: And you can structure it in a way that gives you, a better return based on your goals, on your investment goals. So one of the things that we offer is a, they call it the reef, which is a real estate analysis. It’s like a financial analysis. So in that case, you’re looking at your current houses, if you have more than one or just one, what the financing is, which your overall goals.

Nicole: And then coming up with different scenarios that could, maximize your, the goal that you’re looking for, whether it’s putting more money in play, whether it’s reducing all your expenses, whether it’s looking to buy a second home, whether it’s looking to buy a home for rental purposes, things like that.

Nicole: It’s a financial investment analysis. And I think, too few people go through those steps to understand their real estate as an investment. And if you consider how much we all spend on our housing, really do, and doing little tweaks, like taking a second look at that, helo that you have, is there a better way to structure it so that you’re spending less?

Nicole: What is the interest rate that you’re on? When does it a adjust, taking a more watchful eye to these major expenses that you have. And a lot of people don’t know that they have options, so that’s a really big focus of home owning right now. 

Brent: Yeah. I think you, you brought up a really good point about your financial advisor and it’s been my experience that a lot of financial advisors don’t look.

Brent: A rental property as a valid investment, they think somewhat probab. Some do I’m not gonna, I shouldn’t generalize so much, but a lot of them would say you put your money in bonds or stocks or, and properties sometimes, or a property or maybe a real estate fund might be something they would recommend.

Brent: But buying a rental property and then trying to. Is sometimes out of their purview. Maybe it’s more common for entrepreneurs to buy doing something like that. But I Maybe just a quick comment on that. Do you feel as 

Nicole: that’s, Yeah, I think that, wealth managers and investment managers, they know their domain very well.

Nicole: And if you think about. There’s a lot to consider already in their domain. They’re not really necessarily trained or equipped to do something, in the real estate realm because real estate investment is itself a large domain. There’s a lot of math and a lot of considerations, tax considerations all kinds of things.

Nicole: Liability considerations. With real estate investment that is, that, I don’t know that you could expect someone to also be an expert in, it’s a different kind of thing. I have a good friend Roger Brown who wrote a book called and I Wish I had it here. He’s a great guy. It’s called Real Estate in.

Nicole: Math or something like that. 

Brent: Roger Brown. I’ll put it I’ll do some research and I’ll put it in the show notes. 

Nicole: Yeah, no he’s an amazing mathematician and so I, I learned a lot from him. He did a lot of work with me over the years, validating the math that I was doing. , helping me make sure that it was solid.

Nicole: And so I learned a lot about real estate investment from him, and I just know that I’ve read his book. It’s very interesting, but it’s it’s something if you’re gonna get into that field, I just don’t think that an investment, a wealth manager is the right person to maybe help you with.

Brent: Yeah, and I guess I never thought about this. Probably there probably are wealth managers that are focused more on the real estate side rather than the just straight up investment side. That’s an interesting, I, that’s an interesting take on things. Yeah. How about what about recommending if somebody were to buy a, an apartment, just paying cash for it.

Brent: Is there ever a good time to do that 

Nicole: right now? Yeah. , I think right now, if you’re a cash buyer, And, you can imagine if the Fed is trying to, slow the economy down and and we know that rates are going up and mortgage rates aren’t tied to that specifically, but they have definitely, the, a lot of relationship to the cost of money being lent, So you know right now you would expect real estate prices to decrease as it’s harder for people to buy homes in this high interest rate environment or high mortgage rate environment.

Nicole: If you’re a cash buyer, you’re, this is your time, Like this is this is in your sweet spot cuz you. If prices are declining and you’re competing against people who have to get a mortgage and you don’t need a mortgage, then you know it’s your 

Brent: time. Yeah. Good. Nicole, we have a few minutes left.

Brent: And it always goes by so fast. If if you have one little piece of advice that you could give somebody, what would that be? To get into the housing market right now. 

Nicole: I think that you should if you wanna be a homeowner and home ownership is for you, you should make it a goal. And don’t give up on it because it does have a lot of potential to improve your financial situation, but at the same time, obviously you wanna know what you’re getting into.

Brent: Yeah, I like that. I like that concept because if you never set a goal, you’ll never 

Nicole: achieve. Exactly. It’s true for everything in life, isn’t it, Brent? 

Brent: Yeah, that’s fairly, that’s a really good way to look at it. So Nicole, as we close out the podcast to give everybody a chance to do a shameless plug, what would you like to plug today?

Nicole: I have a newsletter. It has a lot of subscribers. You can go to my site, homeowner.com/newsletter. You can sign. And also, take a peek at the site. There is the formula, which is for people who want to be aspiring homeowners, and there is what we call the reef, which is financial analysis for getting better returns on your, on the money you spend on home ownership.

Nicole: That’s great. That was really three plugs, . That’s 

Brent: perfectly fine. You had to sit through my joke, no, I 

Nicole: love you could get it. I wanna hear more of your jokes. Okay. 

Brent: You could get extra plugs because of the bad joke. , 

Nicole: the free joke. 

Brent: Yes. Thank you so much for being here today. It’s been such a pleasure.

Brent: And just so many more things we could talk about on this subject. 

Nicole: Yes, Thank you for having me. Wonderful to be here with you. Thank you.