DANGER: Home Investment Loans & Point.com Exposed.

hey everyone meet kevin here in this

video i have to talk about what is

possibly the ugliest

dirtiest

legal scam

in real estate that i have seen yet and

it has to do with home investment loans

now many of you know me some of you

might not know me i've been in real

estate for 11 years a real estate broker

real estate investor i own over 20

million dollars of real estate with my

wife no partners it's just us got about

50 equity in those properties we love

real estate and we also love loans to

the point where i was also a licensed

lender at one point while i was selling

real estate actively so i've been

through va loans fha loans home equity

loans home equity lines of credit

refinances cash out refinances hard

money loans private money loans you name

it we've even used margin from stocks to

cash buy fixer uppers and then refinance

after i mean we've done lots of

different things so when i hear of new

loan options sometimes i get excited i'm

kind of interested like okay let's hear

it what do you got and so then i came

across the home investment loan where

the lender will invest in your home with

you give you money up front you make no

monthly payment but in return you share

some of the appreciation of your

property with the lender and if home

values fall well they lose money too so

let's understand what's really going on

here and if these are actually worth it

so take a look at this here's just an

example of one type of company that does

this look happy family why are they

happy well they're happy because you

could get up to 350 000 with no monthly

payments

ever

and if you are a homeowner all you have

to do is click this shiny little yellow

button over here and go ahead and throw

in what your home address is so i just

grabbed a home address off of zillow

over here it's not a property i own i

don't know anything about this property

just a recent sold in in the city that i

live in and so let's see if this home

qualifies so you put in an address and

really what this software is doing now

is it's just pulling the zillow estimate

from zillow pretty close to at least and

they're going to throw the home value

here and it doesn't even matter what you

think your home value is you can make

this number as large or as small as you

want it does not matter what you put in

here you just hit continue and the sole

goal of you filling out this form is to

get your information first name last

name email address phone number because

obviously they want to sell you this

product now it's worth noting over here

on the right side that you'll see these

sort of generic things here like point

provides lump sum payments of between

thirty five thousand and three hundred

fifty thousand dollars yes yes that

sounds great at the closing of your home

we'll deduct three to five percent for

processing okay well i mean so would any

lender any lender would charge some form

of fee on the loan amount you know if

it's a large loan they charge a lot less

if it's a small loan they charge more

right these are gonna be smaller loans

so three to five percent make sense i

mean five percent on a hundred thousand

dollar loan uh you know i mean it's

chunky it's 5k in processing fees uh you

know three to five k but okay there'd be

processing fees if you did a cash out

refinance or whatever be a few thousand

dollars of processing fees uh and uh an

escrow fee typically between 450 to 750

and an appraisal fee now it's worth

noting that just because you filled in a

fancy number over here does not mean

that your home is actually going to

appraise for this in fact this number is

entirely meaningless the appraiser does

not care licensed appraisers are going

to use comps in your neighborhood and

then they're going to evaluate the

upgrades the positives and minuses of

your homes versus other homes and then

they're going to give you a valuation

which might be substantially different

from the zillow valuation worth noting

but so far this is typical of any loan

process this would be true with home

equity lines it'd be home with true of

home equity loans true of refinances

you're always stuck with that appraiser

right so so far this sounds good i mean

35 000 to 350 000

with

no monthly payments golly i mean sign me

up right

well not so fast

see here's something to know about how

point.com works

and a lot of these these home investment

loans

first

what

you want to remember or ask yourself is

what do you think about the real estate

market does the real estate market tend

to go down over time

or does the real estate market tend to

stay flat over time

or does the real estate market tend to

go up over time well i think all of us

can agree that over time the real estate

market goes up now the real estate

market doesn't move in a straight line

though sometimes we get these crazy runs

up and these crazy runs down right we

have real estate cycles but on average

we tend to see homes appreciate in value

over time and this makes sense because

the value of homes tends to ride a

little above whatever inflation is so as

things get more expensive homes get more

expensive this makes intuitive sense now

what

point.com and these home investment

companies are doing is they're saying

hey we'll invest in a slice of ownership

of your home they don't actually go on

title so it's not like you're deeding

them anything because then you could

alienate your lender but you're making a

contract with point.com and in return

you have no monthly payments which is

kind of cool because you get money

but that won't show up as debt to income

like when you go qualify for a rental

property or another property right so

that's kind of cool you could get a lump

sum of money and all you're doing is

promising to share in the appreciation

with point.com so intuitively you think

oh well if my home is worth

five hundred thousand dollars

and i give a slice or of of my home's

value away to point.com uh like let's

say 10

then hey i'll get a 10 lump right well

that would make sense like if i came to

you and you said hey kevin uh do you

want to buy 10 of my home you know you

could you could give me 50 grand and you

could have 10 ownership well that would

make sense right but that's not exactly

what point.com is doing in fact

point.com is doing what i think is kind

of shady now i get it it's a business

they're in it to make money but here's

where things get a little shady

if they invest about ten percent in the

value of your home or fifty thousand

dollars which is what we'll see on their

website in just a moment

they're not going to take a ten percent

share they're actually going to take a

thirty percent share of any future

appreciation

so they invested about ten percent the

value of your home but they're taking 30

percent of your appreciation in return

for that

that's a big old premium

but wait a minute they're also not going

to invest in your home at its current

market value they're going to invest in

your home between 15 to 20 percent below

market value so they're really investing

in your home at let's say 420 000

when you get 50 000 from them on a 500

000 home now you might not believe that

so take a peek over here let's go

straight to their website and let's

explore on their calculator see how much

a homeowner could get today and how much

it would cost here's a five hundred

thousand dollar home point will invest

fifty thousand dollars

and in exchange you give up thirty

percent of the appreciation see point

share of appreciation in exchange for

points investment today point receives a

share in the home's appreciation above a

risk-adjusted home value the share is

determined during underwriting so it'll

be something likely around 30

of course to be determined by

underwriting but the expectation is it's

going to be around 30

so they're investing in the scenario

that they have on their website they're

giving someone 50 000

which is 10 of the home value in

exchange for 30 of the right to whatever

future appreciation happens that's a 3x

rip off first of all

but here's where it gets a little funny

this risk-adjusted home value and i'm

going to show you a perfect scenario

where this is just disgusting okay watch

this because point shares and downside

and if market values go down point

implies a risk adjustment of 15 to 20

percent to offset small declines at home

value and protect its initial investment

okay interesting so what they're saying

is your 500 000 property in their mind

is only worth 420 000

now this becomes really interesting when

you go to sell your property let's say

you sign this contract with point and

two years later you decided i gotta sell

i just have to sell this property i

can't keep it away i'm gonna sell it

let's say after two years your home is

literally still worth five hundred

thousand dollars

well think about that for a moment just

ignore point.com for a moment think

about that

so somebody invested in your home while

your home was worth five hundred

thousand dollars and they are going to

take 30 of your future appreciation well

two years later you sell it for 500

grand well there hasn't been any

appreciation right

wrong your home appreciated eighty

thousand dollars your home actually

appreciated from 420 000 to 500 000 in

their mind which means they get their

money back and their fee because they

just built that in so literally

if you sign this contract and then right

away you want to pay it off you're

upside down let's say you want to pay it

off after two years how much would you

pay look at this no change in home value

they literally tell you in their

calculator right here future home value

is flat five hundred thousand dollars

well you're going to be paying

point dot com seventy thousand

one hundred dollars that's the 50 grand

back

plus another twenty thousand one hundred

dollars wait a minute twenty thousand

one hundred dollars is the extra that

you're paying so twenty thousand one

hundred dollars plus the processing fees

let's say it was five percent so that's

twenty five hundred dollars in

processing fees plus the escrow fee say

six hundred dollars plus the appraisal

fee say six hundred dollars

so excuse me your home value stays flat

and for your right to get that 50 000

you're paying 23

800

which is almost 50 of the loan amount

that's if the property's value stays

flat so let's do math on this because

the big sales pitch here is that you

don't make any payments oh no monthly

payments right that's the big sales

pitch well what if you took out a fifty

thousand dollar home equity line of

credit well fifty thousand dollar home

equity line of credit at four percent

interest would cost you somewhere around

uh four percent interest would cost

somewhere on two thousand dollars a year

well wait a minute two thousand dollars

a year we just spent twenty three

thousand eight hundred dollars after two

years on point.com if after two years

you pay this thing off and you spend

twenty thousand eight dollars that's

like paying an annual rate

of eleven thousand nine hundred dollars

on your fifty thousand dollar loan

that's like paying

23.8

interest in two years that's like a

credit card that's a rip-off that's an

insane rip-off

now what if you held it longer okay well

then it'll be less of a rip-off right

let's go out to

seven years the average length of time

somebody keeps a loan is seven years

so after seven years you'd be paying 23

800 on top of paying that money back

let's say after seven years your home is

literally still flat

like you just bought in an area where

there's no appreciation your home value

has not changed at all that's twenty

three thousand eight hundred dollars

plus the processing fee plus the

appraisal plus the uh

the the whatever uh escrow fee that's

twenty seven thousand five hundred

dollars twenty seven thousand five

hundred dollars divided by seven years

means you're paying interest of three

thousand nine hundred twenty eight

dollars per year

on your no payment loan

and if i divide that by fifty thousand

dollars to see what interest rate that

looks like that means i'm basically

paying seven point eight percent

so

after seven years you're still paying

seven point eight percent interest

essentially

that's nuts

so

if you pay it off soon you're basically

paying nosebleed credit card interest if

you pay it off during an average amount

of time you're paying 7.8 percent

but wait a minute what if the property's

value goes up over 70 years or over 70

years seven years over seven years let's

say it's now worth six hundred thirty

six thousand dollars okay well point is

going to get a hundred fourteen thousand

four hundred dollars minus the original

fifty thousand dollars that's principle

so they're gonna get a sixty four

thousand four hundred dollar fee plus

the processing fee appraisal fee and

escrow fee so they're going to charge

you 68

hundred dollars

to have this loan for seven

years

as your home is appreciated because

remember they're sharing in the

appreciation right that's like paying

nine thousand

seven hundred twenty eight dollars per

year and if you were paying that on a

home equity line of credit for 50 000

that would literally be like paying 19.4

interest per year

so

so far

if you like the idea of no monthly

payment

you're gonna take it up you know the

behind in a different way and it's just

gonna be behind the scenes this is

scammy fugazi where they're making you

feel like they're investing in you but

you're really signing up for a big fat

ugly credit card now in what scenario

does this make sense

well it somewhat makes sense if your

home value goes down but wait a minute

wait a minute wait a minute they have a

risk adjusted value here

so let's say you have a 500 000 home

today

and it falls to 420 000

like you bought a home for 500 grand and

all of a sudden one year two year three

year five years later it's worth

16 less

well wait a minute like the home value

went down right i mean point should

share in that that reduction right

no they don't at 420 because that's

their zero point at 420 they literally

still get their 50 000 back they just

might not charge you those additional

appreciation fees you'll still have your

processing and appraisal and all those

other fees though right

now if your home value went down

to 375 which would mean your home value

fell 25

and

right when your home value fell 25 you

decided to sell at the bottom of the

market for some reason okay

in that scenario

wow

you got them you got 13 400

off of their loan but you just sold at

the bottom of the market like the odds

of of this larger the odds of you taking

this loan

and then the market declining

beyond their risk adjusted 15 to 20

percent discount

and then you selling at the bottom of

the market in my opinion is very low

it's possible but it's very low so in

other words the scenario where you win

is a very small chance my guess is less

than 10 chance that would happen

probably honestly way less than that but

let's just go with that that means 90 of

the time you're probably paying probably

okay i'm making an opinion here

point.com don't sue me it's not my fault

i think you're running a scam this is an

opinion video and i could say whatever i

want in an opinion video and i think

that your company is scamming people

because you're telling people they don't

have a monthly payment but it's really

like you're charging them credit card

nosebleed interest rates

in no scenario in like 90 percent of

scenarios here not in this area but in

90 of scenarios here i think homeowners

are getting ripped off

offering 10 of their homes value at a

15 to 20 discount

to give up 30 of their homes

appreciation

i am blown away like quite frankly this

is

in my opinion such a scam

i wouldn't be surprised if people are

watching this video thinking how can i

invest in the company doing this because

that sounds really profitable

except i don't invest in what i think is

a scam i would not touch this company

with a 10-put poll i would not use this

product i would not invest in the stock

i hope companies like this disappear

because

i think they are misleading people and

people aren't actually doing the math to

realize how badly they're getting

screwed like if you want to do a loan

like this

no scratch i was gonna say like call me

because that's easy money but then i'd

be scammy that's just like wrong like no

no it's just don't do it so

now what did we learn

and i know i know i'm a little

aggressive and potentially a little too

heavily one-sided here but look your net

worth does nothing to me i it doesn't

matter if your net worth is negative a

million dollars or a hundred million

dollars it doesn't matter the reason i'm

making this video is to provide value

because i feel like this is a rip-off i

have no interest whether you use them or

not it does zero difference to me it's

not like i'm a lender today i'm not a

licensed lender it's not like i want you

to call me up i will not sell you a

house i don't actively sell people's

houses anymore i will not help you buy a

house and i will not do a loan for you

so in my opinion i have no conflict of

interest here i just think this is a

rip-off that's it that's all i'm sorry

rant over thanks for

watching uh if any of this stresses you

out though you can always go to

medkkevin.com life and get life

insurance in as little as five minutes

thanks so much folks

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