Unlock the future value of your home today.â„˘
Exchanging the possibility of future appreciation for the certainty of cash today. EquityKey is transforming the economics of residential real estate by helping to manage both the risk and cost of home ownership, handing you a check today in exchange for a share of your property’s future appreciation. The money you receive from us is not a loan, there are no monthly payments, and you alone own your home—EquityKey is making an investment right alongside you, believing that more often than not, our share of the long-term appreciation will more than cover our initial payment. In the meantime, that money can provide you with new levels of freedom and control, and help to better align your assets and obligations. You can use it to reduce the size of your loan, diversify your investments, and even minimize the impact of another drop in real estate values, since our payment can provide a buffer against market volatility. For many homeowners, an EquityKey Home Appreciation Rights Agreement provides a sensible alternative to having their financial future bound so tightly to a single asset. After all, few people would pour their savings into just one stock, much less borrow huge sums to do it. Even if you’ve owned the property for years, an EquityKey agreement can be a sophisticated wealth management tool, empowering you to increase your liquidity without having to sell your property.
It’s simply a new alternative to home finance.
The EquityKey Appreciation Rights Agreement How does it work? It’s pretty simple, really. We give you an upfront payment, typically between 6% and 17% of your home’s current value. In return, you choose to sell us a share of any future appreciation, with options ranging from 30% and 75%. You keep all of your existing equity. When you sell the property or transfer ownership, the deal ends. We will use an index to determine how much appreciation has occurred, and a one-time settlement payment is made to EquityKey.
How much money can I receive? EquityKey typically pays between 6% and 17% of a property’s current appraised value in exchange for a share of future appreciation for as long as you own the home. If, for example, a home had an appraised value of $750,000, EquityKey would pay between $45,000 and $127,500. An EquityKey agreement can be tailored to your needs, and the amount that you receive depends on the product characteristics you choose. You decide how much of the appreciation you want to sell, and whether or not the settlement amount at the end of the deal will include any of the money we originally paid you. We can show you various options to help you find the right balance between current and future needs.
How can I use the money? Any way you want. It can be used to reduce or retire debt, for example paying down a mortgage to reduce monthly payments and interest accrued over the life of your mortgage. If you already own a home, it’s a way to free up cash without having to sell your home or take on new debt. You could use it to fund a child’s or grandchild’s education, or to make a charitable contribution, so you can see the results of your generosity in years to come. An EquityKey agreement can also be a useful financial or estate planning tool, enabling you to make investments, manage your assets, diversify your investment portfolio, or transfer wealth. The choices are endless—and entirely yours.
Where does the money come from? EquityKey works with asset managers who invest on behalf of pension funds, endowments, life insurance companies, and other institutional investors. Like us, they’re focused on long investment horizons, and see residential real estate as a good bet. Until now, the only way they were able to invest in real estate was to buy it, manage it, and maintain it. Now, for the first time, EquityKey enables them to invest in real estate without the burdens of actually owning it.
How are home values determined? You pay for an appraisal to establish the initial value of your home. If you don’t agree with the appraised value, you have the right to pay for a second appraisal. Then the two appraisals are averaged together to determine the Initial Property Value (IPV). The IPV is used to determine the amount of the purchase price we agree to pay you and the basis for calculating appreciation.
America’s single largest market: Now open to investment. EquityKey is a new kind of real estate investment company, and an innovator in the economics of home ownership. But in a sense, we’re not doing anything new at all—we’re simply applying sound, proven investment principles to the biggest market of all, residential real estate. Businesses routinely use cash from investors to retire debt, reduce liabilities, and finance new ventures. Now we’re providing homebuyers and homeowners a way to do the same. Residential real estate is the biggest investment market in the US, worth about $25 trillion, more than the combined value of the entire US stock market. Yet until now, there’s been no easy way for homeowners to benefit from outside investment, and no easy way for investors to access the home market without buying property themselves. In this, the founders of EquityKey saw an opportunity. Working as investment managers and financial planners, they realized there had to be a better way to serve clients who had significant assets tied up in real estate, yet had no real way to access those assets without selling the property or taking on additional debt. The result was the EquityKey Appreciation Rights Agreement—a new way to unlock the value of real estate, without loans, monthly payments, or interest charges. Instead of taking existing equity out of a property or burdening homeowners with debt, EquityKey focuses on the property’s potential future value. With this patent-pending approach, everybody benefits—property owners receive cash today, and EquityKey shares in the growth of tomorrow. You don’t need to pay us our share until the property changes hands. We see it as a mutually beneficial relationship. After all, we both have the same goal, which is to see the value of your property increase over the long-term. The only difference is that you can start reaping the rewards today.
How is the amount of appreciation determined? Over the life of the agreement, appreciation is measured using the S&P/Case-Shiller Home Price Index. The S&P/Case-Shiller Home Price Indicies track the changes in real estate values in 20 major US markets. ®
At the start of an EquityKey agreement, we refer to the designated index for the property location and use that value as the Beginning Index Value for the transaction. At the end of the transaction, the Ending Index Value is set based on the value of the index at that time. If the Ending Index Value is more than the Beginning Index Value, the percentage increase determines the appreciation. Because you can monitor this index online, you will be able to calculate the change in value of your property any time you like, throughout the term of the agreement. For example, if your property in San Diego had an initial appraised value of $750,000 in 2000 and you entered into the EquityKey agreement in that year, the Beginning Index Value would have been 113 and the 2012 Ending Index Value would have been 160. The appreciation would have been calculated as follows: Beginning Index Value: Ending Index Value: Appreciation of the Index:
113 160 42%
Initial Appraised Value of the Home: $750,000 $1,065,000 Ending Property Value: (Regardless of actual sales price)
You would then apply the percentage of that appreciation sold to us to determine what is owed to EquityKey. *The amount you owe is based on the Index. The actual sales price of your property does not impact our agreement. This example is for illustration purposes only. The terms and values associated with your agreement will likely be different than those used above. Please be certain you understand the terms and values applicable to your agreement.
Why is an index used to determine the appreciation? The S&P/Case-Shiller Indices are widely regarded as the national benchmarks for measuring home price movement in 20 metropolitan regions. The Index is published by Standard & Poor’s (S&P), and its performance can be tracked or reviewed at any time by you and our investors through the S&P website, standardandpoors.com*. The index helps to mitigate the subjective nature of appraisals, and is viewed as an advantage by many EquityKey clients. If you make improvements to your property after entering into the agreement— adding a bedroom or remodeling the kitchen, for example—the increase in market value because of those improvements will not be reflected in the index value used to calculate our share of the appreciation. Any difference in appreciation above the index value will be yours to keep. * http://us.spindices.com/index-family/real-estate/sp-case-shiller
What types of properties qualify? Both primary residences and second homes are eligible, providing they meet or exceed minimum value requirements in your market. The maximum combined value of all mortgages may not exceed 65% of the value of your home.
How do I qualify for the EquityKey agreement? To qualify for the EquityKey agreement, you must be between 18 and 85 years old, and satisfy certain requirements showing you are able to continue any payments and maintenance required on the home.
What are my obligations under the agreement? Because EquityKey views your home as collateral for our investment, you must continue to care for your property. This includes things such as maintaining the condition of the home, making mortgage and property tax payments on time, and keeping the home insured at its full replacement value. You should read the agreement carefully as it outlines all of your responsibilities and what can happen if you don’t fulfill your obligations.
How long does it take to qualify, and what are the costs? You simply submit an application and pay for the appraisal of your home. There are no other fees or closing costs. If your application is approved, it typically takes 4–6 weeks to complete the transaction and send you your funds. If it is not approved, EquityKey will refund the cost of the appraisal.
Application Package Provided to You Application Returned to Us and Approval Schedule Appraisal Performed and Term Sheet Presented EquityKey Appreciation Rights Agreement Signed County Records Performance Deed of Trust Purchase Price Paid to You
EQUITYKEY APPLICATION PROCESS AND TIMELINE
Can I refinance? Yes. You can refinance, or even take out additional loans on the property, though refinances of existing loans and all new loans must be approved by EquityKey. The structure of your new loan must satisfy our guidelines, and the loan-to-value ratio generally cannot exceed 65%.
Can I move? Yes. There’s no requirement that you live in the property. As long as you maintain ownership and the condition of the property, you can live in another home, and continue to share the appreciation with EquityKey until the property is sold.
What if I have to sell in the first 7–10 years? We view our investment in your property as a long-term one. In order to give your property the opportunity to appreciate, time must pass. If you take some action that cuts short our investment horizon, such as sell your property, we would not have the opportunity to realize the full potential of our investment. This is why a Minimum Settlement Amount will apply if you sell, transfer, or change ownership (or otherwise breach the agreement) in the first 7–10 years, depending on the terms of your agreement. The Minimum Settlement Amount is simply the purchase price we originally paid you, plus a fee designed to cover our origination costs and an investment return. If the amount of appreciation we are entitled to (as measured by the index) exceeds the Minimum Settlement Amount, the minimum does not apply.
What happens if I sell my home and I get more than the Index says it’s worth? What if I get less? All we’re entitled to is our portion of the appreciation determined by the S&P/Case-Shiller Index. If you’ve worked hard to maintain or improve your property, and that effort results in a higher sales price, we think you deserve to enjoy the benefits of your hard work. Any amount above our portion of appreciation, calculated using the S&P/Case-Shiller Index, is yours. It’s important to note, however, that if you sell the property for an amount that would indicate the property has not appreciated as much as the index, we still are entitled to our portion of appreciation that is calculated using the S&P/Case-Shiller Index, regardless of the actual sales price of the property. If the proceeds from the sale are not sufficient to cover the amount we are entitled to, you are responsible for the difference. There is an incentive, therefore, for you to maintain and care for your property and to seek the highest selling price possible. Remember, you can always track the S&P/Case-Shiller Index to determine the amount of appreciation we are entitled to under the agreement. If you’re thinking about selling your property, you can check the index at standardandpoors.com* to determine our share of the appreciation.
What if I want to transfer the agreement to a new property? We will do our best to accommodate you. The EquityKey agreement is intended to last until the sale of the original property. However, if you want to sell your home in the first 7–10 years and continue in the agreement to avoid the Minimum Settlement Amount, you can ask EquityKey to transfer the agreement to the new property. This is subject to approval by EquityKey, and a new agreement with new terms will be needed. But if you are looking to move, you may be able to take the EquityKey agreement with you.
What if my family wants the home after my death? If your heirs or estate wish to keep the property in the family, they can do so simply by paying EquityKey the amount we are entitled to receive based on the S&P/Case-Shiller Index, ending the agreement.
More choices, more freedom.
Let EquityKey change the way you look at home finance.
4747 Executive Drive, Suite 450 San Diego, CA 92121
© 2014 EK Investments, LP. All rights reserved. This material does not constitute an offer to enter into an EquityKey Home Appreciation Rights Agreement, and we will not be bound to pay you any amount unless and until you and we enter into a final and binding EquityKey Home Appreciation Rights Agreement. The terms of your Agreement will depend on numerous variables, including some that you select, and those terms can and will differ from others in similar circumstances. We reserve the right to decline to make you offer. Any information in these materials is qualified in its entirety by the terms of a final and binding EquityKey Home Appreciation Rights Agreement and you will receive related disclosures before you enter into an Agreement. You will need to read those materials carefully, and none of the information above in any way modifies or qualifies the terms of any final documentation between us. EquityKey uses an Index to determine the amount of Appreciation or Depreciation in the Agreement. There is no guarantee or assurance that your property will perform similarly to the index or that you will be able to sell your property for more than its current value, or even for its appraised value. The value of your property might decrease, and might decrease significantly, after you enter into an Agreement with us. An EquityKey Home Appreciation Rights Agreement is not the right choice for everyone. If you are planning on selling your property during the first 7-10 years of our Agreement, you may owe us a Minimum Settlement Amount. The Minimum Settlement Amount you will owe us will be more than what we pay you. If our Agreement terminates, you may have to pay us a settlement amount regardless of whether you have proceeds or other cash or liquid assets to pay it. If you breach or default under an EquityKey Home Appreciation Rights Agreement, we may foreclose on your property and we may pursue other remedies. Before entering into an EquityKey Home Appreciation Rights Agreement, we encourage you to discuss and review the transaction with your heirs as well as your legal, tax, and financial advisors to see if an EquityKey Home Appreciation Rights Agreement is right for you.. You and your heirs, or anyone who may have an interest in your property, may receive less from your property in a sale or other transfer than if you do not enter into a transaction with us. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC (“S&P”), Case-Shiller® is a registered trademark of Corelogic Case-Shiller, LLC (“Corelogic”), and these marks have been licensed to S&P Dow Jones Indices LLC and sublicensed for certain purposes to EK Investments, LP (“EquityKey”). The S&P/Case-Shiller Home Price Indices (the “Indices”) are proprietary to Corelogic and have been licensed to S&P Dow Jones Indices LLC and sublicensed to EquityKey in connection with Appreciation Rights Agreements (“Agreements”). S&P Dow Jones Indices LLC is the exclusive licensor of the Indices. More information on S&P Dow Jones Indices LLC and its affiliates including McGraw Hill Financial, Inc. and CME Group Inc. is available on EDGAR and on www.spdji.com. The Agreements are not sponsored, endorsed, sold or promoted by Corelogic, S&P Dow Jones Indices LLC, S&P, or their respective affiliates or third party licensors (collectively, the “S&P Dow Jones Indices Parties”). None of the S&P Dow Jones Indices Parties make any representation or warranty, express or implied, to the owners of the Agreements or any member of the public regarding the advisability of investing in such contracts, agreements, derivatives or securities generally or in Appreciation Rights Agreements particularly or the ability of the S&P/CaseShiller Home Price Indices to track the performance of the real estate market. S&P Dow Jones Indices Parties’ only relationship to EquityKey with respect to the S&P/Case-Shiller Home Price Indices is the licensing of the Indices and the related trademarks identified above. The Indices are determined, composed and calculated by Corelogic without regard to EquityKey or the Agreements. The S&P Dow Jones Indices Parties have no obligation to take the needs of EquityKey, homeowners, or the owners of the Agreements into consideration in determining, composing or calculating the Indices. None of the S&P Dow Jones Indices Parties are responsible for or have participated in the determination of the prices of the Agreements or the timing of the issuance or sale of the Agreements or in the determination or calculation of the equation by which the Agreements may be cash settled, bought, sold or otherwise transferred. The S&P Dow Jones Indices Parties have no obligation or liability in connection with the administration, marketing or trading of the Agreements. There is no assurance that investment or home finance products or any financial transactions based on the S&P/Case-Shiller Home Price Indices will accurately track the performance of the Indices or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a security within an Index is not a recommendation by the S&P Dow Jones Indices Parties to buy, sell, or hold such security, nor is it considered to be investment advice. NONE OF THE S&P DOW JONES INDICES PARTIES GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE INDICES OR ANY DATA RELATED THERETO OR ANY COMMUNICATION WITH RESPECT THERETO INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS). S&P DOW JONES INDICES PARTIES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES PARTIES MAKE NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIM ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY EQUITYKEY, BUYERS OR SELLERS OF THE APPRECIATION RIGHTS AGREEMENTS, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE INDICES OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES PARTIES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE.