Tapping into home equity can be an attractive proposition for cash-strapped owners seeking alternative financing. According to Freddie Mac, more than 80% of borrowers who refinanced mortgages in Q3 2018 chose to cash out, withdrawing a collective $14.6 billion in equity from their homes.

New York-based EasyKnock hopes to capitalize on this trend by buying homes and leasing them back to owners at a fixed rate. The company today announced that it’s raised $215 million in debt and equity from new and returning investors ($12 million of which was equity), which brings its total raised to over $300 million following a $103.5 million debt-equity round last September.

Blumberg Capital led the round, with contributions from Correlation Ventures, Rubicon Ventures, and existing investors Montage Ventures, Kairos, FJ Labs, and 500 startups. CEO and former Goldman Sachs vice president Jarred Kessler said the fresh capital will be used to fuel the launch of new products and enable EasyKnock to add to its team, expand its national footprint, and enhance its technologies.

“We are continuing to innovate in home ownership and flexibility,” Kessler, who founded EasyKnock in 2016 with Ben Black, said. “With [our new portfolio offerings], we’re offering people a bridge between their current home and their future home, which is something millions of Americans need.”

EasyKnock

EasyKnock pitches its Sell and Stay program as a hassle-free solution for the roughly 23% of homeowners who can’t secure traditional home equity financing through a loan, refinance, or mortgage. Toward this end, its plan — which is available in Texas, Florida, Georgia, Kansas, Michigan, Arizona, Indiana, and Ohio, and will expand to over 30 more states and 500 markets in 2019 including Colorado and Virginia — doesn’t have interest payments or minimum credit score and W2 requirements.

Owners begin by filing an application to see if their home qualifies. EasyKnock estimates the value of the home, checks their mortgage status, and creates a custom contract based on their needs (i.e., cash upfront or lower monthly fees).

Then, EasyKnock and customers agree on a funding amount, a rental price, a repurchase price, and an initial lease term. Typically, the company pays 70% of the home’s independently appraised value, and rents at an average of 10% of the home value.

The rental period begins immediately, but customers can buy back their homes at any time at the agreed-upon upfront price. (EasyKnock levies a 5% fee.)  Alternatively, they can authorize EasyKnock to sell the house and reap a portion of the profit, minus a 1.5% to 2% processing fee on the final sale price.)

So how much does the average customer make, really? EasyKnock pegs the annual interest at about 9.5% and cash-out at between $60,000 to $450,000. That’s compared with 15% interest and $50,000 to $250,000 cash-out for a typical auto loan.

EasyKnock has been compared to Roofstock, which recently secured $75 million in venture capital. But unlike Roofstock, which matches home sellers as renters with investors, EasyKnock assumes ownership of the homes itself, and it pays for property taxes, insurance, and maintenance.

It’s more like Palo Alto startup Point in that way, which extends up to $250,000 (over a 10-year term) in equity financing to homeowners and homebuyers in 13 states. Point raised $122 million in March.

Alongside the funding announcement, EasyKnock today unveiled MoveAbility, which was designed for those looking to move but who want runway to find their home before closing a sale. Eligible customers get a lump sum of cash that improves credit scores and eases the down payment on the next home, and stay in the home as renters for three to 18 months while they look for a new place.

“It’s difficult to get a new mortgage until you have paid your current mortgage,” said Kessler. “This keeps many homeowners in a state of limbo. MoveAbility allows homeowners to pay their mortgages off without having to uproot the family, and without having to settle for a lower price.”

To date, EasyKnock has purchased about 100 homes in 5 southern states, a number which it intends to grow to 2,000 this year. It says the bulk of its clientele are homeowners aged 45 to 65 living within 50 miles of major metropolitan areas.

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