Crypto: a gateway drug to... building a property startup?

My financial literacy was admittedly poor before I began exploring the world of cryptocurrency and smart contracts in 2014. I grew up in Salisbury, South Australia, where ideas about getting rich were commonplace, but wealth-building was not a part of our vocabulary.

If we wanted to buy a stock on the ASX – pretending such a thought had even crossed our minds – barriers were high and participation was prohibitive, with minimum purchase amounts that outstripped most savings balances, let alone non-trivial brokerage fees. Such factors made it impossible for many young people to get into the stock market, especially in places where pay cheque to pay cheque living was more common for families than not. To us, the stock market seemed like a game for people who were already rich. We have since seen a democratisation of access to shares, with the advent of micro investing and even no-fee investing apps which enable anyone and everyone to build wealth beyond renting out their time.

Flashing forward to the early twenty tens, like many of my peers, through the rise of cryptocurrency I not only deep-dived on distributed systems and cryptography, but how markets operate and how our macroeconomic systems work in ways that were previously opaque or unexplained. It took crypto, not our schools, to educate so many of us on so many important financial concepts. It's thanks to this process that I also began to truly understand the power of property as a financial tool that can be leveraged to accelerate the building of wealth, at a time when my opinion was that I might continue to rent, perhaps in perpetuity, investing only in other assets instead. Unfortunately, what we do see today is many young people giving up on home ownership aspirations, putting any disposable income they have into shares alone.

Buying and trading shares is better understood and more accessible than ever before, even for the youngest of generations, yet home ownership still isn’t. As house prices rise, increasing deposit amounts needed to purchase a first home are among the largest barriers to unlock the elusive wealth-building benefits of an investment in property. The importance of diversification of investments is widely understood, and no one should be forced into ruling out property as an asset class because of an ill-founded perception that it’s now out of reach.

That’s why we’re building OSQO?

Like modern stock trading apps democratising access to investments in companies, it’s time to lower the barriers to property investment in similar ways. Our team is working hard to solve the problems associated with the increasing divide in homeownership between generations, whereby vast property portfolios are held by Boomers, yet Gen Z struggle to even get their foot in the door... any door. This is dangerous territory, exacerbating themes of a rent seeking society – metaphorically, and literally.

So, how do we get more people into the property market and into a better financial position? By addressing the key issue of property attainability, not to be confused with “affordability.” Even with property prices at record highs, being able to afford mortgage repayments isn’t the insurmountable part of the equation for many Australians, but coming up with the deposit for a mortgage to begin with often is. A 20% deposit for an average property in many of our cities is now multiples of a median annual salary, whereas for Boomers it was fractions of an annual salary. Ditching the smashed avocado on toast simply doesn't make up the difference.

Except for limited government schemes, first home buyers without a 20% deposit have needed lender’s mortgage insurance (LMI) to avoid many years of continuing to save for that deposit and missing out on the capital growth of a property in the meantime. However, insuring the bank using LMI can cost many tens of thousands of dollars when capitalised into a home loan.

Enter OSQO’s first financial product, which we are making available to Australians in 2023. We're investing in deposit shortfalls through our newly devised "Deposit Gap Loan" (DGL) model. Like LMI, it helps home buyers get in early to benefit from capital growth sooner, however DGL can also save home buyers genuinely significant amounts of money in comparison to a scenario where LMI is payable. Money that can instead be spent on renovations, education, or other improvements to wellbeing beyond the house itself.

By way of example, buying an $800,000 home with a loan of $690,000 and $110,000 in savings, LMI could cost a home buyer as much as $55,458 over the term of the loan. Alternatively, by choosing a DGL to fund their deposit gap, a home buyer could save $29,375 of that cost. Of course, the actual savings may vary depending on a range of factors such as the loan purpose and a borrower’s personal circumstances.

Despite periodic dips, values continue to rise across the housing and share markets. These markets are where much of my net worth currently reside – not in a bank account earning ~2% in interest when the inflation rate is ~3% or more; not "saving" it when doing so is merely eroding the value of my money over time. Getting into the property market sooner rather than later is important not only to avoid erosion of savings value due to inflation, but in order to benefit from capital growth in property value for future leverage.?Helping more people do just that is what drives us.

Investing in the home ownership of others?

Beyond our mission to get more people into the property market and into better wealth-building positions, over the coming months I look forward to sharing more about our plans to enable the broader market to invest in the home ownership of fellow Australians, for the benefit of all. We'll also be revealing how the technology we’ve been developing over the last four years will be applied to other financial products through impressive partnerships, locally and abroad. Shrinking the intergenerational home ownership divide is, in fact, just the beginning...?

In the meantime, you can learn more about the OSQO Deposit Gap Loan at depositgaploans.com.?