How this Monash graduate is changing the face of home ownership

August 19 2024

Monash Business School alum Michael Ragavan, the force behind Our Leg Up, is reshaping Australia’s real estate landscape with a blend of financial wellbeing, social impact and innovation.

As the child of immigrants who fled genocide in Sri Lanka, Michael Ragavan has a powerful desire to contribute to the country that provided his family with a new home.

The Monash Business School alum has come up with an ingenious way to fulfil that commitment - giving first homebuyers a much-needed 'leg up' into the real estate market.

“I’m very grateful to God to have been born here, and I have a strong sense of duty to give something back by building a business that aligns with my values,” Mr Ragavan said.

Drawing on his background as a mortgage broker and investment banker, in 2021 he started Our Leg Up, creating a new financial instrument that brings together two sides of the real estate market –  property owners and aspiring homeowners – to build each other’s financial wellbeing.

“For most Australians, their home is their largest asset and most important vehicle for wealth accumulation,” Mr Ragavan said. “The number one driver of generational wealth inequality is not owning a home.”

'The biggest barrier to home ownership is saving a deposit'

Mr Ragavan has taken the concept of guarantor home loans and turned it into a market-first, diversified investment product.

At the heart of his business model lies a mission to unlock Australia’s $7 trillion-plus reservoir of real estate equity as a force for good, helping the two out of five Australians missing out on home ownership.

“The biggest barrier to home ownership is the deposit, and Our Leg Up essentially removes that barrier,” he said.

“Instead of having to rely on rich parents, we’ve brought together aspiring homeowners and people with equity in their property who can provide a substitute for a full deposit.”

Our Leg Up partners with banks and other lenders to help people buy their first home with a deposit of as little as 5%, at the same interest rate as a 20% deposit, allowing them to also save on lenders mortgage insurance.

“This means they can buy 5-10 years faster and save tens of thousands of dollars in the process -  it’s the most economical option on the market, outside of government guarantees.”

For property owners, the model enables them to earn a passive income on the equity sitting idle in their real estate, without any capital outlay.

“Our product has an attractive risk-to-return profile underpinned by Australian residential real estate, offered in a managed investment scheme structure, and regulated by the Australian Securities and Investments Commission (ASIC).”

A global force for social impact

Mr Ragavan said because Our Leg Up had been built on the Basel III international banking framework, the concept could be rolled out in more than 100 countries across the globe, including the UK and USA.

“We’ve created the ability for people to use the equity sitting idle in real estate as a force for social good, and we want to expand that to the world,” he said.

While the model is currently aimed at the housing market, there are many other areas of need where it could be applied.

“We’ve been looking at the most pressing need, where we can have the most impact, and at the moment, that is housing,” he said.

“However, with our partner lenders, we could use this to support corporate debt against real assets, or finance green energy and infrastructure projects. We’ve created a new equity unlock mechanism that we can point in any direction.”

How 20 minutes changed the game

In November 2022, Our Leg Up was featured on The Property Couch podcast for a pivotal 20-minute segment.

“From that one podcast we got more than 100 leads and $15 million in equity commitments, well before we were ready to launch,” Mr Ragavan said.

That has now grown to over $40 million – and they haven’t even started marketing.

“We thought it would take a bit of time to educate the market about our new product, but the response has been amazing,” he said.

“It just shows there’s significant pent-up demand for our product, and that Australians are very willing to help others get a leg up into the housing market. Of course, it helps that their good deed allows them to make a solid risk-adjusted return on often inaccessible equity”.

Accelerating his vision

While the combination of finance and technology has been a winning formula for Mr Ragavan, he also credits his success to the opportunities he received through Monash University.

“I took part in the Monash Industry Team Initiative and spent six months working at HP in San Francisco, then the Ben Gurion exchange program to Tel Aviv, both of which were valuable learning experiences” he said.

He has recently also completed the Monash Generator’s Accelerator program.

“It’s the only program in the country focused on developing the founder, rather than just the company,” he said.

“The support and opportunities are second to none – you’ll never be in a room with more people who act with your best interests at heart!”