We recently connected with Yair Benyamini, CEO and co-founder of Lendai.
Founded during the COVID-19 crisis, the world’s first disruptive digital lender allows foreign and non-resident investors to purchase properties in the United States through an online mortgage approval process that takes about a week. According to Lendai, this is much faster than what American buyers typically have access to.
During our conversation, Yair explained how foreign investors plan to reap the rewards of the $ 3.9 trillion mortgage market – which is notably the largest private debt market in the world. Yair also believes this market is “ripe for disruption”. In addition, he commented on the common obstacles or challenges that foreign investors face and how Lendai addresses those challenges. He also discussed the impact of the coronavirus outbreak on investments.
Our conversation is shared below.
Crowdfund Insider: You mentioned that your business was founded during the COVID-19 pandemic.
You described your business as a disruptive, digitally-focused lender that allows foreign and non-resident investors to buy property in the United States.
Please explain how you support your clients and tell us more about your main value proposition.
YaÃ¯r Benyamini: Foreign investors who live outside of the United States face serious obstacles when trying to purchase American investment property. The vast majority of the time, their mortgage applications will automatically be turned down, even if the property they are interested in is considered a solid investment by the bank.
Even if the investor has an impeccable credit history in their country of residence, US banks are reluctant to lend to potential investors with little or no established credit history in the United States. It is almost impossible to assess the creditworthiness of a foreign investor, which means that banks are unlikely to work with them.
This creates a scenario where the only foreign investors who can buy in the United States are those who already have all of their money up front – that means the super rich. Your average middle class investor is out of luck. It’s also essential to remember that in real estate time is of the essence, so a good deal will likely be struck while a foreign investor is dragged into a round-trip negotiation with a potential lender.
And the problem exists on both sides of the fence. A foreign investor will have no chance of obtaining capital from a bank in their own country for a purchase in the United States, as the local bank has no way of analyzing the risk of the transaction. Not only will the foreign bank encounter obstacles in repossessing the property in the event of a default, but it will also not have the ability to determine whether or not the property is a good investment.
Because of these huge information gaps, US banks, foreign banks, and private lenders are reluctant to extend loans to foreign investors. This effectively restricts foreign investors from making investments solely on the basis of their own funds. And that’s exactly the problem Lendai is solving.
Lendai is a FinTech company that has developed an artificial intelligence-based digital triple underwriting system and online platform that allows us to provide financing to foreign investors and non-US residents who wish to invest in the US real estate market. . With the help of our technology, we are bridging a financial gap for which the traditional banking system has no effective solution.
Via Lendai’s platform, a foreign investor can complete the entire loan process (from application to closing) entirely online, from the comfort of their own home, whether in Canada, UK, Europe. or in Australia. Our vision is to give foreign investors simple, lightning-fast and profitable financing so that they can purchase investment properties in the United States, generate income and achieve their financial goals.
Crowdfund Insider: You shared that foreign investors plan to reap the rewards of the $ 3.9 million mortgage market (the world’s largest public debt market). You also think the market is ripe for disruption.
Tell us about this high potential market and the types of needs it will meet.
YaÃ¯r Benyamini: The US real estate market is the largest private real estate market in the world and the US mortgage market is the largest private debt market in the world. But despite these impressive measures, there is no way for foreign investors to break into the market and buy investment property in the United States without having the money up front. In today’s world, where technology has disrupted, revolutionized and streamlined almost every aspect of our daily lives, we believe it is time for the financial services market to evolve and follow suit.
When we talk about the previous process of getting a mortgage in the United States, borrowers have to sign several documents in front of a notary. In the pre-COVID era, this was a significant barrier for non-US residents. Foreign investors had to prepare for an exhaustive undertaking, which often included hours of travel to the nearest US embassy. Physical presence at the Embassy was mandatory either to sign documents in front of an American notary or to obtain apostilled documents (legally authenticated.) But today, thanks to regulatory and technological changes, our clients can sign loan documents. from anywhere in the world, in front of an online American notary.
We believe the time has come to reinvent the outdated and broken global financial services marketplace. Relaxation of regulations, coupled with vast technological advancements, can create a situation where, for the first time in history, foreign investors can enjoy a truly global and borderless experience.
Crowdfund Insider: Common obstacles or challenges that foreign investors face being unable to exercise a wide range of options when acquiring real estate in other jurisdictions.
But, as we have discussed, the world is becoming more and more global. How will globalization help your business to grow further?
YaÃ¯r Benyamini: One of the main motivations of our business is globalization itself! Globalization means better opportunities for investors around the world, as geographic barriers become less and less relevant when it comes to both finding a solid investment and raising the capital you need to secure it.
The data revolution has a huge role to play in this regard. Data is what enables Lendai to determine an investor’s creditworthiness across borders and to move foreign investment from a space reserved only for wealthy people to a democratized one accessible to a larger part of the country. company than ever before.
Customers who previously would not have dreamed of âplaying with the big boysâ with established investors now only need a computer or cell phone and an Internet connection. The idea that a middle class investor in Singapore could buy investment property in Florida out of the blue, while virtually obtaining financing for the property, would have been unimaginable just a few years ago.
Crowdfund Insider: What are your plans as a business for the rest of 2021 and up to 2022?
YaÃ¯r Benyamini: We launched in early 2021 with investors from a home country, focused on a US state, Georgia. Today we operate in seven states and with investors from other countries.
By the end of 2021, we will deploy our algorithms in more regions so that we can fund foreign investors from North America, Europe and Australia who want to invest in Florida, Georgia, Alabama, Oklahoma, North and South Carolina, Pennsylvania, Ohio, Indiana, Michigan and Texas.
We also plan to expand our offerings to second home buyers, non-US citizen investors who live in the United States, and more. We will also open our office in Asia and offer mortgages to investors from a wider range of home countries in more US states.
Our proprietary triple digital subscription system, built by our in-house data science team, is the heart and soul of our business. We are continuously expanding it to bring more value to our borrowers (foreign investors interested in US properties) and our partners, which are real estate agents, property managers, loan brokers, developers, etc.
Crowdfund Insider: How is your business leveraging AI or other decision-making algorithms to improve their processes?
Is digital transformation going to be a key part of the future of the real estate industry on a global scale?
YaÃ¯r Benyamini: AI is a critical part of our business and our solution. Our AI-backed digital triple underwriting system is what gives us the confidence to make cross-border loans with confidence. The decision whether or not to provide funding comes from our AI system, which taps into thousands of data points that provide an accurate picture of potential risks and rewards.
Our algorithms determine:
- The value and cash flow of the proposed US property, both now and in the future.
- The likelihood of recovering the lost principal through the property if the borrower defaults on the loan
- The solvency of the foreign investor and his current financial situation in his country of origin.
Going forward, digital transformation is sure to become a key part of real estate strategy for investors around the world. Even established real estate companies are eagerly embracing AI, and everyone from industry titans like Deutsche Bank to multi-family investment firms are already using algorithms to make smarter decisions.
Based on our AI-based system, we can provide fast and competitive financing to foreign real estate investors. This allows us to decide to lend in a fraction of a second, dramatically shortening the mortgage approval process. Because we are not a middleman and provide capital directly, our borrowers are ahead of the competition with lightning-fast approval that allows them to grab a good deal without delay.