What’s in it for Me? Real Estate Investment Technology

What’s in it for Me? Real Estate Investment Technology

For those looking to diversify out of the stock market and into asset-backed or alternative investments, real estate has long been a popular choice. In 2014, things changed significantly for these investors; historically if they didn’t have $40,000 for a down payment on an investment property loan or $4 million to spend on commercial property development, they would be out of luck. Recently, however, we have seen successful startups looking to lower the barrier to entry for novice real estate investors.

Earlier this year, we examined the breakdown of proptech and where its four separate divisions fit into fintech. Today we’re taking a closer look at one of those categories, real estate investment technology, and 15 startups in that sector. Companies in this area are as diverse as the real estate industry itself, but they can easily be categorized under three major business models:

  • Crowdfunding
  • Cash flow share
  • Match-making platform

Here’s a quick comparison chart of companies working on crowdfunding and cash flow share models (right click to enlarge):

Here’s a more in-depth look at each company’s model:

Crowdfunding
Think of it as Kickstarter for Real Estate— it’s the most common model for real estate investment platforms. While many companies in this category take a different approach and host a variety of offerings, all rely on a crowdfunding model.

  • Cadre
    Cadre caters to a range of high net worth accredited investors and institutional investors who are willing to commit a minimum of six figures per deal. The company focuses on commercial, retail, and multifamily properties in all major U.S. markets. Cadre undertakes all sourcing and due diligence on properties before presenting the opportunities to investors. When users find a deal they like, they request their desired allocation to a specific property (or across multiple properties) and fund the deal. Investors receive quarterly distributions along with performance reports.
  • EquityMultiple
    EquityMultiple offers accredited investors debt and equity investments in commercial real estate projects. The company has raised $10 million since launching in 2015. Its partnership with Mission Capital – a national loan sales and commercial real estate advisory firm – has helped it access institutional projects, closing 25 and comprising over $300 million in total capitalization since launch. Its debt deals range from six to 18 months while the term for equity projects ranges from two to five years, during which time investors receive a share of the cash flow.
  • Fundrise
    Fundrise allows users to build a diversified portfolio of eREITs, a real estate investment trust built on the Fundrise platform that cuts out the middlemen often involved in traditional REITs. The REIT consists of commercial real estate investments and earns returns through rental income and property appreciation. Investors start with a minimum of $1,000 and select from three different U.S. geographies. Returns and distributions are specific to each listing, as is the term of each investment.
  • Groundfloor
    Groundfloor is open to accredited and non-accredited investors in eight U.S. states. The company sells debt securities called Limited Resource Obligations (LROs) to investors with a minimum investment of $10. Once investors purchase an LRO, they become a creditor to Groundfloor. Each LRO is paid back to investors when the borrower repays the loan, which ranges from a term of 6 to 12 months. If a loan fails to fully fund within 45 days, the company relinquishes the funds back to the investor.
  • LendingHome
    Lending Home is open to accredited investors looking to fund real estate investment projects for a term of 12 months or less. The company funds mortgages for real estate professionals and makes them available to investors as fractional notes. Each note sells for as low as $5,000, but LendingHome requires a $50,000 minimum investment to start. Lenders receive interest on a monthly basis and when borrowers repay the loan at the end of the 12-month term, the investor receives their principal.
  • Patch of Land (FF 2014 demo)
    Patch of Land uses a crowdfunded approach by matching borrowers in need of short term financing for a real estate project, with lenders looking for real estate investment opportunities. The company vets each property purchase and project (refinance, rehab, or flip) and curates information such as financials, appraisals, and project details. Under Patch of Land’s model the investor doesn’t own the property nor the title. Instead, users invest in a borrower payment dependent note– a contract with Patch of Land in which they receive interest for the term of the loan and then repayment of their principal once the term is complete.
  • PeerStreet
    PeerStreet enables accredited and institutional investors to invest in private real estate loans secured by first liens on real estate (in other words, not refinances or second mortgages) through partnerships with top-tier originators. The investments are short term, ranging from six to 24 months and are intended to fund a real estate project. Investor funds are held in an Investors Trust Account with City National Bank and in the event of default, the funds are FDIC insured up to $250,000. Users invest in mortgage-dependent promissory notes issued by PeerStreet. The minimum investment is $1,000.
  • RealtyMogul (FS 2014 demo)
    Founded in 2012, RealtyMogul operates under a crowdfunding model that matches sponsors and borrowers searching for capital with individual investors looking for a higher return. The company offers two investment types: joint venture equity investments, and a real estate investment trust (REIT).Joint venture equity investments focus on properties with existing cash flows (rented real estate). Throughout the term of the investment, which ranges from one to 10 years, investors receive a monthly return from the cash flow and a share of the proceeds when the property is sold. RealtyMogul offers a 1031 exchange option for investors for a tax-friendly funding option. The MogulREIT is an SEC-registered LLC formed to invest in and manage a diversified portfolio. The REIT requires a minimum investment of $1,000 and is open to both accredited and non-accredited investors and is generally more liquid than debt and equity funding, as it generally allows for redemptions once per quarter.
  • RealtyShares
    RealtyShares offers a minimum investment of $5,000 with monthly or quarterly cash flow options. The company enables accredited and institutional investors to invest in commercial (office, industrial, self-storage, retail, medical office and hospitality facilities) and residential (used for investment purposes, not owner-occupied) properties. RealtyShares sells securities related to secured real estate loans, equity investments in commercial properties, and preferred equity investments based on investor preferences. With equity investments, the company sets up individual LLCs for each property. Under this structure, investors own shares in the LLC. Interest distributions for equity investments are paid out on a quarterly basis depending on cash flow. When the property is sold, investors receive any appreciation realized over the term of the loan. For debt and preferred equity investments, users invest in notes corresponding to the loan and typically receive payouts monthly. The company does not offer a 1031 exchange but it does offer self-directed IRA investments through five preferred custodians.
  • Yield Street
    Yield Street sells a variety of asset-backed offerings– from real estate, to commercial equipment, to lawsuits– to help accredited investors diversify their portfolios. The company is also set up to handle larger opportunities for money managers and institutional investors. Yield Street manages the investments, which are divided into Special Purpose Vehicles (SPV’s) available for a minimum of $5,000. Interest payment frequency and the term of the loan vary per investment.

Cash flow share
These companies offer investors returns on the cash flow of the property. They do not cater to borrowers and instead own the properties themselves.

  • CK Mack (FF 2012 demo)
    CK Mack is a Montana-based startup that allows users to invest in the cash flow of rented real estate in $25 increments for a minimum of 12 months. The company maintains ownership and responsibility for the properties themselves and takes care of all property management responsibilities.
  • Brickx
    Australia-based Brickx divides the purchase price of houses into 10,000 units, or bricks, and places each unit for sale on its marketplace. At the end of each month, members receive their share of the net rental income of the house. Brickx takes care of all property management.

Match-making platform
These are Lendio-type platforms that simply serve as a matchmaking platform for borrowers and investors. They are not a party to the transaction.

  • CrediFi
    CrediFi offers a platform that matches borrowers, brokers, and lenders. The company does not invest on the users’ behalf.
  • Crowd Street
    Crowd Street hosts a marketplace that matches accredited commercial real estate investors with borrowers, which the company refers to as sponsors. It was created to offer investors easy access to private equity real estate operators, such as commercial real estate developers and managers.
  • RealCrowd
    RealCrowd allows accredited investors to browse, compare, and invest with professional, private, commercial real estate companies. The platform simply serves as a matchmaker for investors and real estate professionals and is not involved in the transaction.

Our proptech series continues next week with a closer look at mortgagetech players.

Last Call for FinovateSpring 2017 Tickets

Last Call for FinovateSpring 2017 Tickets

FinovateSpring 2017 is right around the corner. Pick up your ticket before it’s too late! We’ve got an impressive roster of companies ready to show off their latest and greatest fintech innovations and you won’t want to miss it.

We recently released the full presenter list. Below, you can check out the cutting-edge companies hitting the stage next week (read more about them in our “Sneak Peek” blog post series):

FS 2017 Presenters

Our two-day show will be packed with live demos of new fintech innovations, as well as great opportunities for high-quality networking with the movers and shakers of fintech. Here’s the final schedule:

FS17 Agenda

To close the event, our first ever discussion panel will recap the key demos and help put the innovations on display into a broader context. The discussion panel will be moderated by Ranjit Palkar, Partner at Capco, and the panelists include:

  • Zack Gipson, Chief Innovation Officer at USAA
  • Lawrence Tang, Head of Investment Promotion InvestHK
  • Oded Shoshany, CEO of Celeriti FinTech
  • Valentina Isakina, Managing Director of JobsOhio
  • Illya Shell, VP New Product Development and Innovation at MasterCard

Visit our registration page today and we’ll see you in San Jose next week!


FinovateSpring 2017 is sponsored by: Kore.ai, CeleritiFintech, AARP, Invest Hong Kong,JobsOhio, InvestCloud, D+HFT Partners, and Leverage PR.

FinovateSpring 2017 is partners with: Aite Group, American Bankers Association, Asset TVBankersHub, Banking Technology, BayPay, Breaking Banks, Byte AcademyCanada’s Trade Commissioner ServiceCelent, EbankingNews, Emerging Payments AssociationFemTech,Filene Research Institute, Financial IT, Fintech Finance, Holland FintechIBS Intelligence,Inspiration Unlimited eMagazine, Javelin Strategy & ResearchJuniper ResearchMapa Research, Mercator Advisory Group, NYPAYOvum, Paybefore, The Paypers, Plug and PlaySME Finance Forum, StartupbootcampSwiss Finance + Technology Association, andWestern Independent Bankers.

Coca-Cola Credit Union Chooses Bankjoy As New Mobile Banking Provider

Coca-Cola Credit Union Chooses Bankjoy As New Mobile Banking Provider

Bankjoy_homepage_April2017

Coca-Cola CU (CCCU), an Atlanta-based credit union serving the employees of The Coca-Cola Company and their immediate families, has picked Bankjoy to provide online and mobile banking services for its members. The new platform will include billpay, mobile deposit, PFM, card services, and wire transfers, as well as a major redesign of CCCU’s website.

CCCU IT manager Farhan Jadavji found a lot to like in Bankjoy’s offering, crediting the technology for being “agile and innovative” and “supporting the trends of cross-generational demographics.” Jadavji listed “greater productivity, improved efficiencies, and increased security” among the reasons why it was “easy to select Bankjoy as our partner.” Bankjoy CEO Michael Duncan added, “Coca-Cola Credit Union has a clear vision of the omnichannel experience it wants to create for its members. No two credit unions are the same, nor should they be.”

Founded in 2015 and headquartered in Detroit, Michigan, Bankjoy demonstrated its Bankjoy API at FinovateFall 2016. The company has been on a tear in recent months, signing partnerships with three credit unions last month. And these partnerships are in addition to the deployments with two other FCUs that Bankjoy announced back in December. The Y-Combinator alum partnered with payments solution provider Payveris in February, leveraging the company’s suite of open APIs to add to the features like business payments and external account transfers to its offerings for credit unions.

Finovate Alumni News

On Finovate.com

  • Coca-Cola Credit Union Chooses Bankjoy as New Mobile Banking Partner.
  • What’s in it for Me? Real Estate Investment Technology: A comparison of Realty Mogul, CK Mack, Patch of Land, and other real estate investment platforms.

Around the web

  • GMC Software announces new partner advantage program.
  • Uniken appoints Nishant Kaushik as Chief Technology Officer.
  • i-exceed earns Gartner Magic Quadrant recognition as notable vendor in Asia Pacific for mobile app development platforms.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.

FinovateSpring Sneak Peek: Microblink

FinovateSpring Sneak Peek: Microblink

microblink_homepage_April2017b

FS2017-Logo(rev)V1A look at the companies demoing live at FinovateSpring on April 26 & 27 in San Jose. Pick up your tickets today and save your spot.

BlinkReceipt SDK is a real-time retail receipt scanner for mobile apps from Microblink. The solution automatically extracts all details from consumer purchase receipts on an item level.

Features

  • Automatic extraction in real-time and locally on a device
  • High accuracy and infinitely scalable
  • Easy integration into any app and on all platforms

Why it’s great
BlinkReceipt is the most cost-effective way to collect consumer purchase data and can be used for purchase validation, loyalty and rewards programs, market research, PFM, etc.

Microblink_IzetZdralovicPresenters

Izet Ždralović, Co-founder / SMD
Besides extensive experience in sales, marketing, and management, Ždralović has a comprehensive business view of innovative technologies. He loves solving problems with mobile technologies to improve UX.
LinkedIn

 

Microblink_DarrenBassmanDarren Bassman, Head of Product, BlinkReceipt
Bassman is a serial entrepreneur with a passion for the intersection of technology and the real world.
LinkedIn

FinovateSpring Sneak Peek: HotDocs

FinovateSpring Sneak Peek: HotDocs

HotDocs_homepage_April2017

FS2017-Logo(rev)V1A look at the companies demoing live at FinovateSpring on April 26 & 27 in San Jose. Pick up your tickets today and save your spot.

HotDocs, the global leader in document automation technology, is used by financial institutions worldwide to reduce risk, aid compliance, and create efficiency with document production.

Features

  • Create sophisticated financial documents in minutes instead of hours
  • Completely eliminate document errors
  • Easily manage document templates throughout your organization

Why it’s great
See how so many of the world’s largest banks and insurance companies have saved millions of dollars and saved countless hours using HotDocs.

HotDocs_MarkSettlePresenters

Mark Settle, Director of Technical Services
For nearly 20 years, Settle has worked in the document automation field supporting hundreds of clients worldwide in banking, insurance, legal, corporate, and government industries.
LinkedIn

 

HotDocs_JulieRotzJulie Rotz, Senior Consultant
For more than 18 years, Rotz has provided document automation training, consulting, project management, and template development for clients worldwide.
LinkedIn

FinovateSpring Sneak Peek: Lleida.net and SATEC

FinovateSpring Sneak Peek: Lleida.net and SATEC

Lleidanet_homepage_April2017

FS2017-Logo(rev)V1A look at the companies demoing live at FinovateSpring on April 26 & 27 in San Jose. Pick up your tickets today and save your spot.

TopayZ is a financial platform supplying a white-label bank for merchants, banks, or collectives, providing its customers with a virtual banking enabler.

Features

  • White-label bank for merchants without compliance requirements
  • Banks can create new prescription channel
  • Registered and certified transactions issued by Lleida.net as trusted third party

Why it’s great
Get your own bank in three weeks for collectives and merchants without banking compliance requirements.

Lleidanet_SiscoSapenaPresenters

Sisco Sapena, CEO
Sapena studied technical agricultural engineering and holds a postgraduate degree in Telematics. He is one of Spain’s internet pioneers and takes Lleida.net around the world, always focusing on innovation.
LinkedIn

 

Lleidanet_AlexArgudoAlex G. Argudo, TOPAYz CEO and Head of Banking and Insurance at SATEC
Argudo studied at HBS, Berkeley, and MIT in Business and Technology. He is a former executive at Santander.
LinkedIn

FinovateSpring Sneak Peek: RFM

FinovateSpring Sneak Peek: RFM

RFM_homepage_April2017

FS2017-Logo(rev)V1A look at the companies demoing live at FinovateSpring on April 26 & 27 in San Jose. Pick up your tickets today and save your spot.

RFM provides the new risk architecture for lenders of all sizes. With unprecedented situational awareness of risk exposure/reserve needs, users of the technology can run scenarios, simplify regulatory compliance, and rapidly deploy models.

Features

  • Stress Testing automation simplifies regulatory compliance
  • Production deployment of models reduced from months to days
  • ‘Model Injection’ integration means no complex re-engineering required

Why it’s great
‘Risk Cockpits’ reduce the cost and effort of stress testing and regulatory compliance. ‘Model Injection’ integrates model engine with credit systems so updates propagate instantly and automatically.

RFM_NIckStavrouPresenters

Nick Stavrou, Managing Director
Stavrou is former Executive Director at Goldman Sachs, Global Head of Credit Models at National Australia Bank, founder of risk consulting firm Q-Risk Strategies, and co-founder of RFM.
LinkedIn

 

RFM_MarkZangariMark Zangari, CTO
Zangari is a software innovator and senior executive with 25 years experience. He is formerly CTO of Spatialinfo, launching U.S. division in 2000, was co-founder and CEO of modeling/machine learning firm Quantellia since 2010, and joined RFM in 2016.
LinkedIn

FinovateSpring Sneak Peek: TALK Accounting

FinovateSpring Sneak Peek: TALK Accounting

AutoKept_TalkAccounting_homepage_April2017

FS2017-Logo(rev)V1A look at the companies demoing live at FinovateSpring on April 26 & 27 in San Jose. Pick up your tickets today and save your spot.

The new TALK app from AutoKept is the first AI and voice recognition add-on to popular software that wipes out 90% of daily bookkeeping and tax records for small businesses.

Features

  • Documents go directly into QuickBooks
  • AI understands a voice memo about transactions to code automatically
  • Platform captures the purpose of the transaction so books are done right, instantly

Why it’s great
TALK Accounting is the easiest and cheapest bookkeeping app available for business owners who want good books done automatically at a fraction of the normal labor cost.

TALKAccounting_KCTrubyPresenter                                  

KC Truby, President
Truby started his first bookkeeping business in 1968. Watching his clients struggle with finances inspired him to create the TALK accounting app.
LinkedIn

FinovateSpring Sneak Peek: Capsilon

FinovateSpring Sneak Peek: Capsilon

Capsilon_homepage_April2017b

FS2017-Logo(rev)V1A look at the companies demoing live at FinovateSpring on April 26 & 27 in San Jose. Pick up your tickets today and save your spot.

Capsilon transforms the speed and economics of the mortgage production process by leveraging intelligent automation to transform your existing mortgage process into a modern digital mortgage factory.

Features

  • Order of magnitude velocity improvement in both speed and costs
  • Optimal workflows based only exception-only handling
  • Highest integrity processes that are repeatable, scalable

Why it’s great
Capsilon powers the shift to a high-velocity, digital mortgage factory with intelligent process automation.

Presenters

Ted Hicks, Director of Product Management

Sanjeev Malaney, CEO

Finovate Debuts: Configo Empowers FIs to Build Customized Customer Journeys

Finovate Debuts: Configo Empowers FIs to Build Customized Customer Journeys

Configo_homepage_March2017

At FinovateEurope earlier this year, Tel Aviv, Israel-based Configo demonstrated its contribution to the cause of greater customer engagement in financial services. The technology, Configo Live Mobile Experience Platform, enables banking marketing professionals and product specialists to design customer experiences that are, in the words of Configo co-founder and CEO Yosi Dahan, “personalized and contextual.”

Dahan warned that nonbanks have done a better job than most banks when it comes to meeting customer expectations of being more innovative and “human-centric.” He said that by leveraging Configo’s ability to bring targeted content to targeted audiences in real time, banks and other traditional financial institutions have the opportunity to regain that lost ground.

Configo_stage_FEU2017

Pictured (left to right): Configo co-founders Natan Abramov (CTO) and Yosi Dahan (CEO) demonstrating Configo Live Mobile Experience at FinovateEurope 2017.

For the live demonstration Configo CTO Natan Abramov showed how the Configo platform scanned the screens of the banking app, and enabled the user to make changes that would appear simultaneously in the app when saved. In addition to being able to make cosmetic changes to text, color, and other features, the platform also supports pushing custom content to user-defined segments such as low-income, families, etc. Virtually any data point, from account balance to age to geolocation to app usage – can be used to define a segment for receiving certain app customizations, targeted messages, or special offers.

Configo also provides for in-app campaigns to send promotional messages to customers. Users can upload their own design or use one of Configo’s templates, then simply add text, images, and a call to action. Schedule the ad to pop-up at any one of a number of cues: a specific time or when a button on an app is pushed, and the campaign is ready to go. Configo’s platform provides for A/B testing, and works with iOS, Android, native, and hybrid systems.

app UI editor

Once the app’s screens are scanned into the Configo platform, individual content items can be tagged for management later.

“By providing contextual offers and content in real time, you are actively optimizing your customer interaction, driving better engagement and increasing mobile sales,” Dahan said. Emphasizing the ease of adopting the technology (“up and running with virtually no integration and without messing around with code in just a couple of days”), he said his company’s platform ensures that FIs gain “total control of your customer’s journey in your mobile application.”

Company Facts

  • Headquartered in Tel Aviv, Israel
  • Founded in 2015
  • Running more than 10 pilots with banks and credit card companies in Europe

We met with Dahan (pictured) and Abramov, co-founders of Configo, at FinovateEurope in London and followed up with a Configo_Yosi_Dahanfew questions for Dahan by e-mail. Here are his responses.

Finovate: What problem does your technology solve?

Yosi Dahan: Product and marketing managers require rapid iterations, prototyping, and optimizations of their mobile banking product to increase conversion and engagement. Working agile has its benefits, but the release and update cycles are still measured in weeks as most of the tasks go through the R&D teams.

Finovate: Who are your primary customers?

Dahan: Financial institutions.

Finovate: How does your solution solve the problem better?

Dahan: Product and marketing leaders get access to a variety of tools in our platform to simply create new customer experiences, optimizing the customer’s journey and interaction. Configo integrates with any existing mobile app using an SDK and provides a dashboard for management. Segmenting users, running A/B test experiments, launching campaigns, and personalizing the app’s user interface, can be achieved without a single line of code. Configo has managed to cut the time-to-market of app changes and business tasks by over 15%.

in-app campaign stats

The Configo platform supports in-app campaigns and provides total control over how the ads look and appear to the user.

Finovate: What in your background gave you the confidence to tackle this challenge?

Dahan: The team behind Configo has more than nine years of experience of developing mobile apps. Prior to starting Configo, we conducted research involving more than 50 financial institutions around the world in order to understand how their app release cycles look like and how we can reduce the time-to-market to meet customer expectations. Configo has managed to cut the time-to-market of app changes and business tasks by over 15%.

segmentation

Customers can be segmented based on any datapoint – age, account balance, app usage – on the Configo platform.

Finovate: What are some upcoming initiatives from Configo that we can look forward to over the next few months?

Dahan: We’ll be introducing new tools for both marketing and product managers to help them better understand their customers’ journey as well as increase engagement, decrease churn rate, and provide exceptional user experience. We are also working on creating a solution for the online (web) channel.

Finovate: Where do you see Configo a year or two from now?

Dahan: Our goal is to help financial institutions around the world shape their mobile channel. We are planning on delivering a custom experience to 50 million mobile banking users by 2019.


Configo’s Yosi Dahan (CEO & Co-Founder) and Natan Abramov (CTO & Co-Founder) demonstrating Configo Live Mobile Experience at FinovateEurope 2017.

Finovate Alumni News

On Finovate.com

  • Take a look at our latest FinovateSpring Sneak Peeks featuring Microblink, HotDocs, Lleida.net and SATEC, Capsilon, RFM, and TALK Accounting.

Around the web

  • Private bank Julius Baer teams up with CREALOGIX for new mobile banking solution.
  • Ripple hires SWIFT business director Marjan Delatinne as new sales director for Europe.
  • Former Kabbage CTO Amala Duggirala joins Regions Bank as its new CIO.

This post will be updated throughout the day as news and developments emerge. You can also follow all the alumni news headlines on the Finovate Twitter account.