InstaLend is an online lending platform that provides accredited investors access to secure direct lending opportunities in the residential real estate market.
The minimum investment per offering is $5,000 and the investment holding period is about 12 months long. All InstaLend deals are senior debt investments, which allows their investors to earn monthly interest. Below is our interview with Sohin Shah, from InstaLend:
Q: You’ve recently announced expanding to Pennsylvania, Illinois, and Georgia; tell us something more?
A: InstaLend has expanded to states where we believe there is an opportunity to do business at scale, as well as to create liquidity partnerships to borrowers. Some of these will include partnerships with refinance lenders and turnkey home buyers, who will hopefully agree to acquire/fund assets post-renovation.
Q: What is unique about InstaLend and how does it stand out from competition?
A: One way in which InstaLend is unique is in the fact that 100% of funds raised through our platform are provided by individual, retail investors. In other words, there is no institutional capital flowing through our platform. This is an advantage to our investors because it allows more individuals to participate per offering, and ensures that our investors do not have to compete against the large check sizes and high funding speed of institutional investors in order to get access to deal flow.
In addition to that, InstaLend is the only platform in the world that provides ‘hybrid’ investment offerings, which are loans that defer some of their interest payments (which reduces the borrower’s monthly expenses).
Q: What are your plans for the next 12 months?
A: Over the next 12 months, our focus will be to continue conservatively growing out our originations while still creating liquidity opportunities for borrowers on the platform. We believe this is a part of our value proposition to both investors and borrowers.
Q: What are your underwriting guidelines?
A: When underwriting a new loan offering, InstaLend’s team analyzes the following information:
First, we look at a deal’s profit, equity and cash-flow potential. We ask ourselves: “Is this a deal that we would like to do ourselves?” We also look at the viability of the property (metrics, timelines, management costs, etc.), especially in regards to how quickly the property could be exited or rented.
Next, InstaLend reviews the borrower’s experience, as well as their cash reserves, net-worth, and property-equity. This is done in order to determine the risk grade of a particular deal for investors.
Lastly, InstaLend considers guarantor payment history and FICO score.
Borrowers are required to put in 10-20% of the project cost in the form of common equity, as their “skin in the game.” InstaLend doesn’t fund loans any higher than 65% LTV.
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Q: What is a hybrid offering?
A: InstaLend structures offerings such that investors may earn a lower amount of fixed interest per month by accruing the remaining interest payment to maturity. In return, the borrower will pay a slightly higher rate on the accrued interest, leading to an increased blended APR for investors. InstaLend is the only company in the world to offer such an offering, where there is senior debt protection and an upside of common equity.
Q: How does a person get started with InstaLend?
A: To get started as either an investor or borrower, simply click here and register for a free InstaLend account.
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