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The U.S. housing market is the largest private real estate market in the world, and the U.S. mortgage market is the largest private debt market in the world. An industry that’s no stranger to innovation, it has always been at the cutting edge, helping it attract patronage from all over the globe. However, things are often not as rosy as painted on the outside. Obtaining financing to invest in the U.S. real estate space is usually a landmine for foreigners who don’t have U.S. residency.
Even if the investor has a spotless credit history in their country of residence, American banks are wary of lending to potential investors with little to no established credit history in the U.S. This has prompted real estate companies looking to streamline efficiency and results to look toward artificial intelligence (AI) for the answers. Lendai is using AI to lower the entry barrier for foreigners who are looking to invest in the U.S. housing market.
Born out of necessity
Lendai was cofounded in 2019 by Yair Benyamini (CEO), Erez Dricker (CTO), Tim Mironov (chief data scientist) and Boaz Leviatan (CFO). The company has an interesting backstory. A few years ago, its CFO and credit manager, Boaz Leviatan, spoke to a friend about the different real estate opportunities in America. His friend already had real estate assets in Arizona, but was interested in leveraging them and acquiring more. He stumbled on a problem because he wasn’t an American citizen — and without that, he was unable to obtain a mortgage loan.
In an interview with VentureBeat, CEO Benyamini noted that Lendai’s goal was to enable private clients to enjoy simple and cost-effective financing for their private investment properties in the U.S. to boost their overall profits.
Building three algorithms, two to look at the property sites in the U.S. and one to look at the industrial sites in the U.S., Lendai claims it’s undertaking a total digital overhaul of the U.S. property market. The algorithm evaluates the properties, checking the actual worth and the current value, estimating both best- and worst-case scenarios, and factors out how much the property will be worth in both cases.
“This is important, as the properties are used as collateral for the loans,” Benyamini explains.
Another algorithm examines the cash flow of the property, ensuring that the property will be profitable long term. If all of the points that the algorithms study are strong enough, the company claims investors can receive loan offers in minutes — a figure it says can be one-third of the time it generally takes U.S. lenders to process the same loan.
How Lendai’s technology works
Lendai claims it’s built a unique AI algorithm technology that utilizes data points while simultaneously evaluating all loan aspects by assessing the creditworthiness of foreign investors, the likelihood of recouping money should the borrower default, as well as the value and cash flow of the property at present and in the future.
“The reason why we are doing what we are doing in the U.S. is because of the data. There is no other relative market in the world that has that much data that you can utilize,” said Benyamini.
Mironov, chief data scientist, noted that Lendai’s AI has over a hundred data points on every property in their database, collects as much data as possible on the client and correlates it to the Lendai credit score. He said this has helped Lendai create a standardized system around the world where it does not matter what country the client is from. He also added that the company factors data privacy into its operations and only collects client data with their approval.
An edge Mironov said Lendai has over its competitors is the depth of data that it has. He said the company built different models for different states, knowing that there was no single model that fit all sizes — another feature that sets Lendai’s technology apart from others.
While Crunchbase lists LoanCheck, Western Wealth Advisors and FrontStage Capital as some of Lendai’s competitors, Benyamini said its AI-backed “Triple Digital Underwriting System” is what gives Lendai the confidence to grant cross-border loans, unlike any other company in the market.
“The decision on whether or not to provide financing comes from our AI system, which leverages thousands of data points that make up an accurate picture of risk and potential revenue,” he said.
Lendai is headquartered in Tel Aviv, with offices in Miami and Toronto. Since inception, the company has raised a total of $35 million in five funding rounds, according to Crunchbase. The company has a headcount of 35 and is currently recruiting.