It seems we can barely go a few days without yet another property lending platform popping up.
MainStreet is a new, debt-based, US platform that is looking to simplify the process of real estate investment. The platform has already made loans secured against retail-centres and office buildings to borrowers in Ohio, Michigan, Pennsylvania, Georgia and Illinois. But is MainStreet bringing anything different to the table?
The fledgling platform points to loan terms as a distinguishing factor. Where many US real estate lending platforms offer pretty lengthy terms, the average MainStreet loan will span a period of 6 to 12 months. This element of the platforms echoes the structure of the UK’s best and brightest property-based platforms – LendInvest and Wellesley & Co. – both of which were originally spun out by traditional bridging loans businesses.
Patrick Janson, Co-Founder and Partner at the new platform, commented:
"We have seen many new crowdfunding sites enter the space, but we feel real estate is still underserved. Our goal is to create a transparent crowdlending platform. We believe that by using an online underwriting interface, we can empower main street investors to finance credit-worthy real estate borrowers."
The transparency and quality underwriting promises made by Janson will require an advanced technological system to deliver on. So it’s a good thing that lending technology is another of the platform’s core areas of focus. The platform is looking to allow borrowers to easily apply and be assessed for real estate loans via a proprietary algorithmic underwriting process.
MainStreet has set itself the (perhaps overly) ambitious goal of channeling $100m into business borrowers in year one. The platform has made a fast start – attracting $1,755,500 since launching in August. One reason for this rapid growth is a strategic alliance that has been forged between MainStreet and private equity firm/commercial real estate lender Emerald Creek Capital.
This union is a key cog in the platform’s origination process – providing MainStreet’s private investor base with a steady flow of institutional grade loans. Emerald Creek remains invested in every deal that it sources for the platform alongside MainStreet’s “crowd” of investors. It’s a structural feature that is again reminiscent of the UK’s top property platforms – for example, LendInvest and its relationship with Montello Capital.
Jordan Trevino, Co-Founder and Partner at MainStreet, summarized:
"This partnership provides MainStreet investors with access to institutional grade loans secured by prime income-producing real estate. We trust Emerald Creek Capital to provide great quality, low-leverage and diversified investment opportunities. They remain invested with our users, and they service and manage the loans. This is the best crowdlending opportunity on the market."