Forbes recently published its 2018 list of the 50 top Fintech firms disrupting the financial services world. Seven of these highlighted Fintech companies work in the real estate industry. The listed companies showcase how Fintech’s disruptive application connects borrowers to lenders, changes the financing process, and gives consumers access to more financial options than before. What does Forbes’ highlighted seven companies say about Fintech and real estate?
1) Fintech is a hot investment commodity if the concept is solid.
Crowdfunding sites are almost a dime a dozen now. The new Fintech companies leading the charge inside real estate leverage a specific niche and have a solid concept. For example, LendingHome started by offering short-term hard money loans for fix-and-flip properties. It expanded into the personal home and remodeling market following its success. LendingHome’s platform raised over a $166 million from investors like Renren, Ribbit Capital, and Foundation Capital.
The company is not alone. White-label mortgage product Blend, now valued at $500 million, has raised $160 million from well-known venture capitalist firms Andreessen Horowitz, Thrive Capital, and others. Other Fintech platforms, mentioned below, join LendingHome and Blend in raising millions in capital from investment firms.
2) Fintech is disrupting traditional institutions.
For decades, the way people managed money in real estate essentially followed the same process. Take property financing. Buyers seeking a loan would go to one of the big institutions and fill out redundant copies of paperwork justifying their financial resources. The borrower’s loan may or may not have been pre-qualified. Even if qualified, the underwriting process could take weeks. Now, a borrower can be pre-qualified in 24 hours, and receive funds in days. The speedy model is completely disrupting the lending process.
It’s not just lenders feeling the disruption. Lemonade is one of Forbes’ callout firms because it’s an insurance company with low overhead and reasonable insurance rates for renters and homeowners. Added bonus: the company has managed to donate 10% of its profits to charity organizations. Take that, insurers of the world!
3) Fintech is making real estate investing more approachable.
People of all income levels can access quality investment opportunities. Cadre is the well-known platform singled out in Forbes. This platform vets investment opportunities for high-net-worth individuals. For regular folk, using a crowdfunding platform is one avenue to buy into real estate investment. Other opportunities allow consumers to buy groups that pool user money into alternative financing or investment properties, or access to private market REITs.
Overall, what financial technology boils down to is about speeding up extant processes, providing security, and enhancing accuracy. CommissionTrac was founded to hit all three of these benefits with its accounting platform for real estate agents and brokers. We believe in the future of fintech and look forward to the next disruptor.