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Top real estate tech firm takes crowdfunding nationwide

Investors and borrowers alike now have access to a unique pool of assets and capital

Technology is pushing one of New York’s most disruptive investment and lending platforms nationwide.

CEO Allen Shayanfekr founded Sharestates in 2015 along with Radni Davoodi and Raymond Y. Davoodi at a time when traditional lenders had scaled back funding for real estate projects due to the 2008 financial crisis. They represent a new breed of technology-driven real estate firms, offering private investors access to a lucrative pool of real estate opportunities and lending capital quickly and at competitive rates to small- and medium-sized developers and house-flippers. 

Since then, Sharestates has handled $2.3 billion in loan volume, mostly in prime East Coast fix-and-flip markets like Brooklyn. 

“Brooklyn is where Manhattan was, from a pricing standpoint, 20 years ago,” said Sharestates CEO Allen Shayanfekr. “It doesn’t matter where you buy in Brooklyn today, the assets are strong and will withstand the economic test of time.” 

But now — with thousands of users on the site, both sponsors and investors, over 2,500 closed loans and a wealth of experience — Sharestates is pushing the real estate crowdfunding business into fresh markets and creating opportunities for those who have struggled to find funding. They are now actively lending in 34 states and growing.

“Our platform allows for investors to go directly to the borrowers,” said Shayanfekr. “… they can individually pick which sponsor and the actual properties they want to lend to. The investor will hold the paper {note} to that loan directly. The process was built around the philosophy of transparency, both for the sponsor and investor.”

Shayanfekr added that instead of making 1 percent or 1.5 percent in a CD, Sharestates can offer returns of 10 to 12 percent on an investment. That’s proved to be an appealing pitch to investors nationwide, allowing the company to swiftly expand from East to West Coast — and even to Hawaii.

The current Sharestates portfolio contains anywhere from a $100,000 loan for a house flip to a cumulative $100 million pool of loans for the development of 460 1-4 family houses. However, most loans from Sharestates range from $100,000 to $10 million, helping borrowers grow their business from a few one-to-four-family fix-and-flip projects a year to much larger commercial building projects.

“We’ve built a one-stop financial shop where sponsors can have access to products starting at the acquisition of a distressed asset through to the long term stabilization of the asset, all while enjoying the experience much like that of online banking,” Shayanfekr said of their cutting edge digital platform, which allows for features like auto-pay, automatic notifications when payments are being processed and a smooth exit process. “You can come online, apply for loans directly, even apply for equity financing and then be set up with a portfolio that will track those different investments and different loans with them.” 

Sharestates is also benefiting from good timing. The fourth quarter of 2019 was the biggest quarter for mortgage lending since 2005, according to the Wall Street Journal. An active home lending market is a strong indicator that the housing market is healthy and growing. 

“When a large and cyclical part of the economy—housing—is starting to improve, it’s a good sign for the economy at large,” Sam Khater, chief economist of mortgage-finance giant Freddie Mac, told the Journal. 

But while banks still account for a large amount of those loans, private lenders like Sharestates are increasingly leading the charge, buoying the market with superior rates and giving small developers a fair shake in the marketplace. 

“We are focusing on markets that have the potential for a lot of upside, but that are also still secure,” Shayanfekr said. “And we’re continuing to expand into exciting new markets every year.”