GI153: Financing for Foreigners Investing in the US with Yair Benyamini

GI153: Financing for Foreigners Investing in the US with Yair Benyamini

Today we have Yair Benyamini from Lendai; Lendai is a tech based, US Private lender, focusing on foreign nationals investing in the US residential Real Estate Market

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Transcript:

Announcer:
Welcome to the Global Investors Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carillo, combined decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now here’s your host, Charles Carillo.

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host Charles Carillo. Today we have Yair Benyamini from Lendai; Lendai is a tech based, US Private lender, focusing on foreign nationals investing in the US residential Real Estate Market . So thank you so much for being on the show.

Yair:
Thank you for joining. So yeah, yeah. Here.

Charles:
Awesome. Yeah, no, it’s great. We’re gonna be able to kind of dive into what you do and your company does and how it might be a huge benefit for the global investor listener audience. So give us a little background on yourself, both professionally and personally, prior to getting involved with real estate investing in lending.

Yair:
So I’m originally from Israel now. Of course, I, I live here in Florida. I’m a lawyer by profession, as I said, nobody’s perfect. What can I say? I worked for quite a few years in one of Israel leading law firms, and I was having the commercial and the international department of the firm. So done everything from helping building cannabis farms in Canada, hospitals in China, into reverse mergers, into NASDAQ shells. And of course, a lot of real estate transactions in Israel, Europe, and actually many of them here in the us. And this is how I got into the real estate business initially. And in the last, almost three years, I’m one of the four co-founders and the CEO of Lindi, which is, as you said, we’re a FinTech company that targeting four nationals investing in the us and solving the also known problem of getting financing when you don’t have a social security number, credit scoring, and you’re not living in the us.

Charles:
Yeah, no for sure. So you, you work with a handful of main countries. Can you give us a, a rundown of the countries, obviously, Canada? What other countries are you you really focusing on where lenders are coming from that you can provide financing?

Yair:
Yeah, so we started with the Israeli market and then we entered into the Canadian market, the Australian, the British markets. And of course those are the one, the most influential markets as we see them on the real estate here the next market that we’re gonna get into it more market in the, in Europe around the end of this year, we’ll get into Latin America as well. There’s a lot of foreign investors coming from Latin America, but that’s in Q3 Q4 of 2022. And the moment you really focus on the Western countries that investing in the us.

Charles:
Okay, cool. Yeah. There’s being in Florida, there’s tons of people from central, Latin America, whatever you like to call it coming into the United States to to invest. So it’s, it’s crazy.

Yair:
Yeah.

Charles:
So with target borrowers and how process works, this is something that’s a little different because other lenders that I we’ve worked with or we’ve had people work with that are listeners on the show. There’s usually it usually is a pretty intensive time intensive process. And of when they go to the lender, when they’re looking at properties, we’re in a very hot housing market now, which doesn’t help trying to put all those pieces together and still get a halfway decent deal. So a broker sorry, a borrower comes to you and they’re looking at finding a house, a property to purchase. And what is kind of the process that you guys kind of go through with them and then timeframes that they might have to kind of work through?

Yair:
Of course. So, first of all, it’s important to understand our business model lend work as a B to B to C type of model, which means that we don’t get to work. We don’t start the work directly with the consumers. We have a global network from Australia to Asia, Europe, Israel, Canada, and the us of partners, which is realtors, property managers, developers, entrepreneurs like yourself. They bring us their clientele and the entire process with lend. And this is why we spend millions of dollars on building. It is a full online streamline process. So the partner connects the barer to us with a click of a button. The barer gets an email say, hi, start your loan application. We ask him a few questions about himself, a few questions about the property that you want to purchase or refund. And then he gets an immediate answer about the balance media answer response takes three to five minutes to complete the first fail.

Yair:
And based on our AI artificial intelligent algorithms, we actually give him a term sheet. So we said, okay, you John from Wales on this property in Georgia, you will get $200,000 on from us. He will see on the screen, a full term sheet with all the information, the loan amount, the closing costs, third party fees, et cetera, cetera. So we’ll know exactly what can borrow from lend against this deal. And then it sees like a, if it looks okay, let’s move onwards. The next phase, which is also happening within our system, we automatically order the appraisal order. The title, schedule a meeting with him with one of our representative, of course, an online meeting, a zoom meeting. And then we help him upload all the information that he needs. It’s a meeting that takes around 30 minutes to finish upload all the information. Then we process everything to get the information from the Bower, from the title, from the appraisal.

Yair:
Once everything is in line, we have the final decision. The power gets a final offer from us. That takes between 24 to seven days. Depends of course, mainly what’s holding us back is the appraisals and the titles. Our system is very efficient. We give them a final approval and then we go to closing, closing itself is also an online close. So we have online notaries. So it goes again, back to his computer, get all the documents, sign it online, and that’s it. We fund the loan. So from application to closing, it takes between 14 to 21 days. We have actually done it in less than that, but I don’t wanna promise cuz it depends on many other vendors. So it’s always been less than 30 days, but our goal is actually enabled to go down less than 10 days from application to closing. And this is why we’re building such a robust platform and the power time actually in the process.

Yair:
So to get the initial, turn it three to five minutes and then another 30 to 60 minutes in the processing of the, of the loan and another 30 minutes on the closing. So it takes him an hour and a half to close an alone in Ohio when he sits in Montreal in Tel Aviv. Whereas as we say, if he wanted alone on his house in Toronto, it would take him longer, go down the stairs, take the car, looking for parking at his bank and start talking to them. So this is basically what we’re doing. We’re enabling foreign borrowers to buy with financing in an ease and, and fast way as if they were buying all cash. And this is actually what our technology enabled us to do.

Charles:
And this is, this is very interesting because I, if you know, if a us borrower typically they’ll go out and I’m looking to buy a property, I’ll get a preapproval from a bank for, let’s say a one to four unit property, a residential property, commercial property is much different, but one to four unit property, I’m gonna go get a preapproval. Most likely if I’m buying this as a second house or as my primary residence. And then I can use that when talking to brokers. So they know that I’m a real borrower. Now, if someone comes to you and they don’t have, they haven’t pinpointed a property yet, they’ve just they just know, Hey, I wanna buy a property in south Florida and here’s some financials and here’s this, and this is what I wanna spend. And are you able to give some sort of preapproval letter and how long is that good for?

Yair:
So we have through that types of products, we have the preapproval and we have the new purchase of the refi. And of course every, every type of loan can also be a portfolio loan. Actually, most of our loans are for more than two doors. It’s the five properties, 10 properties, but a preapproval is very easy. They get the same email, start the process. We ask them a few questions about themself and then within three minutes or so they get a prequalification letter. They can print it. They see exactly what they want. If they want this prequalification to be a preapproval, then they press enter, move to the next phase. The next phase is again, scheduling a short meeting with our representative cause we wanna make sure who, who they really are uploading some personal financial information, nothing about the property, cause there’s no property yet. And within 12 to 24 hours, they will get the preapproval letter by email. Again, so we have this product, a lot of Canadian borrowers actually love it. Now they’re just starting to looking for a property. First of all, go get the preapproval, understand what is their buying power and then start looking for the next investment.

Charles:
Yeah, of course, because that real estate agent wants to make sure they’re not wasting their time and they actually have a real buyer cuz you can tell real estate agent anything, but you’re not gonna get brought. You know, you’re not gonna really see properties and you’re not gonna see too many of ’em. You’re not gonna be sold to that seller seriously, unless you have proof of funds in this case you know, a down payment in this letter. So that’s awesome. You know, you worked with these a lot of foreign investors they’re investing here into the United States and what are some, give us, give us like a little bit of normal questions that you might see that they have or anything that these investors should be aware of that maybe if someone has never invested and they’re outside of the United States in the United States, what they should be looking out for.

Yair:
So first of all, outside investors need to, first of all, decide what they wanna get from the us investments. Do you want the appreciation or you want the return on the investment on a month to month base or you wanna get both of them? Cause it’s very different from one state to the other. And the, the first thing that I was always say to people understand that the us is 50 states, 300, 3 30, 200 different counties. And each county is a different real estate market. So there’s no such I’m investing in the us. You can invest, even in Florida, you can invest in tens of different areas and you need to understand what are your goals? Do you look for the appreciation? Do you like to build wealth fast? Do you, and then you, based on those answers, they can know, do you wanna go to fixed and flip to get more, to create a bigger equity or you wanna a long term player and you will say, okay, I’m buying a residential rental portfolio or going to Airbnbs and short term rentals.

Yair:
So this is always the first question people come to the us say, okay, us is amazing, but they don’t understand that within the us residential market, there’s so many different opportunities in different markets. So that’s the first question. The second question is note how to build the infrastructure. Do you need an LLC? Do you need that? LLLP, there’s a lot of tax implementation that can happen if you don’t do it correctly. And I’m always say, don’t save money on legal advice and tax advice, make sure that you are building the structure in a way that will be sustainable. And cause nobody would like to pay taxes and build and build it in the right way. And we see a lot of people that say, no, I don’t need it. I can open an LC online and it’ll be okay. And then they open an LC and throw that invest in Georgia and doing all kinds of funky stuff.

Yair:
So use professional advice. It will help you build a much stronger portfolio and, and learn a lot of the market and, and the best thing of course, and, and I’m I’m compromised by is get financing when you can cause using financing in real estate. And specifically in the us has so many advantages. It can get of course double your buying power, but it get you a higher cash and cash return and it diversified your investments. And it allows you if we were talking about tax exemptions. So all the loan costs on a loan in the us, if you do it as a business, purpose loan are deductible against your taxes in the us. And if you already bought a property, let’s say five years ago in all cash, cause you didn’t have any financing. And now you have a lot of equity stuck between the walls. You can either sell it, but then you have to pay capital gain tax and you lose the property. Instead of that, go and refi extract the capital, don’t pay any taxes and not just, you’re not paying taxes, you’re even getting tax exemptions and in deductions on all the costs. So if you know how to plan your way, right from the legal and tax wise in the us, you can benefit so much more out of your investments here. And this is something that many people are missing.

Charles:
Yeah, that’s the United States has so many, so many advantageous points to investing in real estate. And we love tax referrals here in the United States. And if you do it right, which doesn’t take you know, it’s not that difficult. If you have the right competent council and CPA, you can really avoid most if not all your taxes around real estate in the United States and people do it every day. And it’s something that having that council set up cause that if people reach out to me that are foreign investors, it’s the first thing I’ll do is listen. Like you have to figure out what your plan is. That’s number one, like you said, and then speak to council and then speak, you know, CPA over the, and figure out exactly what it is because there’s a lot of, a lot of buying real estate in the United States is similar for us and foreign investors.

Charles:
And then a lot of it is different such as like a state tax is like $12 million for residents in the United States citizens. And it’s like 60,000 bucks for like, which, I mean, anybody buying a property now or bought one, two years ago has a $60,000 game. So these things have to be known upfront of, Hey, how much are you gonna invest? Where are you investing? Is this one time? Is this a real investment like that? You’re gonna do, you know, it’s not just like second home. And it’s great advice. Thank you very much for, for all of that. What, what are the common mistakes, I guess you see foreign investors make, I know you touched on some of them there, but are there some main ones other than just going straight into putting offers on properties or setting up stuff without talking to council? Is that like the biggest one you’ve seen?

Yair:
So those are, those are the main ones, but I have to say that cause four investors are investing remotely and specifically during COVID. So they have to put a lot of effort in finding the right partners in the us because we we’ve seen it all. We’ve seen, you know, when we’re starting to underwrite a property, we’re suddenly seeing that they’re not really the owners of the property that they thought they own. Cause they didn’t register it correctly and they don’t have a title policy in place. And they thought that they have an insurance policy in place, but actually they only got an offer and then they never signed it. So for the last year they have no insurance. We haven’t signed in one of our loans that we did. It’s it’s still in my memory. We, it was a portfolio loan on like five properties for a season investor.

Yair:
He has like 10 properties total in Georgia and all the are rented and everything is okay. And we send the app and we send in the, the appraisal and the appraisal wrote in the report. The following said the kitchen floor is sinking into the basement, but I couldn’t get into the basement because there were so much small that it was unhealthy. So, and this property is there’s a tenant paying every month, like, like he needs to and the foreign investor, because he doesn’t have the right. People do puts in the ground. He didn’t even even know that. So now there’s, I don’t know why, but there’s a tenant to keep on paying, but what will happen the day that he will live now, you see it there’s a 10 or $20,000 renovation that he didn’t even expect it. So make sure that you refine a good team to work with and you can really count on in the us and understand this, this thing.

Yair:
Another thing that we see, and it depends on the specific market origin market is currency risks and people are not taking this into consideration a lot of time. So if you’re a Canadian or an Australian, that there’s a lot of volatility between the us dollar and your origin country currency. This can really change the numbers of your investments because if the dollar rate goes down or, or how it can change everything. So of course the solution for that is minimize the currency risk. And the way to minimize your corn risk is taking us mortgages against your us properties. So instead of investing a hundred thousand dollars, which let’s say, if it’s a Canadian dollars 500,000 Canadian dollars, for example, you need to, to invest only 30,000 us dollars. And the rest comes from a us lender and you pay the mortgage in us dollars. So you minimize in 70%, your currency exchange rate. And this is a big thing for foreign nationals.

Charles:
Yeah. I never thought of that. That, that makes perfect sense. The other thing I’ve seen too, is that what you said about having advisors here? I have one attorney that works with a lot of foreign investors and I’ll call ’em sometime and he’ll be like, oh, I’m driving to see a property. And I’m like, well, well, you know, what are you doing driving? You know, you’re an attorney. And he’s like, no, they paid me to go and review the property. And, and when you hear that, and it doesn’t really make complete sense for a us person, but if I was buying in another country, it makes perfect sense. I found someone that I trust and if you’re buying a half million dollar property, what does it matter if you’re paying someone $200 or $300 an hour that you trust to verify what you’re doing?

Charles:
It’s not like they’re sitting at the property all, you know, the whole time. It’s just that they’re verifying, stuff’s done, they’re verifying this. They found something they can, they can trust. And then you avoid an issue like that. Nightmare. You’re just talking about that you would have no, I, if you know, you, you have no idea other than loan to the property that you had, that issue or someone else that worked with you. So you know, that’s great. So when I know, I, I don’t wanna talk about like interest rates cuz that’s going where we’re in 20, 22, that’s all gonna change, but let’s talk about just typical terms that you would see as a foreign investor, let’s say from Israel or Canada or something like this, that’s coming into United States, like what is a typical down payment? Can you like go into that a little bit more in depth? So people have an idea of what they probably can afford.

Yair:
Yeah. So I can speak on, on our terms. Of course every lender is, is a different, but if it’s, and, and it’s pretty much the same but for a foreign national, for a new purchase loan picking gets up to 70% of the LTV or the purchase price of the, of the property, if it’s a refinance. So let’s say we did a lot of loans that people took a hard money loan, you know, a 10, 10% interest rate loan bought the property renovated and then replace it with a 30 year fixed loan from us in a 4% interest rate. So if it’s a refi, you can also get to 70% if it’s a cash out refinance, which means that you have only cash in the property and you’re extracting CA capital back home, you can get up to 60 to 65%. In some cases says we can go to 70, but it’s, it’s less mainly in the Canadian front.

Yair:
But it it’s mainly will be 60 to 65% T the rates. Well, our model is slightly different. We work in a way that we always have the same rates. It’s between four 20, let’s say this morning, it’s between 4 25 to 5 25. And if our system decides that this is a good borrower, and this is a good property that we wanna finance, we will always give you the best software we can. If we say we don’t, it, it doesn’t suit our guidelines. We will simply say no it one to say, okay, you’re not such a good investor, or it’s a bad property. I’ll take 10% interest rate it. It doesn’t work that way. It’s the same price. You know, when you go into a bank to get a loan, you always think that your friend got a better offer. You know, everybody think that no, no. I’m sure that I have heard that he gets a better offer for you guys that doesn’t exist with Linda. We have 4 25 to 5 25. If we want you as a client, you will get the best offer. Nothing less than that. And this makes things much more simpler and easy to understand cause nobody thinks that somebody’s getting a better deal than him or something like that.

Charles:
Are these loans usually fixed like a 30 year fixed term?

Yair:
Yeah, we are doing 30 year fixed term loans. 30 year motorization. We do one to four doors. So single families, two to four units, town homes condos. We’re not doing at the moment. We will get their late home this year. It’s a long term rental loans. So it, the property needs to rented for a long term. Actually in Q1 of 2022, we’re going to get into Airbnb and short term rental loans, which is a huge deal for bris and, and Canadians specifically. And around Q3 of 2023, we’ll go to residential vacation rentals, which means second homes again for Canadian streets and others that are coming, you know, for two, three weeks or two, three months a year. And the rest of the year, they either do it as a Airbnb property or just keep it vacant. So those are the types of properties and the type of loans we will offer.

Charles:
Yeah. The other thing I wanted just to point out there is that even with a lot of us lenders they don’t want to, they don’t wanna finance Airbnb properties per se. If it turns into an Airbnb property that’s different, but it’s something I’ve found that they don’t want to use it, no matter what the income is, you’re showing them, they see it as a lot more volatile than a 12 month lease. So that’s, that’s, that’s great because that’s not something that a us bank would even be really interested if you said, Hey, I’m buying this for an Airbnb. They’re not gonna be the first one to call you back. You know what I mean?

Yair:
Yeah. And, and, and we’re working now ly with the rating agencies to build the guidelines for those specific loans. From my point of view, it’s a much safer loan than a regular loan. Cause you have much more data. Cause let’s say just to give you how that the lender looks on the things. So you say, okay, I have a lease here for 12 months. So, and let’s say the lease was signed two months ago and he was paying two months his list, but it’s one person. And I don’t see anything when I’m lending to an Airbnb property. We have data from the Airbnb websites and from the, the, the online arena, we know two years back what happened in this property exactly when it was vacant, when it was not how much money they, so this data gives us a much better understanding of the revenues coming from this property. So as we see it from the data perspective, cause we’re, we’re tech oriented lender. So we’re looking always at the data, it’s actually much safer and much more data oriented loan than what other people are thinking. And, and there’s a big gap there because us banks and, and lenders still haven’t understand that it’s actually a better loan than just somebody who lives there with a month to month or a 12 months phase. Yeah.

Charles:
Especially with like with our larger apartment complexes that we buy and we’re getting agency debt, Freddie and Fannie Mae. They don’t even wanna see Airbnb rentals in the property. And we had that one property with a bridge loan. And when we refinanced it to agency debt we had to change that to like three month, six month nurses. And the Airbnb was like 10% of the property maybe. Yeah. Somewhere around 10% of the property. And it was very, very profitable, but lenders don’t like to see it. So it’s very, it that’s something that I was surprised at hearing because it’s not a typical thing and it makes perfect sense coming from it. But most banks aren’t really using common sense when you <laugh>, when you get down to it. And you’re like, well, how does this make sense? But that’s just kind of how it works. So you’re, you’re a successful attorney in multiple countries. Now you’re working with this company and your company is very successful with lending to foreign investors. What are the main factors for you that have contributed to your success?

Yair:
So I have say it’s, the company is much more than the media. Of course you met mial from our Canadian office. We have a big office in our R and D center in Israel and another office here in Florida, just between the, the, the high management of the company. We have more than a hundred years, actually more than 150 years of experience in investments in real estate, in underwriting and building what we have built and using, as we said, we’re data oriented. So we have teams of data scientists that are looking on those transactions, not like a banker, just we have the banking system of course, in place, but we’re looking into it in a much more complex way. And we start to look on every problem. And every question from the data perspective, and this allows us to do things that others can’t to basically what we’re doing when we are over, how come a us bank looks on a, a Canadian, for example, who is speaking, English has a Canadian credit scoring has a great job.

Yair:
And they say, you have no credit score in the us. I can’t talk to you. I don’t know you at all, but what our system says, he’s a banker in Canada. We have bankers in Australia, in Canada, high take employees. Those are amazing borrowers. Those are people. Basically we give money to people that have money, but other lenders simply look only in the us and can’t understand that, Hey, this guy is an amazing Bower. He simply lives in Canada. So why not check him in Canada, understand his profit there. And the property in the us connects <inaudible> and give him loan. And this is basically what we’re doing it. When you’re thinking about it, it makes much more sense. Another example that I wanna emphasize. And a lot of us lenders doesn’t understand that given money to foreign nationals, it’s actually safer. And why I’m saying that let’s say something happened tomorrow with the us residential market, everything crashes again like 2008.

Yair:
So if I’m investing in a I’m lending to an American, he just lost his job and everything came crashing down his property and everything. But if I’m giving money to a doctor who works in London, even if something happened in the us economy, he still has his job in London. I need both economies to crash to something really happened. So I’m actually more protected than just giving a loan to an American cause I’m protected by the British economy and the us at the same time. And this is some something that’s regular lenders sometimes, sometimes missing as we see it.

Charles:
Yeah. A lot of us banking institutions just have blinders on when it goes to getting accounts opened or doing anything. I mean, just people opening up accounts. It’s I mean, just from Canada, you know what I mean? Which is, you know, which is our neighbor here it’s, it’s so difficult cuz they just have their tunnel vision on of this is, Hey, this is what it says I can do. And that’s it. And there’s not any, anything else outside the box, which it’s great that you’re providing this to a much needed market. So how can our listeners learn more about you and your business Yair?

Yair:
So of course we have a very vast online presence. You can go to our website, LinkedIn, bigger pockets. You can read about us. You can of course, listen to this podcast and understand a bit more about us. And I encourage you to enlist our newsletter that we issue once a month with more information about the market. And of course the fair thing is to approach people like yourself, who work with us, who knows us, seen our programs and that’s the best way to connect us. So via our partner networks that we trust and knows us and examine what we do and how we can benefit their foreign nationals industry, if you they’re foreign nationals investors.

Charles:
Awesome. Well, thank you so much for coming on today and looking forward to touching base with you here in the near future.

Yair:
Likewise, looking forward,

Charles:
Have a great week. Bye.

Yair:
Bye bye. Thank you.

Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.

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About Yair Benyamini

Yair Benyamini is the Co-founder and CEO of Lendai. Prior to founding Lendai, Yair headed the Cross Border Transaction Department and the Business Development Department in one of Israel’s leading law firms. In that capacity, he managed global multi-million dollar transactions in North America, Europe, Asia, and the Middle East.

Yair has more than 15 years of experience leading large-scale operations, including in the IDF and several NGOs. Yair is the Chairman of SpaceGirlz, a non-profit organization promoting space and science studies for young girls aiming to build the next generation of women scientists.

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