It’s hard to imagine booking a holiday without Airbnb. Or getting to the airport without Uber as an option. And just as marketplaces have changed the way we holiday and travel, they’re slowly changing the way investors and borrowers connect too.
According to AltX co-Founder and co-CEO Steve Beinert, credit flow is critical to the economy – and right now there’s a kink in the flow.
“It’s getting harder and harder for borrowers to do business with the banks – they aren’t flexible or responsive enough in a fast-moving market,” he says. His platform connects those property-backed borrowers and developers with a previously under-utilised source of capital: Australia’s private investor base.
Matching demand with supply
Beyond the major banks’ increasingly strict lending criteria, there’s a boom in non-bank and private lending. “Developers and property investors are tired of waiting for bank approvals while they bleed money into their projects, or miss out on the deal,” says Steve.
The big four’s share of the commercial real estate market shrunk to 72% in 2020, and is expected to decline further to 65% over the coming years. Meanwhile, private lenders will need to pick up more than $50billion in funding needs by 2024.
Borrowers are looking for simpler, faster lending solutions online. And investors are looking for a more reliable source of returns – without risking their hard-earned capital. AltX simply matches that demand with capital supply, in the form of private real estate debt.
“It’s time to rethink access to capital. Because where banks are failing to deliver, private investors are seeing opportunities – reaping the returns,” Steve Beinert
“When professionally managed, private real estate debt offers investors the best of both worlds,” says Steve. “Our investors can protect their downside risk because their investment is backed by a first mortgage.”
At the same time, investors enjoy monthly income in the form of interest payments.
Steve believes the “beauty” of first mortgage loans is their stability. “If an asset needs to be sold to recover the loan, the money from the sale will be paid to the first mortgagee as a priority. Investors love knowing they are the first to be paid, at the front of the queue.”
Democratising access to more deals
Until now, investing in this asset class was a question of who you knew. “It’s a bit like a private club,” says Steve.
“We know there are many wholesale investors out there who have capital ready to invest. They just didn’t have access to the opportunities. They didn’t even know investments like this existed.”
Much like homeowners or car drivers didn’t realise they could easily turn their existing asset into an income stream through a marketplace like Airbnb or Uber. As a marketplace for private real estate investment, AltX helps Australian wholesale investors tap into the opportunity to ‘be the non-bank’. It offers consistent returns of between 4% and 8% – without significant risk. They can review daily deals on the AltX portal, and can make a minimum investment of just $50,000 in minutes.
And over the past decade, those investors have shown an increasingly strong appetite to be part of the action. Over the past decade, AltX has funded more than 850 loans to the value of $1.85 billion – and currently has over $900 million in investor funds under management.
“We make sure every deal meets our strict criteria,” notes Steve. “If we aren’t comfortable putting our own money into the deal, we don’t fund it.”
The AltX in-house team the strength of the asset securing the loan, the borrower’s experience and income – and their exit strategy, given terms are typically 12 to 18 months for these types of transactions. Private lending suits opportunities in a fast-moving market, where timing can make all the difference. And that’s where bank red tape can hold things up. Steve believes AltX is part of the solution – while also meeting investor needs for short-term, low-risk investment opportunities with reliable, consistent returns.
“In an economy that depends on efficient flow of credit, the AltX Platform is a win-win all around,” says Steve. Just as app-based marketplaces allow goods and services to move more efficiently through the economy, platforms like AltX are helping to reduce the barriers to credit flow.
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Bondi Junction, NSW, 2022
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