New Platform Deep-Dive Review: FinResi Real-Estate Debt Platform

This intriguing newcomer to The Review offers a surprisingly large number of investments, low LTVs and first-position liens. Downsides are current lack of disclosure of full track record and exact spread on each deal. There also may be a hint of something ground-breaking in the works at FinResi (and that I've felt the industry has needed for a long time): Recession stress-tested data.

(Usual disclaimer: I'm just an investor expressing my personal opinion and am not an attorney, accountant nor your financial advisor. Consult your own financial professionals before making any financial decisions. Code of Ethics: To remove conflicts of interest that are rife on other sites, I/we do not accept ANY money from outside sponsors or platforms for ANYTHING. This includes but is not limited to: no money for postings, nor reviews, nor advertising, nor affiliate leads etc. Nor do I/we negotiate special terms for ourselves in the club above what we negotiate for the benefit of members. Info may contains errors so use at your own risk. See Code of Ethics for more info.)

A Changing of the Guard for Real Estate CrowdFunding?

Downturns typically do one of two things to a young industry: Either:

1. The leads of the top one or two companies become cemented (as the smaller ones go out of business). And these leaders emerge far further ahead and more dominant than ever.

   
   

2. ....OR the leaders crack (through miscalculations and/or mistakes). And this often opens up the door for brand-new companies to enter the market with better and more innovative solutions, which can take the industry in a new direction.

CrowdStreet stumbles

Several years ago I assumed that real estate crowdfunding would be in the first situation when the next real-estate downturn hit. And I believed that CrowdStreet (which was the dominant leader, by far) was going to grab virtually all the business and cement an insurmountable lead (as the most of the others were choked out).

But I never imagined that investor-claimed satisfaction with CrowdStreet would tumble through the floor. Nor did I imagine that their deal-flow (which was always their strongest advantage), would drop from 20-30 deals to only a handful today (and prior to that almost nothing for a long time). 

To be fair, some real-estate sectors have been in a pricing recession. So lowered deal-flow is expected (and an industry-wide issue). At the same time, CrowdStreet's business model requires it to put out new deals to get paid (and continue to keep the lights on). So I feel the above combination is a worrying development.

And the permanent loss of what used to be a great source of high deal-flow would be a sad thing. So I really hope CrowdStreet is able to turn things around.

In the meantime, I've been noticing a trend of brand new companies popping up like daisies after a spring rain. And many of them are taking a different take on things and/or doing things differently than than the old guard.

So this is the first article in a new series about these new platforms. And this one is about FinResi.

FinResi

Since this is a relatively young platform, I was surprised and impressed by the # of offerings (6 currently). And as a conservative investor, I liked seeing the low LTVs (all below 65% currently) and the focus on all first-position liens.

I personally would like to see FinResi disclose their full track-record (to backup the claimed default rate of 4%) and fully disclose the exact amount of their profit spread on each deal.

I also would like to see no lending in judicial-only states. Although other investors coming from a different place (different risk tolerance, financial situation and financial goals) will disagree with this criteria.

Additionally, FinResi's investment offering notes appear to hint at something potentially groundbreaking in the works at FinResi (and something I've felt all platforms would show...but none currently do): the presentation of recession stress-tested data.

This new review has more info on how FinResi works, its pros and cons and also a due-diligence deep-dive on a current FinResi deal. Click here to see the full FinResi review.