In this episode, we interview Saurabh Shah, co-founder of Instalend, a private lender for real estate investment properties. Saurabh explains how Instalend provides financing for investors who want to buy and fix up investment properties. He shares the inspiration behind starting Instalend and the process of vetting deals. Saurabh also discusses the funding options and rates offered by Instalend, as well as the company’s unique features and advantages. The conversation concludes with a discussion on the current state of the real estate market and the outlook for the future.

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What’s Covered In This Episode

  • In this episode we’ll cover:
    • Instalend is a private lender that provides financing for real estate investment properties.
    • The inspiration behind starting Instalend was the need for a more stable and faster source of capital for real estate investors.
    • Instalend is an asset-based lender and focuses on the underlying subject property rather than the investor’s income.
    • The funding options and rates offered by Instalend depend on the investor’s experience and the type of property.
    • Instalend offers direct access to appraisers, has a low loan minimum of $50,000, and has no upfront fees.
    • The real estate market is expected to perform well, especially with potential interest rate reductions.
    • Instalend aims to make a net positive community impact by helping resolve the housing crisis and gentrifying neighborhoods.

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Read The Transcript Here


Trevor Oldham (00:02.126)
Hey everyone, welcome back to the R .I. Marketing Secrets Podcast. Today on this show we have SoRabShaw. SoRab, for those listening to the show, do you mind just walking them through what made you decide to go out and co -found Instalend?

Saurabh Shah (00:17.678)
Hi, Trevor, thanks for having me and hello to your audience. So at Instalent, we are a private lender. We make loans for real estate investment properties. So individuals like you and I who want to invest in real estate, we need access to financing to go and make those purchases to fix them up or to just hold on to these. And that’s where we step in.

What inspired us to go find InstaLand was we started off as an investor ourselves where we were buying and fixing up investment properties, residential investments. So typically single family homes, two units, three units or a four unit. And to buy those properties, we needed capital. So we would usually go to a bank or look for a local hard money lender, but the banks were too slow. Hard money lenders were too expensive. And I come from a Wall Street background, so I felt like there was a

gap that I could address, which was a more stable institutional color of capital, not as expensive as hard money and definitely quicker and faster as compared to banks. That’s how we co -founded Insulan to solve for this problem, to enable investors to get access to financing and close on investment properties ASAP.

Trevor Oldham (01:31.662)
And from a process standpoint, what does that look like? Is it someone going out there and say they’re finding a deal, maybe they’re finding a fix and flip, it’s a property, whatever the ARV might be. Let’s say it’s 100 ,000 and they know they put 50K in, they can make 200K, or they sell it for 200K, is there a certain minimum, I guess, is there a certain minimum that you’re looking for when someone comes to work with you, or how does the process work when it comes to vetting the deal? Because I’m assuming if I go out in my local neighborhood and say, hey, I think this deal can make some money,

Let me go get some money to flip it. I’m assuming that there’s more of a vetting process than that, but just curious how the whole process works.

Saurabh Shah (02:07.854)
Sure, that’s a great question. So we are an asset based lender. What that means is we don’t qualify the investor’s income for the purchase, rehab or refinance. So we will never ask you for tax returns, pay stubs, W -2s, none of that. We focus our underwriting on the underlying subject property. So the only way we do that is by ordering an appraisal report, which tells us everything we need to know. What is the as is value? If there’s a rehab budget, how much would be the ARV?

the comms and things that we need to know all the good stuff, right? That’s the one key document we need and these loans that we give to you, they are structured as a business purpose loan. So they go out to your business entity like an LLC or a corp.

So it’s not in your individual name. So it doesn’t affect your credit. It doesn’t, you know, tap into a utilization. It completely keeps you free from the additional loans that we made you in terms of a utilization perspective. And it doesn’t limit us in terms of any exposure. So you could be doing one loan with us, or you could be doing 10 loans or 100 loans. There is no cap. So the process is straightforward. The underwriting is on the property.

not on you as an individual. We do look at credit background for you just to make sure, hey, this kind of meets our basic requirement. You have been making payments on time with your previous lenders or your open mortgages, stuff like that. So just somewhat of a preview on what your credit pattern is. But outside of that, it’s pretty simple. You send us a contract. If you have a property under contract that you’re going to fix up, you send us a rehab budget. We get the appraiser out there. The report comes back in five days. We need two days to finish underwriting and we get to closing on the 10th day.

Trevor Oldham (03:45.294)
And when it comes to funding the deals themselves, is it something where you fund 90 % of the deal, 100 % of the deal plus rehab costs? How does that look like from an investor perspective?

Saurabh Shah (03:56.27)
Great, so funding is based on your experience. So if you are an experienced investor, and by definition what I mean as an experienced investor, someone who’s done five deals in the last five years, and those could be fix and flips, fixed to rent, buy and hold, anything that qualifies you as some sort of exposure to real estate investments is what we count as experience. So if you’ve done five deals or more in the last five years, we’ll give you 90 % of purchase and cover 100 % of rehab. Also our loan minimum is only 50 ,000.

So that’s a wide range of spectrum going from 50 ,000 minimum to 5 million maximum where you can work across states. If you’re a first time investor, we’d probably finance 70 to 75 % of your purchase and always cover a hundred percent of rehab. And if you’re in between that first deal to five deals, we’ll be anywhere from 80 to 85 % of your purchase and always cover a hundred percent of your rehab on the fix and flips. On the second product we offer is long -term mortgages, which is also popularly known as

SDSCR or 30 -year rental loans. We have no experience requirement there so we’ll finance up to 80 % of the purchase price on a property that doesn’t need rehab, is ready to be rented and you’re just going to buy it to hold and we’ll finance 75 % of the property value on a property where you’re just looking to cash out.

Trevor Oldham (05:19.182)
Yeah, I think that that’s super helpful for audience listening. And let’s say someone is listening, they’re like, hey, I want to go check out InstaLend. Are you able to lend out in all 50 states or is there certain states that you guys don’t lend out into?

Saurabh Shah (05:32.558)
So we’re not currently lending in the Dakotas. But as a result of that, we should be able to make your loan everywhere else.

Trevor Oldham (05:38.766)
Perfect that’s that’s good to hear just want to make sure any of our listeners out there in the Dakotas They don’t get there, you know, maybe someday but hopefully they don’t get their hopes up But no that that sounds great and curious from a protection standpoint when it comes to protecting yourself and your company when someone is going out there and you and using you guys for funding just from a company perspective Do you just are you going through and making sure you have first lien position? How do you just cover your end just in case someone you know, they go out and they buy the property and they own it?

Not to say someone would, but you know, you give them a loan for 50k, then they go run away with it. Again, not to say that that would happen, but just how do you protect yourselves on your end?

Saurabh Shah (06:15.214)
Sure, so because we’re giving you max leverage, right? We’re probably financing 90 % of purchase, 100 % of your rehab. You’re putting only 10 % down. That’s some sort of skin in the game, but that’s definitely less than what we are putting in. So from a protection point of view, the security that we have is we put a lien on the property, and we are the first and only lien holders. So if tomorrow there is a scenario of a potential default, our recourse is the underlying subject property.

Trevor Oldham (06:27.086)
Mm -hmm.

Trevor Oldham (06:44.366)
Yeah, I think that’s also very helpful for audience to know it’s just how you guys can protect yourselves. But curious, if someone does go out and they go through and get a loan to your company, how does it look from your standpoint? And there might be different interest rates, different things like that that you charge depending on prior performance, experience, credit, however, there may be, but is it something like, just again, hypothetically, as an example, someone comes to you, you charge them, say, a 10 % interest rate with maybe three to four points, and then do interest only for a year.

and then have a balloon payment. At the end of that one year, there’s every single deal. I mean, obviously a smaller rehab is probably gonna take less time than say a $5 million rehab. Just curious what it looks like from your standpoint when it comes to financing these deals and what someone could expect. Because at the end of the day, I know you guys have to make money. It’s not just like I can go there and get free money or is it more just a regeneration fees? Just curious what that looks like.

Saurabh Shah (07:36.974)
Again, good question. So let me just break this up as two different products, the short term and the long term. The short term is for up to 12 months, which is on anything that needs a rehab. It could be residential one to four units. It could be beauties, condos, townhomes. It could also be a commercial property, which is five plus multifamily apartments or a mixed use. Anything which is short term, our interest rates start at 11%. They are interest only monthly payments. They have no prepayment penalty. So to answer that,

your question if you’re doing like a really cosmetic rehab is you’re going to knock it out in the next two months or three months and going to pay us back you don’t need to carry that interest only mortgage for up to 12 months you finish your work in three months you either sell the property and pay us back without any prepayment penalties or if your exit is to just bring in a tenant and hold on to it then we just refinance into a 30 -year mortgage so that’s the short term in terms of the long term which are 30 -year mortgages the rates start right now at 7 %

and we offer different pricing options. It could be a fixed rate mortgage. It could be an adjustable rate mortgage. We can do interest only. So depending on where your DSCR is, how much are you going to cash out? What is the leverage you’re seeking? What is the rate you’re seeking? We can work with you and structure pricing based on those requirements. I’ll set up the interest costs in terms of our fees. We have no fees upfront. Our fees are at the time.

of closing, which means we’ve performed to make sure that the loan is at the closing table. And our fees include 2 % in origination fees, not four or five. It’s 2 % at standard, regardless of the loan amount, whether it’s a 50K loan or a 500K loan or a 5 million loan. It’s the same amount of work we put in, but we don’t discriminate with pricing. And we have a fixed fee towards application, processing, and underwriting, which is a cumulative total of 1 ,690, which is also paid at closing.

Trevor Oldham (09:34.062)
That’s definitely a lot cheaper than when I closed up my house. I think the closing costs were like, oh, I don’t know, 20, 25 ,000, however the number may be. And that one was killer just spending that. It’s not going towards the mortgage or anything. It’s just going straight to the bank. But you know, I have to do it. But just curious, when it comes to your company, what really sets you apart as a leader versus in the space versus say another company in the space?

Saurabh Shah (09:36.75)
I’m sorry.

Saurabh Shah (10:02.99)
So I think we’ve tried to always identify how do we set ourselves apart from our competition, from our peers, what can we do better to service our clients? And a few things that we feel could be the qualifying talking points for us would be, we’re direct to appraisers, so we try and make sure that as a client, you have visibility, full control into the turnaround time, into the values. We try to remove the middle layer, which I don’t know a lot of other lenders are doing it. We’ve tried to keep,

the loan minimum to only a 50 ,000. So that allows us to be active in a lot of states where property values may be lower, but cash flows may be higher. So just to name a few, if you look at Ohio, you look at Michigan, somewhere in the Midwest, these states have low property values, but they’re good cash flow investments. We have no fees upfront, which is always great.

we can get your pre -qualification letter without running credit based on the representation you make with us. And only once you have a property under contract is when we will run credit. And outside of that, it’s really the structuring and the consultation that we offer when you bring in the loan, where you want to make sure your experience is worth your time, worth the fees that you pay us. We won’t just tell you, hey, this is the box.

Either you send us something that fits the box or it’s a denial. If something is out of the box, we’ll structure it with you to bring it back in the box. So sometimes there are situations where you had a great credit score all along, but say you just happen to have an auto -pay payment which got missed because you switched bank accounts and that dinged your score.

If you have a situation like that, I’m going to tell you, hey listen, we’ll work it out, right? We’ll probably just compensate that with some sort of an interest reserve, which is going to service your loan. Something that you are anyway paying for is just that it works as a compensating factor.

Saurabh Shah (12:02.702)
We have the ability to bring on co -garantors for you. Say if you’re a first -time investor, you want maximum leverage, we’ll tell you, hey, listen, we have a match program where we can bring you on with one of our investors who’s refunded before, has round tripped with us, has paid us back. So there’s a good track record. And if you want to partner with that individual, we’ll max out the loan amount because that’s what you’re seeking. So a bunch of different options that we offer in terms of programs, in terms of service.

in terms of minimum loans, in terms of being direct to appraisers, that I would say would help us put a step forward as compared to where the payors are.

Trevor Oldham (12:43.598)
Yeah, I would definitely agree with that. I think the nice aspect of it just sounds so much more reasonable to work with you and your company than some of these larger companies that are out there that I can think of that are just like a nightmare to work with. I always like work with, I don’t want to say smaller companies, but more, I would say reasonable companies and one where I know I can pick up the phone and someone’s going to answer and I’m not going to be on hold for three, four hours just trying to get through it, just ask a simple question. So I really like that aspect about your company, but…

Why did you choose this particular niche to build your company around? I know you mentioned your prior experience. Was it just, you saw fault points within like the industry? Just curious again, why you chose this particular niche.

Saurabh Shah (13:24.462)
I mean this space, this niche really stood out for us for two particular reasons. One is, of course, there is a genuine supply issue with housing and somewhere we want to make an effort to help resolve that. So if you talk to any investor, any contractor, any builder, what stops them from putting out more houses on the market is, hey listen, I need access to capital to go and do the work.

buy my material, buy a piece of land, start building. So being in that space where we make access to capital pretty easy and convenient is one way to solve for that. And the second thing we noticed was, you know, we also make a net positive community impact when you’re helping gentrify neighborhoods. So except for the Dakotas, we’re everywhere. So if you’re talking about certain neighborhoods, which today most lenders are shying away from for certain reasons, we’re still moving forward there.

So the ability to make a net positive community impact and the ability to solve for housing is something that we felt we were well positioned to solve for. And at the end of the day, it made a difference. It was not just about the bottom line on the numbers, but it was actually driving some sort of change and difference. So that’s really what inspired us to do this and helps us continue to do this on an everyday basis.

Trevor Oldham (14:45.294)
Yeah, that’s awesome to hear. But I’m curious to hear your take on just real estate as an asset class this year and what your thoughts are. I mean, I know I haven’t seen as much in the, when you say you’re fixing flip space other than there’s just been low inventory in the space just given everything that’s happened in the last little while. But I’ve seen like multifamily investors get absolutely crushed and with these different loans that they took out and you could take a look, they over leverage themselves and have capped.

you know, any caps on their rates. They, you know, I know there’s just a minute, there’s a whole host of sense. Obviously multifamily, investing in like a 300 unit apartment complex is going to be different than me going down and fixing and flipping a house down my street. But just curious from your perspective, how you think the real estate as an asset class is going to perform this year.

Saurabh Shah (15:35.534)
That’s something that, you know, I mean, there’s so many driving variables. The most important one is the cost of capital, interest rates, right? I mean, we’ve seen the rates peak from being at close to 0 % to where they are today in a span of 24 months. Now, higher cost of carrying impacts investors like you and me, and then, you know, it impacts lenders who then are not able to make these loans. So, I mean, my personal take is that there is a genuine shortfall.

Trevor Oldham (15:43.822)
Mm -hmm.

Saurabh Shah (16:05.472)
in the inventory that is available. And you can actually tie this in when you look at the sliver of the real estate stock as new inventory that came to the market. I think this was last probably 1980s, 1970s to 1980s. And since then, we’ve only seen the same houses being refurbished and traded, right? New buyers buying the same old house, refurbishing it, rehabbing it and selling it again.

So my take my personal take or rather our internal thought process on real estate is that to solve for this genuine housing crisis You need to put out more inventory for that. You need more access to capital Of course, you can have you know your cycles of real estate like we saw GFC in 2008 which was more subprime driven We’re seeing the interest rate impact on the ability for investors to do more transactions right now also

Trevor Oldham (16:46.926)
Mm -hmm.

Saurabh Shah (16:54.478)
The higher interest rates are getting many qualified buyers out of the space because their mortgage amounts are not working out given the higher cost of capital. But as you see the rates starting to come down, which is what everybody is guiding towards sometime in this year, the Fed’s expecting 325 basis points reduction. That’s definitely going to help kickstart the momentum. A lot of qualified buyers, a lot of investors who’ve been on the fence are going to jump back in. So we are…

Net net pretty optimistic, pretty positive on real estate as an asset class, both from an investment perspective and also from an end -use primary residence driven.

Trevor Oldham (17:35.086)
Yeah, I think that’s a great explanation. I think just looking over the last, I think no one really could have expected the pandemic and then the interest rates being cut so pretty quickly and then just skyrocketing as quick as they did, you know, it was definitely an unprecedented time. But so Rob, I just want to say it’s been a pleasure speaking with you today. And if someone is listening in our audience and they do want to work with your company, where should they go? Where can they learn more about you?

Saurabh Shah (17:59.502)
Thank you. I had a great time talking to you as well, Trevor. You can find us easily through our website, which is instillend .com. There’s a section to contact us from there. You can drop in an application right from Apply for a Loan. You can also request a pre -approval, which says Request Pre -approval right there. And we typically get back within two hours on any queries that come through. So somebody wants to reach out. We’ll be sure to get back immediately through the portal.

Trevor Oldham (18:29.134)
I’ll make sure to include that in the show notes of today’s episode and again Thank you so much for coming on to the podcast today

Saurabh Shah (18:35.598)
Thank you, Trevor. It’s been a pleasure.