Years before the buzz about AI reached a fever pitch, Reigo Investments harnessed it to transform the real estate underwriting market.
Prior to its founding in 2018, the process for real estate underwriting had not been updated for years and involved little more than consideration of “a limited number of parameters managed in old Excel spreadsheets,” according to Yariv Omer, the CEO of the Israel/U.S.-based fintech company.
That all changed with Reigo, which hones its machine learning algorithms with data culled from “hundreds of sources” and then “scores, rates, and selects the best loans.” Today, the AI-powered platform has revolutionized the underwriting experience by cutting down non-performing loans, shrinking the timeframe for underwriting from days to a matter of hours, and enabling investment managers to diversify their portfolios.
“The lending community has realized these archaic systems are not capable of getting them to reach their full potential. With our AI-powered platform, we are focused on helping investors avoid discrepancies in the underwriting documents, filter out potential non-performing loans, make faster investment decisions, and create ultra-diverse portfolios across the U.S. to set themselves apart among their borrowers,” Omer said in a recent press statement.
The idea for Reigo came to light after Itay Goren, Omer’s partner and veteran private lender, had a loan that defaulted, resulting in the loss of some of the principal. Omer and his partner wanted to avoid something like that from happening again – was there a better way to do real estate loan underwriting?
“When looking back and trying to learn some lessons from this non-performing loan case, he wasn’t sure if that loan’s specific issues would be relevant for all his future loans. He wasn’t sure how or even if he should change his underwriting model and to what extent. Also, how could he test that his new assumptions really work on significant amounts of loans involving different borrowers in different markets with different projects?” Omer said, during a recent interview with Originate Report. “Together, we wondered if we could utilize technology and data science to build an underwriting platform that could help in reducing defaults, losses, and fraud significantly, as well as help balance-sheet lenders and institutional loan buyers add another underwriting layer on top of their current approach.”
The two eventually came up with what Omer describes as an “ironman suite” that allows underwriters to “accelerate their abilities to predict loan performance.”
In the short-term debt market in the United States, investors continue to use “archaic excel models without data science,” Omer says, positioning Reigo as an alternative for institutional investors as a platform for loan aggregation, underwriting, and asset management. The platform he and his business partner developed delivers on the vision they outlined – reducing default, losses, and fraud; increasing performance and speed; and incorporating regular updates to the underwriting model. Omer says one highly experienced quantitative strategist from a large fund concluded that – after reviewing what Reigo had to offer –he was “convinced Reigo [is] able to achieve Alpha in this market.”
Reigo’s originator partners can close a range of loans with flexible eligibility criteria across all 50 states. Originators also can choose from among several loan strategies, such as bridge, fix-and-flip, and ground-up construction loans, and the type of property, which includes not only single family and multi-family housing, but also mixed-use and land loans.
Reigo taps into a network of 35 partners that ensure a consistent stream of off-market loan purchasing opportunities in the short-term residential bridge loans market. The company then aggregates these loans to different capital structures, such as funds and securitizations, which gives investors a better risk-reward ratio.
In March 2022, Reigo announced a second $100 million securitization led by Cantor Fitzgerald. The company now boasts over $320 million in assets under management, structured in securitizations and funds. The company’s initial securitization was issued within three years of its founding, making it one of the fastest growing among its peers, according to Omer. “Reigo’s strong reputation in the capital markets allows for building new structures and fueling the business,” Omer said.
In addition, Reigo has won accolades for its technology. In 2023, it won the Fintech Technology for Investment Competition by the Fintech.IL Innovation Community, a joint venture by the Bank of Israel and several Israeli government agencies. In 2022, it won Best Real Estate Underwriting Technology by Wealth & Finance International. And the list goes on.
One of the key advantages of Reigo’s AI platform is its ability to absorb large amounts of new data as conditions change both in the tumultuous real estate market and the economy at large. “Reigo’s data science team is working tirelessly to keep our algorithm updated with hundreds of data sources per loan. Our unique technology is driven by dynamic data which compares each loan to thousands of similar historical loans. This technology, combined with our credit team’s decades of real estate expertise, gives us the ability to build new investment models monthly and provide an unparalleled underwriting platform,” Omer said.
At the same time, Reigo’s platform serves as a consistent reliable source of data science for investors. “Our originator partners enjoy a fast and reliable platform that helps fund and purchase their loans in a programmatic way,” Omer said.
“The combination of flexibility with data science consistency gives a crucial advantage during periods of rapid and significant change, much like the industry is currently experiencing,” Omer added.
For more information, visit https://reigo-inv.com/. To request a demo, click here.
