Start-up aims to incorporate fintech elements over time
GPARENCY is a commercial mortgage brokerage start-up with several wrinkles that set it apart from the rest.
Launched just last November, the New Jersey-based company is built around a membership model, where it only charges flat fees and zero commissions, and clients never pay more than $16,000. Borrowers have access to more than 3,000 lenders nationally, and the start-up also expects to eventually rely on a number of fintech-driven processes over time to keep things efficient and easy.
“It’s going way better than we expected this early,” said GPARENCY CEO and founder Ira Zlotowitz (pictured). “We always had confidence that this is what’s needed [and] the market is going to take off, but we never thought it would take off this quickly.”
For example, the company set a goal in the first six months to sign 120 contracts between new members and repeat business. The number hit 142 instead.
Just over 70 people currently work for GPARENCY. The company raised a seed round of venture capital money, oversubscribed at $15 million.
Read more: GPARENCY adds commercial lender search tool to its platform
Zlotowitz describes GPARENCY As a “premier commercial mortgage broker” whose subscription model makes it different from its peers.
“We have an annual subscription that gives a lot of benefits and perks and information to the [general partner/real estate owner client] – all the intel they would need to do loans and have acquisition access,” Zlotowitz said.
GPARENCY has been steadily ramping up its capabilities. In May, for example, the company launched a match-to-lender software product designed to give commercial real estate borrowers the ability to search by loan and property type to access every single loan lender in their state, free of charge. Earlier in June, GPARENCY launched a database of more than 500 market and off-market commercial property listings exclusive to active buyers. Designed to help general partners find the most relevant deals on the market, all listings are 100% confirmed and regularly updated with the latest information.
Read more: What is a commercial mortgage broker?
Slow and steady tech adoption
There is a three-year plan to enhance and further build up GPARENCY’s platform. Elements to come include developing a comp database for the platform, which will also rely on machine learning and artificial intelligence to scan the rent rolls and recommend which lenders to go to.
In real estate language, a rent roll reflects the income potential of a rental property. Landlords and property managers use them for daily management of properties to help analyze anticipated rental income and actual rental income collected, among other purposes.
“We’re starting first with the needs of the client… on the front end, [considering] how do we bring everything that’s fragmented in the industry to one dashboard for the client and then drilling all the way down to the artificial intelligence,” Zlotowitcz said.
The beginning stage of the company is more about being a regular commercial broker. Digital enhancements will come over time as the user interface and platform are built up.
“As the user interface is built, we’re going to drill down as far as replacing the human side” with some of the platform’s functions, Zlotowitz said. “Instead of being 100% human on the back end it [is about] finding the right blend of what percentage [will be] human and what potentially will be AI technology.”
Digital marketplace
As the technology enhancement grows, the system will more closely resemble a digital marketplace.
“The long-term business plan is that we will have lenders, listing brokers, equity sources and [general partners/real estate owners with memberships] interact with each other,” Zlotowitz explained. “The parts that need a human will be available to [customers].”
Read next: GPARENCY appoints chief product officer
Building a more traditional commercial mortgage brokerage first made sense, according to Zlotowitz, because it allows for building of relationships that will last and remain as technology enhancements are added.
“This is a human business first [and] the commercial real estate industry has been the last to adopt technology,” Zlotowitz said. “They’re accustomed to [human interaction] and we want to start thinking about humans [while] using all the technology behind the seams.”
He added “if you want that human, we will give that to you. If you want pure tech, we’ll get into that as well.”
Zlotowitz, added, however, that GPARENCY believes customers will shrink the number of times they want humans involved in their process. He disagreed that commercial mortgage clients will want everything to be automated.
“The old school brokerage firms think technology will never make a difference in commercial real estate,” Zlotowitz said. “The other side thinks things will be automated. I think it [will be] a hybrid – half human, half technology”.
