Mortgage loan in a new way

I’m a serial entrepreneur and I’m constantly busy with launching and developing the business. In general, all my projects were connected to real estate: a developing company has built innovative buildings in Ukraine, a construction company in Barcelona builds houses and office buildings.

Of course, pandemic brought many inconveniences to our life but with this, the quarantine freed up some time for developing new ideas. I managed to think about how to give people the possibility to buy housing in a comfortable and accessible way.

Today, if you want to buy housing on a mortgage, one has to pass a difficult and lengthy (up to a few months) documentation procedures. The necessity to provide the bank with all the personal information, including health and religion statements, causes terrible discomfort for most people.

The average mortgage refusal rate in the world is over 50%. The banks hide the actual percentage of refusals, and the real situation has to be clarified by many indirect signs. For example, according to the data (source), the number of Americans who do not own their own homes is currently about 40%. Banks in the USA, Britain, Australia report that on average they refuse 20% of potential borrowers.

SAORSA begins to work in those tech-markets that are currently experiencing a boom in residential construction — the United States, the United Kingdom and the United Arab Emirates. Then, we will selectively add the countries of Europe and Asia throughout the year. We focused on the regions where demand for real estate is very high.

A client, who has decided to purchase housing, just has to select a unit in our application and fill out an application to obtain approval for financing the purchase. At the next stage, you will need to verify your identity and upload the necessary documents. This procedure is not new; the process is very similar to identification in neobanks.

After verification, our service will give an answer about whether we are ready to work with this client. We are tentatively planning to bring the approval percentage to 90%. A positive response will allow the customer to book the item in the SAORSA app and complete the purchase process.

Within 48 hours, we will complete the transaction and all accompanying documents and send a confirmation letter with a full package of documents to the client’s e-mail. Then all the one has to do is go to the developer’s office for the keys and this is the only offline action.

It is important that our client can be a resident of any country, while the conditions of registration will not change. You can be anywhere in the world in the process of selecting real estate and completing the transaction. We start working only with new real estate, commissioned, only with developers. This simplifies many tasks and gives transparency to the housing valuation.

There are two types of clients who are ready to buy real estate online. The first are people with a traditional outlook on purchasing a house, planning to buy real estate in their city. They can independently go and see the unit of interest, and buy through us. It will be more profitable, faster and easier.

The second type of customer thinks a little more broadly. These are people who are in constant development, moving forward. They value their time and do not waste it on unnecessary actions. And for them, we add to the catalogue the most detailed description of units with many photos, 3D reviews, reviews about the area, developers’ ratings, schools and institutions and other important information.

The experience of using our service is a unique possibility to remotely buy housing in another city or even another country. With this, you can use real estate both for your own purposes and for getting additional income or investments, so there are no limitations.

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Everybody wins

We will finance the purchase of real estate with funds raised by many banks. Funds from each of the banks are raised in fairly large volumes, starting from $10 million. Raising such funds for an idea may seem crazy, but everything turned out to be quite possible. And the feedback from more than a dozen banks proves that they are ready to cooperate.

It is profitable for banks to work with us because we take money quite expensively. For example, German banks have mortgage interest rates never exceeding 2.5%, while the usual rate is around 1%. We immediately take a lot of money at a high percentage for them, from 1.5% to 2.5% per annum. The interest on the mortgage for the client will be higher, starting from 2.5% per annum.

At the moment, the minimum down payment on mortgages in our target markets is not less than 20%, but we are ready to approve the transaction with a down payment equal to 10% of the cost of housing. We can also simplify the conditions for obtaining a mortgage because we have the ability to quickly sell real estate through SAORSA.

Thus, if a client has 10% of the housing cost and the amount to complete the transaction, then this is already a big enough guarantee that he will pay regularly. In case of non-return, we have worked out a very loyal scheme of providing a deferral for the payment of the principal debt and interest for up to 12 months — so the client will have time to resolve his material issues. This period will be enough to return to the agreed payment schedule again. If the situation does not change within a year of the deferral and the client does not resume payments, the property will be re-sold through SAORSA at market value.

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Competitors

Our strategy allows us to use competitors as additional sales channels, and in such a way, turning them into our partners and giving a possibility to earn more.

We anticipate the first competitors in a few months after the sales start. Quite possibly, that we have to be pioneers in this field. Far from everyone will decide to become our competitor, as the operational process (loan scoring, working with the documentation, raising funds from banks) is far from easy to realize and require great competences from the whole team. The majority will find it more profitable to cooperate.
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Development plan

In September, we applied to YCombinator, which was highly recommended by our advisor, Alex Lazovski, founder and managing partner of Scale-Up Venture Capital. The real estate sector is precisely the focus of this fund. There are several proptech companies in their portfolio, including Opendoor “unicorn”.

We plan to launch sales at the beginning of 2021. It is at this time that demo days will be held in accelerators. Now the main work is underway to expand the catalogue of new real estate in million-plus cities in the United States, Britain and the UAE.

Our plan for at least the first six months of 2021 is to reach a sales level of 1,000 properties. This will be enough to show the effectiveness of SAORSA’s work. Thanks to accumulating contacts on the landing page, we already have hundreds of potential clients who want to buy real estate.

We have developed a fairly original business model, which uses several monetization methods, but we disclose this information only to investors upon request.

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Developers are of great help

The feedback from the developers is fantastic. All of them agreed to work with us. This makes sense as we provide an additional sales channel and lower the price for the client by eliminating the realtor commission.

We start working only with new real estate because its price is more transparent than prices for the secondary one. We are ready to work with a variety of developers offering an adequate price/quality ratio. In addition, developers’ transparent ratings, fixed on our service, allow creating healthy competition between them — and, thereby, contribute to improving the quality of construction projects.

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Our team

Dmitry Maluchin, our CTO, has already launched a few successful startups, and now, he develops the technical part of SAORSA. Oleg Stupakov, a sales manager, who’s been living in Germany for quite a long time and has great experience in managing international projects, is responsible for cooperation with banks and our strategic partners.

Operational, organisational and many other tasks we solve together with Anna Chistyakova, who’s my beloved wife. We’ve been together for more than 20 years and it’s not the first time that we launch joint businesses. With this, we’re developing four most important startups in our life — our kids:)

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Investments

We already have a lead-investor and he covers quite many competencies, which are of great need to us at this development stage. Currently, we are pooling in the pre-seed round. We are selecting investors with great attention as we have more value in non-toxic money. At the seed-round, we are planning to become big enough for the funds from Silicon Valley.

The raised funds we are going to use for launching sales: advertising, marketing, hiring new customer support employees and opening offices in the jurisdiction of our target markets.