Joseph Ashkouti With Yieldi

Intro: [00:00:04] Broadcasting live from the Business RadioX Studios in Atlanta, Georgia. It’s time for Atlanta Business Radio brought to you by on pay Atlanta’s new standard in payroll. Now here’s your host.

Lee Kantor: [00:00:24] Lee Kantor here, another episode of Atlanta Business Radio, and this is going to be a good one, but before we get started, it’s important to recognize our sponsor on pay. Without them, we couldn’t be sharing these important stories today on the land of Business Radio. We have Joe Ashkouti with yield. Welcome, Joe.

Joseph Ashkouti: [00:00:43] Hey, how are you? Thanks for having

Lee Kantor: [00:00:44] Me. Well, I’m excited to learn what you’re up to. Tell us a little bit about yield. How are you serving, folks?

Joseph Ashkouti: [00:00:50] So yield is a private lender. We have set it up as a technology company, so we formed a marketplace to bring investors and bring borrowers together. So we we underwrite all of our deals. They’re all asset based, real estate backed, and we put them up on the marketplace and we close them with investors that can choose which deals that they like to invest in. So it’s it’s been great to be able to to build off that and build a marketplace to be able to bring technology to what is typically a mom and pop business, to be able to give investors an opportunity to invest in deals that they would never be able to see unless they were institutional type investors.

Lee Kantor: [00:01:39] Now are these investors kind of working in the flip world where that typically they would be investing in the home, they would be rehabbing it and then and then selling it again in this enables them to kind of cherry pick the deals they want to get in on maybe the smaller level, but just a more scale.

Joseph Ashkouti: [00:01:58] Yeah, that’s right. So our investors can choose which which deals that they want to invest into. So they we lend on all asset types. Commercial, residential, multifamily and our loan amounts are between two hundred and fifty thousand and about five million. So the investor has the opportunity to pick and choose which deals they like, and they can also determine how much they want to put into a deal. So if they we have typically $50000 minimum, so if they want to invest one hundred thousand, they can say, Hey, we like this single family house in Atlanta, Georgia. It’s a $500000 loan, but we would only like to put one hundred thousand into it. And so it gives them the opportunity to pick and choose. And then on the other side, the borrowers, you know, we’re lending to fix and flippers and developers to commercial guys that are buying, you know, they just need bridge loans. They’re all one year loans. So that may need a bridge loan in order to get the property fixed up to get a tenant in there to go get traditional financing.

Lee Kantor: [00:02:58] And is this something that is only for accredited investors or can anybody invest in this?

Joseph Ashkouti: [00:03:04] Right now we’re we’re set up to only work with accredited investors, so it keeps it keeps pretty much five to 10 investors in each deal and no more.

Lee Kantor: [00:03:14] And then for the for the listener, can you explain, you know what an accredited investor is?

Joseph Ashkouti: [00:03:19] Sure, an accredited investor is somebody that besides your the value of your house has income equal to or greater than two hundred and fifty thousand a year, or has a net worth not including their residence of over a million.

Lee Kantor: [00:03:33] So if you kind of pass that test, then do you you are considered accredited, so then if I’m if I am that, how do I show that to you? Do I have to observe some documentation you have to see in order for me to do the deals?

Joseph Ashkouti: [00:03:48] Yeah, we have a we have a third party that we use that is all streamlined. And when you go to sign up online, it walks you through those steps and the documentation we need in order to prove it.

Lee Kantor: [00:04:01] Now is the value or one of the values of this marketplace kind of the speed in which deals can get done because sometimes in traditional lending environments, it can be a little cumbersome.

Joseph Ashkouti: [00:04:13] Yes, that’s right. It’s pretty much one of the reasons why we started the business just because we knew there was a lot of issues. Considering what happened in 08, banks are just not lending. And so in order to get a loan from a traditional bank, it is a brutal long process and it takes between 60 and 90 days, especially if it’s investment property. I’m sure a lot of listeners have gone through the process to get an owner occupied loan for a house that they buy, and that process is pretty cumbersome. So we saw an opportunity in the marketplace to be able to offer quick loans, underwrite quickly and close and sometimes less than 10 days. So that’s really where we’re providing a lot of value to our borrowers.

Lee Kantor: [00:05:00] And then you’re kind of your background makes you kind of uniquely qualified to to take on a project of this magnitude, right? You’ve you’ve kind of been on the other side of the table in terms of owning, managing and developing real estate for a minute or so, right?

Joseph Ashkouti: [00:05:18] Yeah. So I’ve been in the real estate business for my entire career, and we developed a lot of grocery anchored shopping centers. We developed multifamily. We’ve done a lot of fix and flip. We had a fund that was buying distressed real estate for five years. And so I really, you know, I’ve worked with a lot of banks and lenders, and I was we were doing a lot of construction back in those five 06 and 08, not the great crash of 08. 09 came and we were just working out problems with banks. I I, you know, I’ve got I still have that memory like it happened yesterday. So in 2017, we started slowing down and lending on projects just because we felt like the market was in an all time high. Land prices were getting really expensive, as high as they’ve ever been, and construction costs were becoming uncontrollable. So we said, Hey, why don’t we just lend on on projects that we understand? And in that way, we’re in first position and at 60 to 70 percent of the actual value of the real estate. So if anything goes wrong, there’s a recession or a downturn, at least we know we’re still we’re still safe in first position. We can take the asset back. So that’s when we started in twenty seventeen on a small scale. And then in 2019, I met my current business partner and Josh Lloyd, and he had exited two technology companies. So he had a heavy, heavy background in technology and building systems, and he was doing private lending on a small scale. And I said, Look, with my real estate background and experience and your technology experience, we should be able to scale a marketplace in a business together, and that’s what the building was formed.

Lee Kantor: [00:06:57] So now how do you identify the opportunities? Are they just coming into the platform and then you’re kind of giving a thumbs up and thumbs down?

Joseph Ashkouti: [00:07:05] Yeah. So we’re getting anywhere between five and 10 leads a day that we look at. They’re coming from brokers that we work with in the industry. We got 70 brokers that send us deals on a daily basis. And then we also do marketing direct to the borrower. So they’re going to our website and filling out the information on their deal and we get leads that way. So and we’re doing some outbound calling as well. And I would say out of the 70 or 80 deals that we look at a week, we’re moving forward on maybe one or two of them.

Lee Kantor: [00:07:39] Wow. So you’re being that kind of your due diligence is pretty intense.

Joseph Ashkouti: [00:07:43] Yeah, we underwrite both the borrower and the and the property very thoroughly because a lot of these deals are, I would say, all of them. We’ve got a little bit of our own money. And so the reason we started the business was put our own money to work. And, you know, once we realized, Hey, look, this is a great opportunity for other investors to come in friends, family and then opening it up to the to the whole U.S. to be able to participate in these loans. We felt comfortable, but we wanted to kind of go through a litmus test of at least a year, a year and a half to make sure that the business work and and and we got all the kinks out. So now we’ve opened it up and we’re kind of wide open on a growth spectrum as well.

Lee Kantor: [00:08:25] So now the credit event and that investor who wants to kind of play what types of returns like, what’s a range of returns they can look for?

Joseph Ashkouti: [00:08:36] Yeah. So our accredited investors are getting it depends on the deal and the risk level of the deal based on our underwriting, but they get between anywhere from a six to a nine percent return and that the way the company makes money is when we close deals, we get an origination fee, which is typically one or two points of the principal loan amount. And then the we also make a spread on the actual interest that’s collected. So if we give a developer a nine percent interest rate, we’re typically taking a two percent spread two and a half percent spread and paying our investors about seven and a half percent. Now they get they get paid on a we collect from the borrowers on the first and we’re paying our investors on the 10th of every month. Wow. Start collecting interest immediately.

Lee Kantor: [00:09:23] Wow. So that’s I mean, traditional lenders, they can’t compete with this at all.

Joseph Ashkouti: [00:09:29] No. You know, I say traditional lenders today are are really for people that do not need money. They only lend to people who really don’t need it. It’s and that’s why this industry has has gotten so large. It’s private lending is fifty one percent of loans that are closed today, including an owner occupied. So the market has just grown tremendously over the last 10 years since the downturn.

Lee Kantor: [00:09:57] Now, as a veteran in this industry, that just must blow your mind, you couldn’t have ever envisioned that when you started out.

Joseph Ashkouti: [00:10:05] No, no. And it’s just it’s, you know, the cost of money is is getting cheaper. And so you’re seeing you’re seeing some of these private lenders now, they’re almost the size of big traditional banks when it comes to how much they’re lending on a monthly volume basis and their rates are getting competitive with traditional banks in some instances.

Lee Kantor: [00:10:30] So now a person who wants to invest in this, they can go in and vest for six months or so, pull out all their money at the end of the terms of each of the loans. And then you go your separate ways. There’s no harm, no foul, right? Like this? It’s not like your your money is locked in there indefinitely.

Joseph Ashkouti: [00:10:48] Correct. And all of our deals are 12 month loans, so they’re all short term. Sometimes we’ll offer, depending on the borrower and how the property is performing. We’ll offer them an extension for an additional year. So the borrower, the investor stays in the deal as long as the money is out to the borrower. So if the borrower pays the loan off in eight months, then we will email the investor and say, Hey, this loan is paid off. Here are some here at three or four more opportunities that you can invest in that we’ll be closing in the next 30 days or we can send you your money back.

Lee Kantor: [00:11:20] Now, is this something that the the investors got to kind of jump on those quickly because the deals are coming in so quickly and they’re being, you know, filled up so quickly?

Joseph Ashkouti: [00:11:32] Yeah, that’s right. So everybody, everybody’s looking for alternative investments today and trying to put more money into real estate out of the stock market. And so there is a huge demand to invest in these deals. And typically when we post one on the marketplace, it gets gobbled up in twenty four hours. So you do need to be kind of quick. And then typically, when a deal gets paid off, we give the investors that were in that deal first priority to invest in the deals that are coming up. And so if there’s leftover money and those deals to for investors, then we’ll post it on the marketplace and give them the opportunity.

Lee Kantor: [00:12:09] So now are you doing loans in all 50 states or most of the U.S.?

Joseph Ashkouti: [00:12:14] We land in every state, but California and New York, the lending regulations are just too stringent for us to.

Lee Kantor: [00:12:22] And then so you started in Georgia and then have expanded pretty rapidly.

Joseph Ashkouti: [00:12:27] Yeah, we started in Georgia, in Florida and then we started expanding to the Carolinas and Texas and Mississippi. And now I think we have active loans and about 16 states.

Lee Kantor: [00:12:40] Now you mentioned brokers earlier. Can you explain how you work with brokers and are you looking? Is that something that you’re constantly looking for more broker relationships?

Joseph Ashkouti: [00:12:51] Yes, of course we’re broker friendly, so we’ve got a lot of relationships with great brokers who work with borrowers on a regular basis, and we pay them a percentage of the origination points at closing for bringing us deals.

Lee Kantor: [00:13:06] So you’re looking for brokers all across the country? Yeah. And then is that something that like how do you how do the brokers even know you exist with so much competition out there nowadays?

Joseph Ashkouti: [00:13:19] Really, because I think we’ve just we’ve made a name for ourself in the industry when we work with brokers. They see how easy our process is because of all the technology that we’ve implemented. So it’s just it’s a completely streamlined process for the borrowers and for the brokers. As far as the documentation upload system that we’ve got, it’s just it makes it very easy for everyone involved and we do what we say we’re going to do and we close very quickly. And if we like a deal, we move on it. And so they enjoy working with us because of the ease of the process. And so I feel like word gets out to the broker community, Hey, these guys are active, they’re good, they’re detailed and they’re structured. So there’s this process of streamlined and easy. And so we’re getting a lot of repeat business and a lot of word of mouth.

Lee Kantor: [00:14:10] And then for the investors, the deals are happening. Are they happening at a fast enough pace or are they clamoring for more?

Joseph Ashkouti: [00:14:18] Natalie, we’ve got investors lined up looking for more deals, so we’re really focused on finding great borrowers, and for us, we want to find that builder or that fix and flip guy who is doing four or five a year, and we want to be able to help them scale to do 10 or 15 a year conservatively. So we’re looking for great borrowers with experience so we can grow our business and help them grow their business.

Lee Kantor: [00:14:44] And then so right now it’s a chicken and the egg thing, right? Or you just need more of everything because it’s going so well.

Joseph Ashkouti: [00:14:51] Yeah, I mean, we’re we’re, you know, we’re a young company. So we’re we’re going through some growing pains just trying to scale the business and and get more deals and also work with with more investors. So it’s a constant seesaw. Sometimes we’ve got 20 million dollars in loans that we’re closing in a week and sometimes it’s two million. So it’s just a seesaw activity.

Lee Kantor: [00:15:16] So if somebody wants to learn more and get onto the marketplace, where should they go,

Joseph Ashkouti: [00:15:21] They can go to the website. If they’re an investor, they can click on the top right of the website and choose Sign up and they can sign up and they’ll start receiving newsletters and we email out the New Deal offerings as well. So you get them in front of people quickly. That’s the easiest way for an investor to get started. And if you’re a borrower looking for money, then you can. You can sign up on the website the same way and then we’ll contact you to send send your deals.

Lee Kantor: [00:15:51] But it’s one of those things. If you’re thinking about this, it’s probably a good idea to go through the paperwork and get kind of blessed by you guys so that when the deal comes in, you’re ready to move instead of, you know, going through the process, you know?

Joseph Ashkouti: [00:16:04] Yeah, that’s that’s exactly right. I would I would definitely go ahead if you’re interested. I mean, that way you’re you’re signed up and get our newsletters, you get our deals. You can start looking at them and kind of get an idea of how we how we were. You can look at all the paperwork and understand it. And so you’re ready to go when you find a deal or a deal passes your desk that you like.

Lee Kantor: [00:16:24] Well, congratulations on all the success.

Joseph Ashkouti: [00:16:27] I appreciate it. Thanks so much.

Lee Kantor: [00:16:29] And that’s yield Hawaii LDI. Thank you, Joe, for sharing your story today. You’re doing important work and we appreciate you.

Joseph Ashkouti: [00:16:37] No problem. Thanks for having

Lee Kantor: [00:16:38] Me. All right, this is Lee Kantor. We’ll see, y’all next time on Atlanta Business Radio.