Property owners in the commercial mortgage market have long been dependent on mortgage brokers to handle financing. For the privilege of having a broker act as a liaison between the lending institutions and borrowers results in significant fees paid to the broker, especially when dealing with large mortgage amounts. Technology addresses this inefficiency. GPARENCY is a tech-enabled platform that directly connects borrowers to banks for a simple flat fee of $5000. In addition to handling the origination, GPARENCY has a team of experts to hammer out the details of the term sheet on an hourly basis that’s capped at $15,000. For a maximum of $20,000, borrowers can replace the manual work done by a commercial mortgage broker without sacrificing terms, time, or resources.
AlleyWatch caught up with GPARENCY Founder and CEO Ira Zlotowitz to learn more about how the commercial mortgage industry is ripe for innovation, the company’s strategic plans, initial product launch, latest round of funding, and much, much more…
Who were your investors and how much did you raise?
There were 150 investors and entities, ranging from real estate professionals, executives at banks, investment sales brokerage firms, competing mortgage brokerage firms, title companies, real estate owners, investors, and service providers – all industry leaders – as well as several executives in venture capital firms. It was the largest ever seed round in the commercial real estate space, oversubscribed at $15 million.
Tell us about the product or service that GPARENCY offers.
GPARENCY provides a new direct-to-bank formula for the mortgage business with a model that empowers borrowers with transparency, technology, and professional services with expert touches from top real estate finance executives. We’re ushering in the age of the self-directed commercial mortgage.
What inspired the start of GPARENCY?
The world is always changing and I wanted to create a company that answered a need in the marketplace – the large desire from clients to work directly with banks.
How is GPARENCY different?
We are leading the revolution in the commercial mortgage space. In the past, commercial real estate owners had the misconception that they needed to delegate the mortgage process to an expert. Owners believed that brokers would get them a better deal and that there was no other option. GPARENCY is revolutionizing this by charging a $5,000 flat fee – thereby changing when and how people go to the bank, by providing broker-services, priced like an attorney.
GPARENCY’s intuitive, user-friendly technologies enable savvy consumers to do their own origination—and call in the cavalry only if and when they decide they want help.
What market does GPARENCY target and how big is it?
We are targeting commercial real estate owners (GPs), which is a multi-trillion-dollar industry.
What’s your business model?
For a flat fee of $5,000 GPARENCY offers a banking team of funding coordinators to underwrite, shop, and negotiate term sheets. In other words, for just $5,000, we deliver a term sheet. Once the term sheet is signed, the client can choose to either work directly with the bank or work with GPARENCY for $500 per hour – capped at 30 billable hours – for a total max fee of $20,000.
Over the next year, we will also roll out exciting technology-based services to further our mission of empowering the GPs.
Finally, we will roll out a subscription-based pricing model to streamline the costs even more.
What are your post-COVID office plans??
Zoom USA. We have employees all over the world and will be continuing to conduct business remotely.
What was the funding process like?
I was fortunate to receive crazy interest from the beginning. My stress was really having to ask people to put in less money so I could accommodate more investors.
What factors about your business led your investors to write the check?
It was a blend of “trusting the jockey” and, as Warren Buffet, says,” invest in what you know.” Finally, all 150 were inspired by our mission to lead a revolution.
What are the milestones you plan to achieve in the next six months?
I expect to have the first phase of the technology rolled out, 50-plus strategic banks and partners involved, and a growing client base month over month.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Double down, hit reset, and focus your resources on this world rather than focusing on the past.
Where do you see the company going now over the near term?
Revolutionizing the industry! We are on a mission to make GPs the total owners of every component of their investment and asset. That begins with creating a world where they are actively involved in acquiring their own mortgages. By lifting the veils of mystery, misinformation, and backhanded tactics, we enable owners to capitalize on the democracy of technology and still enjoy the benefit of human capital and counsel.
What’s your favorite outdoor dining restaurant in NYC?
Covid has caused me to forget! I’ve only eaten in a restaurant in New York City twice since COVID began.