Steven Renbaum is trading commercial real estate for the startup world — in the form of alternative luxury lending.
The real estate veteran — who founded Summit Real Estate Partners in 2011, was a former managing partner at Cygnus Partners and was formerly a leasing director at Newmark Grubb Knight Frank — recently launched Loanzy, an alternative lending company that is on pace to finish its first year with $1 million in deal flow, according to Renbaum.
Loanzy makes loans for clients on luxury assets — from exotic cars, to Rolex watches, to antiques.
Clients give the company the asset, and often within 24 hours, a check is written for between 40 to 70 percent of the value of the asset, which is held in collateral in state-of-the-art storage. Renbaum estimated that more than two-thirds of the $400 million square feet of office space in New York City is allocated to tenants with $5,000 square feet or less, many of whom are small business owners that have been successful in leading up to opening their own firm – that’s Renbaum’s target market.
“We’re a bridge lender,” he said. “Our loan is designed to be six months or less. We have some longer-term products that have different interest rate profiles, but our core product is six months or less.”
Renbaum said he’s had clients borrow money for as little time as two weeks, and for as much as six months.
The idea for Loanzy started during a lease signing process with a client in 2013.
Renbaum was working with a successful designer in opening up a new showroom, and despite the company’s success, the designer’s money was all being utilized, and she needed a sizable chunk for the security deposit in order to secure the lease.
“I knew she kept a fancy car out East in the Hamptons, a classic Porsche worth well over $100,000,” said Renbaum. “She could have used an extra $50,000 for the security deposit. I had worked with her since 2006 and wanted to help her, but didn’t want to take a bunch of risks. Why don’t we use the car?”
Renbaum ended up making the deal — taking the car for collateral and giving her loan at less than 50 percent of what the car was worth.
“That was the genesis of my company,” said Renbaum. “I decided there must be so many small business owners with liquidity challenges where they could use luxury assets to bridge that gap,” said Renbaum.
He started doing research, and found that there was nothing like Loanzy out there in the market.
“You can do a side deal or go to a car dealer, jewelry store, or art dealer, but there is no buttoned-up professional company that packages this solution for a small business owner,” he said.
Renbaum’s clients have ranged from small business owners to commercial real estate brokers.
Loanzy gives clients up to $2 million in loans, and aims to stay above $10,000 at a minimum. Renbaum said the company’s “sweet spot” is between $20,000 and $200,000.
“You’re expecting money in 60 days, and you need money today, I’ll give you money, and you come back in 60 days and pay me,” said Renbaum.
“You can’t get it from the bank and an individual can’t go to other alternative places. Where else are they going to go? With me, they come to me; I take their personal assets and store it in the best of class storage facility.”
In the past few years, banks and auction houses have been encouraging luxury asset loans and there has been a proliferation of lenders in teh sector.
Borro, the U.S. and UK-based online platform that people borrow money and put up luxury items as collateral, raises $131 million in new funding in the past year as it works to expand its2 share of the market.
Strategic investments have come from Israel’s OurCrowd and Berlin’s Rocket Internet as well as Victory Park Capital.
CEO and founder Paul Aitken said Borro will soon be making its way to entering emerging markets in South America and Asia while expanding the pool of money that it has available to offer for financing.
In 2013, Borro saw about $50 million of lending, according to published reports. This year, it expects to lend $100 million.