Jia Finance, an online residential mortgage platform for foreign investors, announced raising a $5 million seed round led by TTV Capital, according to a press release shared with FinLedger.
The company, based in Washington D.C. with offices in Hong Kong and Shanghai, says the funding will be used to scale its offering in the U.S. for international buyers.
Jia Finance says it provides foreign investors access to U.S. real estate by addressing notable hurdles, including the lack of a U.S. credit score and a large amount of paperwork requested by major banks in the country.
In order to conquer these hurdles, the fintech startup uses AI and identity verification to quickly handle underwriting decisions and fund mortgages for international investors, saying that its platform is capable of cutting the entire real estate transaction period from the standard 90 days down to 30.
This identity verification utilizes in-app facial recognition technology as well as an overseas network and foreign credit databases to verify user credentials and close transactions remotely.
“The Chinese market that we work with is actually slightly different, where an ecosystem started in China itself. You have a network of real estate brokers, and they essentially promote international real estate, whether it’s in the U.S. or UK and so on,” Jia Finance co-founder and CEO Sufian Creui told FinLedger.
“These have developed over time to be one-stop-shop. We’ll help you find the place that you want to buy. We’ll help you with a transaction, we will help you manage it. If you want to rent it, and you don’t have to do anything. You don’t even have to leave China, but the biggest pain point for them was finding reliable sources of financing for their clients. That’s the kind of network that we plugged into from the finding real estate prospective,” Creui said.
According to data from the National Association of Realtors, foreign investors in the U.S. residential real estate market make up 2.8% of the $1.96 trillion spent on existing homes from April 2020 to March 2021.
Asia-Pacific investors represented 22% of all investors in that period (followed by 19% from LatAm and 11% from Europe), driving Jia Finance to focus on this region at launch. It also says it will begin to look at LatAm buyers in the future.
“We are focused on China and Asia generally at the moment, but obviously the business is transportable to other countries. Our underwriting is still based on U.S. assets and U.S. data, and that can be used for Latin clients as well,” Creui added.
Jia Finance says that its typical customers are middle-class investors in Asia that are looking to invest in single-family homes or condos as rental properties. The company says that its primary areas include states with lower regulation and higher activity such as California, Florida, Texas and Washington.
The funding round also included participation from Stanford Angels, the co-founder of SoFi and founder of U.K. top investment app Nutmeg.
While the company pulls its data from a number of sources, such as centralized credit bureau operated by the People’s Bank of China, Creui noted that getting that information was challenging and that the company is actually planning to build a product to provide access to these reports.
“They hold the records for all mainstream banking offline transactions, and getting access to those reports is very difficult. We managed to do that, and that’s really helpful for us. We’re actually looking to build new products around the ability to access the reports,” he said.
Despite challenges related to the COVID pandemic, including supply chain and travel restrictions, Creui said that he believes these problems are transitory and will fix themselves in the near future.
In other recent proptech news, Clear Capital launched two new desktop appraisal solutions to meet new GSE standards. Home365 also raised a $26 million Series B for its property investment and management platform.