This interview is part of our new Blockchain In Real Estate series, where we interview the world's leading thought leaders on the front lines of the intersections between blockchain and real estate.
In this interview we speak with Jude Regev, CEO and founder of Jointer, to understand how his company is using blockchain to transform the real estate business, and what the future of the industry holds.
1. What’s the story behind Jointer? Why and how did you begin?
JR: After five startups and three successful exits, I set my sights on the US and moved from Israel to Silicon Valley. My passion is in commercial real estate, so I decided to create a passive income stream by investing in this industry so I could focus my time on identifying barriers and solving the next great market need.
When I looked at how to identify the most lucrative deals, I realized there was no easy way because the best deals never hit the market. It is all about off-market relationships meaning many are left out. This revealed a new problem; to invest in good properties, you need to underwrite many properties to understand what would be a lucrative opportunity which requires an enormous amount of time and attention.
To make the acquisition process less labor-intensive, I created an algorithm to reduce my work and instantly identify the most lucrative commercial real estate opportunities. Thus, version 1 of Jointer was unintentionally started. From there, I brought in top minds and we began to learn the target audience, build a community of 250,000 commercial real estate investors, and test solutions on this audience. We utilized their knowledge and lived their struggles to create Jointer’s syndication model that solves major issues for both investors and owners.
2. Please describe your use case and how Jointer uses blockchain:
JR: Jointer utilizes blockchain to fractionalize a commercial real estate fund rather than tokenizing a single property. This approach provides owners with one check and investors low-risk investment with double the returns of REITs.
Here is how it works, property owners need to come up with the capital to purchase lucrative properties and investors want to invest in these lucrative properties. Traditionally, a property owner would have to ask many investors to invest in this property which carries regulatory burdens and risks of losing the property. Now, the owner can come to Jointer with the property, we will underwrite the property and if it passes, we will invest the full amount requested by providing the owner with one check. Further, investors are able to earn as if they invested directly without any of the direct investment risks since they receive 2X leverage of the Global All REIT, a money-back guarantee, and Index-collateral on their investment.
3. Could you share a specific customer/user that benefits from what you offer? What has your service done for them?
JR: Jointer helps both sides of the Commercial Real Estate acquisition market – property owners and investors.
Currently, investing in commercial real estate requires extensive due diligence on each property purchased and since not all deals are lucrative, this is costly. So, while CRE investing can come with high returns, it is very resource-intensive and comes with a high risk, making it available to few. To mitigate the risk, investors diversify their portfolios by investing a small amount in multiple properties. Jointer’s solution allows investors to invest in one asset while completely diversifying their portfolio without sacrificing high returns. Jointer does this by offering a SAFE Note that receives 2X leverage on the popular Global All REIT index.
For owners, the traditional syndication process is time-consuming and full of regulations which presents a major barrier in obtaining lucrative properties since they do not stay on the market very long. This means they need to fundraise quickly to win the property bid. Jointer completely removes the need for this syndication and provides one check to owners for equity.
4. What other blockchain use cases in real estate are you excited about?
JR: We are excited for the current solutions because they will fit well into our model. A lot of the struggles our fellow crypto community is experiencing when it comes to single property tokenization can be solved with our alternative to syndication. Also, there are distributed work-live rental companies that are pretty exciting right now.
5. Where will Jointer be in 5 years?
JR: I am notorious for saying we cannot predict the future, so I will do my best to answer your question here. We are currently raising funds to hit the market running. Since the product is ready, we only need this investment to engage national stock exchanges and broker-dealers which have already expressed interest. After this round, we will initiate our Auction strategy to start earning revenue immediately.
The commercial real estate industry ($33T value) has an average debt of 58% and 42% ($14T value). Currently, no major player provides a solution to this major investment barrier, which makes the market ripe for Jointer's solution. With this market opening and current lack of solutions, in 5 years, Jointer could be the largest holder of Commercial Real Estate in the world. Since our method adds so much value to the CRE acquisition process and our team has so much experience, we are uniquely positioned to see this to fruition.