27 Jun Special Sections: Industry Spotlight
Brew is the visionary leader behind PeerStreet. His experience in technology platforms, real estate, and law culminated in the unique concept that is PeerStreet. Prior to PeerStreet, he worked as general counsel at VirtualTourist, where he oversaw the company’s $85 million sale to Expedia/TripAdvisor. Before that, he was a real estate attorney at Allen Matkins Leck Gamble & Mallory and a technology attorney at Brobeck Phleger & Harrison. At Allen Matkins, Brew advised some of the largest real estate development and investment firms in the country on a wide variety of complex real estate transactions. He continues to advise startups and is an active real estate developer, investor, and private lender. Brew graduated from USC with degrees in international relations and history and earned his JD from the UCLA School of Law.
Originate Report: What made you want to start PeerStreet?
Brew Johnson: I’ve always loved private money lending because it fulfills an important niche in the market. I also loved that good lenders could make smart loans to good borrowers in short time (as opposed to banks that could take months to make a lending decision) and get paid higher returns doing it. Over the years, I made loans directly to borrowers, invested in hard money and private money loans, and represented lenders and borrowers as a real estate attorney, and found myself frustrated by the inefficiencies and friction for lenders and investors created by fragmentation in the market.
Many high-quality lenders didn’t have access to the right type of capital and most sources of capital were administratively burdensome. As an investor, I felt the options for investing in hard money loans were limited—there was either enormous complexity in underwriting the deal or analyzing the legal structure, or enormous commitments of time and money. There was also little to no transparency into what was happening with the loans.
After leaving real estate law, I helped build and sell a technology platform to Expedia, and it became clear to me that technology could change the private money lending market. If we can create a platform that connects high quality lenders to investors in a more systematic and transparent way, everyone wins. So we built a platform to do exactly that. Investors get better access with less complications, and risk mitigation through greater diversification and transparency. Lenders get access to a new and efficient source of capital, with technology that automates administrative functions and is focused on making more quality loans and servicing borrowers. As we’ve grown as a platform, the value we provide to lenders also increased—with more powerful technology, access to new and lower sources of capital, and better loan products.
OR: What excites you about the Fintech industry?
BJ: ‘Democratization’ has recently become an important movement in fintech. It refers to the way technology provides investors access to opportunities, data and information historically only available to large, sophisticated institutions. I think that’s very important.
In the case of real estate lending, I’m most excited about fin- tech’s ability to empower and democratize access to both technology and capital for small businesses/lenders. If we can provide world-class technology to any lender to make their business more productive, those lenders now have more time to find borrowers, underwrite loans, and service those borrowers. If that same platform can also connect those lenders to worldwide capital markets and investors to fund their loans, those lenders can now compete with incumbent institutions in terms of capital as well. We believe this creates a domino effect—by democratizing access to technology and capital for small lenders, those lenders can make more loans to quality borrowers, who in turn help improve communities and create asset value. This ability for fintech to provide infrastructure to reduce overhead and costs, and more efficiently distribute capital in a way that creates value throughout the entire chain is incredibly exciting.
OR: What emphasis do you place on technology?
BJ: Technology is essential to our business. Our efficiency and ease of use would not be possible otherwise, nor would the combination of speed and depth of underwriting we do. We’ve built a tremendous amount of technology into this business, and there is so much more we still want to do, which is what continues to motivate everyone here at PeerStreet.
OR: Where do you see technology in the next 12 months for PeerStreet?
BJ: We’re continuing to build out tools for lenders to help them work even faster, more accurately, and more efficiently.
OR: What tools are essential to PeerStreet? i.e. Slack, SalesForce, etc.
BJ: Internally, we use Slack, Salesforce, Amazon Web Services, G-Suite, Asana, Trello, and Chrome. But we’ve also built a lot of internal software for interacting with lenders, our customers, banks, and other partners, so it’s a combination of external and internal technology resources.
OR: What CRM software do you use and why do you use it?
BJ: We use Salesforce combined with our internally built software. Our head of retail operations has a deep background in Salesforce and is a powerhouse at using it. Salesforce can be extremely powerful with the right expertise.
OR: How could a lender or loan officer work with you?
BJ: Our mission as a business is to provide lenders with technology and capital to help them outperform the competition. We are creating more tools for lenders and loan officers to use in their day-to-day business, and if they need it, we can connect them to capital to lend.
OR: Where do you see the mortgage industry one, three, and five years from now?
BJ: I see it returning to a more local market. Today’s banks have removed the local aspect of mortgage lending and underwriting, often to the detriment of communities. I think private lending will continue to expand and, with technological innovation and easier access to capital, local lenders will be able to compete on increasingly more types of loans against the banks. Technology is empowering more local lending and it’s a trend we are invested in.
OR: Do you feel that PeerStreet is a disruptor?
BJ: In a way, though we like to think of ourselves not necessarily as disrupting the industry, but transforming it for the better for stakeholders in the system. There’s no doubt that certain elements of the system will be disrupted, but the positive transformation and value creation we intend to achieve is absolutely worth it.
OR: What do most people not know about you?
BJ: I do a hell of a Neil Diamond impersonation.
OR: What is one piece of advice you would give loan officers in general?
BJ: Quality over quantity.