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fix-and-flip projects. The impact is most noticeable with regard to two specific aspects: speed and convenience. Rehabbing is a sector of the real estate investment market that requires a certain degree of agility. Investors need to be able to move quickly on deals. There’s simply no time to sit around wondering whether you’re going to be able to secure the financing you need. Technology has eliminated the waiting game. Automation and online collaboration are significant contributors, giving online lenders the ability to deliver funding in less time so that investors aren’t at risk of missing out on an opportunity. While technology has accelerated the fix-and-flip financing process, it hasn’t forced lenders to compromise their underwriting standards. If anything, tech is making it easier for lenders to evaluate and approve borrowers to ensure that deals are credible. At RealtyShares , for instance, we have an expert team in place that carefully vets each opportunity presented to our platform. We require a thorough background and credit check to verify that a sponsor has the means to repay the loan. Our sponsors appreciate that attention to detail, as well as the time frame in which we’re able to close deals. We’re able to get funds to borrowers in as little as five to seven days, allowing them
Tech’s capabilities are changing the old school rules of borrowing on a broad scale, with investors reaping the benefits.”
Hard money lenders represented a third alternative. Investors could buy properties and complete flips using short-term loans, without having to worry that another investor would swoop in and close the deal first. Compared to bank financing, the advantage of hard money lending for fix-and-flip deals was, and continues to be, the fact that it’s largely asset-based. There’s less emphasis on an investor’s credit and a more concentrated focus on the property’s anticipated profitability. The tradeoff, however, is typically a much higher interest rate than what a bank would charge. If you fast forward to where we are now with fix-and-flip financing, an entirely new path is being forged. Tech’s capabilities are changing the old school rules
of borrowing on a broad scale, with investors reaping the benefits.
Tech Provides What Fix-and-Flip Investors Value Most Over the past several years, technology has been on a mission to reinvent the real estate industry. Venture capital firms funneled an estimated $1.5 billion into real estate tech startups in 2015 alone, according to research from CB Insights. They see a massive industry that is still conducting business with pen and paper in some cases, and salivate at the chance to back the innovative startups that could redefine the space. So far, the disruption of real estate by technology has strongly influenced the way investors connect with financing for
to move forward with flip projects without fear of being sidelined by their competitors.
ATTOM Data Solutions • P11
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