There are four compelling reasons that mortgage brokers should take the buy-to-rent investor seriously as a great source of new business in 2015 and a very good way to build their businesses during a time when other lines of business are not performing well.
A viable focus
When a mortgage broker differentiates themselves from their competition, they have a distinctive competence that qualifies them to do work better than others—or work that others don’t even do—they prove themselves to be a valuable resource.
Very few mortgage brokers are catering to this particular real estate investor at this time, making it an excellent opportunity for a broker that wants to specialize in a defensible niche. Depending upon your location, this could be an auxiliary product, allowing you to say “yes” to prospective customers more often. For others, it could become a large part of your business.
Even better, it’s a product offering that blends the best of residential mortgage lending with aspects of commercial mortgage lending. This has the effect of making the broker who understands it very attractive to real estate agents, accountants, commercial brokers and other referral partners who have clients seeking hybrid financing options.
An empty niche
This market is just heating up, fueled by a new class of mortgage bonds backed by loans made to this community. That means that more lenders may be looking at this market in the future. Now is the time for brokers to establish their leadership in the buy-to-rent market, before other brokers move into the space.
This is great news for real estate brokers, who know who the investors are in their geographies but have had limited access to good financing options to offer them. Those who form relationships with these referral partners first will have the best chance of earning money from those relationships for years to come.
The deals are easier today than in the past
Experienced loan originators will tell you that writing loans for investment properties, especially when the investor already owns four single-family homes, is a laborious process that takes a great deal of time and rarely results in affordable financing. In the past, this was true. But today’s market is different.
Today’s buy-to-rent investors have access to the same capital that financed the big Wall Street players. It’s available through a streamlined application process with underwriting that takes into account the property’s anticipated cash flow. Mortgage brokers can now help these investors increase the size of their portfolios and even pull cash out by refinancing them, singly or in a group.
These investors are highly motivated to transact
This may be the biggest reason for mortgage loan brokers to investigate this opportunity now: these investors have very few options available to them today. That may not always be the case, but for the foreseeable future, the brokers who reach out to them today will be able to provide the financial solutions they have been looking for.
Ryan Dunphey works with B2R’s wholesale lending platform, advising third parties and facilitating access to B2R’s financing options for their clients. For more information, call (888) 495-7731 or visit http://info.b2rfinance.com/NMP.
This article originally appeared in the March 2015 print edition of National Mortgage Professional Magazine.