Although the market is sending mixed messages, savvy commercial real estate investors know how to find opportunity in any market cycle. But once a deal is found, it needs to be funded. And that’s the fly in the ointment of many real estate transactions today.
The problem is that there’s a tremendous amount of advertising out there pushing and pulling investors toward potential capital sources. Investors who don’t have access to accurate lender information can waste valuable time chasing down the wrong lender.
Borrowers need to know which lender has the greatest certainty to close their deal and fund their acquisition or refinance. Many loan terms are important, but at the end of the day, the deal needs to close, and it needs to close with the proceeds and terms specified.
In this article, we’ll show you how to use reliable lending data to analyze who is making loans on what types of property, in which markets, and who can you count on to close with certainty.
Using lender data to guide CRE investment
CrediFi has detailed lender originations intelligence available for every market, property type, and lender segment in the U.S. We’ve randomly selected Austin, and using the CrediFi Analytics Dashboard we researched lending activity since 2018 by asset class and lender type to create the charts in this article.
In addition to traditional capital sources such as banks, credit unions, and insurance companies we’ve included loan activity from two other sources: 1) ‘Alternative’ lenders like mortgage REITs, debt funds, hard money sources, and bridge lenders, and 2) ‘Other’ lenders such as conduit, HUD, and multi-strategy lenders.
Here is an example that illustrates how knowing which lenders are actually closing loans on what asset types and where CRE financing data can help to guide the best source of mortgage funds.
Funding a multifamily property in Austin, TX
The National Apartment Association notes that over 40% of real estate investors expect to be buyers of apartments in 2019. Imagine an investor in Austin has located the perfect multifamily value add property. In an asset class with this much competition, it’s critical to know who’s actively making loans on multifamily property in Austin. Our investor uses CrediFi to rank the percentage of the total allocation of multifamily loan origination activity by lender segment in Austin:
- 0.0% Credit Unions
- 5.37% Alternative Lenders
- 10.72% Insurance Companies
- 31.73% Banks
- 52.04% Other Lenders
The data indicates that Banks and Insurance companies are both active multifamily lenders in Austin. Yet, more than half of the multifamily loans were made by “Other” types of lenders.
The last thing an investor wants to do in a hot market is waste time on the wrong lender and end up losing the deal. Remembering that ‘Other Lenders’ includes a specific type of lender designated as a multi-strategy lender, the buyer uses CrediFi’s loan comp map feature shown below to identify the lenders of loans on properties similar to the investors target property. The investor is able to drill down and locate the names and direct contact information for specific lenders. Now he knows exactly who to call to begin his search for capital.
Each color circle represents a different lender and property loan.
Lenders can make or break a deal
As we’ve mentioned in previous articles, owners frequently spend over 30% of their resources arranging capital for their properties. Having the right commercial real estate financing data can help investors save time and effort and put the focus on managing their property portfolio instead of finding a lender.
While the example in this article has looked at investors seeking capital for their property’s refinance or next target acquisition, the fact is that any commercial real estate practitioner can benefit from having access to in-depth and unbiased commercial real estate financial information. That’s because slicing-and-dicing lender data from CrediFi can identify loan comps, their specific lenders, and their contact information on originations activity by dollar amount and the number of loans originated over any time period going back 10 years and more.
Note: the data examples in this article are for illustrative purposes.
To learn more about how CrediFi can accelerate your capital sourcing needs, please contact Elliot Auerbacher directly at (201) 615-0222 or elliot.auerbacher@credifi.com.
