How to 10x your volume in the SFR space

by David Kitai18 Feb 2021

As the single-family rental (SFR) market has boomed this year, driven in large part by an exodus of multifamily renters to the suburbs, large and small SFR landlords have been looking for new financing solutions. Whether it’s to expand their portfolio of homes, or take cash out for material updates and upgrades, these landlords are turning to their mortgage brokers for effective financing solutions.

While most lending outfits in the SFR space might specialize in single-property lending, one SFR lender has been specializing in a solution for established SFR landlords: portfolio loans. LendingOne’s portfolio loans allow landlords to refi all their properties with non-recourse loans of up to $30 million. Approvals are based on property cashflow, rather than tax returns. Matthew Neisser (pictured), president and COO of LendingOne, explained why his company has been offering these loans, and how brokers working in the SFR space can use them to 10x their volume while helping their clients win out in the long term.

“This is ideal for clients that have already been successful and own 10 or more rental properties,” Neisser said. “This is a solution for them to be able to do one loan against all those properties. They would typically refinance their money from that loan and go out to continue to buy. The advantage of it is that our rates now are very competitive to banks, starting in the 4% range, but without all the bank underwriting or restrictions.”

Read more: Is single family rental the new multifamily?

The non-recourse aspect of these loans is also attractive and something a bank can’t offer for borrowers because, if something does go wrong, LendingOne won’t be coming after the landlord’s personal assets.

In commenting on how brokers and originators can capture these larger SFR landlords and put them into a portfolio loan, Neisser noted the somewhat amorphous nature of these borrowers. Not as many of them, given the traditionally ‘mom and pop’ nature of the space, would consider themselves SFR borrowers. They’d just call themselves landlords. It’s up to a smart originator and their referral partners to find out who those landlords are and educate them on the range of products available to help them grow.

Now might be the ideal time for these borrowers, Neisser explained, thanks to the ongoing low-rate environment and the entry of big institutional players in the SFR space. Many landlords may see growth as a key to competing against these big players, and a portfolio loan could go a long way in securing growth at a time when house price appreciation is accelerating.

Read more: How much will the commercial mortgage market grow in 2021?

For brokers and originators looking to secure portfolio loans for their clients, Neisser explained why LendingOne can serve as a strong partner. With years of experience securing portfolio loans, it can manage the intricacies of packaging dozens of properties, each with their own financing deals, into a single portfolio loan at a competitive rate.

“We’ve been doing this for a long time,” Neisser said. “We have a dedicated wholesale team to just make sure we’re solving your unique problems. Clearly our payouts are very strong for brokers, but ultimately, we will close and get the deal done. We close thousands of loans a year.”