Establishing direct lending relationships on the retail side

Opening the dialogue with would-be commercial investors to profit from non-QM lending opportunities

Establishing direct lending relationships on the retail side

This article was produced in partnership with RCN Capital

Karen Surca of Mortgage Professional America sat down with Tim Herriage (pictured), executive director for retail loan development with RCN Capital to discuss the need to pull in investor interest to capitalize on a robust commercial non-QM market.

The commercial lending landscape remains a lucrative area for many. With current lending opportunities that go far beyond the traditional Freddie Mac and Fannie Mae lending model, would-be investors can tap into the profitable commercial lending space.

One specific area to witness this growth firsthand is the non-QM commercial sector – this has been reflected not only in the overall mortgage numbers but also in investor recognition and acceptance over the last several years. 

Despite an ongoing pandemic that could have easily offset some non-QM commercial growth, market factors have converged that are squarely in a commercial investor’s favor. 

A US housing shortage, historically low mortgage rates, and the increasing need for rental housing have been instrumental in pushing the non-QM commercial space forward. This trend sees no signs of slowing down as we wrap up the fourth financial quarter of 2021 and head into a new year.

RCN Capital is capitalizing on private commercial lending opportunities and favorable market conditions by ramping up its efforts to attract potential real estate investors.

With several innovative non-QM loans available including its popular 30-year fixed rental platform, RCN can offer potential investors suitable lending options.

Read next: Non-QM vital to economic recovery

“A real estate investor is a high-value customer. It is important to form direct relationships with the customer and when you look at the lifetime value, this relationship can be significantly beneficial to a property and an investor himself,” Tim Herriage, RCN Capital’s newly minted executive director for retail loan development stated.

As a private real estate investor, Herriage has witnessed first-hand how the commercial non-QM space is flourishing, as well as the untapped potential it holds for future investors.

“My wife and I have a rental portfolio here in the Texas area,” Herriage explained.

“I have been through all the phases that our customers have either gone through or are going to go through, so I am happy to go out there and share this experience with the investor.”

Upcoming initiatives

One of the challenges that RCN Capital has seen in recent years is the lack of information that potential investors possess when considering commercial investment opportunities.

If, for example, an investor is looking to buy a house as a rental investment, often the assumption is made that the only lending option would be a traditional amortized mortgage loan.

Herriage is determined to have the necessary conversations with these investors to open their eyes to the many non-QM options that fit their investment goals.

“We have to keep the dialogue going to the point that they (investors) are aware that there are private loans are out there and they are amazing. Some of our products have been around for over eight years now and yet there are still investors in the marketplace that think that they are only limited to Fannie Mae and Freddie Mac mortgages and refinance.”

Meeting with investors on a one-on-one basis in an “almost evangelistic way by spreading the necessary information and sharing the available opportunities,” is viewed by Herriage as the route to success for drawing in investor interest.

Along with educating investors about the non-QM potential for income growth, RCN Capital is focusing its efforts leading into the new year on increasing its already impressive volume of loans. Loan origination for 2021 is over one billion and Herriage sees that number doubling for 2022.

Read next: Looking through to 2022 with the expansion of popular non-QM programs

With a targeted investor strategy, looking ahead, RCN Capital will focus primarily on mid-size commercial investors.

“I feel that the investor looking to buy in the range of 10 to 50 properties for rental purposes is where RCN products are going to be beneficial,” Herriage pointed out. 

The technology push ahead

Any effort to capitalize on robust commercial lending opportunities is facilitated greatly using available technology to streamline the lending process. RCN Capital has been cognizant of the need to utilize the most efficient technology to get the job done.

Herriage highlighted that this technology-driven approach will continue to be a central focus moving into 2022.

“The technology of this company is probably the most impressive technology I have seen used in any company in this space (commercial lending) in terms of tracking and reporting and the efficiencies in the payment process for brokers which are all carried out through available technology,” he said.

RCN Capital has chosen to utilize Bridge Loan Network. Heading into the new year, a push towards even further technological consolidation of the loan process will be a key initiative.

“There are trillions of dollars of loans that are just waiting to be picked up. I don’t think that we would be starting these initiatives if it wasn’t on a scalable and integrated platform,” Herriage argued.

“With the Bridge Loan Network and the technologies that form the backbone of RCN, the business is ready to be kicked into overdrive nationwide.”

Focusing on the future

The commercial lane is wide open. Bypassing other lending options and turning towards non-QM commercial financing can be a lucrative avenue to choose.

“We are already gassed up and ready to go. We have been talking about this anticipated growth since 2014 and recognize the number of customers that are out there and need our help. RCN Capital is primed to help them now,” Herriage concluded.

Tim Herriage, executive director of retail loan development, oversees initiatives to strengthen RCN Capital’s direct-to-investor lending presence and increase retail sales, as well as develop and execute strategic initiatives to grow RCN’s retail lending channel. For two decades, Herriage has been on the leading edge of the real estate investor space with time spent as co-founder and managing director of Blackstone’s B2A Finance, the founder of 2020 REI Group, the founder of the REI Expo, and as a Franchisee and development agent for HomeVestors of America.

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