by Marques | Jan 12, 2023 | Insights
Lending to businesses that are supported by assets or other forms of collateral is known as asset-based lending. Asset-based loans — sometimes referred to as lines of credit backed by assets like accounts receivable, inventories, equipment, or other assets included in the balance sheet, are also known as such loans. The terms asset-based financing and commercial finance are also used to describe asset-based lending.
Asset-based lenders make it potential for commercial mortgage brokers to accommodate the specific needs of real estate investors who are often difficult to qualify by placing more emphasis on a property’s value and potential for income generation than the borrower’s personal income and credit history.
Asset-based Lending and its Ideal Features
For residential mortgage brokers, asset-based lending opens up new possibilities.
To supplement their home finance business when interest rates begin to rise, a lot of residential mortgage brokers have noted that securing loans for investment and commercial real estate can significantly level up their earning potential. In reality, a huge number of Marques Direct broker clients have grown successful businesses by meeting the requirements of underserved, independent real estate investors who struggle to get financing for their business because they don`t qualify for a standard bank loan.
Asset-based Lending offers Manageable Transactions
Asset-based financing highlights two key advantages for serving real estate investors- flexibility and ease. Marques Direct holds and maintains servicing of asset-based loans as a direct portfolio lender. Thus, Marques Direct is free to establish the underwriting guidelines and secure more adaptable financing options. Asset-based lending is also simpler to fund since they are less complex. If the conventional lenders are compelled to say “no”, applying asset-based funding urges the brokers to say “yes”.
Cross-selling offers a new window of opportunities
Offering asset-based residential investment property mortgages to their existing clients is frequently less challenging and time-consuming than what the experienced residential mortgage anticipated. Brokers, for instance, frequently have the chance to view the real estate holdings of their customers while arranging a house mortgage loan. When house insurance is offered with an existing customer’s vehicle coverage, it presents a cross-selling opportunity. Having more items on your list enables brokers to deepen their connections with their clients and generates more profit.
Asset-based lending allows a win-win deal for both borrowers and lenders. Several advantages fall under each roof. Its attractive features attract more borrowers and affect potential profit among lenders.
by Marques | Jan 10, 2023 | Insights
When companies wish to grow, more opportunities are opened through business expansion. The strategy to diversify will maximize the chance to attract more clients. The more products or services being offered to the market, the more benefits investors can get because it can really increase the potential returns and achieve stability in the long run.
In the real estate market, change is always constant. For that reason, use change as the key factor to broaden the business horizons. Various factors can move the real estate market on a completely different track. Creating a further diversified mortgage offering, the business more likely to lessen the risk and guarantees a more secure future than those businesses that only serve limited offering.
Even with the possible challenges associated with diversifying, it is still the most effective way to invite more clients. Clients are very important because they create income. Without them, businesses would go nowhere. The more products or services are introduced to them, the more they are attracted. More customers mean more opportunities for business growth. Business growth signifies more earnings.
Diversification Techniques
In the investment world, there should be an equilibrium between security and risk-taking. An investor can’t always put everything in one basket. There should be other options just in case the first one doesn’t get ahead as planned. This way, if one option isn’t a hit- there are some more options that will cover up.
There are three different types of diversification techniques. These are:
- Concentric Diversification – involves the addition of new products and services that are alike to the ones that are existing.
- Horizontal Diversification – involves the creation of new products or services that are somewhat related to what is already existing in the market.
- Conglomerate Diversification – involves the creation of new products that are distinct and different from the existing ones.
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Learning to diversify will help boost the business. It is about creating products and discovering new areas in business thus offering numerous options to customers which means having access to an additional source of income. Considerably, the easiest way for longstanding development for investors and third parties comes from horizontal diversification since adding new products and services to an existing market will give the business just a little time to acquire new skills or knowledge and as a result, it will increase the chances of growth and revenue generation in a shorter period of time.
by Marques | Jan 4, 2023 | Insights
The Pew Charitable Trusts estimates that around 43 million American households rent their homes instead of buying them, either for convenience, cost, or a combination of the two. The Americans` option to rent instead to buy varies largely on several variables, such as their family`s income, lifestyle, and the real estate market area.
The increase in the number of Americans who prefer to rent rather than own their homes has created opportunities for investors in one- to four-unit rental properties, mixed-use complexes, and multifamily structures. This is an ideal chance for commercial mortgage brokers to expand their market by responding to this trend and providing financing programs for residential rental properties such as single-family houses, condos, townhomes, and small apartment complexes.
Potential Market
America claims that the rental property business has been booming over the past ten years. Records show estimates from the Census Bureau, the number of single-family rental homes increased in the U.S. by 31% in the decade immediately after the housing crisis of 2007, while the number of multifamily rental homes only increased by 14%.
The Rental Market and the Millennials
The rental property market, specifically the urban regions have greatly influenced by the millennial outlook. According to United States population estimates, the U.S. Census Bureau, millennials will exceed baby boomers in 2019 as the largest generation of living adults in the country when their numbers reach 73 million and the Boomer population goes down to 72 million. Even still, in terms of homeownership, millennials aren’t imitating their parents.
The fact that renting is more economical on a monthly basis than owning was given as the primary reason for millennials’ preference for rental housing.
Boomers and millennials live relatively different lifestyles than one another, especially when it comes to where they choose to reside and why they prefer to rent rather than own a property. By the time they were 34 years old, around 52% of baby boomers in 1974 had their own house. This percentage was only 29% among millennials in 2016. So, despite the notion that millennials are purchasing more houses than ever, according to a new Ellie Mae analysis, the majority of millennials endure to live in rentals, and data indicates that this trend is unlikely to alter very soon.
Mortgage Brokers and the Renting Market Demand
To respond to the decline in home-purchase loans and refinancing businesses influenced by the recent increase in interest rates, commercial mortgage brokers have been able to capitalize on the improved demand for rental assets by providing investment and small-balance commercial mortgages to borrowers interested in purchasing rental properties.
Millennials, labeled as the “Generation of renters,” comprise the largest generational group in the U.S. Their renting preference has significantly influenced the rental business industry and positively modified the landscape in the rental market.
