While the real estate industry has long been considered one of the most resilient and lucrative sectors of the U.S. economy, it is still not entirely immune to significant periodic fluctuations tied to major global events. This has proven especially true amidst the fallout of the COVID-19 pandemic, which has brought unprecedented change to key industry metrics including inventory and property values on a national basis. The market is still in a state of flux, and it’s essential to keep an eye out for emerging trends. To help unpack the shifting environment of the real estate investment profession, Originate Report recently spoke with Erica LaCentra, Chief Marketing Officer at RCN Capital, to discuss lessons learned over the course of what has been a challenging, yet productive, past year and how these insights will drive future innovation in the lending space.
Been There, Done That
Reduced liquidity in the credit markets combined with an uptick in regulatory demands in the banking sector has historically made conventional funding options non-viable for investors in a rapidly changing and competitive national real estate market. “RCN functions to fill that financing void left by traditional banks using intuitive and efficient underwriting protocol geared towards facilitating sustainable lending relationships,” notes LaCentra. “It’s all about mutual success, we want to see all of our clients succeed in the long-term and structure our lending philosophy with that as the end-goal—COVID-19 has not changed our approach in this aspect.”
Adaptation as a Necessity
It is undeniable that the COVID-19 pandemic threw the economy for a loop this past year, and it is expected to persist well into the future as the gradual recovery phase continues to progress. In analyzing the resultant trends in the real estate investment industry, LaCentra emphasizes that flexibility is the key moving forward. “Private money lending remains an important source of capital to drive growth in the real estate space, but to be successful we have to be receptive to client feedback by maintaining open lines of communication and tailoring our funding products to the demands of the industry.”
So, what exactly have been the most notable adjustments RCN Capital has made to evolve along with the market? “The unique combination of historically low interest rates, increased construction costs, a decimated housing inventory, escalating housing prices and expiring COVID restrictions has fueled a boom in the multifamily and single-family rental sectors,” says LaCentra.
The statistics certainly support this premise, with a recent market analysis conducted by the National Association of Realtors (NAR) indicating that there is a national shortage of approximately 5.5 million homes while the average home price has increased nearly 24% in the last year alone. “As would-be homebuyers increasingly put their plans on hold until prices stabilize, the demand for single and multi-family rental options is a tremendous investment opportunity—and will continue to be for the foreseeable future as the housing shortage will take time to turn around,” notes LaCentra.
That explains why RCN’s long-term 30-year fixed loans and fix-and-flip program for multifamily properties are two of the most in-demand products from real estate investors over the past quarter. “We will continue to monitor and accommodate the emergent trends in the investment space as that inherent organizational flexibility is a necessity to remain competitive as a lender,” says LaCentra.