“Everyone has a plan until they get punched in the mouth.”

This quote from boxer Mike Tyson is how Romney Navarro would describe the year 2022 for real estate professionals.

Navarro, the CEO of the Austin-based Streamline Funding, began his career before the 2008 Financial Crisis and knows the ins and outs of navigating precarious marketplace situations.

To better gain insight into ‘the year as it was’ for Streamline and the lending space, Originate Report sat down with Navarro to discuss how the group continuously adapts to a changing marketplace.

Established in 2002, Streamline Funding has a clear mission: to empower real estate investors with the resources, flexibility, and expertise to grow businesses and achieve financial freedom. Through establishing partnerships with a network of experienced real estate entrepreneurs, the Streamline Funding team continues to see unprecedented growth in its loan programs.

Currently, Streamline offers loans for single-family, multifamily, fix-and-flip, and residential bridge properties. In addition to lending in their home state of Texas, Streamline offers its services across the United States.

Navarro said that in his mind, the ‘name of the game’ is perseverance, resilience, and innovation when successfully building lending programs across the country.

“The early days of so-called “hard money” lending were in many ways the Wild West,” Navarro spoke. “The pricing was unheard of, and those loans were reserved for people with no other outlet. Where hard money originated in our DNA [at Streamline] was very much for the opportunistic investor, the person with that entrepreneurial spirit.”

When faced with a period of economic downturn, such as the 2008 crash, Navarro stated that the ‘fear on the sidelines’ led many to rethink sources of capital and embrace the flexible terms of private lending.

“As we exited the recession, we started raising more capital and, in turn, funded more loans. This is one of the things that is unique about this business. It leads to the perseverance I was talking about earlier,” he commented. “When the spring comes, the flowers start to blossom again.”

But this period of blossoming, however, was not without its pitfalls. Navarro explained an environment in the early 2010s where many players, including institutional-level groups, were in a ‘race to the bottom’ with their pricing and services offered.

“There were many small players. Someone who knew someone from church and larger companies realizing that there was a move to more decentralized capital, and all the deals looked the same – it was all fix-and-flip,” he recalled. “With those markets opening and more people buying, at Streamline, we created a blue ocean inside this red ocean where everyone was fighting over the same chunk. That blue ocean, where no one else was looking, was construction.”

Because of an influx of Wall Street money, Navarro remarked the fix-and-flip product became commoditized. “This new construction element allowed Streamline to grow from around $18 million to over $100 million,” Navarro said. “There is always an element of risk-taking when entering a new space, but Streamline has always been able to adapt to shortfalls in the market and create value for borrowers. With so much Institutional money in our space today, and faced with a changing marketplace, there are billions and billions of dollars that are saying ‘use me,’” he added. “We are trying to take that influx of capital and attention on the space and use that to innovate.”

What this looks like, Navarro answered, is ensuring that borrowers have the ‘dry powder’ necessary to make sure that no property becomes a ‘could have, should have, would have.’

“As long as you have that box, Wall Street will fund your deal,” he responded. “What we are trying to do at Streamline is not necessarily expand the box, but perhaps paint the box, so it is a little more valuable to the borrower. It is not one loan anymore – it is about creating generational wealth. That is innovation today.”

When it comes to ‘stocking the armory’ or making sure that borrowers have that dry powder, Navarro expressed that Streamline focuses on ensuring that every stage of the lending process is stacked with top-tier talent and has the tools needed to succeed.

“That success is not guaranteed, though. As a small fund manager, what we are seeing now is that market values are changing. Property A is now worth 15 percent less than it was yesterday,” he noted. “We must practice resilience because that price change is compressing my portfolio. I always strive to avoid that carnage that impacts other players in the field.”

To avoid that carnage and ensure the continued growth of Streamline, Navarro mentioned that it is crucial to adapt to new technology and trends in the environment. Without that sense of adaptation, or a team in place to collaborate on new ideas, Navarro observed that those lenders are doomed.

“I think the groups and players that will survive in this new marketplace are those that start thinking about scale. Those that can refine their craft and truly take a step back and holistically look at the market,” he replied. “Inside compression comes opportunity, and our world has gotten smaller. At Streamline, we are ecstatic about the opportunities on the horizon.”

To learn more about the services offered by Streamline Funding, visit streamlinefunding.com.