If only we had a crystal ball to tell us what 2022 has in store for the national real estate market. The past 18 months have been a proverbial roller coaster of activity, prompted by the fallout of the ongoing COVID-19 pandemic that created the perfect storm of recession-induced historically low mortgage interest rates, the widespread rise of telework enabling homebuyers across the country the option to vacate the crowded (and costly) urban sprawl and a demographic transition as a new wave of millennials reached peak homebuying age. As if the situation needed more nuance, decades of lagging construction activity translated into alarmingly low inventory levels insufficient to meet the rise in demand. Cue rampant price escalation.
How much longer will these unique market dynamics persist? What can the private lending sector expect in the upcoming months? While we don’t have the aforementioned magical crystal ball, Originate Report found the next best thing: an experienced professional with years of industry experience and a proven track record of success when it comes to developing creative and effective real estate investment funding strategies. Steve Trowern, Co-Founder & Principal at Temple View Capital, LLC, is responsible for strategic direction, investment policy, and corporate finance. Before launching Temple View as an institutional platform in 2016, Trowern was one of the three original co-founders of MCM Capital, an $8 billion distressed asset management company, and was co-founder and Chairman of Dynamic Capital Mortgage, Inc., a $1.5 billion residential mortgage lender.
Temple View Capital is a national private portfolio lender that delivers flexible financing options for residential real estate investors. Trowern and his colleagues use their decades of combined experience in the investment space to stay at the forefront of innovative product development and empower real estate investors, correspondent lenders and brokers nationwide to optimize financing efficiency on projects and rental properties of all shapes and sizes.
Temple View Capital leverages its extensive experience investing in rehabbing properties to provide real estate investor financing with simplicity, transparency and efficiency at the core of its daily business operations. “We take a common-sense approach to lending,” explains Steve. “Our underwriting process focuses on asset value and investor experience in demographically attractive suburban and urban in-fill markets across the country that are underserved by traditional construction and real estate lenders.”
Temple View offers a comprehensive suite of funding products including fix-and-flip, fix-and-hold, long-term rental investments, ground-up construction and bridge loans. The firm’s unique structure has enabled it to flourish in spite of the COVID-19-related turbulence that led many of its competitors to halt lending activity altogether. “We never stopped lending during the pandemic, it was more of an opportunity for us to reevaluate the market as a whole and adjust our products accordingly to ensure the long-term sustainability of our clients’ projects and portfolios,” said Trowern.
That approach has proven immensely successful, with Temple View utilizing its in-house underwriting and tech-savvy portal-based draw management system to deliver unparalleled client-centered focus in what has been a challenging time for lenders everywhere.
Leveraging DSCR Loans in the Current Market
“We are able to provide our real estate investor clients the opportunity to avoid the high interest rates and points, lengthy underwriting timelines and overly-strict lending requirements typically associated with traditional investor lending by utilizing DSCR loans,” explained Trowern. DSCR loans have evolved from non-QM residential lending, creating a loan product that is premised on a property asset’s annual net operating income and annual mortgage debt—allowing lenders to quickly and accurately analyze the inherent creditworthiness of the collateral and the investor.
The Temple View team expects to remain extremely active when it comes to DSCR lending activity in the next 12 months. “The property supply imbalance will take some time to be resolved and, in fact, will remain a tailwind in the housing sector for the foreseeable future. As a result, we expect prices to continue to rise despite upward pressure on interest rates,” notes Trowern. “Ironically, this is fantastic news for real estate investors—particularly rental property investors—as many would-be homebuyers elect to remain renters. That means landlords should have little concern when it comes to vacancy.”
While rampant inflation and the Federal Reserve’s plans to ramp up tapering while simultaneously increasing the Fed Funds rate substantially in the near future have prompted many experts to raise alarms when it comes to mortgage interest rates rising significantly over the course of 2022, Trowern expects the change will be modest. “Mortgage rates have been historically low for the past couple of years. Even a modest rise in 2022 will still be a bargain, and as supply chains adapt to the post-COVID economy. Inflation will likely subside and we may even see the Fed take a more dovish approach than the long-end of the yield curve would suggest. Fears of a steep rise in mortgage rates are probably unfounded.”
Don’t Miss Out!
There’s no substitute for getting advice firsthand from some of the industry’s leading experts—which is exactly what you’ll experience at Geraci’s upcoming Innovate Conference, April 11-12th. Steve, along with a panel of fellow lending professionals, will be hosting a live panel dedicated to answering all of your questions regarding DSCR loans as well as anticipated market trends and insight. Don’t miss out on this fantastic opportunity, reserve your spot today!