Davis said that because a growing percentage of all mortgage loans are done by investor clients, having access to these construction products allows a broker to get multiple loans for the same project.
“Last year, 30% of the transactions were investor transactions,” he said. “I think it’s a must-have product because it allows you to further work upstream. Because if you can help the builder-developer build a home, then when it’s time to do the takeout financing, you could actually do the end loan, and you can get two deals on one project.”
Not only can brokers close multiple loans on the same project, but because so many investors are constantly coming back for financing, you might be able to fill your pipeline with limited customer outreach.
“Unlike a consumer who might buy a house every five years, an average investor across the United States is doing five deals a year. If you don’t have access to fix-and-flip and ground-up construction, then investors in the marketplace, the savvy, professional investors, they’re not going to take you seriously.”
A hard deficit to make up
Davis noted that even if the large builders aren’t capped in how many homes they can build, even if they increase production, it still won’t be enough to close the gap on the housing shortage.
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