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Commercial Department: From the Editor: June 2018

 

From the Editor

Alternative lending plays a key role in mortgage financing

c_2018-06_FTE.jpgDefining and understanding the alternative-lending industry may still be a tricky task, even for commercial real estate professionals who have been around since the fledgling days of marketplace, peer-to-peer and other online-lending platforms — a major component of the alternative-lending market.

According to The Americas Alternative Finance Industry Report, co-authored by the business schools at the University of Chicago and the University of Cambridge, technology-enabled online lenders in the U.S. issued $34.5 billion in financing in 2016, a 22 percent year-over-year increase. Marketplace and peer-to-peer (P2P) lending — subsectors written about in this month’s magazine — accounted for about two-thirds of that loan volume.

Broadly speaking, alternative financing is obtained from sources other than traditional banks. Throughout the year, in our mission to inform commercial mortgage brokers and connect them to business opportunities, Scotsman Guide presents a wide array of articles about alternative loans. Our June magazine is focused on the topic of alternative lending and we hope to give our readers a glimpse into what is happening within this expansive — and fast-evolving — realm of real estate finance.

First-time author Bill Lanting of RealtyShares gets things started on Page 31. In his article, “Emerge With An Alternative,” Lanting lays out the evolution and present-day roles for crowdfunding, P2P and marketplace lending.

On Page 44, another first-time author, Creighton C. Bildstein of PlattPoint Capital, writes about the various regulatory burdens facing traditional banks and how these constraints have pushed borrowers toward alternative lenders. Speed and flexibility make private lenders an attractive option for small-business owners who have had their bank-loan requests turned down, Bildstein writes.

This edition wraps up with an article titled “An Alternative Lending Checklist,” written by Mark Fogel of ACRES Capital. On Page 84, Fogel details what mortgage brokers and borrowers should look for when choosing an alternative lender. Scrutinizing a lender’s management team, its various loan products and its willingness to maintain relationships are all key pieces to the puzzle, Fogel says.

Alternative financing, of course, doesn’t have to refer solely to funding sources. Mortgage brokers who are looking for additional avenues of business may want to explore alternative-financing options for niche-property types.

Edwin Urrego of Kennedy Funding Financial provides an in-depth examination of the medical office building (MOB) market on Page 77. These facilities are in high demand, are becoming highly profitable and present an excellent opportunity for brokers to connect with private lenders that don’t require the extensive documentation of traditional banks.

Jay Litt of The Litt Group returns on Page 56 to outline the cyclical nature of the hotel industry. Evidence suggests the hospitality sector has passed its peak, Litt writes, but there are ample opportunities for borrowers who wish to purchase financially distressed assets and turn things around with value-add investments.

Technology is the thread that often ties together alternative-loan types. And Elliot Vermes of redIQ, on Page 54, helps mortgage brokers and lenders comprehend the quickly evolving role of data analysis within the multifamily market. Information like rent rolls and operating statements can be compiled and analyzed in a standardized format that reduces confusion for all parties involved in a real estate deal, Vermes says.

The arrival of June means the arrival of summer and, with it, the apex of the homebuying season. Our readers who also handle residential mortgage originations may be busier than ever, but they, along with brokers who specialize exclusively in commercial transactions, can keep business booming year-round by making the right connections in the alternative-lending world.


 

Neil Pierson is editor of Scotsman Guide Commercial Edition. Reach him at neilp@scotsmanguide.com or (800) 297-6061.

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  1. Posted: Jul 16, 2018  15:57 ET
    By: Becky Ford | Becky Ford Int.
    1. 0


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