Community/How are you adjusting your business for the rate environment? (Late 2024 edition)
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Ron CastellanobrokerPinned
Nov 8, 2024 at 8:00 AM
How are you adjusting your business for the rate environment? (Late 2024 edition)
Rates have been elevated for 18+ months now and I'm seeing real changes in borrower behavior and lender appetite. Some observations:
- Fix and flip volume is down about 30% from 2022 peak in my market
- DSCR loan demand is actually up (investors holding rather than flipping)
- Bridge loan terms are getting shorter (lenders want 12-month max vs 18-24 months before)
- More borrowers are asking about rate buydowns
How are others adapting? Are you shifting your deal mix? Targeting different borrower profiles?
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Jennifer CastillobrokerNov 8, 2024 at 11:00 AM
Ron, your observations match mine exactly. I've shifted my focus:
- DSCR now 40% of my volume (was 15% in 2022)
- Bridge loans I'm focusing on shorter duration deals where the exit is clear
- I'm spending more time educating borrowers on rate expectations — the ones who bought in 2021 expecting 3% rates forever are the hardest to work with
The silver lining: fewer amateur investors in the market means the deals that do come through tend to be from more experienced borrowers.
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Steve HarringtonlenderNov 8, 2024 at 1:00 PM
From the lender side: we've tightened our exit strategy requirements significantly. We now require a written exit strategy with supporting documentation before we'll issue a term sheet. The days of "we'll figure it out when the time comes" are over.
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Darnell JacksonbrokerNov 8, 2024 at 3:00 PM
DSCR is where it's at right now for sure. my whole pipeline shifted that direction. the math just works better for buy-and-hold investors in this environment
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Oscar LindqvistbrokerNov 8, 2024 at 5:00 PM
I've been through 2008, 2020, and now this. Every cycle is different but the fundamentals don't change: work with experienced borrowers, make sure the exit is real, don't stretch on LTV. The brokers who survive cycles are the ones who don't chase volume at the expense of quality.