Blackstone Affiliates B2R Finance, Finance Of America Bring New Loan Opportunities To Borrowers
Industry experts find real estate investments are still among the top-performing assets, even taking into account the volatility of the global marketplace and cooling real estate sectors. With that in mind, Blackstone’s B2R Finance, a lender that offers mortgages for non-owner occupied houses, has partnered with Finance o America to expand the reach of its product nationally.
“We do mortgages specifically for real estate investors,” B2R SVP and chief development officer Fiona Simmonds (pictured), tells Bisnow. “Our product is considered a commercial product, not a residential product. If you think about it, it’s like a small business, something that generates a lot of income. These are folks looking to purchase a property with the express intent to have a renter in the property to generate cash flow.”
B2R (Buy To Rent) Finance was launched July 2013 with the sole purpose of making multiple mortgages available to investors who might not otherwise qualify. B2R’s distribution relationship with Finance of America started last month, and the distributor's VP of sales, Matt Weaver (pictured), says it’s paying off for borrowers.
“We’re excited about the product because it's allowing us to have a conversation with borrowers that we weren’t able to have before,” Matt tells Bisnow. “Not only is it filling a need and a void in the marketplace, but it’s also opening opportunities so the investors we serve can purchase additional property. They now have the ability to take out that money, get back in the marketplace and seek more property. B2R hit a sweet spot that’s directly in the middle and similar to Uber—they are serving a need, but they have also opened a market, and I think that’s what this product is doing.”
Unlike traditional bank loans and government-sponsored enterprises (GSEs) like Fannie and Freddie, which underwrite the lender, B2R primarily underwrites the property. The lender is going after a range of investors, from the self-employed to those who buy-to-rent as a side job. B2R will lend on properties that have a minimum value of $100k, and takes into account a number of different factors, focusing more on the value of the properties, their geographic location and the property cash flow than borrowers' debt-to-income ratio.
“Where we saw a big need is for folks who want to invest but perhaps may have four-plus properties. When the banks or GSE look at their debt-to-income (ratio), they start to not be able to qualify,” Fiona says. “We’re different than everyone else (because) we underwrite the property, not the borrower. We see the inherent value in the cash flow that comes from the rental income.”