Here at Patch of Land, we put customers first! That’s why we want to take the time and answer all those questions still circling the community regarding our platform. In this Growing with Patch of Land 3-part series we will provide clarity and improve the general knowledge on the real estate crowdfinancing marketplace by focusing on these three frequent topics of discussion:
- Part 1 - Future plans to scale
- Part 2 - The underwriting process
- Part 3 - Default scenarios
We hope you enjoy reading this 3-part series. Now without further adieu, let's begin our discussion with Part 1 which evaluates Patch of Land’s future plans to scale and grow as a company.
How do you plan to scale your business? Which areas will you be focusing on over the next six months?
In order to scale, we plan to focus on several different metrics:
Underwriting
Patch of Land is getting an exponential increase in funding applications. To streamline and accelerate the underwriting process, we are marrying the traditional process of loan underwriting with new technology—all without relaxing our standards. This will ensure an automated, algorithmic understanding of our underlying assets. Essentially, this process allows us to grow and work with more developers, all while keeping high standards and dedicating more time to our investors (like you!).
Technology
We are developing a real-time system that pulls data from multiple sources, including major credit reporting agencies. This disparate collection of data will be scientifically conglomerated into proprietary information models and risk analysis summaries. That information, along with a trained process will allow us to pre-approve a wide variety of loan requests and extend automatic terms to existing borrowers for new projects. This intelligent information will be available to our underwriting team along with an internally-developed scoring system, allowing efficient final decisions on lending. Once a decision is made, electronic documents can immediately be made available to the borrower for signing and funds wired automatically. This system will also automatically create marketing and project listing materials for the project to be listed on the platform and included in related communications. Information such as a property’s comparable neighborhood sales data will be plugged into listings in a standardized and hands-off fashion. This allows the Patch of Land team to focus on getting better deals and ensuring projects are running smoothly. Rest assured, even with these new technologies and data collection, all projects and developers will be fully vetted and underwritten to the highest standards that you have come to expect.
Geography
To scale the business, Patch of Land is moving into new markets, and remains vigilant in both the opportunity and risk of doing so. In some areas, we are seeing a large gap between traditional financiers and alternative lending that allows Patch of Land to enter the market quickly and make a significant impact. However, when viewing these opportunities, it is important to keep in mind the strong market fundamentals (such as market maturity or population growth rate) in those areas. Because we primarily finance fix-and-flip loans today, we focus on expanding into secondary markets--ones on the upswing but not yet fully mature. We also need to have local contacts in new areas in order to provide the hyperlocality and attention that is important for the real estate market. We utilize nationally licensed appraisers, real estate attorneys, investors, contractors, and other high level professionals in each regional market as trusted resources of information in order to safely expand into new area.
Capital run-rate and deal flow
Patch of Land carefully manages the balance between the size of investor base and the size of our project pipeline. We are fully aware that focusing too much on either side of that seesaw will result in complications with our marketplace. To be successful, we have to be scalable while keeping our commitments to customer service.
We hope this cleared up any questions or misconceptions regarding our scalability as a company and where we plan on taking Patch of Land in the near future. Stay tuned for Part 2 of our Growing with Patch of Land series when we discuss and answer all your questions regarding the underwriting process.
Did you enjoy reading this article? Still have questions? We want to hear what you think, so please leave your comments and questions below!
