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How Our Technology Assesses Risk with Speed and Accuracy

We live in a world where speed and reliability are crucial. However, when it comes to making investment decisions it's extremely important to take the proper measurements to assess risk. Unfortunately, the process of risk assessment often takes a fair amount of time, which can lead to many investors facing a race against the clock. Patch of Land recognized this dilemma and set forth to create the technology necessary to assess risk while taking into account both speed and accuracy. We are proud to say the technology we've created is helping to change the way people access capital and invest in property in the real estate industry.

 

As solid as our technology is in evaluating the local market and the risk profile of the borrower, we don't solely rely on its accuracy. Rather we use it as a tool to help the overall process. As a safety measure, we still perform a background check on our borrowers and make sure to work with professional and experienced developers with strong track records in the real estate industry. Additionally, we typically fund up to a certain percentage of the ARV (after repair or rehab value) of the property. That way, in a worst case scenario, we can liquidate the property and return funds to our investors.

Related Articles: Growing with Patch of Land: Part 3 - Default Scenarios

 

The application of technology and data science to the real estate financing process can enhance the process of identifying high quality loans. As technology makes these transactions more efficient, they will scale. As more transactions occur, more data is processed with greater efficiency. As a result, the data collected will help us understand which loans embody lower risk and are of higher quality. Borrowers, in turn, benefit from decreased risk and costs while enjoying a more expedient, standardized, and pleasant customer experience. Investors also benefit from our due diligence procedures by gaining access to pull our data, as well as the peace of mind in knowing that we have used our high-end technology to pre-approve and assess risk in every one of the projects hosted on our crowdfunding portal.



If you want to learn more, take a look at some of the most commonly asked questions we receive about real estate crowdfunding on a daily basis and find out why so many people are crowdfunding real estate projects across the country with Patch of Land.
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If you still want to know how Patch of Land works for professional real estate developers and accredited investors, please visit Patch of Land’s FAQ section and learn more today.

3 thoughts on “How Our Technology Assesses Risk with Speed and Accuracy”

  • How to Participate in Real Estate Crowdfunding with Patch of Land Part 2 - The Patch commented March 9, 2015

    […] the sign-up process, deliver ease and efficiency of use, provide complete transparency, detailed risk assessment, and a stringent due diligence & underwriting engine. We believe in our products so much at […]

  • Steven Norris

    Steven Norris commented June 24, 2015

    As a commercial real estate due diligence expert for more than 30 years, the premise of making a credit decision in 24 hours or less is preposterous. This video leaves me feeling far more concerned about your process than I was before. This has shades of the cause of the Great Recession written all over it.

    Marco Rivera

    Marco Rivera reply June 24, 2015

    Hello Steven, thank you for your comment.

    My apologies if the video brought some confusion regarding Patch of Land's due diligence process. I want to assure you that in no way do we suggest we are able to perform all of our due diligence and underwriting to close within 24 hours. If you revisit the video, you will hear our CTO describing the notion that Borrowers would like loans to be "closed in the same day." To that point, we agree - to do such a thing would be preposterous! At the end of the day, we know due diligence takes time to perform, which is precisely why we tell Borrowers we can close within 1-2 weeks on our lending parameters page found in the "Borrow" menu above.

    On another note, we understand people are still weary about using technology in the lending space. However, we want to make it clear that Patch of Land does not rely on the technology we've built to approve loans by any means. In fact, we have rejected many loans that our technology considered "good" based upon the due diligence that was performed on the Borrower thereafter.

    Ultimately, Patch of Land uses technology as a resource and advantage in its ability to reduce wasted time and man hours by rejecting what most would consider "bad" loans up front. Now, if the property "makes sense" based upon our investment criteria, then it will move forward and be furthered processed through our originating and underwriting department where we do a more in-depth and hands on due diligence process (Credit verification, background check, third-party appraisals, etc.)

    I hope this answers your concerns and if you'd like to learn more about what information we look for and how it works for borrowers you can access it through the "Borrow" menu above. You can also take a look at our YouTube videos as well by clicking on the button under the video in the right hand column of this page. Overall we are very transparent and open about how we operate. We are also very accessible as well, so if you still have any questions or concerns, please feel free to contact us directly at 888-959-1465 where you can speak to a representative, or our head of underwriting.

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