Compared to other investors, Velocity investors are 2.5 times more likely to choose a funding source that offers flexible underwriting and easier qualification.  They are also 1.4 times more likely than other investors to choose a funding source based on the time required to close and the source’s reliability to close.

QUESTION: Why do you turn to your preferred source when seeking financing for your investment properties?

BASE: Velocity Investors (N=66). Other Investors (N=221). Values indicate the percentage of total investors surveyed in each sample.

In contrast, other investors focus more on the loan terms, lender location and, to a lesser degree, Internet ratings when choosing a funding source.

Two primary reasons may explain the key reasons in why Velocity investors and other investors choose a funding source.  First, Velocity investors typically don’t qualify for traditional bank loans with more stringent underwriting rules.  Second, Velocity investors tend to purchase more properties than other investors. Together, a more flexible underwriting approach that makes it easier to qualify for an investment property loan that also closes in less time creates the optimal solution for Velocity investors. 

Since Velocity investors typically don’t qualify for loans with the best interest rates, they seem to place a lower emphasis on loan terms than other investors.  In contrast, their investors are 23 percent more likely than Velocity investors to cite loan terms and 4.3 times more likely that Velocity investors to cite location as their primary considerations when choosing their preferred loan source. 

Implications

If your goal is to attract independent real estate investors in general who typically qualify for traditional bank loans, your message and sales strategy should focus on the terms of your loan.  On the other hand, messaging for a company aimed at servicing the needs of independent investors and small business owners should focus on flexible underwriting, ease of qualification, and a shorter time to close.