Combine a housing shortage with record high residential market valuations and you get the perfect opportunity for real estate investors who can move quickly and decisively.
As local builders step up to fill the void left by several decades of housing development falling short of population growth, Flatiron Realty Capital has designed a range of loan programs that give real estate investors fast access to the financing they need to get deals done. The firm has carved out a niche for itself as a capital provider for luxury home builders, specializing in loans of up to $10mm for homes with between $15 and $25mm exits. We spoke with Robert Talas, Co-Founder of Flatiron Realty Capital, about building a lending program for today’s real estate investor.
Building A Better Lender for Real Estate Investors
Robert Talas cofounded Flatiron alongside real estate magnates Edward Ostad and Michael Ostad in 2018 to serve the growing market of real estate investors who saw opportunities in their communities and needed to move quickly to secure them. Because Flatiron is a privately held fund, it has the latitude to take feedback from its originators and adjust its products to meet market needs. To date, Flatiron has funded loans in over 38 states, leveraging data-driven decision making and its robust staff to move into new markets.
“We like to become experts in a location and then really delve in,” explains Talas. “That helps us improve our decision-making process so we’re fast and efficient without sacrificing attention to detail in the right products.”
When it comes to delivering for its borrowers, speed is everything. In key markets that it serves, Flatiron has cultivated strong relationships with vendors including local appraisers and title companies to provide expedited service. The firm also created a proprietary loan operating software to make it easier for the borrower to not only source data but also keep track of documents and provide transparency throughout the borrowing process.
“The platform has allowed borrowers to have clear-cut communication and get to the next milestone of the loan process within minutes,” emphasizes Talas. Flatiron’s staff is constantly working with clients to help them parse the wealth of data provided to them by the firm’s AI-driven analytics. “We’re a high-tech, high-touch firm.”
Meeting Market Forces Head-On
Talas sees both renovating existing housing stock and adding new construction as important components in solving America’s housing crisis. Flatiron serves investors who are engaged with both of these market sectors.
“We believe that our borrowers are key to reducing the housing shortage,” states Talas.
Flatiron’s loan products are designed specifically for real estate investors who want to strike while the iron is hot. From Fix & Flip Loans that can close within five business days, Rental Loans requiring minimal documentation, and Stabilized Bridge Loans that can be closed within 24 hours of receiving a clear title and appraisal, Flatiron works hand-in-hand with borrowers to put their money to work.
It’s a business model that has proved incredibly successful in today’s high-demand housing market.
“The market is demonstrating that renovated and fixed-up homes are commanding a decent premium,” observes Talas. “There is just such strong overall demand for the finished product, and we’re seeing more pre-approved buyers that have been showing up in the last 90 days than we’ve seen in the last 18 months.”
For example, Flatiron funded a loan for a foreign national in South Florida for the ground-up construction of 24 individual townhomes. The anticipated sell-out price was $1.2 million each, and the homes ended up selling for 50% above the projected price.
“What we’re seeing for ground-up and fix-and-flip is that sales are happening at higher prices than what was projected when we originally underwrote the loan,” notes Talas. “There’s a huge appetite on the buyer’s side, where homes are often being sold on day one and above the ask price in multiple geographies around the country.”
Growing With the Market
The success that fix-and-flippers and builders are having on the sale side is driving growth for Flatiron. The company is continuing to expand its geographic footprint and build market expertise and relationships in local markets across the country. In particular, the firm is focusing on markets where there is the potential for home price appreciation, including net in-migration of wealth and of working-class people looking to buy homes.
All that demand adds up to tremendous growth, with Flatiron aiming to expand its assets under management to $2 billion by the end of 2026.
“There’s also a Wall Street appetite for this product,” says Talas. “The loans that we’re creating are not only sitting on the balance sheet, but there’s a secondary market appetite from institutional capital, insurance funds, and now securitizations.”
As part of its growth strategy, Flatiron has formed a co-investment strategy focused on residential transition loans (“RTL”) with O’Connor Capital Solutions (“OCS”), the private credit strategy within O’Connor on a co-investment strategy focused on residential transition loans (RTLs). RTLs are short-term, first lien business purpose loans on residential real estate are used for renovation or construction, a logical extension of Flatiron’s business given the trends they’re seeing in the market. This partnership alone is expected to expand Flatiron’s managed loan portfolio across the $600 million mark.
Between asset value stability and forecasts of further rate reduction in the near future, Talas sees “a lot of optimism in the housing market.” If you’re a real estate investor looking for a lender who can move as fast as you, reach out to Flatiron today.