Despite the well-known housing crisis, the value-add real estate segment is thriving at an impressive pace. Just ask the team at Sherman Bridge, a private money lender in the single-family residential space, who have seen even more success since partnering with New Western, the nation’s largest private real estate investment marketplace. In just 18 months, they’ve closed on over 2,100 loans totaling $450 million across 48 markets. According to Kurt Carlton, co-founder and president of New Western, their unique platform is truly one of a kind.
An age-old idea receives a fresh perspective as it gains newfound importance in the face of a difficult housing market. “Since we embarked on this venture 15 years ago, the potential of value-add homes has been widely misunderstood,” Carlton explained. “Today, we have a staggering 200,000 investors on our platform, and we facilitate a house transaction every 13 minutes. These are all value-add properties, where investors can enhance their equity through renovation or similar means.”
According to Carlton, the addition of a lending marketplace has propelled their success to new heights. “We absolutely nailed it with this partnership,” he exclaimed. “It has truly been a game-changer for us.”
Despite the backdrop of a housing crisis, Carlton’s company continues to thrive. However, this is not unfamiliar territory for him, as he founded his business during the tumultuous times of the Great Recession. It seems that as times change, some things remain constant.
Back in 2008, Carlton and his team faced a daunting challenge – starting a company with no money. But they didn’t let that stop them. They started a finance company that allowed investors to purchase not just one, but three houses from them. However, as the market changed, they realized they needed to adapt. That’s when they created a platform tailored to the needs of investors, with 15 of the most reliable lenders in the space. The goal was to simplify the process and make it a one-stop shopping center for investors. With their underwriting engine and reliable lenders, investors can now get the process started with just a click of a button. And with the growing number of lenders in the market, it’s clear that their partnership is paying off.
The rise of the “side hustle mentality” has played a significant role in driving further growth, according to Carlton. He humorously referred to it as the meeting point between the “great resignation” and the “great renovation.” In cities like Seattle and California, where the cost of living is exorbitant, many individuals are venturing into the world of side hustles by adding accessory dwelling units (ADUs) to their backyards. This trend is gaining popularity as people realize they can generate rental income from these additional properties. As a result, they are becoming real estate investors, constantly seeking their next opportunity.
Carlton also highlighted the Federal Housing Administration’s recognition of this real estate method as a positive sign of its growing acceptance. ADUs are now considered as income when qualifying for a mortgage, indicating that the housing industry is taking the inventory crisis more seriously. This approach allows individuals to access homes that would otherwise be unaffordable, providing a potential solution to the affordability challenge.