Arbor: Single Family Rental

I got contacted by Arbor's in house recruiter about joining their new SFR product. Anybody here familiar with Arbor's SFR product? I am not too excited by it as I dont think they can match or beat my current pay (CMBS originations & securitization) and it looks like it would be essentially SBL lending? Any feedback/opinions? Thank you.

Comments (11)

 
Apr 8, 2019 - 6:37pm

Arbor and similar lenders feed off servicing fees. With larger loans, you're getting a 30-60bps servicing fee on top of the origination fee and whatever premium the deal trades at (normally Fannie thing).

With SBL it is definitely harder because the costs and time/effort are practically the same as a $20MM loan but you also have more hair and smaller mom/pop borrowers.

In order to SBL to be profitable, you need streamline processes and use of the minimal amount of resources. So the true key to increasing profitability is volume while keeping the costs low. Can you scale without having extra expenses?

 
Apr 8, 2019 - 9:39am

All I know is SFR is quite different from commercial real estate.

Corevest has done several SFR securitization, go read their term sheets, you will see information like FICO scores and a lot metrics unique to SFR lending

 
Jul 27, 2019 - 6:21pm

I would not say SFR is significantly different from multifamily. Remember, the tenants are not on long-term leases so their FICO isn't that relevant because during the 3-5 year term of the loan there very likely will be at least one lease turnover. The long term sustainable cash flow will follow multifamily market dynamics. The one part of underwriting that is different would be the operating costs as single family homes are definitely more costly for R&M on a per unit basis.

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