Innovation Points Straight to Evolution
Industry behemoth Altisource is helping every investor scale
When Stephen R. Covey observed in the 1980s, “The key is not in spending time, but investing it,” he could have been describing the problem Altisource would be solving roughly three decades later.
Altisource, an integrated service provider and marketplace for the real estate and mortgage industries, offers a tailored suite of services for real estate investors. Altisource Vice President Ben Hall described the offering as “a compelling solution for investors getting into the market or looking to scale.”
“We help close some of the largest transactions in the industry, including a $508 million single-family rental portfolio acquisition last year with multiple levels of financing. We are not a small shop,” Hall said.
Still, the very scale of the company enables midsize investors to leverage the Altisource suite of products and services to scale their portfolios and streamline their real estate operations in meaningful and accelerated ways.
“We provide solutions to investors managing diverse portfolios,” he said. “Real estate investors understand that having a diverse portfolio will provide greater opportunities to innovate. We are an ideal partner for these investors because at Altisource, our products and services are constantly expanding and evolving.”
Support and Data on All Fronts
Altisource operates on multiple, distinct fronts. The company’s suite of solutions allows investors to research, bid and close on real estate properties with a single vendor.
“You cannot get our combination and breadth of data anywhere else on the market,” Hall said.
For example, investors currently scaling their investment portfolios use RentRange rental data and Springhouse valuation services to make predictions about market-specific economic trends, rental rates and property values, factoring in a vast array of metrics and data points not centrally available outside of Altisource.
Investors on all scales leverage the online real estate marketing platform Hubzu to both acquire and liquidate properties. The company also offers a standardized closing process option using its vertically integrated Premium Title and settlement services.
“Our message to investors is simple: Don’t do it alone,” Hall said. “The real estate investor market is maturing, and there are phenomenal resources out there to help you along the way.”
Innovation and Investor-Friendly Focus
Hall explained that one of the biggest attractions to him when he joined Altisource in 2011 was the company’s potential to be a “market differentiator.” Unlike many real estate-related service providers, Altisource continues to be viable and relevant in both up and down markets.
“Real estate is cyclical. If one part of the market is down, another part is probably up. A company like ours is a diversifying and stabilizing factor because the organization is diverse and stable,” Hall explained. “It’s why we are so focused on serving the investment community and taking every opportunity to innovate while we do so. When you have a diverse portfolio of real estate or of real estate services, the innovation just comes naturally.”
One of these innovations has become a staple for many lenders using the Altisource suite. “In conjunction with traditional appraisal methods, lenders can utilize the RentRange Automated Valuation Model (AVM) to help justify valuation of the property and the rental income or stated rent values,” Hall said.
AVM leverages RentRange’s wide range of data integration and data retrieval tools to expedite the loan underwriting process, saving lenders time and money while increasing their ability to see the whole picture when it comes to underwriting a loan.
“Our RentRange AVM results may be incorporated into the loan underwriting model as part of the underwriting process. This helps lenders evaluate loan amount and mortgage amount versus rental income,” Heigold explained. “The adjustment to the underwriting process will create a clearer picture for the lender when it comes to predicting negative cash flow potential on a property.”
That data may also be used to identify alternatives for investment properties when an investor’s original strategy falls through.
“Any loan can benefit from a review using our services because the information gives the investor an idea of other options for what to do with a property,” Heigold said. “For example, if you are an owner-occupant falling on hard times, could you rent a less expensive apartment and cover your mortgage by renting out your house? In some markets, this option would let you keep your house and even generate returns in some cases. This type of analysis can also help an investor identify which properties to keep and which to sell in a liquidation scenario.”
All About Scale
At the end of the day, every move Altisource makes is about providing something—a data point, a service inroad or a new purchase or sales portal— for midmarket real estate investors. One way to create an increasingly large pool of midmarket investors is to assist smaller investors through the scaling process in every way possible.
For example, RentRange’s AVM was designed with the individual investor’s needs in mind as well as the requirements of those with larger holdings. Unlike traditional AVM estimates, RentRange’s model can predict current market rent rates using the characteristics of an investor’s specific property.
“Investors with just a few properties in their portfolios use our model to make decisions about future rent changes,” Heigold said.
Hall noted many of the company’s larger clients are using the tool as well, which is, of course, good for the integrity of the entire analytics system.
“The RentRange AVM provides you with real-time cash-flow estimates to plug into your unique investment model. It is a key component for investors that used to have to make guesstimates about future rental income,” Heigold said. “With the RentRange AVM, we have more data than they could ever collect on their own: MLS, property management companies, other rental sites, etc. We combine it into one system that provides you with a rental estimate in two seconds—a real fastball.”
“We solve the complexities of managing diverse real estate portfolios so investors can remain hyper-focused on investment strategy,” Hall said. “We listen to the investor community and, together, continue to modernize how real estate is being transacted.”
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