Innovative Solutions for Experienced Investors
Temple View Capital has Service, Creativity in Its DNA
by Carole VanSickle Ellis
Steven Trowern, co-founder and principal at Temple View Capital, does not pull any punches when it comes to explaining how the non-bank lender operates. “When we identify situations where the credit market is either absent or broken, we believe that is an opportunity for us to serve real estate investors,” he said. “Temple View Capital exists to provide innovative solutions that do not exist in traditional lending channels.”
Co-founder and principal Michael Niccolini agreed. “We pride ourselves on creating and providing those innovative solutions,” he said. “It is in our DNA to serve real estate investors whose businesses and strategies are not necessarily served by the GSEs and large-money banks.”
Trowern and Niccolini, like the entire team at Temple View Capital, have a track record of high-level positions in the finance industry. They pride themselves on their pragmatic approach to residential real estate lending, observing that their practice is to view investments and lending opportunities through a more commercial lens than most lenders. For example, one of the company’s programs evaluates a client’s debt-service coverage ratio (DSCR) in order to determine what type of loan a client might use to fund a project. DSCR lending bases the decision on whether to make a loan and how much to lend using information about project-related income rather than focusing solely on credit history. This enables borrowers to take on more diverse projects than a conventional loan would permit.
“If you are serving real estate investors, basing the decision to make a loan on their rent rolls is just a more efficient, more commercial way to think about the world than the methods used by traditional mortgage lenders,” Niccolini said. “It is just part of how we address the needs of a marketplace that does not necessarily come with traditional solutions.”
Big-Picture Focus Serving Individual Investor Needs
Both Trowern and Niccolini spent decades in the financial services industry prior to launching Temple View Capital and had experience starting companies and working with investors long before founding the company in the mid-2000s. From their vantage point inside the industry prior to the housing crash in 2007 and the credit crisis in 2008, Trowern and Niccolini saw clearly that there were and would continue to be certain lending services that federal programs and traditional mortgage lenders would not (or could not) provide to real estate investors – particularly investors specializing in smaller residential properties of no more than four units. Temple View Capital focuses solely on serving this sector of the real estate investing population with a variety of customized programs intended to meet the evolving needs of the residential sector.
“If investors really want to expand their business and build their portfolios, they need consistent lending parameters that are applied in common-sense ways,” Trowern said. Temple View’s company-wide determination not to lose sight of the big picture, helping real estate investors get projects done, has led to the creation of a series of evaluative strategies that help Temple View Capital identify opportunities for lending that other companies might miss. Strategies include the implementation of a series of “borrower tiers” that rank a potential borrower based on the number of successful projects they have completed in the past 36 months, a system that factors in investor experience, and new programs that offer up to 24-month terms on bridge loans, ground-up construction project funding, and even a newly launched short-term rental product that Niccolini reported is already “a big growth area for investors in the market.”
Niccolini and Trowern are certainly well positioned to identify “big growth areas” in real estate. In a separate business venture together, they were involved in the purchase of more than 30,000 loans on distressed assets. That experience led to the decision to focus on single-family residential units and multifamily projects of no more than four units at Temple View.
“We really understand the value of these types of properties,” Trowern said. “We wanted to get really good in one asset class and collateral type that would fit the needs of our investors whether they are looking for conventional financing in the future, liquidity, or the easy sale or financing to another buyer. All of these goals actually require a project to meet nearly the same lending criteria so that the borrower can ultimately create an attractive, profitable asset.”
Achieving Reliable Results Through Analytics & Market Data
Since its founding in 2007, Temple View Capital has underwritten more than half a million loans on around $10 billion of mortgage assets. This track record brings with it a certain degree of comfort when it comes to understanding real estate investments and the markets in which Temple View’s borrowers are operating. “We are very comfortable in our underwriting when it comes to understanding value, market trends, and the short-, medium- and long-term outlooks in those markets,” Niccolini said proudly. “We know what the rents and market should look like in order for us to make good underwriting decisions.” Temple View has also used its vast reservoir of data over the years to create a proprietary analytics system used in the evaluation of every potential loan.
The grounding in a solid background and deeply rooted comfort in both finance and residential real estate feed the innovation on which both the Temple View executive team and the company’s employees pride themselves. That innovation, Niccolini noted, is the primary source of the company’s constantly evolving product and service offerings. For example, the DSCR rental finance product that was recently expanded to include financing for short-term rentals like Airbnb properties could not have been added so successfully without the internal support of years of data and analytics and a deep understanding of the industry stemming from the underwriting department.
“You have to track short-term rental rates, occupancy rates, and the effects of seasonality when you are underwriting for short-term rental projects,” Trowern explained. “It is essential that you identify what the market should look like on a property and utilize that information in your underwriting decision.” Temple View tracks its own data internally and combines that information with data on borrower behaviors, default risk, street-by-street metrics, and overall market and project performance. Only when all of that information is compiled to create a comprehensive big picture do the company underwriters make a final decision on a loan.
The result, Niccolini said proudly, is a new level of “ease of access to reliable lending and reliable credit” that enables Temple View clients to plan for the future. “They make a strategy and put the strategy to work,” he explained, referring to the relatively new industry sector of short-term Airbnb operations. “Because we can now extend credit to these investors, they can begin to treat that strategy as part of their normal investment strategy. We get a high-yielding asset as collateral, and they get a property that is flexible, offers short-term cash-flow, and can be converted to another strategy, if necessary, in the future.”
When Time is Money, Invest in Tech
When innovation is part of your company’s core values, mission, and mandate, it becomes imperative that you remain sensitive to areas in which clients may feel pressure or pain. For Temple View, this means staying vigilant about sensitive situations for real estate investors, particularly when it comes to how projects are managed and, hopefully, streamlined and optimized for efficiency and performance.
“Time is money for real estate investors,” Niccolini observed. “We have to be nimble if we want to keep working with them.” That nimbleness comes as a result of significant investments in technology, such as a proprietary app that enables investors to time-stamp pictures, establish geolocations for those images, and even fill out inspection reports on their mobile phones in order to get money released the same day.
“That is something that is utterly unique,” Trowern said. “We were literally built to serve this market sector, whereas banks and more traditional lenders have reserve requirements, limitations on how you can draw money and the timeline on which that occurs, and a lot of other stumbling blocks that prevent investors from being able to really push a project forward when it is ready to move.”
Temple View investors leverage the company’s dynamism in a variety of ways, often relying on the use of various lending products to explore the changing opportunities in today’s constantly evolving real estate market. “You might start out a project because you found an opportunity to buy, renovate and add value, and then sell the property, but then later decide to rent it for cash flow and wealth creation,” Niccolini explained. “The great thing about residential real estate is that it is not just a financial asset; it is a utilitarian one. In markets where there is uncertainty, our investors are in a position to know with a relative degree of certainty that they have access to credit and will be able to hedge against any environment.”
Creating Opportunities for Investors Every Day
“At its heart, Temple View is dedicated not just to making loans but to creating access to opportunities for real estate investors,” said Niccolini. In today’s market, that determination is opening more doors than ever. “We are at an amazing point of opportunity for real estate investors,” he explained. “In a world of investments that often offer very little yield in most asset classes, the single-family residential sector continues to be a shining star. We are working hard every day to remain on the cutting edge of financing so we can help our investors drive their wealth and returns during this period.”
Trowern agreed, emphasizing the importance of viewing a lending partnership as a long-term relationship that should, ideally, evolve and grow over time. “It is important as a real estate investor to choose a lender that actually understands what your day-to-day life is like,” he said. “Your lender must have the experience to remain a stable and viable company so that you can make stable, viable investments.” As part of Temple View’s dedication to meeting those criteria, the company recruits and hires employees with a vast array of knowledge and experience, including those with Wall Street backgrounds, legal expertise, mortgage finance experience, and analytics insights. The result, Trowern said, is an extremely stable lending firm that continues to operate and perform even during times of economic volatility and uncertainty.
“We are a stable, growing, well-capitalized balance-sheet lender that did not stop lending even during the early stages of the COVID-19 pandemic,” he noted. “We have been and remain in a strong competitive position in the market. Temple View Capital was designed to last.”
Sidebar 1
Growing a Team of Diverse Thinkers: Temple View Capital’s Growth Process “Just Makes Sense”
Perhaps not surprisingly given the intensity of today’s national real estate market, Temple View Capital is currently expanding its team. Of course, like everything else at Temple View, the expansion and growth plan for the company revolves around innovation, creativity,and predictable, logical processes.
“We like to hire smart people,” Trowern said bluntly. “Our employees have a responsibility to first learn all about what we are doing, then help us think outside the box and innovate.
The things we do, we do because they make good sense, but we have not adopted other companies’ ways of doing business. We have created our own systems, and the people we hire are essential to that diverse, inventive thought process.”
“Our best employees are the ones who believe in the importance of investing in themselves,” Niccolini added. “The ones who believe the sky is the limit are the ones who thrive and who best serve our investors also.” Company policy tends to favor the bold; employees and potential hires who are willing to point out places where Temple View might perform better or handle certain aspects of its operations more effectively are the ones who get the jobs and rise through the ranks.
“We have a team of people who share our values and want to get to the top together not to ‘beat’ someone else in the industry but rather to constantly increase the access for investors to the products and services provided by our industry,” Niccolini said. “Our corporate culture is hard work, urgency, and spirited debate. We all are determined to evolve and improve; those are the characteristics we look for in new team members.”
Sidebar 2
Innovative Lending Programs for Today’s Real Estate Businesses
Real estate investors know they cannot become emotionally involved in their projects. After all, that is one of the first things that every educator drills into their students when teaching basic real estate investing. Only the numbers matter. While this is an integral part of successful real estate investing, it goes against the grain of many aspects of traditional, big-bank lending practices that are designed mainly for retail buyers of owner-occupied properties. As a result, most “traditional” lenders are not equipped to evaluate real estate investments based solely on the logical angles of the project and may fail to fund extremely viable, high-potential investment deals. That is where Temple View Capital comes into the picture with four basic products serving and meeting specific investor needs.
“Traditional lenders and the GSEs, Fannie Mae and Freddie Mac, do not have the mandate or mission to serve the needs of investors like landlords, who are buying rental properties, or flippers, who need relatively short-term funding to get their deals done,” Niccolini explained. “That is where Temple View comes in.”
- Fix & Flip Funding
Designed for residential projects between one and four units, Temple View provides consistent lending parameters for obtaining capital for projects focused on individual properties. With 12-month terms, low rates, and up to 90 percent loan-to-value (LTV), this program funds single-family, 2-4 units, condos, and planned unit development (PUD) projects without the use of tax returns or debt-to-income (DTI) qualifying in most cases.
- DSCR Rental Financing
Billed as “the best and most flexible DSCR product on the market today,” Temple View offers loan amounts up to $1 million to finance single-family properties, multifamily units with no more than four units, condos, and townhomes. This program includes Temple View’s new short-term vacation rental financing program as well as funding for long-term rentals.
- Bridge Lending
The bridge loan Temple View program is simple, with up to 90 percent LTV and the option to borrow both to purchase and refinance properties. Loan amounts rank from $75,000 to $2 million, and loans may be made on soon-to-be-leased properties as well as those currently occupied.
- Ground Up Construction
Financing Because Temple View evaluates loans through the lens of the project rather than solely based on the borrower, the company’s ground-up construction financing program enables experienced builders and investors to borrow as much as $4 million on qualifying projects.
Learn more about Temple View Capital’s lending products at TempleViewCap.com
