While the most popular type of investment property for independent real estate investors in general is a single-family home (SFI), Velocity investors have a significantly higher incidence in purchasing a small apartment, multi-family, small commercial, and mixed-use buildings. 

QUESTION: Which of the following types of properties do you currently own?

BASE: Velocity Investors (N=66). Other Investors (N=221). Values indicate the percentage of total investors surveyed in each sample.

Most specialty finance companies don’t combine loans for multiple property types in their portfolios. However, Velocity began its business in 2004 by primarily focusing on small balance commercial mortgage loan originations.  In response to the increased demand for rental properties in the wake of the financial crisis, Velocity began originating loans for 1-4-unit investment properties in 2013.  Because of this, it was one of the first specialty finance companies to offer both residential investment and small commercial loans, which may account for the difference in property ownership.

Implications

The mortgage industry is, and will always be, in a constant state of change, making it difficult to determine the “right” business strategy for every market scenario. There are too many variables to consider that brokers are unable to control. For these reasons, diversifying your business strategy by offering a variety of mortgage programs that serve the needs of home owners and investors is a sound strategy that pays dividends when markets change.  That diversification strategy is strengthened when mortgage brokers are also able to offer both investment and small commercial property loans.