Investor Sentiment Index reveals key trends

IN Partnership with

RCN Capital's survey offers brokers valuable insights by tracking real estate investor sentiment. With data-driven trends, the index identifies opportunities and informs brokers and investors alike, empowering better decision-making in an evolving market

WITH PLENTY of data collected about the residential mortgage industry but nothing to gauge general sentiment for real estate investors in the market, RCN Capital identified an opportunity to surface much-needed information while also serving its core business objective. “In terms of a main index that offered a consistent grasp of what’s going on in the investor market, there was a gap,” says Erica LaCentra, chief marketing officer at RCN Capital. “In the context of the private lending space it’s relatively new, but we realized that despite being a young industry, real estate investing shows tremendous promise. We see a lot of success in it, our clients see a huge amount of success in it, and we felt that somebody had to track it. We’re glad to be the ones to fill that hole in providing this data.”

RCN Capital is a national, direct, private lender that provides commercial loans for the purchase or refinance of non-owner-occupied single-family and multi-family properties. RCN specializes in ground-up construction financing, short-term bridge loans, fix-and-flip financing, and long-term rental financing for real estate investors. RCN lends to both new and experienced real estate professionals throughout the country. RCN Capital values referrals; brokers are protected. For more information on RCN Capital and our loan programs, visit www.RCNCapital.com

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“[As] an indicator for the industry, it gives not only our investor clients but also our broker partners something to reference on a quarterly basis and leverage to inform their own businesses”

Erica LaCentra, RCN Capital

Kicked off in spring 2023, the lender reached out to its own investor clients to participate. Over 300 respondents answered

The index’s most recent iteration reported real estate investor sentiment jumping 16 percent. This increase comes following a dip in investor sentiment over the fall and winter, and despite ongoing headwinds such as financing costs, rising home prices, limited inventory, and competition from institutional and traditional homebuyers. “The uptick in positive attitude toward the market is great,” LaCentra says, adding that the index also highlights trends in terms of where investors are going over time. For example, a year ago there was a lot of optimism for long-term rentals, whereas today there’s been a shift toward the fix-and-flip market – providing data to back up something RCN Capital has seen anecdotally in its origination volume.

business, very solid organizations for reasons that surely didn’t make any sense to us. “We’re seeing some of the carriers pull back because of their own financial reasons. We saw some of them pull back pretty dramatically last year. Some of those are starting to come back in again. So, I would expect that it will be somewhat more stable over the next year, although some organizations we still see are somewhat distressed – foster care, child serving in general and animal rescues are still very difficult. And we’re also seeing some sorts of advocacy organizations having some difficulty finding coverage.” Smith predicts that underwriters will be cautious with commercial P&C lines, while he sees workers’ comp softening due to lower loss trends. As for claims, in addition to the standard auto, property and general liability claims, nonprofits are increasingly grappling with cyber losses and cases of abuse.

The data gleaned from the surveys and showcased in the index shines a light on areas of opportunity and underscores the specific value to brokers. Recognizing this, RCN Capital conducts webinars for its broker partners to go over the results for actionable advice. “[As] an indicator for the industry, it gives not only our investor clients but also our broker partners something to reference on a quarterly basis and leverage to inform their own businesses,” LaCentra explains. “Here are the main data points, here are the areas to pay attention to, and here are some additional insights to hopefully target clients based on the findings from investors.”

“Developing and launching this survey and the index empowers both groups with an additional level of insight and goes back to our core business model: to provide resources that allow them to be successful”

Erica LaCentra, RCN Capital

Still an evolving initiative, the survey has received positive feedback, with people beginning to look forward to it. More investors are participating – resulting in increasingly robust data – and the custom webinars are driving up interest from the broker side as well. RCN Capital is looking forward to the industry’s reception of the second iteration of the index, slated for a fall release, as well as to the long-term impact of continuing to collect and report this information over time. LaCentra says the team is excited to see how the data will ultimately be leveraged by the industry, and welcomes the challenge of determining how best to refine the process. It’s the ultimate goal to develop a powerful tool and key indicator that everyone refers to, similar to the housing trend index, and

serves as an additional step RCN Capital is taking to help all stakeholders thrive. “Education has always been a large focus at RCN, and we have a drive to provide clients and broker partners with value beyond the loan programs we offer,” LaCentra sums up. “Developing and launching this survey and the index empowers both groups with an additional level of insight and goes back to our core business model: to provide resources that allow them to be successful.”

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The takeaway for brokers

Investor Sentiment Survey highlights opportunities

Published September 23, 2024

Investor Sentiment Survey highlights opportunities

the call for the initial Investor Sentiment Survey and it ramped up from there, with the intention being that after collecting a year’s worth of data, RCN Capital, in conjunction with the CJ Patrick Group, would create an index from it, and continue to do so on a quarterly basis. In line with this plan, the survey’s corresponding index was launched for the first time this spring, built on four key questions: Current market outlook: How does the environment for residential real estate investing compare to one year ago? Future market outlook: What’s your outlook for residential real estate investing over the next six months compared to today? Expected home price increases: What do you expect home prices to do over the next six months? Number of properties compared to past 12 months: How does the number of properties you plan to invest in over the next 12 months compare to the number of properties you’ve invested in over the past 12 months? While these core queries inform baseline data, LaCentra says they add in more topical questions as they see fit, which allows the team to better understand what they’re seeing in the market. For example, they touched on the impact of insurance, where trends were identified in certain areas of the country such as California and Florida, and the summer 2024 survey asked respondents about the issue of squatters and how that affects their businesses. Aligning additional questions with hot topics and trending issues provides interesting data and greater insights, LaCentra notes.

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Wholesaling

12.96%

Fix- and-Flip

51.54%

Buy-and-hold for rental

35.49%

Average of overall index by year, period, and season

SEASON

120

110

100

AVERAGE OF OVERALL INDEX

100

116

Summer Qtr2

Fall Qtr3

Winter Qtr4

Spring Qtr1

Summer Qtr2

2023

2024

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MORTGAGE INDUSTRY

BEST IN MORTGAGE

SPECIALTY

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MORTGAGE INDUSTRY

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Investor Sentiment Survey highlights opportunities

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