Standardizing your processes creates efficiencies and transparency—and drives success.

To set your company up for success in fix-and-flip lending, the right mix of standardization, people, and technology is key for a profitable program. Let’s look at some of the best practices for delivering better efficiencies, transparency, and an outstanding customer experience.

 LanProcess Standardizations Drive Better Experiences

For companies like yours to succeed and grow, consider how company-wide standardizations can provide benefits in multiple areas, for both borrowers and internal teams. Temple View Capital, a leading fix-and-flip lender, is a good example of a company that has focused on standardizing processes that have made a positive difference for its nationwide program.

To do fix-and-flip nationally, Temple View Capital has discovered the importance of developing standardized processes that are easy for their time-strapped borrowers to navigate. Eugene Amegashitsi, the vice president of loan and portfolio administration, said the company’s borrowers are focused on finishing their projects so they can sell them, make their money, and move on to their next deal. He noted that if Temple View can’t offer their borrowers consistent processes, they won’t be able to keep them.

Recognizing this, Temple View has created a standard process that sets borrowers up for success. They created tiers based on borrower experience. When the company begins to work with a new borrower, the borrower is placed in the tier that will place them on the right path. As the borrower’s experience grows, Amegashitsi said Temple View can adjust, giving the borrower more flexibility and better terms. Although the relationship may start off simply as a business transaction, depending on how the borrower wants to grow and business progresses overall, the relationship can become symbiotic and breed success for everyone.

Communicate Often and Early

Standardizing processes and programs is a start. To optimize growth and profits even more, consider the improvements you can make in terms of communication with the customer. The more convenient and transparent your communications, the more your borrowers will feel at ease with you, and their trust in doing business with you will grow. The easier you can make it to communicate and for borrowers to access information, the better and easier the portfolio will be to manage and to keep in good standing.

Amegashitsi said Temple View has taken a huge step in improving their client communication, especially post-closing. Why? Because after the loan closes in fix-and-flip, clients will be involved with properties where they don’t know what’s going on behind the walls.

He said Temple View’s goal is to ensure they answer borrowers’ questions quickly and with clarity, meaning a response to inquiries in less than 24 hours, a turnaround time that helps borrowers keep their projects moving forward. The company uses technology that keeps all communication and information organized in one place, which helps meet the goal of a 24-hour response.

Still, Amegashitsi said, implementing seamless communication processes isn’t enough. At the heart of any truly successful communication process is a team that understands how it works and can therefore use it to its maximum potential.  A team that understands and fully utilizes the tools they have enables them to respond to people’s needs quickly and clearly.

Amegashitsi pointed out that the Temple View platform allows them to not only keep a record of customer communication but contains mechanisms that ensure quick and ongoing follow up. Staying on top of any potential issues that could become problems and quickly managing complaints has been a big part of Temple View’s customer service success.

Interestingly, Amegashitsi said that being able to use technology to communicate, execute documents, and organize all the communication and documentation in one place helps keep everyone accountable. Accountability is especially important when you are working with people who make a living doing construction projects—not being able to get answers or money quickly can be a big issue.

Technology Is Key

Technology is a major key to optimizing efficiencies in your organization’s day-to-day processes.

Amegashitsi notes that, in particular, Temple View has used technology to improve the process of requesting draws and managing construction projects. He said before the company began using construction loan management software, they had to guess how much time it took from a borrower requesting a draw, to when the inspection was ordered, to when the inspector got out to the site, to when a draw was processed. Using software, they now have a very clear understanding of that timeframe, and the process has sped up considerably.

Amegashitsi points out that technology not only makes it easier to manage loans and offer a better customer experience, but also helps you make smarter decisions about your pipeline.

One way to make better decisions is to analyze computer-generated reports. He said that at any point in time, he can pull a report that shows what’s happening in the company’s portfolio and through comparative analysis access various perspectives of what’s occurring. For example, a report can help you better understand how you were doing a year ago compared to current, or since the coronavirus pandemic began. Lately, Amegashitsi has been leveraging reporting tools to analyze draw request volumes, funds released, and time frames compared to 2020 to see how the COVID-19 crisis has impacted them.

Those reports can also provide visibility into the health of your portfolio pipeline, revealing how quickly projects are moving. Amegashitsi reviews percentages of project completion, individually and as a whole, to see how far and fast projects are moving. He tends to check the percentage of projects that are within a certain percentage range of completion to assess how the portfolio is flowing.

Your company will need to determine the metrics that are meaningful for it and that mirror your standards for a healthy pipeline. For example, as projects progress to completion, you may want to know what is replacing them and can analyze that information and inform the sales team that you need more loans. That information can provide critical insights into the flow of business and let you know where and how you need to push.

In addition to pipeline health, you will want to create a cadence for when to look at the health of each project, specifically how many days have passed since the last draw. Amegashitsi said he needs to understand how many clients are within a reasonable time frame, such as 30-60 days, and who is beyond 180 days. He notes that if someone hasn’t taken a draw in six months, there is an issue Temple View needs to understand and deal with.

Setting checkpoints like these will help you understand whether you need to touch base with a borrower. Doing so early could mean the difference between solving a small issue immediately or dealing with a bigger problem that is more costly to resolve down the line.

Navigating the Market for 2021

Everyone is dealing with the slowdown in the fix-and-flip market. The properties for borrowers to do their best business are not as available as they once were. Borrowers are competing with traditional homebuyers who are driving up prices, forcing companies like Temple View to be more diligent in their valuations and closing timelines to ensure they are not lending based on values that are out of touch with the market.

Using your financial capabilities, technology, teams, and standardizations, you’ll put yourself in position to attract best-in-class borrowers who return to you time and time again.