Updated: Jul 22, 2021
Opportunity knocked. It was a Class A office building, Class A market, Class A tenants, and I passed on it because at $27 million, it was too rich for my blood. It turned out for the best because a downturn in the cycle brought it back to me at $10 million. But that same downturn meant that the capital markets had all but disappeared. Fortunately, my investor base came through and we closed the deal in 15 days. But it could have gone another way. I could have likely done the deal with just $300,000 and not $10 million - if I had only had a bridge loan available.
Every commercial real estate investor knows the excitement of lining up the perfect deal, being ready to jump on it, and then, the frustration of losing it due to factors outside of your control. In our industry, the main reasons that deals disappear are slow bridge financing on the part of traditional financial institutions, and lack of acceptable loan products among private lenders who specialize in catering to completely different businesses than CRE.
I have spent my three-decade career repositioning transitional assets through renovation, development, lease-up, and construction. Again and again, I saw that when you need a small-balance bridge loan, there’s only a small chance you’ll be happy with your options. CRE borrowers represent a range of business scenarios, and I learned the hard way that and at the moment that you need to secure time-sensitive financing, you’re often forced to accept sub-optimal terms. The high cost of capital is only one of the reasons CRE transactions are not efficient.
The commercial real estate technology landscape is bursting with software solutions for finding, building, evaluating, financing, managing, and utilizing properties. Yet, every time you need a bridge loan, there are piles of paperwork to submit, the percentage costs of the third party reports and procuring the loan is too high a portion of the loan proceeds.
A year ago, I set out to create the product I wish I had had during my commercial real estate career as an equity investor and managing principal. That’s when I connected with Omer Haim, an accomplished business operations executive in fintech, adtech, and startups with a focus on lending products. We built an inspiring team of people passionate about technology, customer experience, and commercial real estate.
Today, we’re launching Novello, a tech-powered, customer-obsessed CRE lender. We provide immediate funding for small-balance CRE investors while lowering their transaction costs. We built Novello's platform from the ground up, putting an emphasis on speed, service, and flexibility from application to funding.
On our website, CRE investors and developers have immediate access to a rapid application to get pre-approved for our financial products. They don’t even have to log in. Our application asks about only the essential details, like the property type and the plan. We’ve done more than digitize all the paperwork in the borrower journey. We’ve thought about each step our users take and have eliminated all non-essential actions from the flow. Since we focus on the asset as collateral and not the individual sponsor, we don’t even require personal financial statements and tax documents in many cases. This saves borrowers critical time when they’re seeking bridge financing.
We carry this approach through to the way we underwrite risk, approve applications, and originate loans. At the end of the day, we want our borrowers to marvel at how fast and easy it was to find the right bridge loan for their situation.
We’re eager to upgrade the borrower experience and provide excellent service to each person, in every interaction. After you submit your application, we assign a dedicated team member to assist you through the entire process and act as a personal loan concierge.
As a balance-sheet direct lender, we’re able to help our borrowers capture rapidly evolving deals by providing certainty of closing early on in the process and to close fast. We finance transactions nationwide* and create a structure personalized to each unique scenario. Our philosophy is that creativity should be embraced because the best opportunities don’t always fit into a box neatly. We built in the freedom for ourselves to be able to partner with our borrowers to make their plans a reality.
Learn more: Novello is an asset-based, balance-sheet, direct lender, focused on providing short-term, CRE bridge loans. To learn more, check out eligible property types here!
*Except CA, AZ & Nevada
David Novoseller is the co-founder and President of Novello Financial Group, with three decades of experience as an equity investor and managing principal in commercial real estate.