Ignite Funding, a hard money lender, experienced zero defaults in 2020, a pitfall that many lenders and real estate developers were unable to avoid due to the global pandemic. Ignite Funding has not taken this achievement lightly, knowing that many in the lending industry were not left unscathed.
Ignite Funding attributes this success to their lending philosophies and the various steps they take to mitigate the company’s overall exposure to risk.
The ‘one-size-does-not-fit-it-all’ philosophy
Ignite Funding does not abide by a “one-size-fits-all” approach to lending. This flexibility allows Ignite Funding to work with proven developers with varying expertise and product type.
In other words, Ignite Funding does not put all their eggs in one basket by only lending on one type of real estate developed in one specific region. This allows Ignite Funding to stay ahead of real estate trends and maintain a diverse portfolio that has been essential during market fluctuations.
“We understand the importance of not limiting our financing and being nimble in an ever-changing real estate market,” affirmed Pat Vassar, the director of underwriting at Ignite Funding.
“Our success is derived from identifying borrowers that recognize a real estate product need and delivering it to the market at an opportune time. This includes the borrower having the ability to re-create themselves and evolve with the market as needed.”
Ignite Funding typically lends in the Western U.S. but is open to working with bankable borrowers in non-judicial states with a long history in the region and reliable track record. Ignite Funding primarily lends on the acquisition and horizontal and vertical development/rehabilitation on residential and commercial projects.
For example, investors have the ability to invest in projects ranging from the Huntridge Theater rehabilitation in downtown Las Vegas to apartment conversions in Sierra Vista in Arizona to converting malls into lifestyle centers on the outskirts of Boise, Idaho.
This level of diversification is how investors are able to optimize and mitigate risk within their individual real estate investment portfolios.
The ‘loan-to-own’ philosophy
While Ignite Funding leaves the door open to new opportunities, that does not mean they agree to fund every project that walks in.
“Only about 10 percent of the loans that come through the pipeline get approved for funding,” Vassar said. “This applies not only to borrowers that may be new to Ignite Funding but repeat borrowers as well.”
This is because of Ignite Funding’s “loan-to-own” philosophy, which means that while the underwriting process includes a thorough review of the borrower to ensure that they are a financially sound company, the main focus is on the respective property and the borrower’s intended exit strategy.
“Even the best borrower is only good until they are not. At the end of the day, your main source of recourse is going to be the property you take back through foreclosure and if you are able to execute the sale of the property as it was intended,” Vassar said.
2020 performance highlights
Ignite Funding prides itself in its ability to continuously support the success of its borrowers, and in turn, provide quality investments to its investors.
At the end of December 2020, Ignite Funding had $175 million in loans under management and paid out $14.3 million in interest income to investors.
To date, Ignite Funding has facilitated 1,376 real estate investments funded with $907 million in investor capital, providing 51 borrowers in 16 states with the ability to acquire and develop more than 12,000 acres of land, 8,100 residential lots and 3.5 million square feet of commercial space.
Go to ignitefunding.com to review Ignite Funding’s annual performance record since their inception in 2011.