Multifamily Loan Automation May Become More Important

Whenever a technology vendor makes an argument of how its type of software is critical to business, it’s time for a firm grip on your wallet. Not that they’re necessarily wrong, but the arguments can become one-sided.

That said, an argument that GoDocs, which has software that automates commercial loan document generation, makes is interesting. Given market conditions, is the pressure to make that part of multifamily deals happen more efficiently going to grow/?

It comes in an analysis of theirs called “7 Facts: How Federal Interest Rate Increases Affect CRE Multifamily Housing”. They write, “Even as the demand for affordable housing continues, the federal government is taking steps to curb inflation by raising interest rates by three-quarters of a percentage point. This relatively small hike will allow the government to assess the impact and make more informed decisions about additional increases that could happen in 2022. This latest increase has some development companies re-examining their project schedule, but ultimately, the multifamily housing market isn’t expected to slow down.”

Then, using multiple sources, they note that rents are likely to stay strong according to observers, with the need for affordable housing increasing. That’s a broadly accepted given now.

“Any slowdown in the multifamily sector is simply a natural balancing out after such a record-breaking 2021,” the company wrote. “While increasing interest rates are bound to have some effect on lending practices and development across all real estate sectors, multifamily lending and development will remain strong for the rest of 2022.”

So, deals will have to close and anything that gets in the way becomes problematic. All good so far. That’s why their ultimate argument, that companies like theirs that can increase efficiency even in one specific part of the lending process is necessary, seems to hold water.

As the economy starts to change direction some areas of real estate could face more difficulty—office is a possibility and even the previously blistering industrial could feel an impact from a slowdown of consumer spending. Those that keep moving ahead could see increased competition for deals and sales, as investors who focused more on property value growth consider selling off properties.

With a rush, the potential for mistakes in activities on a quick march grows while the desire to get things closed out and onto the next one becomes keener. Using automation software to generate documents starts sounding like one possible stop to keep the flow moving.