New York private lender We Lend is seeing a significant shift in its loan portfolio as real estate investors move away from traditional fix-and-flip projects toward larger construction ventures. Ruben Izgelov, CEO and Founder of We Lend, said the company’s loan volume is increasingly going toward ground-up construction, condo conversions, and vertical and horizontal building extensions, with construction budgets now often exceeding property purchase prices.
According to Izgelov, the standard fix-and-flip model—buying a property, investing $50,000 to $100,000 in cosmetic work, and reselling—no longer generates the returns it once did. “Our borrowers’ returns have been compressing,” Izgelov said. “The general fix and flip model doesn’t work as much as it used to, so investors have had to get creative, and that requires heavier, more substantial construction and rehab work.”
That shift is evident in the numbers. Construction budgets on deals through We Lend have grown from the $100,000-to-$200,000 range to $1 million to $2 million, and in some cases the construction budget now exceeds the purchase price. This trend is reshaping the private lending landscape in New York, where fix-and-flip loans were once the cornerstone of the business.
We Lend, a private direct lender with a history of funding quick-turnaround fix-and-flip loans in New York and New Jersey, now handles larger, more complex projects. The firm is backed by the entire capital stack and makes all underwriting and funding decisions in-house, allowing it to take on ground-up construction, condo conversions, and building extensions alongside traditional renovations.
To manage the increased risk of larger projects, We Lend requires documentation many lenders skip. Before financing a conversion or extension, the firm mandates an architect’s letter confirming the work can proceed as of right, without rezoning or variance applications. On larger jobs, general contractors must sign completion guarantees. “We want GCs committed to the project just as much as the borrower is, without having to personally guarantee the loan,” Izgelov said. “They’re guaranteeing that the project gets completed. That keeps the playing field level between the borrower and the GC, especially when the borrower hasn’t worked at this scale before.”
Two recent deals illustrate the range of projects We Lend now finances. In one, a borrower purchased an eight-unit bank-owned property after the previous lender declined to fund improvements. We Lend financed the conversion of that building into 16 fully leased units, and the borrower is now in discussions with several banks about refinancing to return some equity for the next project. In another deal in an affluent New Jersey suburb, a borrower was about 85 percent finished building a 22,000-square-foot spec home when a lot line sale required paying off an existing private loan. We Lend restructured and refinanced the loan, providing the payoff and a small cash infusion to complete construction.
Izgelov cautioned that investors moving from fix-and-flips to larger projects often underestimate timelines. A typical fix-and-flip loan runs six to eight months, but ground-up construction, major conversions, and extensions often take much longer. “Budget carefully for the interest that has to be paid over that term,” he said. “Built-in extension options with your lender help, or better yet, start with a term longer than 12 months. We offer 18-month terms, and we’ve done at least one loan at 24 months.” He also warned against building to trends rather than demand: “If there’s demand for a project of that size or caliber, great. But don’t build a mega mansion in a neighborhood that can’t support it just because that’s the trend.”
More information on how We Lend structures its loans is available on the company’s How It Works page.
