Real estate investors often treat origination fees as an unavoidable cost, paying a percentage of the loan amount on each deal. However, homebldr, a technology-driven investment financing platform, has launched a product that eliminates these fees entirely for a year through a subscription model. The implications for investors closing multiple deals annually could be significant, as the cumulative cost of origination fees often goes unnoticed.
Origination fees, typically around 1.3% on a $417,000 loan, amount to approximately $5,421 per deal. For an investor closing six deals totaling $2.5 million over a year, the total origination fees would reach $32,526. This annualized perspective, often overlooked, highlights the potential savings of the subscription model. Adam Eldibany, founder of homebldr, notes that investors react strongly when they see the annual total, as the per-deal cost seems reasonable but the aggregate reveals a different story.
The homebldr financing subscription offers three tiers: Core, for up to $1 million in loan volume; Growth, for up to $2.5 million; and Scale, for up to $5 million. Using the Growth tier as an example, an investor paying $20,000 upfront would save $12,526 compared to the traditional model, a 39% reduction. The break-even point occurs after using just 45-65% of the allotted loan volume, making it advantageous for most active investors.
Beyond savings, the subscription fee offers payment flexibility. Unlike origination fees, which must be paid in cash at closing and may require documentation of source, the subscription fee can be paid via credit card, gift funds, or buy now, pay later services like Affirm or Klarna, without sourcing requirements. This flexibility preserves capital for investors managing multiple projects.
Eldibany also emphasizes the advantages of the broker model, which homebldr uses. Subscribers often access wholesale and preferential pricing from a network of over 80 capital partners, including lenders and family offices, that are not available to investors working directly with lenders. Many competitive capital sources operate exclusively through the wholesale channel, making brokers the only way to access their products. “Investors who limit themselves to direct lenders are excluding an entire segment of the financing market,” Eldibany says, noting that subscribers typically receive terms without additional fees or yield spreads. This combination of lower costs and better pricing can significantly benefit investors.
This article is based on information provided by the expert source cited above and is for informational purposes only, not constituting legal or financial advice.
