Market Selection Is Risk Management
At Requity Group, every bridge loan we originate and every property we acquire starts with a market decision. The best-structured deal in the wrong market is still a bad investment. The mediocre deal in a strong market has margin for error.
Our investors often ask how we choose where to deploy capital. The answer is a systematic framework that evaluates six factors, weighted by their predictive value for bridge loan performance. Here is how it works.
Factor 1: Population Growth (Weight: 20%)
We target markets with trailing 3-year population growth above the national average (currently 0.5% per year). Population growth drives housing demand, which drives occupancy, which drives our borrowers' ability to stabilize their properties and exit on time.
In 2026, our top-performing markets by population growth include the Raleigh-Durham corridor (2.1% annual growth), the Tampa-St. Petersburg metro (1.8%), and the Boise metro (1.6%). We avoid markets with population decline unless there is a specific catalyst (military base expansion, major employer relocation) supported by public data.
Factor 2: Employment Diversification (Weight: 20%)
Single-employer towns are high risk for bridge lending. If the major employer cuts jobs, occupancy across the market drops simultaneously, and every borrower in our portfolio faces the same headwind.
We measure employment diversification using the Herfindahl-Hirschman Index (HHI) for employment sectors. Markets where no single sector represents more than 25% of total employment score highest. Healthcare, education, and government employment provide ballast because these sectors are less cyclically sensitive.
Factor 3: Rent Growth Trajectory (Weight: 15%)
We track trailing 12-month effective rent growth by asset class in every market where we lend. Bridge loan borrowers need rent growth to execute their business plans (see our Q1 2026 bridge lending market and deal flow report for current data), whether that means leasing up vacant apartments, increasing MHP lot rents, or backfilling retail space.
Markets with negative rent growth are not automatically excluded, but they receive heavier scrutiny. If rents are declining because of temporary oversupply (like the apartment glut in Austin and Nashville), we may still lend if the borrower's basis is low enough and their hold period extends past the supply absorption window.
Factor 4: Supply Pipeline (Weight: 15%)
New construction competes with our borrowers' properties. We track permits, starts, and deliveries by asset class in every target market. Markets where new supply exceeds 3% of existing inventory in any asset class receive a risk flag.
For manufactured housing communities, the supply pipeline is almost always favorable because new MHC development is extremely limited. This is one reason MHP bridge loans have the lowest default rates in our portfolio.
Factor 5: Cap Rate Spread to Treasuries (Weight: 15%)
When cap rates compress too close to risk-free rates, the margin of safety for our investors shrinks. We target markets where stabilized cap rates for our core asset classes (multifamily, MHC, mixed-use) maintain at least a 200-basis-point spread to the 10-year Treasury.
In early 2026, with the 10-year at approximately 4.1%, we are most active in markets where stabilized cap rates range from 6.0% to 7.5%. Markets where cap rates have compressed below 5.5% (coastal California, Manhattan) are generally outside our lending footprint because the risk-adjusted returns do not support our underwriting standards.
Factor 6: Regulatory Environment (Weight: 15%)
State and local regulations affect bridge loan outcomes in real ways. Rent control, eviction moratoriums, and lengthy permitting timelines can extend a borrower's business plan by months, increasing carry costs and reducing returns.
We favor markets with landlord-neutral regulatory frameworks, reasonable permitting timelines (under 90 days for renovation permits), and predictable property tax assessments. States like Texas, Florida, Tennessee, and the Carolinas score well on this factor. Markets with aggressive rent control (parts of California, Oregon, and New York City) require additional underwriting buffers.
How This Framework Protects Investor Capital
Since implementing this systematic market selection process, our bridge loan portfolio has maintained a default rate below 2%, compared to the industry average of approximately 4% to 6% for commercial bridge loans. The framework does not guarantee outcomes, but it ensures every lending decision starts with data rather than intuition.
For investors in the Requity Income Fund, this discipline is reflected in the fund's consistent performance: targeted 8% to 10% net annual returns backed by first-lien bridge loans in markets we have personally vetted.
Want to see the specific markets where we are currently deploying capital? Schedule a call with our investor relations team. If you are a borrower, apply for a bridge loan in one of our target markets.
Frequently Asked Questions
What markets is Requity Group most active in for bridge lending in 2026?
Requity is most active in the Southeast and Mid-Atlantic, with a particular focus on the Tampa-St. Petersburg metro, the Raleigh-Durham corridor, and secondary markets in Florida, Georgia, the Carolinas, and Tennessee. These markets score well on our six-factor framework, particularly population growth, employment diversification, and regulatory environment.
Does Requity lend in markets outside the Southeast?
Yes. While our acquisitions portfolio is concentrated in the Southeast, Requity Lending originates bridge loans nationally. We evaluate every market using the same six-factor framework and lend in markets where the deal fundamentals meet our standards, regardless of geography.
Why does the regulatory environment matter for bridge loan performance?
State and local regulations directly affect a borrower's ability to execute their business plan on time. Rent control limits revenue growth, lengthy permitting timelines delay renovation projects, and complex eviction processes extend repositioning periods. All of these extend the bridge period and increase carry costs. We account for regulatory risk explicitly in our underwriting.
How does Requity's market selection framework protect investor capital?
By restricting lending to markets with strong fundamentals, we reduce the probability that a borrower's business plan fails because of market conditions outside their control. Our portfolio default rate has remained below 2% since implementing systematic market selection, compared to a 4 to 6% industry average for commercial bridge loans.