At Pacific Private Money, we strive to provide best-in-class alternative financing solutions for real estate transactions. Our team of experienced professional has built and earns a reputation for transparency, speed, and reliability.
Whether you are a self-employed borrower with a seasoning of funds and reserves issues, a real estate professional trying to provide their client with all the options available to them, or a mortgage broker who wants smart funding to achieve their client's goals, private money is a great tool that gives the borrower lending luxuries such as the ability to make cash-like o ers.
Partner & CEO, Geraci LLP
ANTHONY GERACI a.geraci@geracillp.com
Chief Marketing Officer, Marketing
LESLEY BOYD l.boyd@geracillp.com
Creative Director
LYNDA HIGHT l.hight@geracillp.com
Graphic Designer
NICO ADOREMOS n.adoremos@geracillp.com
Sr. Marketing Ops. Manager & Editor
DANI L’HEUREUX d.lheureux@geracillp.com
CONTRIBUTORS
Kyle Concannon • George Flint
Katie Bean
Mike DeRienzo • Stephen Beale
FOUNDING UNDERWRITERS
MARK HANF
President, Pacific Private Money
ORIGINATE REPORT
www.geracilawfirm.com/originate-report
GERACI LAW FIRM
www.geracilawfirm.com
CONFERENCE LINE
www.geracicon.com
Welcome to the Innovate Special Edition of Originate Report!
“Innovation doesn’t always mean inventing something completely new — in many cases, it’s building upon what exists and delivering a best-in-class solution.” - Anonymous
As we delve into the latest edition of Originate Report, centered around Innovation, I am reminded of the transformative power that change brings to our industry. In conjunction with our Innovate conference, this issue celebrates the pioneers shaping the future of private lending with groundbreaking ideas, products, and strategies.
Our cover story puts the spotlight on Stronghill Capital, an Austinbased powerhouse whose journey is a testament to the innovative spirit, capitalizing on market shifts and rising above challenges. President Dustin Wells shares their success story, showcasing how Stronghill originally identified opportunities and strategically positioned itself to succeed. Elevate, their unique tech platform, streamlines workflows for brokers, enhancing the overall client experience and setting them apart.
We learn how Stronghill leveraged existing technology, customized it for their needs, and maintained a strong foundation for innovation. The insights shared by Wells serve as a guide for those contemplating technology adoption in the private lending space.
As we celebrate the success of Stronghill Capital, I extend heartfelt gratitude to our Innovate attendees and sponsors for their unwavering support of Geraci events. Your commitment plays a pivotal role in making our conferences and publications platforms for industry excellence.
The Innovate Special Edition is not just a magazine; it’s a portal to the cutting edge of private lending. Embrace the transformative power of innovation, and let this issue inspire your own journey of progress.
Here’s to innovation, progress, and the remarkable individuals shaping the future of private lending.
Till Next Time…
By Katie Bean, Contributing Writer for Originate Report
Innovation doesn’t always mean inventing something completely new—in many cases, it’s building upon what exists and delivering a best-in-class solution.
Stronghill Capital, based in Austin, Texas, has perfected that model for commercial and residential brokers. Stronghill provides a variety of lending solutions for today’s unique non-QM brokerage. However, it’s not just what Stronghill offers but how it delivers that elevates the experience for their clients.
Stronghill has built up its non-QM business over the past couple of years. As the market shifted with rising interest rates, the opportunity arose naturally.
“A huge opportunity that arose was non-QM, and within non-QM was investor residential because investors are not as hyper rate-sensitive as a consumer looking to purchase their first home or second home,”
Stronghill President, Dustin Wells, said. “You also had conforming rates rising, and refinances almost stopped overnight, which created this artificial pause of everything else and this influx of individuals that still wanted to acquire real estate. They realize that there aren’t nearly as many buyers because the rates have started to increase, so they don’t have to be as competitive on their offers and can continue to build their real estate portfolios. It’s an ideal time to invest.”
Stronghill positioned itself to help its clients identify these investors in order to provide them with capital.
“We tried to be at the forefront of that,” Wells said. “It was the right time to roll out and expand our company and our product offering.”
A subsidiary of Denver-based investment management firm ArrowMark Partners, Stronghill also provides small-balance commercial mortgage loans in addition to its residential non-QM and investorfocused products.
One key to Stronghill Capital’s success is elevating those it works with by making it easier to do business.
Around the same time it began making inroads with residential investors, Stronghill also started building a tech platform that could simplify and speed up workflows for the brokers it works with.
Wells said that, when he joined Stronghill in April 2022, CEO John Eisinger challenged him to start with a clean slate and an open mind in creating the new tech solution— going beyond “what you’ve done in the past or what you’ve seen work in the past. Is there a better way?”
“Admittedly, I’ve never had anybody in my past career kind of say, ‘Listen, there are no constraints. What would you do if you could build out whatever you wanted to?’” Wells said.
“And so, with that as a backdrop, it was a refreshing approach.”
As he dug into finding the best solution for Stronghill, Wells identified that technology was underutilized in the firm’s commercial business. Until the firm started building out its residential non-QM offering, he said, there wasn’t much focus on implementing innovative technology.
Smaller brokers had been somewhat left behind in innovation, Wells explained.
“It’s a very manual process. Their businesses are run on spreadsheets and Word documents,” he said. “And it’s a relationship business.
Stronghill Capital: Continues on pg. 8
Stronghill Capital: Continued from pg. 7
They are working with a customer they’ve known for a while, and they’re doing a manual, physical application at best. It’s a short-form application, and then they would send that short-form application into a small-balance commercial or investor residential lender who would then key that information into their system. And a lot of the dialogue would be either phone calls or emails. There wouldn’t be one source of truth, one system they could log into for updates, dialogue, feedback—it was all manual. The whole process really didn’t lend itself to scale.”
From their experience working with larger brokerages, the Stronghill team knew what key features were needed to make the loan process easier for their clients. Their solution, the Elevate portal, eliminates the need for the barrage of emails and phone calls common to the industry. It offers a short-form application online to capture the data, and that information is uploaded straight to the underwriter’s queue. Users then receive real-time updates on their loan status.
“The days of having to call and say, ‘Did you get the email and has somebody looked at it?’ are gone and replaced with, ‘I’ve uploaded the information, I’ve received confirmation that they received it and that it’s going to be reviewed within 24 hours.’ It just completely simplifies the process for the broker,” Wells said.
The platform is unique in the wholesale and correspondent space, he said, and the feedback Stronghill has received is “phenomenal.”
Stronghill’s flexibility and responsiveness to client feedback about Elevate has enabled the team to stay ahead of the curve and deliver an outstanding product.
“We’re pretty proud that, when a client reaches out to one of our account executives or to our executive team directly and says, ‘I had this pain point’ or ‘I thought this was supposed to happen and it didn’t,’ we address it in real time,” he said. “If it is something we need to resolve quickly because it is going to create friction, then we deploy the team necessary to solve whatever that problem is.”
Wells provided several examples of features Stronghill has added or improved thanks to its commitment to listening to what clients want from Elevate.
work before it’s even submitted,” he said.
One addition that has been “a big win,” Wells said, has been the delivery of an online pricing engine that can be used in the SFR and multifamily space. Providing pricing early in the process can help structure the deal for success.
“Empowering the client to identify what the rate is going to be on the loan early in the process allows the client to figure out the DSCR payment from the very beginning, so they know whether the deal will
Another pain point Stronghill identified was in ordering appraisals, which Wells described as another “very manual process.” The team built a bespoke storefront experience where brokers can order an appraisal via a click rather than trying to find their own appraiser and working with them directly. In addition, Stronghill learned that ordering a broker price opinion (BPO) for multifamily or mixeduse properties often took additional time after the appraisal, creating delays in the overall transaction
time for borrowers. Now, through Elevate, the appraisal and BPO can be ordered simultaneously.
“So, when one (report) comes back, the other comes back, and we’re making the collateral decision at one time—we’re not waiting for something else a week later when maybe the yes becomes a no. This enhancement has improved the client experience because, previously, the broker would not know what to say until they had the whole collateral picture. We’ve streamlined the process,” Wells said. Another process Stronghill was able
to automate through Elevate was in requesting delivery of a letter of intent, or LOI, that brokers can provide to borrowers.
“Now there is a process where a commercial-facing broker can upload basic information and request just an LOI the broker can then take that LOI and deliver those terms to the customer the same day, getting the deal off the street. Then, we can start working through processing and underwriting,” Wells explained. “This adds much-needed efficiency to what has typically been a very manual process.”
In his ongoing commitment to improvement, Wells said he actively seeks out feedback from his team and clients. He holds virtual roundtables to hear how Elevate is working for customers and visits with clients when he travels. He also emphasizes open dialogue among his team, he said.
“I consistently remind everybody that if I don’t know it’s broken, I can’t fix it. So please don’t keep things a secret,” he said. “Also, if I don’t know what’s working, then I don’t know how to replicate that for somebody else.
So, if one client is having a really good experience and the other one’s not, how do we ensure the other one’s having the proper experience—could it be a lack of training? We need to make sure to take the things we’re doing well and replicate them across all of our partners so everyone has that same positive experience across the board.”
Wells often thinks back to an adage frequently repeated by one of his former bosses: Inch by inch, life is a cinch. Yard by yard, life is hard.
“If you can identify the little things on a consistent basis and make those improvements, then inch by inch, you can make improvements deliver better service,” he said. “If you take two months off and don’t really focus on making improvements, and now you have a yard’s worth of work to do, it’s a lot harder—it’s a much bigger list, and it’s a lot more time-consuming.”
Of course, it’s not always pleasant to receive customer comments, but Wells called the dialogue “mission-critical.”
“Sometimes, you don’t want to hear them tear apart a solution you just deployed that you thought was really slick,” Wells admitted. “But then you kind of redirect that conversation and get actionable feedback that will help improve the overall process. Then everybody wins.”
Strong Foundation in Technology Elevate was built by harnessing current technology and customizing it for Stronghill’s clients, Wells said.
While some private lenders pride themselves on creating a custom platform from scratch, Wells said he and his team decided against this path for two key reasons: the cost to build a completely bespoke platform and the speed to deployment. With the executive team’s depth of experience in the field, he said they had a good idea of what needed to be included. In his own career, Wells said he’s done technology builds both ways—from scratch and off-the-shelf—and has seen pitfalls of completely custom solutions.
“Historically, I found that they spend three times what they expected to spend, and at the end of the day, the solution is marginally better or marginally worse than what they could have deployed two years prior had they started with an existing platform,” he said.
Given his extensive experience, Wells offered advice for other firms considering creating a technology platform:
• Listen to what the customer is asking for. “To spend the money to build a technology stack and delivery that you feel is best-inclass when it’s not what your customers are asking for is a monumental miss, and it’s a cash burn, and it’s going to delay delivery of a true solution out to your customers.”
• Keep the dialogue going with customers. “The idea is that, if we need to enhance something we thought was a best-in-class delivery a month ago, then let’s put it on the docket for further iteration, because we’ve got
three or four customers that are experiencing the same friction.”
• Know your business and know your audience. Don’t get overly bogged down in everything the technology can do if it’s not relevant to your clients, he said. “Here’s my customer base. Here is the way the business operates today. Let me survey those customers to see what we could deploy that would help them scale their business, accelerate delivery, provide more certainty.”
Location, Location, Location
As is true in any aspect of real estate, Wells said Stronghill’s location is a major factor in its success. Its presence in Austin, one of the country’s biggest tech hubs, bolsters its focus on innovation.
“You’re around it all the time,” he said. “You’re hearing about what one company is leveraging over another. You’re hearing about a company’s win with leveraging XYZ versus another company that is trying to figure out how to race to deliver XYZ.”
Hearing from clients throughout Texas reinforces those conversations about technology and how to stay on the cutting edge, he said.
“Because we’re in one of those environments where it’s talked about, discussed, and dialogued about a lot, I feel an expectation to try to do our best to deliver a solution that’s aligned with or exceeds expectations,” Wells said.
Those expectations push Wells and Stronghill to keep innovating.
“It’s not easy to say that you want to be at the forefront of technology delivery because it is incredibly challenging not only to execute, but to execute effectively. But we certainly work at it.”
For real estate investors navigating the competitive world of property acquisition, securing financing is often the key hurdle separating ambition from reality. In this quest, a potent ally emerges: the mortgage broker. While banks remain a traditional option, a growing number of investors leverage the expertise and services of mortgage brokers, unlocking significant value through this strategic partnership. This article delves into the crucial contributions mortgage brokers make to the success of real estate investors, highlighting several key areas where their involvement yields tangible benefits.
Mortgage brokers maintain a pulse on the evolving landscape of real estate finance, encompassing shifting interest rates, emerging loan programs, and changing regulations. They translate this knowledge into actionable insights for investors, enabling them to make informed decisions and identify the most favorable financing options within the current market climate.
Unlike individual banks with limited offerings, mortgage brokers have access to a wider spectrum of lenders and loan programs. This translates into personalized solutions tailored to investors' specific needs, encompassing hard money loans, DSCR rental loans, and portfolio loan options. Brokers understand the nuanced differences between these products and match investors with the program that best aligns with their investment strategy, property type, and financial profile.
Because of their established relationships with multiple lenders, mortgage brokers possess superior negotiating power, securing investors more favorable interest rates, lower closing costs, and flexible loan terms. This advantage becomes especially crucial in tight lending environments, where securing the best possible financing can significantly impact the profitability of an investment. By leveraging their industry knowledge and negotiating skills, brokers help
The journey doesn't stop at closing. Brokers celebrate their clients' successes, sharing in their achievements and offering ongoing support as their portfolio grows.
— Kyle Concannon
investors maximize their returns and minimize borrowing costs.
Unlike traditional mortgage professionals primarily focused on primary residences, brokers specializing in investment properties possess in-depth knowledge of unique financing requirements. They understand the nuances of DSCR (debtservice coverage ratio) calculations, rental income verification, and underwriting guidelines specific to investment properties, ensuring a smoother and more efficient approval process.
time for investors to focus on core activities like property sourcing and due diligence, ultimately accelerating the deal timeline and securing a competitive edge in the market.
Unexpected hurdles are commonplace in real estate. Whether it’s tight deadlines, intricate property structures, or credit bumps, brokers don't shy away. They put on their problem-solving hats, drawing upon their vast network and experience to find creative solutions. Alternative lenders, bridge financing, and tailored credit improvement strategies they exhaust all avenues to ensure their clients' goals are not derailed.
Mortgage applications can be complex and time-consuming, demanding meticulous attention to detail and proactive follow-up. Brokers act as experienced guides, navigating the intricate paperwork, gathering necessary documentation, and enabling swift processing. This expertise frees up valuable Constructive Capital: Continues on pg. 16
In a high-stakes environment like real estate investing, peace of mind is invaluable. Mortgage brokers take on the burden of navigating the intricate mortgage process, allowing investors to focus on other aspects of their deals. Their expertise instills
confidence, knowing that a qualified professional shepherds a smooth and successful transaction.
The world of real estate finance can be complex and jargonintensive. Mortgage brokers serve as educators, simplifying complex concepts and explaining various loan options in clear and concise language. Thus, investors can participate actively in the financing process, make informed choices, and avoid potential pitfalls associated with misunderstanding loan terms or market trends.
Mortgage brokers connect investors with a network of professionals crucial to their success, including appraisers, attorneys, and both real estate and insurance agents. These connections facilitate smoother transactions, reduce transaction costs, and offer access to exclusive properties not readily available on the open market. Investors benefit from the broker's established relationships, building a trusted team to optimize their investment journey.
Keeping one step ahead in the dynamic world of real estate finance is crucial. Brokers act as translators, deciphering complex market trends, shifting interest rates, emerging loan programs, and evolving regulations. They distill this knowledge into
actionable insights, empowering investors to make informed decisions and capitalize on the most favorable opportunities for their financial gain.
Real estate deals can be stressful. Brokers take on the burden of navigating the intricate mortgage process, allowing investors to focus on other priorities. Their expertise and proactive approach instill peace of mind, knowing that a trusted professional is diligently working behind the scenes, ensuring smooth and successful execution. The journey doesn't stop at closing. Brokers celebrate their clients' successes, sharing in their achievements and offering ongoing support as their portfolio grows. They remain accessible, addressing concerns and proactively seeking solutions for emerging challenges, ensuring a long-term partnership grounded in mutual trust and collaboration.
A true champion doesn't stop at the finish line. Mortgage brokers invest in building long-term partnerships with their clients, understanding their evolving needs and goals as their portfolio expands and strategies adapt. They become trusted advisors, sharing valuable market insight, and proactively exploring financing options aligned with investors' long-term vision.
The journey of a real estate investor isn't merely about acquiring properties; it's about navigating a complex financial landscape fraught with challenges and opportunities. More than just loan facilitators, mortgage brokers become fervent advocates for investors, unlocking doors to success through unparalleled expertise, strategic advocacy, and unwavering support. Their knowledge and personalized approach empower investors to navigate the financial landscape with confidence. The potential gains for investors include favorable financing terms, expedited transactions, and peace of mind related to execution risk. A relationship with a mortgage broker is a key strategic advantage for savvy investors seeking to navigate the competitive world of real estate investing.
About the Author:
Kyle Concannon is a graduate of Purdue University and has worked in the private lending industry since 2016. A top producer and Sales Manager, Kyle and his clients have funded $500MM of loan volume since starting at Constructive Capital in December 2020.
Q: Why did you choose Private Lending?
I started my career in 2003 working for a commercial real estate private equity company called Buchanan Street Partners located in Newport Beach, CA. After the housing collapse, I started my own company in Orange County, CA, that purchased SFR assets at trustee sale. That predecessor company expanded with affiliate companies focused on brokerage, title/ escrow, and construction. We brought all aspects of the business in-house and bought and sold 2,500 homes totaling over $1.5 billion nationally.
Given our principal experience, Easy Street Capital and private lending
was a natural evolution beginning in 2015. I chose to evolve the platform to private lending to 1) take advantage of industry fragmentation, 2) scale efficiently, and 3) provide our investors with the best risk adjusted return available.
Q: What is your current role and what do you do day-to-day?
My efforts focus on short/long-term strategy, capital structuring, and overall economic performance of the company across all divisions. Easy Street stays nimble to continually meet the ever-changing demands of the market. Therefore, it’s important for me to outline a high-level
vision while maintaining an “in the trenches” understanding of the dayto-day challenges.
Q: What excites you about your role today?
I’m excited about the potential of the Easy Street team! I referenced this quote at our all-company meeting this past December from the book Good to Great: “If you have the wrong people, it doesn’t matter if you discover the right direction; you still won’t have great company. Great vision without great people is irrelevant.” We have an exceptional team at Easy Street Capital, and we are dedicated to building a debt platform structured for the long term. We are excited to be investing heavily in technology/software to create greater efficiency while continuing to maintain a personal relationship with our borrowers.
Q: Can you explain a time where you faced adversity or had struggles early on in your career? Where did it all begin? How did these experiences mold and shape you into the leader you are today?
I was working in commercial real estate private equity during the financial crisis of 2007-2008 which created significant adversity. Lots of panic, layoffs, and real estate investors losing everything they had built. At that time, exuberance was off the charts and people believed housing values would never go down. I remember attending industry
Stephen
Continued from pg. 19
conferences in 2006 where attendees convinced themselves that the real estate market had experienced a paradigm shift. There is always the temptation to believe that today’s market is different from the past, causing complacency and excessive risk taking. “History doesn’t repeat, but it often rhymes.” As a fiduciary for our Easy Street investors and secondary market partners, it has been important to capitalize our balance sheet conservatively.
Q: Is there anything that you wish you could go back and tell yourself at the beginning of your career?
Trust your gut! When you’re younger, it’s easy to be influenced by other people’s opinions. You tend to defer and believe that somebody else knows better than you do. Trusted advisors are important, but ultimately have confidence in your convictions.
Q: Who is someone that has had a significant effect on your career and why?
Too many to list! I have been fortunate to have several investors provide a significant amount of capital and guidance to Easy Street over the last 15 years. I want to mention my old business partners, John Schafer and Tom Rakow, for exemplifying the importance of consistency and character. Additionally, Carl Neuss, who runs a large home building company in CA and is heavily involved in reforming our nation’s college campuses
(Harvard, Cornell, and others). Carl is a force to be reckoned with and has provided unwavering support and guidance. It cannot be underestimated the importance of having mentors and partners that believe in you. I attempt to pay this forward through investment and support of younger entrepreneurs that I believe in.
Q: What has been your favorite aspect of being in private lending over the years?
Working with my business partners Casey Denton and Scott Townes.
At the end of the day, it is about relationships, and I could not have asked for two better business partners. We’ve been working together for 15+ years and our similar worldview has minimized conflict and made working together highly rewarding!
Q: What would you consider to be the highlight of your career thus far?
Some recency bias, but we held our 2023 year-end meeting and holiday party in Newport Beach, CA, for our 100+ person team. The 3-day event was a culmination of back-to-back years producing over $1 billion+ in volume and a celebration of our team and growing company. We look forward to more highlights to come!
standout contributors. As time goes by you appreciate more and more the company superstars who infuse an organization with relentless enthusiasm and determination. Least favorite well, if you don’t enjoy doing it, delegation is a beautiful thing!
Q: Is time or money more valuable and why?
Time is certainly more valuable the one thing you can’t buy. If you improve an organization incrementally day after day, the progress you can make over time is remarkable. The economics will take care of themselves.
Q: How do you make sure your company stays ahead in this industry?
Industry involvement and connectivity is certainly one aspect. Frankly, that’s probably one area where we historically have fallen short but are attempting to course correct. We have operated more independently within the industry but are working to broaden our relationships and brand visibility. Industry engagement can certainly spark ideas and cultivate that competitive spirit to stay ahead!
Q: What do you enjoy most about your job? Least?
Favorite part recognizing and financially rewarding Easy Street’s
Q: What tools do you use to aid you in your role to be most efficient, organized, and focused? No fancy tools or technology hacks. Over time, I meet in-person with every member of the team regardless of seniority and attempt to get frank and transparent feedback. What do we do well and where can we improve?
“Trust your gut! When you’re younger, it’s easy to be influenced by other people’s opinions. You tend to defer and believe that somebody else knows better than you do. Trusted advisors are important, but ultimately have confidence in your convictions.”
Stephen Hagerman President Easy Street Capital
quired, and if you utilize leverage, assume regular secondary market dislocation.
2. Accountability: Originate all loans assuming it’s your personal capital and will stay on your balance sheet. “I can sell it” or “the appraiser signed off” is not a sufficient or defensible reason to fund a loan. Never adopt an underwriting attitude where you outsource the responsibility.
3. Competitive Advantage(s): What do you offer that is different from the competition? Product, service, speed, etc. Define what you can sell and market accordingly.
Q: How will private lending change to adapt to the current market trends?
I’ve found that, most of the time, people know what the solutions are, but don’t share them because they don’t believe their voice will be heard or that they have the power to affect outcomes. We attempt to eliminate that. This allows the organization to be informed with a “bottom to top” approach, which allows us to react in real-time, create efficient solutions, and focus on what is primarily driving the business. See the trees and the forest.
Q: Has your role changed significantly to address the current environment?
Our conservative approach to the business has allowed us to weather
the interest rate volatility of the past 24 months better than most. We have grown the Easy Street team significantly and see increased opportunity in 2024 growing production, geographies, and products. Regardless of environment, I focus on first principle thinking. For Easy Street, that means leading the organization based upon our fiduciary to investors as the top priority.
Q: What advice would you give to someone who has just started out in private lending?
1. Conservatism: Capitalize your organization conservatively. Raise significantly more equity than re-
We are still in the early stages of regional banks dealing with the reality of their exposure to office and ongoing liquidity concerns. This will continue to impact warehouse line availability but will also provide an opportunity for private lenders to access new regional bank borrowers. Demand for high-yield assets is increasing, and that seems to be reflected in late 2023 and early 2024 securitization pricing. Increased liquidity will continue to put downward pressure on yields, and we expect robust competition. Overall, lots of reason for optimism despite a very complicated global macroeconomic picture.
For more information, please visit: https://www.easystreetcap.com
When you hear the term “encore,” you probably think of a live performance, like a band or a comedian. To a performer, it’s the ultimate compliment. You put on such an amazing show that the crowd wants more and is calling you back to the stage for one more performance. But whoever said that encores are limited to the entertainment world? Why can’t groundbreaking performers in the real estate industry be called back onto the stage to give one more amazing performance?
If you’re Beth O’Brien, Founder and Chief Executive Officer of Encore Finance, you can. Twice.
“This is actually my third startup. After years of being an attorney and banker with a focus on commercial and residential real estate, I began to notice certain gaps between the markets.”
Director roles at finance giants Citi, Goldman Sachs, and Auction.com catapulted O’Brien into her first startup, AuctionFinance.com, an online platform helping buyers obtain financing on assets purchased through Auction.com. From there, she founded CoreVest Finance, a leading nationwide private lender specializing in rental portfolio loans, credit lines, bridge loans, and buildto-rent loans for residential real estate investors.
That diverse experience led her to see things that others might not be able to see.
“My business was a classic tale of seeing a need in the industry just adjacent to other things that were being done well and being able to expand a market. It’s no secret that residential mortgages are a huge business. The commercial mortgage business, while smaller, is also quite strong. But both businesses lack the same thing. They both fail to address the needs of the people who invest in residential real estate in a professional commercial sense. In fact, the regulatory framework fails to address this category well.”
While vision can provide you a path, more is required to turn a great idea into something that works. You need to develop connections and relationships with people that can help you make your company a reality through startup capital and other investments.
You also need a good strategy to make that vision happen. And O’Brien’s strategy is all about that next performance.
“We like to think of Encore as an understanding that we are always playing for the next loan. We are not just transacting but building an ongoing relationship. This is why our tagline is ‘Encore—For your next loan’.”
But it was something more that allowed O’Brien to take each of her next steps.
“As Louis Pasteur said, I am fond of quoting, ‘Chance favors the prepared mind.’ I’m not so sure I chose my career path; I always was open to and responded to the opportunities that I saw by being prepared. With good preparation, the right strategy, and the right capital, a business can thrive.”
What else do you need to do to get your name called back onto that business stage?
“You need to be able to respond, react, adapt, and forge forward.
decisions. The key is to keep making decisions and react quickly enough to course correct when you do hit a challenge. The most difficult part is telling when a speed bump is a mistake and needs to be fixed.”
Unfortunately, in the business world, mistakes can happen, even to someone as experienced and successful as O’Brien.
“You always think you will not make the same mistakes, and by and large you don’t, but you make different mistakes because the market is different and the circumstances are different.”
Mistakes are a common part of being an entrepreneur. Some mistakes are fixable. Some mistakes are not. Some mistakes will force your company to close early while others might be the secret to your success. But it’s not the mistakes that make the difference between success and failure—it’s how you respond to them.
“The greatest skill of an entrepreneur, in my opinion, is the ability to course correct in a timely fashion.”
So far, that ability to navigate her ship through the bumpy world of residential real estate mortgages has resulted in a successful business. Even with competing companies sharing the line-up with her, there is nothing but support in the community.
clients to vendors, bondholders, and competitors. The support for everyone else in the industry is incredibly reaffirming.”
Encore Finance, O’Brien’s current venture, strives to be more than the industry’s typical non-conventional lender they create lasting relationships through dependable financing solutions tailored to each individual investor. Many of their clients have been in a relationship with O’Brien for several years or more.
So, where does she go from here? O’Brien has already been an accomplished attorney, a successful banker, a real estate executive, and an innovative entrepreneur. What else is there for her tackle?
“I am a big cook and grow an amazing vegetable garden that forms the basis of my experimentation. I would like to write a cookbook since one of the most enjoyable things I ever did at work was help compile a cookbook of what everyone was doing during the quarantine.”
If we’re lucky, we’ll all be shouting for O’Brien to return to the stage one last time. If we’re really lucky, she’ll be carrying her next (hopefully tasty) innovation with her.
Since this is my third startup, I’ve had the chance to learn a lot of lessons along the way. Though they’ve been different, they’ve all presented me with challenges that have required me to make quick For
“That has been the biggest surprise so far on this journey. The amazing relationships developed in this industry as we grow together from
Offering a simpler, more reliable, and faster way for real estate investors to access financing for investment proper ties.
• Fix and Flip / Bridge Loans
• New Construction / Infill Loans
• DSCR Single Asset Rental Loans
• Rental Por tfolio Loans
• Cash-Out Refinance Loans
Scan
By Stephen Beale, Contributing Writer for Originate Report
Some startups are founded to solve one big problem. Backflip, however, solves two of them the lack of both technology and access to capital in the fix-andflip real estate investor market. Founded in late 2020—when the COVID-19 pandemic was turning the real estate industry upside down— Backflip aims to equip entrepreneurs with the tools they need to renovate homes by creating an “end-to-end residential investment operating system.” Co-founder and COO Jake Rome describes the app as “Shopify for real estate entrepreneurs.”
Rome recently sat down with Originate Report to discuss how his
following year to over $135 million in 2023, with the current year growth “forecasted to be substantially higher.” And, in 2023, Backflip members analyzed approximately $35 billion worth of investment properties using its app, a 775% increase over the $4 billion analyzed in 2022.
Backflip’s membership numbers have seen similar growth; as of early 2024, 15,000 real estate investors had created an account on the app. The company is expecting to double its staff size this year in response to the rising demand.
“After hundreds of early customer conversations, we honed in on the fact that lack of purpose-built technology and difficulty accessing sophisticated capital are common pain points shared by real estate entrepreneurs,” Rome said. “We began originating fix-andflip loans using a small debt fund to generate revenue, which allowed us to raise sufficient venture capital to invest heavily in our technology products.”
Backflip’s technological product—its platform for analysis, tracking, and real estate data—are available for free to entrepreneurs who download the app and create an account.
Currently, Backflip only monetizes its loan products. In July 2021, the company started testing fix-andflip loans for investors and has since unveiled an array of different capital products, each crafted to “solve specific pain points,” Rome said. Backflip’s loans have had a significant impact on the market, growing rapidly in volume from approximately $4 million in 2021 to nine times that amount the company has leveraged technology to make becoming a residential real estate entrepreneur more approachable to everyone.
“Backflip aspires to be the most trusted technology and capital partner in the ecosystem. Our technology products are highly valued by our members, who are primarily digital natives used to managing their entire lives on their phones. In fact, they expect it,” Rome said.
With the Backflip app, real estate entrepreneurs can quickly calculate the value-add investment potential of a home by inputting an address or simply pointing their phone’s camera at a house. The app instantly generates “as-is” and “after-repair” values, key metrics in the loan underwriting model. Once a member has found a property that meets their criteria for a flip, they can submit a loan application from the app.
Backflip: Continues on pg.
Backflip: Continued from pg. 27
“Our belief is that the entire financial process of managing an investment should be able to be done from the palm of your hand— in the field,” Rome said. “Simply put, our business model is to bring all the tools—financial, analytical, informational, community, and more —for residential real estate entrepreneurs into one platform, unlocking significant value for them at every turn.”
For Backflip, access to technology and capital products goes hand in hand with a commitment to transparency. Being open and transparent not only builds trust and loyalty among its thousands of members; it also creates a culture focused on continuous improvement: “Backflip’s culture is one of hyper-transparency; we routinely publish data to share how we are doing. We publish these reports to hold ourselves accountable. It’s hard to improve what you can’t measure, so it’s important for us to quantify the impact of our efforts,” Rome said.
Rome launched Backflip with cofounder and CEO Josh Ernst, and both bring an extensive background of real estate, investing, and innovation. Rome, who has over $2 billion in transaction experience across multiple types of institutional real estate classes, previously worked as the SVP of Corporate Development and Founding Partner of Daydream
Apartments, an integrated flexible living platform (which was acquired by ICONIQ Capital in 2020 and rebranded as Sentral).
Prior to Backflip, Ernst was the COO at DeShong Companies (dba “Trelly”) and Myers the Home Buyers, managing all internal operations, including product development, sales, marketing, and accounting, and leading the company during a period in which it completed over 1,500 investment and sales transactions annually.
Other key C Suite leaders include Leslie Jordan, the Chief Product Officer, who previously held that position at Realtor.com prior to joining Backflip in April 2023; Richard Porteous, VP of Capital Markets, who started in August 2022 after holding positions for traditional financial institutions like UBS, Bank of America Merrill Lynch and Citi; and, most recently, Pierce Spitler, another alum from Realtor.com who now serves as Backflip’s Head of Data Science and Analytics, effective this past January.
“Our employees are attracted to Backflip’s mission and culture. We attract individuals who are inspired to reimagine and rebuild an outdated and unbalanced system, and to support and celebrate America’s local entrepreneurs. Backflip is a 100%-remote organization with a unique operating heartbeat that is unlike anything the private credit markets have ever seen,” Rome said.
Backflip’s entry and expansion into the fix and flip real estate market comes at a time when housing affordability is at a historic low. According to a recent Redfin report, the typical American household could afford to buy 15.5 percent of the homes on the market in 2023, a drop of 40 percent from pre-pandemic figures. The problem of affordability is exacerbated by the “dramatic undersupply of housing,” according to Rome. Besides these market factors, most homes are too old to meet the needs of the modern homebuyer. “Essentially, we don’t have enough homes—and too many of the ones we do have are unaffordable and largely obsolete,” Rome said.
By empowering their members to make informed investment decisions and expanding access to capital, Rome says Backflip is having a positive impact on “one of society’s most important challenges.”
Backflip is also changing the makeup of who invests in real estate.
Over half of Backflip’s loans go to people of color, 27% go to women, and the average borrower is 39— eight years below what is typical for the industry. Backflip’s membership base is also economically and geographically diverse: 64% of its loans went to ZIP codes where the median income was below the average in the state, and the company is now taking on a more active role in rural communities that have been underserved by more traditional real estate lenders.
“We love connecting with the individuals behind the loans and their unique stories. Our borrowers
are more than just a directional indicator of default probability in a rating agency’s forecast model.
Our members are heroes. They are doing the important work of rejuvenating the American housing stock, which is in desperate need of modernization at affordable price points,” Rome said.
For more information, please visit: https://dobackflip.com/
Q: How many years have you been in Private Lending and why did you enter this field?
I have been in private lending for almost 10 years. I entered the field in 2015 after receiving an opportunity from an old colleague to join the residential investment space, which is something I’ve always had my eye on. Growing up, I saw my grandfather, a first generation American, investing in rental properties and it’s always been inspiring to me. Since joining the industry, I’ve become a real estate investor myself, which gives me a unique and personal understanding of the needs and challenges facing Kiavi’s customers.
Q: Where did you get your start?
My background is in hospitality.
I went to the Hotel School at Cornell
University and spent the first half of my career focused on the hotel asset class and equity side of real estate finance. During the financial crisis, I was at a small advisory shop helping community and regional banks work through their troubled real estate portfolios. That’s how I was first exposed to consumer lending.
The industry as it is today, with access to institutional capital for residential investors, did not really exist before the 2008 financial crisis. It grew out of the private equity and hedge fund space, buying foreclosures initially intended to become rentals. As large buyers like Blackstone and Colony Capital started lending arms, a colleague reached out to see if I was interested in running a
bridge lending business. He felt that I had the right combination of operational mindset and the ability to interact with customers on a meaningful level to lead the burgeoning business.
At that time, there were only a couple of us lending for fix-and-flip properties and rental portfolios. While these assets had been around for a while, bridge and fix-and-flip lending at an institutional level didn’t exist, so it was an exciting opportunity to be part of the birth of our industry.
Q: What is your current role and how does that affect your company at large?
As the Chief Revenue Officer at Kiavi, I am responsible for all revenuedriving functions, including all sales, marketing, and partnership teams, as well as overseeing our data science function to anticipate the needs of our customers and identify creative ways to solve their challenges. Since I joined in early 2020, Kiavi has seen significant revenue and market share growth. In fact, we funded a record $4 billion in fix-and-flip volume to more than 5,600 customers last year alone!
Q: How have you seen your company grow in spite of—or because of— current market conditions?
Despite the challenging market and flipped home transactions being down about 30% year-over-year, 2023 was a banner year for Kiavi.
Stephanie Casper: Continues on pg. 32
We did $4 billion in fix-and-flip loan volume, a 7% year-over-year volume increase, and closed more than 13,000 loans to 5,800 real estate investors. A lot of new borrowers turned to Kiavi last year because the challenging market conditions limited funding capacity from other lenders, which was not an issue for us because of our reliable stable of institutional capital via our securitizations. While other lenders’ volumes were impacted by a fix-and-flip market that was down by roughly 30% last year, Kiavi captured market share via new customer acquisition and by enabling our existing customers to scale their businesses.
There have been a few key factors in our success. First and foremost, Kiavi’s unique technology platform provides real estate investors with a clear, seamless, easy, and near-instant financing experience. Based on the customer’s input on a property, they can get immediate feedback on what they would likely get from a leverage and pricing perspective. Very few, if any, lenders in our space have that functionality. In fact, most other lenders are still living in Excel spreadsheets!
Another way we’ve seen success in this market is by building credibility as a reliable, consistent partner to real estate investors via our capital strategy and structure. We sell bonds to the bond investor markets that are collateralized and secured by
our bridge and fix-and-flip loans via securitizations. At the beginning of the COVID-19 pandemic, these securitizations enabled us to continue lending despite many other lenders not having capital to lend. Since we had reliable, available capital while most other lenders didn’t, we earned a lot of loyal customers most of whom are still with us today.
Q: What are some of your goals for 2024 and beyond?
As a company, Kiavi’s goal for 2024 is to continue growing. And as Chief Revenue Officer, I’m laser-focused on increasing our market share, launching new products, and leveraging our data and technology platform as a competitive advantage. Over the past 10 years, we’ve used our machinelearning models to support our operations processes but we also see an opportunity to make these models more visible to our customers. For example, our after-repair valuation model statistically does a better job at predicting an exit price than a thirdparty valuation. So, if we explain what the model is assessing and why that matters to our customers, we can create an unmatched customer experience paired with our alreadyleading processes and execution.
We also have a customer risk model that considers factors beyond credit score. While other lenders rely solely on FICO scores to assess a borrower’s risk level, we’ve built a model that’s wildly more accurate than FICO scores alone. And this model allows
us to offer higher leverage and better terms to more borrowers. A goal of mine in 2024 is to push the limits of these models so we can offer customers the best terms possible while maintaining our risk profile.
Q: What does success look like for you?
My definition of success has evolved over time. Early in my career it was about titles, moving up the ladder, and making more money. But, now that I am established in my career, I see success a little differently. I more clearly see the value of relationships, downtime where you can truly unwind, and the ability to give back in some way. The more senior I have become in my career, the more satisfaction I get from seeing my teams develop and grow. Helping my team become more confident and successful is now how I define success for me.
Q: What is something most people don’t know about you or your company?
Part of the reason we have such a strong understanding of our customers and their needs is that many Kiavi employees are investors themselves. My husband and I have six rental properties with a total of eight units, so we’re investors just like the customers we serve. This enables me to better understand what Kiavi customers are going through and to help tailor the investing experience to their needs.
Despite what you might see in the news, rental property investing is
much more dominated by momand-pop landlords than by giant management companies. About 80% of rental properties are owned by people who own fewer than 10 properties. This space is very much focused on small investors who typically view real estate investing as a retirement plan. They buy a property, rent it out, and use those proceeds to pay the mortgage and property taxes. Once it’s paid off, they have a straight cash-flowing property. It’s just a different way of saving and generating income than putting your money in a savings account or 401K. The fact that so many members of the Kiavi team are putting this retirement strategy into action helps us shape our products and meet the unique needs of our customers.
Q: What steps are you or your company taking today to make an impact on the industry?
Are you familiar with the quote from Ratatouille, “Anybody can cook?” At Kiavi, we believe “Anybody can invest.” We make residential real estate investing accessible by focusing on each property’s unique traits to help point investors in the right direction: what a project should look like, what they should be spending money on, and what they need to be successful. I don’t see other lenders doing that. We love empowering first-time investors and want to set them up for success. Lending for this product type is not well-known, so we’re helping people live the American Dream
Over 65% of the U.S. housing stock is more than 30 years old— with a median age of 39 years old—and is worth an estimated $25 trillion.
— Stephanie Casper
by providing the capital they need to invest in real estate.
Over 65% of the U.S. housing stock is more than 30 years old with a median age of 39 years old and is worth an estimated $25 trillion. The average homebuyer doesn’t have the skillset or the capital to update a property of that age to today’s standards. So, we have a huge housing shortage in this country that can’t be solved by traditional homebuyers. Flippers, on the other hand, have the resources, skills, capital, and patience to upgrade older homes,
reposition them to today’s standards, and sell them at a first-time homebuyer’s price point. They are transforming this enormous segment of the housing stock to provide modern, move-in ready housing for millions of Americans.
Q: What piece of advice did you personally receive early in your career that has helped shape decisions you’ve made?
When I was 22, my boss gave me the best piece of advice that I’ve
Stephanie Casper: Continues on
Stephanie Casper: Continued from pg. 33
continued to reiterate as I’ve moved up in my career: “Of course we’re going to make mistakes. We all mess up. Just don’t hide it from me. Come to me first and I will always support you and work to find a solution but if I hear about it from someone else, I won’t.” As a young person fresh out of school, that advice gave me the space to not be so afraid of failing and to take some calculated risks. It also showed me how important transparency and managerial support is to someone’s ability to grow. This sentiment is something I took to heart and always try to instill in my teams. It’s okay to try and fail, just be honest with your team when doing so.
Q: Tell us about a person or organization you admire. How have they made an important impact on you, the industry, or the world?
Brene Brown is who first comes to mind. She is recognized as having a dramatic impact on the national conversation around connection, empathy, and vulnerability. Her research and relatable, personal approach to the subject matter are so applicable not only in our personal lives but also to how we lead as leaders for our communities, teams, and companies. What I have learned from her books, TED talks, and podcasts is that demonstrating vulnerability, as scary as that can feel, is the key to connecting with others and feeling as though you belong.
As a leader, being willing to show your humanity is how we give our people the space and confidence to develop and grow in their roles. Her message resonated with me the moment I watched her TED talk in 2010 on the Power of Vulnerability. If you haven’t seen it, stop what you are doing and watch it right now!
Q: Are you involved in any associations, networking groups, or the like that have influenced your career path?
My college alumni association has had a big impact on my career. The Cornell Hotel Society is jokingly referred to as “the hotel mafia” because it’s a tight knit, supportive group with an instant connection. All of my roles prior to Kiavi came through word-of-mouth relationships built in that alumni association because of someone I worked with or went to school with. In any industry, but especially real estate, relationships make or break your career trajectory.
Q: If you had a clean slate to start over and do anything you wanted to do, what would that be? I would be a teacher. Both of my parents were high school teachers and so were all their friends. In my romanticized view of teaching, I feel it must be so rewarding to have such an impact on young people. Sometimes it’s hard in the business world to fully get your arms around the impact you’re making. Teaching seems to be a tangible way
to do that. I didn’t become one because I have a very expensive shoe habit and I was adamant about not pursuing a traditional female-led career path; I wanted to prove that I could be successful in a man’s world and defy gender norms.
Q: What is the best advice you could give someone thinking about making a leap into Private Lending? For me, this industry is less about being a private lender and more about enabling real estate investors. It’s rewarding because it makes investing tangible and accessible. There didn’t used to be this broadly available financing to the investors in our space, but today almost anyone can scrape up the money to buy a small investment property. It’s exciting to see.
My advice for young people especially young women who want to be in this space is to know your stuff and go for what you want. There’s immense value in diversity, but you need to make sure you show up every day. Acknowledge that you will naturally stand out in an industry dominated by men, but if you know your stuff and show up each and every day, you can shine in the spotlight.
For more information, please visit: https://www.kiavi.com
www.aaplonline.com
Formed in 2009, the American Association of Private Lenders (AAPL) is the oldest national organization representing the private real estate and peer-to-peer lending industry. Our membership includes private money lenders, mortgage fund managers, brokers, and service providers from around the United States.
www.acralending.com
With more than 40 years of mortgage industry experience, Acra Lending is the leader in Non-QM Wholesale and Correspondent lending programs. Acra Lending offers a range of programs and services geared toward helping mortgage professionals and borrowers achieve their purchase and investment goals.
www.anchorloans.com
Anchor Loans is the nation’s leading private, direct lender to experienced residential real estate investors and builders, and the first to surpass $10 billion in total fundings. For two decades, we have built deep client relationships by offering fast decisions, superior customer service and risk-based pricing that rewards repeat customers. More than 85% of our volume comes from repeat customers, and more than 75% of new business comes from referrals.
www.constructiveloans.com
Constructive Capital is the leading provider of wholesale lending solutions in the business purpose loan industry. Their focus on Single Asset Rental Loans (DSCR Rental) allows them to deliver best-in-class product terms, loan pricing, and the fastest turn-times in the industry, setting them apart from competitors and helping investors move at a faster and more consistent rate. With decades of experience across industries, the Constructive leadership team is committed to charting the future of private lending.
www.kiavi.com
With more than $12.3B in funded loans, Kiavi is one of the nation’s largest private lenders to residential real estate investors (REIs). Kiavi harnesses the power of data & technology to offer REIs a simpler, more reliable, and faster way to access the capital they need to scale their businesses. Formerly known as LendingHome, Kiavi is committed to helping its customers revitalize the approximately $25 trillion worth of aged U.S. housing stock to provide move-in ready homes and rental housing for millions of Americans across the country.
www.roccapital.com
Roc Capital is a leading capital provider for private lenders in the residential real estate investment space, funding over $10 billion in investor loans thanks in large part to its superior table funding and white labeling capabilities. Roc Capital offers the widest range of investor loans in the industry, including comprehensive bridge loan programs for fix-and-flip, ground up construction, multifamily bridge, and rent-ready stabilized bridge loans; as well as a full suite of rental loan products including single property rental loans, rental property portfolio loans, and multifamily loans.
Years before the buzz about AI reached a fever pitch, Reigo Investments harnessed it to transform the real estate underwriting market.
Prior to its founding in 2018, the process for real estate underwriting had not been updated for years and involved little more than consideration of “a limited number of parameters managed in old Excel spreadsheets,” according to Yariv Omer, the CEO of the Israel/U.S.based fintech company.
That all changed with Reigo, which hones its machine learning algorithms with data culled from “hundreds of sources” and then “scores, rates, and
selects the best loans.” Today, the AIpowered platform has revolutionized the underwriting experience by cutting down non-performing loans, shrinking the timeframe for underwriting from days to a matter of hours, and enabling investment managers to diversify their portfolios.
“The lending community has realized these archaic systems are not capable of getting them to reach their full potential. With our AI-powered platform, we are focused on helping investors avoid discrepancies in the underwriting documents, filter out potential non-performing loans, make faster investment decisions, and create ultra-diverse portfolios across the U.S. to set themselves
apart among their borrowers,” Omer said in a recent press statement.
The idea for Reigo came to light after Itay Goren, Omer’s partner and veteran private lender, had a loan that defaulted, resulting in the loss of some of the principal. Omer and his partner wanted to avoid something like that from happening again was there a better way to do real estate loan underwriting?
“When looking back and trying to learn some lessons from this non-performing loan case, he wasn’t sure if that loan’s specific issues would be relevant for all his future loans. He wasn’t sure
how or even if he should change his underwriting model and to what extent. Also, how could he test that his new assumptions really work on significant amounts of loans involving different borrowers in different markets with different projects?” Omer said, during a recent interview with Originate Report . “Together, we wondered if we could utilize technology and data science to build an underwriting platform that could help in reducing defaults, losses, and fraud significantly, as well as help balance-sheet lenders and institutional loan buyers add another underwriting layer on top of their current approach.”
The two eventually came up with what Omer describes as an “ironman suite” that allows underwriters to “accelerate their abilities to predict loan performance.”
In the short-term debt market in the United States, investors continue to use “archaic excel models without data science,” Omer says, positioning Reigo as an alternative for institutional investors as a platform for loan aggregation, underwriting, and asset management. The platform he and his business partner developed
delivers on the vision they outlined reducing default, losses, and fraud; increasing performance and speed; and incorporating regular updates to the underwriting model. Omer says one highly experienced quantitative strategist from a large fund concluded that after reviewing what Reigo had to offer he was “convinced Reigo [is] able to achieve Alpha in this market.”
Reigo’s originator partners can close a range of loans with flexible eligibility criteria across all 50 states. Originators also can choose from among several loan strategies, such as bridge, fix-and-flip, and ground-up construction loans, and the type of property, which includes not only single family and multifamily housing, but also mixed-use and land loans.
Reigo taps into a network of 35 partners that ensure a consistent stream of off-market loan purchasing opportunities in the short-term residential bridge loans market. The company then aggregates these loans to different capital structures, such as funds and securitizations, which gives investors a better riskreward ratio.
Yariv Omer Co-Founder & CEO Reigo InvestmentsIn March 2022, Reigo announced a second $100 million securitization led by Cantor Fitzgerald. The company now boasts over $320 million in assets under management, structured in securitizations and funds. The company’s initial securitization was issued within three years of its founding, making it one of the fastest growing among its peers, according to Omer. “Reigo’s strong reputation in the capital markets allows for building new structures and fueling the business,” Omer said.
In addition, Reigo has won accolades for its technology. In 2023, it won the Fintech Technology for Investment Competition by the Fintech. IL Innovation Community, a joint venture by the Bank of Israel and several Israeli government agencies. In 2022, it won Best Real Estate Underwriting Technology by Wealth & Finance International. And the list goes on.
One of the key advantages of Reigo’s AI platform is its ability to absorb large amounts of new data as conditions change both in the tumultuous real estate market and the economy at large. “Reigo’s data science team is working tirelessly to keep our algorithm updated with hundreds of data sources per loan. Our unique technology is driven by dynamic data which compares each loan to thousands of similar historical loans. This technology,
combined with our credit team’s decades of real estate expertise, gives us the ability to build new investment models monthly and provide an unparalleled underwriting platform,” Omer said.
At the same time, Reigo’s platform serves as a consistent reliable source of data science for investors. “Our originator partners enjoy a fast and reliable platform that helps fund and purchase their loans in a programmatic way,” Omer said.
“The combination of flexibility with data science consistency gives a crucial advantage during periods of rapid and significant change, much like the industry is currently experiencing,” Omer added.
For more information, please visit: https://reigo-inv.com/
Lightning Docs offers a fully automated, cloud-based loan document solution. Its brief, interview-style questionnaire allows each set of documents to be tailored to your exact terms redraw fees or contract period.
Documents available in all 50 states
Easily customizable to fit your needs
Easy to access and copy old files
No redraw fees or contract period
Capital markets approved
Securitization friendly
Many LOS platform integrations
Create any business purpose loan (Bridge, DSCR, fix-and-flip, and many other product types)
ARM, interest only, partial amortization, and all other amortization types
In the complex world of construction financing, lenders play a crucial role in influencing the success of projects by building meaningful relationships with builders and subcontractors. Beyond just dealing with finances, success in this realm relies on the quality of connections formed among all involved parties. Recognizing the vital nature of these relationships, savvy lenders actively seek ways to strengthen and improve their bonds with borrowers and subcontractors.
From the lender's standpoint, a successful construction project goes
beyond just a financial transaction; it involves a delicate balance of relationships. The connection with builders requires finding the sweet spot where lenders aim for a fruitful return on their investment while managing the associated risks. Builders who actively address these concerns not only make the lender's role more straightforward but also establish themselves as dependable and trustworthy collaborators.
Similarly, the relationship with subcontractors proves pivotal in the construction process. To a builder, the relationships with their subcontractors are their most important. Timely and efficient work from subcontractors is critical
for achieving project milestones. Builders, recognizing the importance of ensuring subcontractors are promptly compensated for their contributions, foster an atmosphere of trust and reliability—essential for the overall success of the project. In short, paying subcontractors faster keeps them happy and keeps projects moving.
One often-overlooked tool that holds significant sway over these relationships is the strategic use of lien waivers. Undoubtedly, risk mitigation is a top concern for lenders, and lien waivers emerge as a potent tool in this context. Builders
incorporating lien waivers into their processes not only simplify their relationship with lenders but actively contribute to minimizing potential risks. By securing lien waivers from subcontractors and suppliers, builders provide lenders with assurance that their investment remains protected from potential legal disputes, thereby safeguarding the project's financial integrity.
While paperwork challenges have historically been a hurdle for lenders and builders, modern technological solutions like those offered by platforms such as Sekady bring an innovative approach to simplify this crucial aspect of loan management.
From a lender's perspective, innovative lien waiver solutions streamline this process. A proficient platform integrates into the construction workflow, presenting an efficient and transparent process for obtaining and managing lien waivers along with other critical pieces of loan management. Lenders can appreciate the simplicity and reliability that technology brings to the table, fostering a smoother and more efficient process.
Beyond risk mitigation, lien waivers play a pivotal role in propelling the project forward. They serve as a catalyst for progress, ensuring funds are deployed judiciously. Lenders
gain confidence when they see the systematic use of lien waivers. From subcontractors' view, the assurance of timely payments through the lien waiver process proves instrumental. Subcontractors look for predictability and reliability of payments, contributing to fewer project delays, streamlined timelines, and enhanced overall efficiency.
Lenders seek assurance that their funds will be used wisely without hidden risks. Lien waivers, with their transparency and risk mitigation features, provide lenders with the necessary reassurance for sound financial decision-making.
Maintaining a robust reputation remains paramount for lenders seeking enduring partnerships with builders. Lenders should also seek builders who consistently leverage lien waivers and manage financial aspects with transparency. This trust cultivates long-term relationships, easing the path to support future projects.
In the rapidly changing loan software landscape, Sekady emerges as a crucial ally for lenders. The platform proves instrumental in managing loans effectively by bringing together the critical components of a successful loan management process. Lenders can manage draws and securely disburse
funds while managing lien waivers, inspections, and much more. Swift and reliable payments to subcontractors keep timelines in check and relationships healthy.
In the realm of construction financing, where success hinges on robust relationships, the strategic deployment of platforms like Sekady is crucial for lenders. Builders who actively prioritize efficiency, transparency, and relationshipbuilding position themselves as reliable partners in the eyes of lenders. This approach not only fosters long-term financial relationships but also sets the stage for enduring success in the construction industry.
As we navigate the intricate pathways of construction lending, the relationships among stakeholders, coupled with the strategic use of modern tools, will continue to shape the success and sustainability of construction ventures in the years to come.
If you would like to be featured in any of our upcoming editions, reach out to us at:
Eric Abramovich
Co-Founder, Roc Capital www.roccapital.com
Eric Abramovich is a Co-Founder of Roc Capital, a vertically integrated platform for residential real estate investors. Eric has pioneered the firm’s industry-leading Private Lender Program. Previously, he was a director at Deutsche Bank, where he managed a quantitative equity long/short strategy trading Japanese equities. Additionally, he co-founded an investment vehicle targeting distressed residential real estate assets in the wake of the 2008-09 financial crisis. Eric holds a B.A. in Finance and Actuarial Science from the Stern School of Business at New York University.
Nema Daghbandan, Esq.
Partner, Geraci LLP | CEO, Lightning Docs
www.geracilawfirm.com | www.lightningdocs.com
Nema Daghbandan is a Partner with Geraci LLP, and the CEO of Lightning Docs™. His expertise revolves around the preparation of business purpose mortgage loan documents and providing compliance advice nationally. Lightning Docs™ are the official loan documents of the American Association of Private Lenders.
Jerry Feinstein
Principal, Spreo Capital www.spreocapitalpartners.com
Jerry Feinstein is the Principal and Co-Founder of Spreo Capital, a non-bank real estate lender focused on bridge, renovation, and construction loan solutions. He was previously the Senior Vice President of Multifamily and CRE Lending at Arixa Capital. Prior experience includes senior level roles with Fannie Mae, Freddie Mac, Bank of New York and Silver Hill Financial; while residing in New York City, Washington, D.C. and Fort Lauderdale. Additionally, Jerry has provided consulting services and is a regular speaker at industry conferences. He brings 40+ years of experience within real estate and lending. Jerry earned a Bachelor of Arts in Psychology from the University of California-Berkeley, is a Certified Mortgage Banker, and is licensed as a California real estate broker.
Ben Fertig
President, Constructive Capital www.constructiveloans.com
Ben Fertig is the Founder and President of Constructive Capital, the leading national capital provider for DSCR Rental Loans and Residential Transitional Loans (RTL or Fix and Flip Loans). Prior to Constructive, Ben led Credit and Asset Management at Finance of America Commercial; before that, he served as Chief Operator Officer of Jordan Capital Finance, where he managed originations, credit policy, and capital markets. Ben was instrumental in the sale of the Jordan Capital Finance platform to Blackstone and Finance of America in 2017. Ben began his Mortgage Banking career over 25 years ago and has served in a Senior Leadership role in the Residential Investor Loan Market since 2012.
Mark Fikse
Founder & CEO, SkyBeam Capital www.skybeamcapital.com
After failing retirement in 2019, Mark Fikse founded SkyBeam Capital, Georgia’s leading local lender with $85+ million of assets under management. The forward-thinking team at SkyBeam has leveraged available connections, learnings, and technology across the private lending industry to grow and operate as a regional lender. Prior to founding SkyBeam Capital, Mark spent over 25 years in real estate, building and construction, including roles as President/CEO of two different $800+ million building services companies. Mark and his wife of 34 years enjoy traveling, boating, volunteering and spending time with their 27-year old triplets and their daughter-in-law.
James Gaskin
SVP Corporate Development, Renovo Financial www.renovofinancial.com
James Gaskin heads up Corporate and Business Development initiatives for Renovo Financial. His role entails leading the expansion of Renovo’s retail lending business into major US markets, managing nationwide business development and strategic partnerships, and helping develop and maintain a world-class culture across the sales and sales support functions of the business, all with the ultimate aim of building Renovo into the #1 private lender to professional real estate investors in the US.
Anthony Geraci, Esq.
Partner & CEO, Geraci LLP www.geracilawfirm.com
Anthony Geraci, Esq., is the CEO and a partner at Geraci, in charge of firm strategy and development of Geraci’s team and culture. He is an avid public speaker and strives to provide peace of mind to his employees as well as to all Geraci clients nationwide. On the legal side, Anthony is skilled in mortgage lending and securities law and has authored numerous articles on real estate finance and security subjects. He is a leader in creating national mortgage pools and mortgage funds as well as sophisticated net branching arrangements among several mortgage companies. On the professional development side, Anthony serves as a mentor to the various legal and administrative departments, spearheading problem-solving and growing his employees.
Tony Ingoglia
Chief Financial & Strategy Officer, Socotra Capital
www.socotracapital.com
Tony Ingoglia is the Chief Financial and Strategy Officer at Socotra Capital. Tony oversees financial reporting, investor relations, and underwriting in addition to evaluating strategic investment opportunities. With a decade-long background in corporate finance, including roles at Intel Corporation and Tony’s Fine Foods, he also contributed to the Financial Crisis Inquiry Commission in 2010.
Kevin Kim, Esq. Partner, Geraci LLP
www.geracilawfirm.com
Kevin Kim leads Geraci LLP’s corporate & securities practice. His expertise lies in fund formation, private placements, and other securities offerings for private lenders, real estate developers and investors of all sizes. Kevin and his team have advised and prepared hundreds of securities offerings including mortgage funds, structured debt offerings, real estate syndications, crowdfunding offerings, EB-5 projects, and Qualified Opportunity Funds. Kevin's passion lies in serving his clients as a pragmatic advisor focusing on real world solutions. Kevin is also a nationally recognized expert in mortgage fund formation. Kevin is the lead instructor for the American Association of Private Lender’s Certified Fund Manager courses, where he teaches mortgage fund managers throughout the United States on fund management and securities laws. Kevin also hosts the podcast Lender Lounge with Kevin Kim, where he interviews industry leaders, friends, and colleagues in the private lending space to learn what makes them tick.
Jeffrey LaMotte
VP & Partner, Val-Chris Investments
www.val-chris.com
Jeff LaMotte, a Southern California native, began his experience in the financial services industry while attending school at The University of California, Irvine. After graduation, he worked as an account executive at Val-Chris Investments. After a few short years with the firm, Jeff became one of the top producers and personally helped Val-Chris reach #1 on Scotsman Guides’ top private lender list in California. Throughout Jeff’s tenure at Val-Chris Investments, he has placed over a billion dollars in loans with private investors. With over 15 years of experience in loan origination and funding, Jeff quickly learned the skills and requirements necessary to originate, underwrite, and place private loans in the most effective and respectable ways possible. Jeff was honored as one of 2020’s 40 Under 40 Business Leaders with the Greater Irvine Chamber.
Keith Lind CEO, Acra Lending www.acralending.com
Keith Lind is the CEO of Acra Lending with 19 Years of Mortgage-Backed Securities and Asset-Backed Securities trading and structuring experience. He was a Managing Director at HPS Investment Partners before joining Acra Lending. Keith was a Trader at Brevan Howard, and prior to that, a Managing Director and Head of the US Non-Agency Mortgage-Backed Securities Trading Desk at RBS. He also was a Managing Director at Bear Stearns, where he traded the Non-Agency Mortgage-Backed Credit book. Keith holds a BA in Finance from Purdue University.
Michael Marshall
CFO, Center Street Lending www.centerstreetlending.com
Michael Marshall is the Chief Financial Officer of Center Street Lending. He is responsible for overseeing finance, accounting, and secondary markets at Center Street Lending and helps facilitate the ease and prompt distribution of funds so that their projects and businesses can continue smoothly and uninterrupted. Michael brings 20 years of experience in the mortgage, lending, and financial services sectors. Prior to Center Street Lending, he was the Chief Financial Officer at FPH Capital Partners, one of Southern California’s fastest growing private equity firms, and was the Chief Financial & Administrative Officer at First Team Real Estate, a leading luxury brokerage firm. He earned his MBA from USC and is a CPA and licensed real estate broker. Michael serves as a board member and treasurer for United Cerebral Palsy of Orange County which provides therapy and a variety of services for children with disabilities and developmental delays. He also coaches little league baseball teams both for his son and daughter and loves to watch college football.
Melissa Martorella, Esq.
Partner & Department Head, Geraci LLP www.geracilawfirm.com
Melissa Martorella is a Partner and Department Head of Geraci LLP’s Banking and Finance practice group. Melissa manages a large team of attorneys and loan processors in the preparation of loan documents and related transactional documents. Her practice primarily revolves around the representation of nationwide mortgage professionals and providing for their transactional documentation needs. She also provides the compliance advice necessary to navigate mortgage lending transactions in all fifty states. Melissa also leads the firm’s non-judicial foreclosure practice and advises clients on all default related matters. Melissa has been recognized by her peers in the legal community as a Super Lawyers® Rising Star from 2018-2022. Only 2.5% of attorneys receive this distinction.
Ray Mathoda
CEO, Anchor Loans www.anchorloans.com
A transformational leader and accomplished executive, Ray Mathoda brings more than 25 years of experience across the real estate, finance, and technology sectors. Most recently, Ray was Co-Founder and partner at Emerge Life Sciences, a portfolio of biotech start-ups focused on developing and commercializing innovative genomics and protein engineering solutions to serve lower income consumers in India and emerging markets. She previously served as Chief Executive Officer at Xome, a real estate solutions provider, and Co-Chief Executive Officer at Genesis Capital LLC, a high-growth specialty finance company that was acquired by an affiliate of Goldman Sachs in January 2018. Ray currently presides as CEO of Anchor Loans.
Arvind Mohan
CEO, Kiavi www.kiavi.com
Arvind Mohan, a unique C-suite executive with a background in both engineering and real estate finance, is Kiavi’s Chief Executive Officer. During his years at Kiavi, he has held various leadership positions in Capital Markets and also served as the Chief Operating Officer overseeing the Software Engineering, Product, Risk, Business Operations, Capital Markets, and Mortgage Operations functions. Prior to Kiavi, Arvind spent 10+ years in the fixed income division at Barclays overseeing teams in the securitized products group. Mohan holds a B.S. and M.S. in Computer Engineering from Carnegie Mellon University.
Matt Podesto
Founder & CEO, Black Label Capital
www.blacklabelcapital.com
Matt Podesto has been involved in real estate since 2016, where he initially partnered with other investors to fix and flip properties throughout Texas. In 2018, Black Label Capital was founded to deploy personal capital on the side as a true private lender while still being involved in renovations. After gaining the attention of several investors, Black Label Capital eventually evolved into a day-to-day operation deploying personal and investor capital. As the CEO and Fund Manager, Matt manages the debt fund, asset management, loan sales, construction draws, marketing, capital raising and investor relations. Matt is also a former U.S. Marine Corps Scout Sniper, serving several combat deployments overseas, until being Honorably Discharged in 2009. Matt continued his service overseas for the next 7 years, providing Diplomatic Security for the U.S. Department of State, and most notably serving on the U.S. Ambassador’s Protective Detail in both Iraq and Afghanistan.
Ryan Shanberg
Executive Director - Securitized Products & Private Credit, Nomura Securities International, Inc.
www.nomura.com
Ryan Shanberg is an Executive Director in the Mortgage Finance group at Nomura within Securitized Products & Private Credit, where he is principally responsible for the financing and securitization of residential bridge loans, investor rental loans, and commercial real estate bridge loans. Since joining Nomura in 2014, Ryan has advised on the issuance of over $25 billion in securitization transactions, including more than twenty-five transactions in the residential bridge loan and commercial real estate bridge loan sectors. Prior to joining Nomura, Ryan focused on mortgage finance and financial institutions investment banking at the Royal Bank of Scotland and MF Global. Ryan holds a Masters in International Economics and Finance from Columbia University and a B.B.A from Hofstra University.
Rick Sharga
Founder & CEO, CJ Patrick Company www.cjpatrick.com
Rick Sharga is the Founder & CEO of CJ Patrick Company, a market intelligence firm for companies in the real estate and mortgage industries. Rick is one of the country’s most quoted sources on the U.S. economy, real estate, mortgage, and foreclosure trends. He has appeared on CNBC, CBS News, NBC News, CNN, ABC News, FOX, Bloomberg, and NPR. Rick is a founding member of the Five Star National Mortgage Servicing Association, on the Board of Directors of the National Association of Default Professionals, and was twice named to the Inman News Inman 100, an annual list of the most influential real estate leaders.
Jeff Tennyson
CEO, Lima One Capital www.limaone.com
Jeff Tennyson is President and CEO of Lima One Capital. Lima One is a nationwide private lender who has originated over $9 Billion of business purpose loans, which include FixNFlip, New Construction, Rental and Multi-Family properties.
Jeffrey Tesch
CEO, RCN Capital www.rcncapital.com
Jeffrey Tesch, Chief Executive Officer, is responsible for overseeing the operations of RCN Capital, including sales growth initiatives, underwriting review with compliance oversight, and leadership of senior level strategic planning. Joining the Company in 2010 as Managing Director, Tesch led efforts to develop a national brand in private lending with the best practices and transparent products for a diverse customer base. Since RCN’s inception, Jeff has personally overseen over $6 Billion in originations. Jeff’s previous real estate experience was as an investor in both commercial and residential properties, ranging from single family homes to commercial retail centers
IRVINE, February 9, 2024 – Geraci LLP, the nation’s foremost private lending law firm, proudly announces the promotion of Steven E. Ernest, Esq., to the esteemed position of Partner. In his elevated role, Mr. Ernest will spearhead efforts to bolster the firm’s overall revenue and growth objectives while maintaining his pivotal role as the Head of the Litigation and Bankruptcy Department.
Quote from Steven E. Ernest, Esq.:
“This is a great firm. So impressive the way we focus on a particular client base and direct all our attention to making sure we can serve every facet of their business. I’m honored the firm thinks enough of me to allow my participation in its broader objectives. I look forward to maintaining our close client relationships and ensuring the litigation and bankruptcy department provides first rate results in all our cases.”
Melissa Martorella, Partner and Head of the Banking and Finance Department, shares her thoughts on Steven’s promotion: “Steve brings unparalleled expertise to Geraci’s legal team. His extensive experience as a trial attorney, coupled with his unwavering commitment to securing the best outcomes for clients, not only ensures robust representation but also enriches the entire litigation department. The Partnership eagerly anticipates witnessing Steve’s continued growth as a Partner and the development of his dedicated team.”
Anthony Geraci, Esq., CEO, and Partner expresses his enthusiasm:
“Steve has been an invaluable asset to Geraci, leading the litigation department with exceptional focus for the past two years. His promotion to Partner is a testament to the dedication, care, and determination he consistently brings to our clients and internal team. Congratulations to Steve on this well-deserved achievement. I am confident in his future leadership both within and outside the firm.”
Geraci LLP is enthusiastic about embarking on this new chapter with Steven E. Ernest as a Partner, confident his leadership will continue to positively influence the firm’s trajectory.
About Geraci LLP
Geraci LLP stands as the nation’s preeminent law firm exclusively dedicated to the private/non-conventional lending sector. As the foremost legal resource for specialty lenders, asset-based lenders, private lenders, and non-bank institutions, Geraci LLP’s legal departments encompass Banking & Finance, Corporate & Securities, and Litigation & Bankruptcy. The Geraci Conference Line supplements these services, providing networking and educational opportunities to the industry at large.
$240 Million Deal Rated by Morningstar DBRS
SUMMIT, N.J., March 01, 2024 – Toorak Capital Partners, Inc. (“Toorak”), a leading capital provider to the residential real estate lending industry, today announced the successful closing of the first-ever rated residential transition loan (“RTL”) securitization, Toorak 2024-RRTL1.
The $240 million deal was rated by Morningstar DBRS, which in October 2023 was the first Nationally Recognized Statistical Rating Organization to finalize a methodology for RTL securitizations (a deal backed by short-term bridge loans generally used to rehabilitate residential properties).
Morgan Stanley led the offering and served as initial purchasers along with Deutsche Bank, JP Morgan Securities, LLC, Performance Trust Capital Partners, and KKR Capital Markets. Significant investor demand during the marketing process led to the offering being upsized and to tightened spreads.
“This development is a pivotal moment for our industry and a significant step forward in the institutionalization of the RTL market. Toorak’s securitization has substantially broadened participation in the RTL market by making it accessible to the bulk of the fixed income investor base which require ratings,” said John Beacham, CEO of Toorak. “I want to thank Ketan Parekh who led the deal team and Aleksandra Simanovsky who tirelessly spearheaded the yearslong effort to obtain rating agency support for the asset class.”
The initial collateral underlying the Toorak 2024-RRTL1 securitization consisted of 370 residential transition loans that financed approximately 527 housing units. The securitization featured a sizeable portion (42.36%) of collateral originated by Toorak’s affiliate company Merchants Mortgage & Trust Corporation, LLC (“Merchants”), an established originator of RTL loans mainly focused on the western U.S. with decades of experience in the space.
“Merchants is excited to contribute to this significant moment for the RTL industry, and we remain committed to originating quality loans with the highest level of service for our borrowers,” said Justin Land, CEO of Merchants.
The transaction features a two-year revolving period, during which time proceeds from loan payoffs can be reinvested in new loans.
“This development is a pivotal moment for our industry and a significant step forward in the institutionalization of the RTL market. Toorak’s securitization has substantially broadened participation in the RTL market by making it accessible to the bulk of the fixed income investor base which require ratings.”
— John Beacham, CEO, Toorak
To date, Toorak has issued over $3 billion in securitizations across 12 deals, including 8 unrated revolving transactions backed by RTL loans and 4 rated transactions backed by long-term investor loans on rental properties.
Toorak Capital Partners is an integrated correspondent lending platform that funds business-purpose loans backed by residential, multifamily, and mixed-use properties throughout the U.S. and the U.K.
With capital commitments from credit funds and accounts managed by KKR, a leading global investment firm, Toorak has revolutionized the way private lenders of business purpose real estate loans access capital. Toorak was the first to link small-balance commercial and residential originators with institutional capital and has perfected this approach in the single-family residential bridge, multifamily bridge, and 30-year single family rental lending space.
Toorak’s principals have a deep understanding of mortgage credit in the residential and commercial space with backgrounds in real estate lending, capital markets, securitization, asset-liability management, asset management, and credit. Since inception, Toorak has provided more than $12 billion in capital and funded over 30,000 mortgage loans. Toorak-funded projects are expected to renovate, stabilize, or provide rental housing for over 50,000 families. Further information is available at https://www.toorakcapital.com/
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