Originate Report - August 2021

AUGUST 2021

THE OFFICIAL MAGAZINE OF GERACI

INSIDE:

RENOVO FINANCIAL

#HustleHarder

FUND RAISING CONSIDERATIONS Tips For Mortgage Investors TRAILBLAZERS NICOLE ANDREWS

TITAN GREG NORRIS

The Origin Story That Launched an Industry

CAPTIVATE S P E C I A L E D I T I O N August 2021 Originate Report 1

2

CONTENTS

AUGUST 2021 CAPTIVATE SPECIAL EDITION

COVER STORY 6 Cover Story: Renovo Financial #HustleHarder

By Charles Peckman, Contributing Writer for Originate Report FEATURED ARTICLES 14 Rehab Financial Group Wants to Help You Succeed:

Their Lending Practices Prove It

By Mark Dewyea, Contributing Writer for Originate Report 32 Tips For Mortgage Investors to Get More Deals

By Rocky Butani, Founder & CEO, Private Lender Link 50 Fund Raising Considerations: A CPA’s Perspective

By Henry Chavez, Principal, Spiegel Accountancy Corp.

GOLD SPONSORS 12 Constructive Loans Re-Inventing Wholesale Lending for the

Residential Investor Loan Market

By Mark Dewyea, Contributing Writer for Originate Report 18 AlphaFlow: Building Trust In Lending

By Charles Peckman, Contributing Writer for Originate Report 28 The Bedrock Fund: Using Selective Underwriting to

Deliver Optimized Returns

By Mark Dewyea, Contributing Writer for Originate Report 36 Going Against the Grain: How Voyager Pacific Capital is

Revolutionizing the Traditional Real Estate Investment Model

By Mark Dewyea, Contributing Writer for Originate Report 42 Flip Factory App’s Programmable Cashflow Transforms the

House Flipping Industry

By Mark Dewyea, Contributing Writer for Originate Report 54 PeerStreet: Deal Flow Is Customer Service

By Charles Peckman, Contributing Writer for Originate Report CONTRIBUTED ARTICLES 20 How Technology Makes Commercial Lending Better for Everyone

By David Novoseller, Co-founder & President, Novello Financial Group 38 The Origin Story That Launched an Industry

By Kat Hungerford, Project Development Manager, AAPL 56 The Advantages of Relationship Lending

By David Nielson, Partner, Boomerang Capital Partners PRIVATE LENDING TITANS 24 Greg Norris, Principal & President, Quick Draw Fund Control TRAILBLAZERS 46 Nicole Andrews, President, Fastapp Appraisal Management INDUSTRY NEWS 61 Applied Business Software, Inc. 62 RCN Capital 63 PeerStreet 64 Voyager Pacific Capital 65 Temple View Capital (“TVC”) and Geraci LLP 66 Corridor Funding

6

14

38

24

46

August 2021 Originate Report 3

CAPTIVATE 2 0 2 1

C O N F E R E N C E

The ® Your Ultimate Lending Platform

THANK YOU TO OUR SPONSORS

For More Information About Our Conferences & Events: Ruby Keys • (949) 379-2600 • r.keys@geracillp.com • https://geracicon.com/ 4

Letter from the

CEO Geraci LLP ANTHONY GERACI a.geraci@geracillp.com

Editor

Welcome to August’s Captivate Special Edition of Originate Report!

Capital-raising and deal flow are not only the themes of our annual Captivate conference but are also at the heart of this issue. To succeed, you must accomplish both by consistently networking,

Senior Vice President, Marketing & Media LESLEY BOYD l.boyd@geracillp.com

forging new partnerships, and going out in search of new deals and capital to back them. In the words of our cover story subject, now is the time to #HustleHarder. #HustleHarder is not only Renovo Financial's catchy tagline; the

Lead Graphic Designer LYNDA HIGHT l.hight@geracillp.com

firm genuinely epitomizes the idea behind their words. Led by CEO and Co-Founder Kevin Werner, this Chicago-based private lender is a growing force to be reckoned with in the private lending space.

Founded firmly on the belief in the importance of the customer experience, Renovo has become a concierge-type lender that

CONTRIBUTORS David Novoseller Rocky Butani • Kat Hungerford Henry Chavez • David Nielson Charles Peckman • Mark Dewyea

anticipates the needs of its borrowers and embraces the ability to get to know them first as individuals and secondly as borrowers. This mindset permeates the entire firm and is exemplified from the top leadership to every member of the team. With a foundation of “rocksolid customer service, underwriting, office morale, and stellar recruiting during the height of the pandemic”, Renovo Financial is poised for continued growth.

FOUNDING UNDERWRITERS

As we all gear up for the “conference season” ahead of us, it’s important to keep Renovo Financial’s tagline in mind and #HustleHarder. All of us at Geraci look forward to seeing you soon to help you facilitate your deal flow and capital-raising activities.

MARK HANF President, Pacific Private Money

At Originate Report, we are currently searching for ground up construction and bridge lenders who are making a splash in the marketplace. If your company does this or you know of someone

ORIGINATE WEBSITE www.originate.report GERACI LAW FIRM www.geracilawfirm.com LIGHTNING DOCS www.lightningdocs.com CONFERENCE WEBSITE www.geracicon.com

who should be covered, please send them my way at submissions@ originate.report .

Until next time,

Lesley

Lesley Boyd

Senior Vice President, Marketing & Media

August 2021 www.originate.report Originate Report 5

COVER STORY

RENOVO FINANCIAL #HustleHarder

By Charles Peckman, Contributing Writer for Originate Report

Kevin Werner, CEO & Co-Founder at Renovo Financial

6

A

of

Werner said one aspect of real

– frames the decade-old company in

traffic and the lapping of

estate that he wished to bring into

a way that facilitates relationships

Lake Michigan against the

the culture at Renovo Financial, the

and business amongst the entire

shoreline, the Chicago-based firm

human element, can make all the

United States.

Renovo Financial has established

difference when facilitating deal flow

itself as a trusted partner in the

and the acquisition of new customers.

midst

the

low

roar

lending sphere.

“I would say that being a Chicago native, and growing up in the

“We’re very conscious of the human The company’s motto, #HustleHarder,

Midwest, puts us in a good position

interaction with our customers. We

is more than a catchy slogan, however.

to service the East Coast, West Coast,

have employees in the markets we’re

As CEO and Co-Founder Kevin Werner

and up and down the map. There is

lending in across the country, and

told Originate Report, the key to

a real estate market in every corner

that, to me, is so important,” he said.

success in growing Renovo, which

of the country, and what Renovo is

“We’re not operating out of a call

offers services including rehab, rental

perpetually looking for is, of course,

center; we’re operating where our

the markets that are doing well, but

customers do business. We take the

also what areas of the country are

time to get to know them, and that’s

underserviced or undervalued.”

'term,' new construction, and multifamily loans, is to strive perpetually for an impeccable customer experience.

Werner, whose father was in the home improvement finance business, said that growing up in that environment – paired with buying and flipping homes in his late teens and early 20s – gave him a firm understanding of the fast-paced, multi-faceted real estate world. He added that this solid foundation gave him the necessary tools to understand deal flow and the importance of solid relationships early in his career.

how we’ve built Renovo. It’s been built on that cup of coffee by cup of coffee mindset.”

Although Werner said this ‘cup of coffee’ mindset might sound easy to achieve, he added that the ‘behind the scenes’ work of customer relations – getting to know a borrower and establishing a rapport with them – is a process into which many lenders do not put enough effort. "’Attention to the customer’ means

"From an early age, I watched

that we take the time to get to know

my dad and learned from him the

each borrower. I liken it to the kind

value of customer service," he said.

of attention that you receive when

"He instilled how it was always

checking in to a high-end hotel," he

important to take the time to talk

said. "The person behind the desk will

to customers and meet with people

ask you how you would like the room

about their concerns. I remember,

and which newspaper you would

on Sunday nights, he would sit in the

like, and they take those moments to

kitchen and make collection calls,

personalize your experience. That's

and that intense communication

what Renovo emulates and is part of

and attention to the business is

what has built our success.”

something I've carried with me."

In addition to a focus on customer Through the guidance of his father

service, Werner said that Renovo’s

and

physical location – the Windy City

his

Midwestern

upbringing,

Speaking to the past year, and more specifically the COVID-19 pandemic, Werner said that Renovo's strong foundation – with an emphasis on creating rock-solid customer service, underwriting, and office morale – has allowed for the firm's continued growth during a period of economic uncertainty for many sectors.

“We continued lending the whole time,” he said. “That is a testament to the team we have in place; we never turned off the lending activity. What the pandemic has shown, and what I think the market is seeing right now, is that the aftermath of COVID has been a large catalyst for growth. We recruited aggressively throughout the pandemic, and I think we are coming out the other side in a very strong place.”

When thinking about the Renovo team’s

ability

to

transition

to

remote work in the early days of Renovo Financial: Continues on pg. 8

August 2021 Originate Report 7

Renovo Financial: Continued from pg. 7

the pandemic, Werner said he has been proud of their ability to work through

a

difficult

period

with

tenacity and strength.

“It

was

a

culture

shock

for

a very collaborative and supportive environment – a family – and many of the people who work here have really grown up at Renovo. As soon as the shift to remote work happened, we implemented Zoom meetings every morning. If not to keep everyone on the same page with business from in the office, then to make sure everyone is doing well outside of the office.” continuation

of

this

team

dynamic, he said, was one of the driving

factors

is an aspect of real estate that is

institutional-quality company from

often overlooked in a technology-

day one and have set up Renovo to be

focused landscape. It is one thing, he

diligence-proof from an institutional

added, to see a property on a screen,

investors’ standpoint.”

but it is crucial to have boots on the ground for every project.

everyone,” he said. “We have built

The

investors,” he said. “We’ve built an

behind

Renovo’s

Paired with this private equity backing is a commitment to hiring experienced,

“It’s

detail-oriented

the

the process of seeing a deal to its

Renovo family. Many lenders, Werner

completion,” Werner said. “It’s being

said, undervalue the significance of

involved with local investor clubs,

seasoned professionals in the deal

understanding specific permitting

facilitation equation.

processes, and networking in that

members

to

everything

that

goes

into

city. That involvement, the creation “Our lending team is very experienced,”

of that, couldn’t be more important

he said. “And there is no substitution

to Renovo’s continued success.”

for that experience. The people we have in place throughout the country

Where Renovo is at the crossroads

are well-versed in their geographies,

of

and that’s what has allowed us to

perspective, is the firm’s ability to

operate in over a dozen major U.S.

unite the latest technology, best

markets. The cup of coffee approach

talent, and a drive for continued

only works if you have people there

growth in the space.

ability to grow during the pandemic.

to sit down and get to know different

From a capital-raising perspective,

areas of the space.”

the

industry,

from

Werner’s

“We’ve been able to attract toptier talent who are experts in their

Werner added that starting from day one with private equity backing has

Aside from the regulatory concerns

locations. And with that, we’ve

been critical.

in different areas of the country,

got a home team office that is

Werner said that having the ability to

hardworking and dynamic, and a

“From the beginning of Renovo,

walk a job site, oversee construction,

Rolodex of lawyers and professionals

we’ve

and be present when situations arise

who can help us with any project,”

8

had

sophisticated,

smart

he said. “The team we have in place,

“I love spending time with them and

get to work on exciting projects with

myself included, have always sought

love watching them grow,” he said.

smart and dedicated people, and in

mentorship from the first days of

business you have to approach each In addition to building a family,

the company.”

day with an energized mindset.”

Werner said he has loved sports Werner said that many bourgeoning

from an early age – but not in a

entrepreneurs

traditional sense. An avid runner, he

undervalue

the

importance of seeking guidance from experienced real estate professionals when starting a business venture.

From the inception of Renovo's business plan, he added, mentorship – both personally and from a companywide perspective – has been of the utmost importance.

“One aspect I've always thought about is, 'who do we want to be in five years?' I've found a way, then, to get to the leader of that business and ask them, 'how did you accomplish that?' There's someone out there who has done exactly what you are trying to do, and what I’ve found

noted that in many ways, business is like a sport.

“I love making connections with other business owners and find joy in connecting with them about their ventures,” he said. “You'll see me sitting outdoors at a restaurant, often with professionals who are much older than me, of course building friendships, but also gaining insight into where they went right and where they went wrong.”

Running, Werner added, also gives

Turning to the future of Renovo and, broadly, future generations of real estate professionals, Werner said his most important piece of advice can be simply put: always have an open mind.

"If someone were to ask me what trait, in business, I most want my children to adopt, it would be coachability. From a young age, this is something I always told myself, too: to understand before being understood," he said. "There's innovation, of course, but for the most part everything's happened

him the opportunity to reflect.

before. What I mean by that is,

“There’s a lot that I want to do in

people have worked on in the past.

what I'm working on today, many

business,” he said. “And, to me, the

And they have succeeded in that.

to sharing information with you,”

attribute I need most in business is

It's important to find mentors and

he said.

energy. There’s nothing like getting

to find those voices who will push

up in the morning and taking the

you forward."

is that people are generally open

Outside of the office, Werner said

time to reflect on what needs to

his wife and two girls are ‘the most

happen on any given day, and it’s

This mentorship, he said, does not

important parts’ of his life.

also an opportunity to be grateful. I

always have to involve grandiose

Renovo Financial: Continues on pg. 10

August 2021 Originate Report 9

Renovo Financial: Continued from pg. 9

(Left to Right) Daniel Rosen, Renovo Financial; Kevin Werner, Renovo Financial

(Left to Right) Daniel Rosen, Renovo Financial; Kevin Werner, Renovo Financial; Paul Shaughnessy, Renovo Financial

topics. Even something as small

perspective – is his team’s ability to

construction, 30-year fixed rental

as how to interact in a particular

step outside of comfort zones and

loans, and in-house underwriting

situation, he added, can lay the

the ‘norms’ of the business that can

and servicing.

building

lead to stagnation.

blocks

of

ultimately

having a seat at the table for larger conversations.

The group’s commitment to building “One of the things, I think, that the

local long-term client partnerships,

team does best is communicate and

combined with its end-to-end suite,

“At various points in my career, when

approach situations with a positive

means clients experience the best

I have said to myself, ‘it’s time to get

attitude. When there’s a problem, or

products and pricing of a national

to that next level,’ my natural instinct

when a deal isn’t going well, those

financial institution, but with the

is to go out and solicit those people

lines of communication are always

attention to detail and service of a

who have achieved the success I am

open,” he said.

nimble startup.

trying to emulate,” he said. “Success often leaves clues.”

Renovo

Financial,

Werner

said,

operates on pillars of reliability, These

clues,

followed

when

carefully,

studied can

be

and

flexibility, speed, efficiency, and

the

local

team

expertise.

The

firm

breadcrumbs of success, Werner

employs

said.

to

that encompasses a full suite of

Renovo’s success – from a deal

loan programs, including single-

facilitation, networking, and growth

family and multi-family rehab, new

10

What

has

contributed

a

one-stop-shop

model

For More Information, Contact: Kevin Werner CEO & Co-Founder Renovo Financial origination@renovofinancial.com https://renovofinancial.com/

REAL ESTATE INVESTMENT LOANS

Local Market Knowledge

Renovo Financial is more than a lender, we’re your partner. With local market knowledge and a streamlined process, we work with you through the life of your real estate investment loan to ensure that your project gets completed quickly and efficiently.

PARTNER WITH US 222 W. Adams St, Chicago, IL 60606 (888) 568-8894 origination@renovofinancial.com | https://renovofinancial.com/ August 2021 Originate Report 11

GOLD SPONSOR

Constructive Loans RE-INVENTING WHOLESALE LENDING FOR THE RESIDENTIAL INVESTOR LOAN MARKET

By Mark Dewyea, Contributing Writer for Originate Report

C The

“Put

a wholesale lending strategy that

Loan (BPL) industry, they primarily

together the parts in their

simplifies lending, reduces overhead,

purchase closed loans, a strategy

proper place and order.”

and

which

onstructus

(Latin):

goal

for

the

Constructive Loans team has been to construct (pun intended) an innovative conduit that provides their clients with simple and efficient access to capital for business purpose mortgage loans. Additionally, the team at Constructive has worked tirelessly to forge productive, longpartners

significant

risks

for their private and conventional

overarching

lasting

mitigates

relationships to

help

with

them

their expand

product offerings and increase their market presence. This unapparelled level of collaboration has allowed Constructive to build a network of partners that continues to grow at a break-neck pace.

lender clients.

predominantly

benefits

larger, more established lenders and brokers. In order to sell a

Originate Report recently had the opportunity to speak with Alex Offutt, Managing Director of the Wholesale Division of Constructive Loans, to gain better insight into the unique qualities that set Constructive apart.

“The team at Constructive recognized early on that there was a large constituency that was vastly underserved in the marketplace,” said Offutt. “Many of these smaller to midsized lenders had no other option but to work with slightly larger lenders that had direct access to capital. This

closed loan, a lender must process, underwrite, close, fund, and then sell that loan. This is an operationally and cost intensive endeavor, as you need highly specialized employees to carry out these tasks, and those employees don’t come cheap in this market. Additionally, once closed, there are carrying costs that come with holding a 30-year loan on a balance sheet. It’s also important to recognize the most likely significant risks, the inability to sell a loan and/or requirement to re-purchase a previously sold loan. Remember

'daisy-chain' of capital was (and still

the disastrous events in early 2020

is) cumbersome and costly to the

that left many originators with loans

Constructive’s leadership team has

individual real estate investors who

they were unable to sell and then

leveraged its decades of combined

form the foundation of our industry.”

eventually sold for a significant loss?

revolutionize the private lending

While

Constructive’s

space. Constructive has pioneered

providers in the Business Purpose

multi-industry

12

experience

to there

are

other

capital

approach

is

to

provide all the necessary tools to its

partners to operate independently.

They provide the underwriting, the loan documents, and the capital to fund the loan, thus eliminating the operational expense and many of the risks associated with the origination of

a

business

purpose

loan.

Furthermore, Constructive delivers this product through a streamlined

(Left to Right) Alex Offutt, Constructive Loans; Ruben Izgelov, We Lend; Moses Suleymanov, We Lend

and fully transparent operational process that closes loans on average in 10-14 days and has closed loans in as little as 3 days.

Pre-COVID, the population of loans Constructive

funded

for

their

partners represented a broad array of BPL offerings. However, since May of 2020, more than 80% of their loans

(Left to Right) Whit McCarthy, Civic Financial Services; Ben Fertig, Constructive Loans

have been Long Term DSCR Rental loans, which are 30-year mortgages.

Constructive has seen double digit growth in this rental product class every month for the last 12 months, and expects to continue that trend well into 2022.

It’s certainly a tall order to maintain this level of growth and superior performance, but Constructive has

The Constructive Loans team hard at work.

excelled where many have faltered.

With an eye towards the future, they have invested significantly in their future by continuing to invest in new technology. Constructive expects to release enhanced tools for its partners towards the end of this year.

For More Information:

At Constructive Loans, we all come to work every day because we want to build strong, lasting relationships with our clients in order to help them achieve their financial goals.

(833) 250-7634 https://www.constructiveloans.com/

August 2021 Originate Report 13

FEATURED ARTICLE

Susan Naftulin, President & Chief Operating Officer at Rehab Financial Group, LP

Rehab Financial Group Wants to Help R You Succeed

ehab Financial Group (RFG) is a private money lender that provides creative and

accessible

funding

solutions

to

real estate investors in 26 states across the United States. RFG fully underwrites all of its loans and

Their Lending Practices Prove It

By Mark Dewyea, Contributing Writer for Originate Report 14

covers 100% of both purchase and renovations expenses for projects up to 70% of the projected After Repair Value (ARV). That translates into zero down payment for most of RFG’s loans—meaning you can scale

your

investment

business

with no out-of-pocket costs for

RFG specializes in getting investors access to the capital they need when they need it. Their longstanding goal is for their lending process to never be accountable for holding up a transaction, and they consistently deliver on this promise. purchase or rehab. RFG’s innovative

as Naftulin puts it: “We have one

consistently delivered competitive

lending strategy enables investors

customer who has trusted us for

and sustainable funding solutions to

to conserve financial resources to

over 150 transactions. We are just as

scores of satisfied investors. Their

account for unanticipated costs over

much in the business of establishing

signature service, the 100% Premier

the project life cycle. RFG is unique

and maintaining relationships as we

loan, offers clients 100% financing,

from the majority of private money

are lending money.” RFG credits the

up to 70% ARV on the purchase

or hard money lenders because it

quality of its service to its thorough

price

strives to streamline the acquisition

and intuitive underwriting process.

and has truly revolutionized the

timeline of distressed properties by

By taking a case-by-case, thorough

lending space over the past decade.

providing 100% financing with zero

analysis of each project proposal, the

By

money down.

expert RFG lending team prides itself

between responsible underwriting

in facilitating creative, practical

protocol with proven risk mitigation

financing terms that mitigate the

strategies seamlessly integrated into

risk of default and assist real estate

an all-round efficient process and

investors in accomplishing their

an end-product carefully structured

professional goals.

to optimize real estate investor

Passionate Leadership Makes the Difference “Just because you are a CEO, don’t think you have landed. You must

Leveraging Creativity the way you think, and the way you Delivers Results

Susan Naftulin, RFG’s president and co-founder, is largely responsible for

instilling

the

client-focused

is

one

of

unfair

advantage

the

last

over

the

competition.”—Ed McCabe, McCabe Communications CEO

corporate environment that RFG is renowned for—a characteristic that

What gives RFG a leg up on any

has built a devoted and loyal base

competitor in the lending industry?

of repeat customers who appreciate

The answer is deceivingly simple:

the

and

100% Financing. RFG is an industry

knowledgeable staff. RFG focuses

leader when it comes to crafting

on clear and honest communication

unique lending products. Ever since

at all stages of the lending process,

its inception in 2009, RFG has

experienced

insight

unique

harmony

bridge loan with favorable terms.

remaining legal ways of gaining an

a

expenses

best of both worlds: an aggressive

approach the organization.”—Indra

“Creativity

striking

renovation

liquidity, the 100% Premier is the

continually increase your learning,

Nooyi, Pepsi CEO & Chairperson

and

To cap it all off, with no prepayment penalties, RFG clients never have to worry about being penalized for proactively paying off their loan prior to its maturity date.

RFG specializes in getting investors access to the capital they need when they need it. Their longstanding goal is for their lending process to never be accountable for holding up a transaction, and they consistently Rehab Financial Group: Continues on pg. 14

August 2021 Originate Report 15

Rehab Financial Group: Continued from pg. 13

deliver on this promise. RFG is typically able to fund projects in 14 days or less—a fraction of the time it would take for a conventional lender to deliver project financing. In today’s increasingly competitive real estate investing marketplace, you simply cannot afford to not have the cash on hand to take advantage of great deals. By partnering with RFG, borrowers can confidently submit offers

on

promising

investment

projects knowing that they can

Susan Naftulin, Rehab Financial Group, LP

quickly and efficiently facilitate the financial aspect of the transaction—a peace of mind that is worth its weight in gold when it comes to successful real estate investing.

RFG finances each and every loan their

own

capital.

That’s

right: it’s their own money they are essentially putting on the line every time they underwrite a loan—which means they are under no regulatory obligations adhering

when to

privilege to have the opportunity to

is RFG’s lending success story. It’s

assist in educating new investors

that underlying mutually beneficial

by walking them through the entire

relationship that truly sets RFG

RFG Has Skin in the Game— Your Success is Their Success

with

clients’ investment success story

it

comes

standardized

to

credit

approval algorithms or inflexible loan formulas. This affords RFG an invaluable degree of flexibility when it comes to evaluating each client’s specific requirements and

apart in the industry. RFG strives to do everything they can to ensure that their clients’ investment strategy is ideally situated for long-term success.

RFG provides loans to investors of all experience levels and portfolio sizes—from first-time house flippers closing on their very first property to

process and acting as a trusted resource as well as partner in their long-term investment strategy.

RFG is invested in their clients’ success. Whether they’re seeking a fix-to-flip or fix-to-rent loan, they can provide a personalized loan product to satisfy all of your needs.

RFG is always on the lookout for financially responsible borrowers

seasoned investors with a diversified

who aspire to make a mark in the

assortment of assets. RFG also

real estate investment space. Contact

routinely lends to LLCs, LPs, and

RFG today to learn more about how

corporate entities with sufficient

we can make it happen!

credit histories that are willing to personally guaranty the loan. The real estate investment industry as a

their

whole has undergone an exponential

loan products with an insightful

increase in the amount of active

For More Information, Contact:

and

investors over the past 10 years.

Susan Naftulin President & Chief Operating Officer Rehab Financial Group, LP susan@rehabfinancial.com https://rehabfinancial.com/

then

individually innovative

tailoring

combination

of

rates, terms and points that ideally

RFG

positions all clients up for succeeding

relationships with those just starting

on their investment project. Their

out in the business and view it as a

16

prioritizes

building

lasting

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BUILDING TRUST IN LENDING

By Charles Peckman, Contributing Writer for Originate Report

P is

roviding professionally managed

The group utilizes software and

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technological know-how to streamline

to

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what

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With offices in San Francisco and Austin, the tech-driven investment manager partners with non-bank real estate lenders around the country who provide 6- and 12-month bridge loans

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18

and

small

to-adapt real estate sphere, and by leading with technology and analytics, it is the first company with the tools to make the fix-and-flip industry available to investors at scale and

Thinking back to the early days of

AlphaFlow,

background

on

Sturm Wall

said

his

Street

–

paired with his parents’ real estate experience (Ray’s mother owned a mortgage company, and his father was a hard money lender) – informs the way he approaches business and weathers the highs and lows of real estate markets.

"When I was working with my parents, I was learning through osmosis," he said. "I started looking at real estate from a business standpoint

and

realized

that

neither side of the equation knew how to talk to the other. I had the ability and enough experience in the startup world to get into the

quality. Originate Report discussed

trenches and translate between both

the importance of this forward-

sides – investors and borrowers –

thinking mentality with AlphaFlow’s

and AlphaFlow has been built on

CEO, Ray Sturm.

that mindset.”

AlphaFlow Team "The strength of the team is each individual member. The strength of each member is the team." – Phil Jackson

Ray said that part of what makes

through a calculated lens and has

needed to be achieved, and so on.

AlphaFlow successful – not only

less of an issue moving on if the

What we did two years ago was flip

from a deal flow standpoint, but

margins are better elsewhere.

the business on its head.”

well – is relentless attention to detail

“What that means is that these

and complete understanding of the

cultures don’t necessarily jive with

The way AlphaFlow accomplished

hours it takes to prove yourself in a

one another,” he said. “What my job

crowded space.

is, and what I believe AlphaFlow has

client solicitation and retention as

been successful in doing, is getting "There's no shortcut for building

everyone in one room and having

trust, and there's no shortcut for

that sense of understanding across

building

the table, even if there was distrust

relationships,"

he

said.

"We've got one power grid, and you

beforehand.”

from an investor mindset – or a counterparty to lenders – to an extension

of

lenders.

Another

attribute of this shift, he added, was the need to think like a lender, to 'get into the canoe with them' and become a better partner by servicing

trust that when the switch is flipped, the lights will turn on. Our industry,

Since the inception of AlphaFlow,

to a certain extent, doesn't have that

Ray said he has witnessed shifts

level of trust. If you can be there for

in the types of properties and deal

a lender in their time of need, you

structures

establish a level of trust that allows

Although he said this is natural

for the facilitation of deals to be

given institutional trepidation in

shifted more in your direction.”

the aftermath of the financial crisis,

that

garner

interest.

he added that how lending itself is In addition to trust, Ray said it is

this, Ray said, was by shifting

viewed has changed.

any given deal. For example, when

“I think what’s changed over time is

thinking about local hard money

that the space got more attention,

lenders, he said that many local

and more hedge funds started to

lenders have built their businesses

enter the space,” he said. “Lenders

off of long-term relationships and

got more sophisticated, and if not

flexibility, offering what they can

more

with

“We're continuously growing, and we just opened an office in Austin," he said. "We're expanding into these

markets

and

focusing

on

building relationships and focusing on the technology behind those relationships because, at the end of the day, the simplest way to grow

critical to understand the players in

sophisticated

and anticipating their needs.

then talking

deal flow is to listen to what the market and its players want.

more

For More Information:

about

lenders@alphaflow.com https://www.alphaflow.com/

to borrowers in good standing. Wall

comfortable

Street, conversely, views transactions

what needed to be done, what rates

August 2021 Originate Report 19

CONTRIBUTED ARTICLE

How Technology Makes Commercial Lending Better for Everyone

By David Novoseller, Co-founder & President, Novello Financial Group

W

hile the pace of tech-

real estate world, with three decades

Here's Why: CRE investors look

nological development

of experience as an equity investor

to take a bridge loan in several

has

and Managing Principal in commercial

scenarios. To start, they may have

real

career

an opportunity or need to refinance,

assets

purchase, or renovate a property.

through development, construction,

The property type can be anything

renovation and lease up. Time and

from multifamily buildings, self-

time again, I saw that financial

storage facilities, office space, light

products built for small-balance CRE

industrial,

investors are scarce and inflexible.

housing, and more. What do they

Such CRE borrowers are a seriously

all have in common? The need to

under-served segment, often forced

access a reliable source of immediate

As the Co-Founder and President of

to accept sub-optimal terms to secure

financing that is malleable and will

Novello, I come from the traditional

time-sensitive financing.

allow them to close their deal. This

only

accelerated

in the last few decades, there’s at least one profession that hasn’t changed much - and it’s one of the oldest professions in the world.

Over millennia, the fundamentals of

commercial

money

lending

have remained static - not for lack of demand, but perhaps, for lack of technology.

20

estate.

repositioning

I

spent

my

transitional

retail,

manufactured

financing is typically short-term, up

would certainly save valuable time

borrower’s

unique

scenario.

We

to 36 months, by which time they will

if someone were to reimagine the

selected Geraci as Novello’s outside

be able to secure their permanent

process of getting a CRE bridge loan.

counsel since they fit our needs like a custom-made glove, and they share

commercial mortgage.

To

start,

advertising

technology

our sentiments about how processes

For small-balance bridge loans, many

could be used by lenders to help put

should be structured to save people

larger or institutional lenders simply

the right services in front of the right

time and provide them with a great

won’t be interested. On the other

people at the right time. The lender’s

experience at every touchpoint.

hand, if a private lender doesn’t

costs could be kept down by focusing

specialize in bridge financing, they

only on appropriate leads, and they

For tomorrow, Novello is developing

may not have the terms to offer that

could even pass on those savings.

additional

financial

technology

products to serve the business needs

make sense for the CRE investor’s business plan. Besides that, there

Then, the myriad web development

of the lending industry. We believe

are many different costs of capital

tools out there could be put to work

that business - like life - is about

associated with applying for several

to create a user-friendly experience

being in the right place at the right

different

Finally,

on bridge lenders’ websites, and

time. If you do your part, you can

investors need their lenders to move

to provide immediate access to

make your own good fortune. With

as fast as their deals do.

short applications that pre-approve

our technology portfolio, we position

borrowers

would

ourselves to be in the right place at

bridge

loans.

instantly.

While the first set of challenges

mean

digitizing

the right time for our partners, and

can be addressed by a focus on

paperwork - it would also mean an

we’re able to align our interests to

customer

dual

overhaul of the process to remove

create a better shared future. After

challenges of speed and the cost are

unnecessary, time-consuming steps.

all, isn’t it time that this profession

experience,

the

going

This

beyond

perfect candidates for disruption by technological means.

got a technological upgrade?

Of course, this approach would have to be carried through to every

*Except CA, AZ & Nevada

My co-founder and Novello’s CEO,

step of the flow, from underwriting

Omer Haim, is an accomplished

risk to approving applications and

About the author

business operations executive in

originating loans. All of this to save

David Novoseller is the Co-founder

financial technology, adtech, and

borrowers on critical time and bring

and President of Novello Financial

startups with a focus on lending

down costs when they’re seeking

Group,

products. Having built customer-

bridge financing.

experience as an equity investor and

centric solutions, he knows the value

with

three

decades

of

managing principal in commercial

of an excellent customer experience

Wouldn’t that be nice? We thought

firsthand. But as he always says,

so, too.

real estate.

“Even the greatest experience or product is meaningless if its intended

Today,

Novello

is

focused

on

users can’t find it.”

shorter-term, smaller-balance, CRE asset-based needs. As a balance-

Wouldn’t it be nice if technology could

sheet lender making heavy use of

help investors discover the right

technology, we’re able to close as fast

lenders, then speed up everything

as borrowers need to capture rapidly

from the application to the required

progressing deals. We finance deals

documentation, all the way through

nationwide*, and create a deal

to approval and loan origination? It

structure

personalized

to

each

David Novoseller Co-founder & President Novello Financial Group david@novellofinancialgroup.com https://www.getnovello.com/

August 2021 Originate Report 21

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22

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For tickets, sponsorships, and speaking opportunities visit: www.nationallendingexperts.com or call 619-865-3177 August 2021 Originate Report 23

PRIVATE LENDING TITANS

PRIVATE LENDING

TITANS Greg Norris

Principal & President, Quick Draw Fund Control

24

up to Division President and led a staff of 110 colleagues with full P&L autonomy and responsibility.

The infrastructure, training, and leadership that the owners provided gave me the best business education of my career. It is in large part the reason I’m a principal of our company today.

Q: Is there anything that you wish you could go back and tell yourself at the beginning of your career?

Be

patient.

All

of

the

career

challenges I worried about resolved themselves naturally and were not

Greg Norris

nearly as big of a concern as I made them out to be.

Principal & President Quick Draw Fund Control

Q: Who is someone that has had a

Q: Why did you choose to enter

and borrower clients to help provide

into this industry?

solutions to get capital deployed

I began my career in home building,

quickly and safely so projects can

then

continue without delay.

worked

for

largest

plumbing

new,

residential

the

nation’s

contractor

and why?

Fortunately, I’ve had a few people in

this

category.

Tobi

Nieland,

my partner, has had a significant

for

construction.

significant effect on your career

and extremely positive impact on Q: Can you explain a time where

my

Subsequently, I went back to home

you faced adversity or had

experience and strategic approach

building and then fund control. It

struggles early on in your career?

has taught me to think differently in

was an opportunity that we were

Where did it all begin? How did

both business and life. She acutely

not thinking of and fell into our lap

these experiences mold and shape

understands

during the initial stages of the 2008

you into the leader you are today?

and how the intersection of both

Great Recession.

In

family’s

can create opportunity for all and

homebuilding business where we

make our company money. I love

1990,

I

joined

my

Q: What is your current role and

delivered 200-600 single family

what do you do day-to-day?

homes per year. I struggled to find

I am the Founder and President

my place and passion within the

of

organization

Quick

Draw

Fund

Control

and

ultimately

left

and am responsible for sales and

the company without a job. In less

field operations.

than two weeks, I was extremely fortunate to start work with a very

Q: What excites you about your

sophisticated and leading plumbing

role today?

subcontractor that I had known for

What excites me today and every day

years. Starting off with all sales and

is working closely with our lender

marketing responsibilities, I worked

career.

Quite

simply,

people,

Tobi’s

business,

discussing new ideas and listening to her thoughts as she often provides a perspective I never thought about.

Q: What has been your favorite aspect of being an in private lending over the years?

I have two favorites. First, meeting and

working

with

many

great

people in the space. Everyone is Greg Norris: Continues on pg. 42

August 2021 Originate Report 25

Greg Norris: Continued from pg. 41

gracious, willing to help and share information. It’s fascinating to work with smart people, learn from them and see how their business models succeed in the marketplace.

Second, hearing the feedback we receive from our clients telling us that we have played an integral role in the growth of their business.

We’ve changed our own industry and made an impact in the way lenders disperse construction loans.

Our decades of experience as both builders and finance experts makes Quick

Draw

uniquely

qualified

to work closely with lenders and borrowers

alike.

We

understand

exactly what is needed from both sides to ensure a project is properly capitalized and help navigate a very bumpy and challenge-laden build cycle.

contractors. I’m learning new things

which helps motivate me for the

every week and it’s fascinating. I

week ahead.

don’t enjoy working with grumpy and ungrateful people which, fortunately,

Q: Has your role changed

doesn’t happen too often.

significantly to address the current environment?

Q: Is time or money more valuable

I wouldn’t say that my role has

and why?

changed significantly since Covid-19

Time is more valuable by far. Money

hit, but it has dramatically affected

comes and money goes. You can

our projects and the way some of

always go out and earn more money.

our clients now do business. We’ve

Once you have spent time, it’s gone

adjusted to help provide information

forever. As I get older, I’m selectively

and reporting that they need to

choosing how to spend my time as it

be comfortable and operate in the

truly is precious.

new environment.

Q: How do you make sure your

Q: What advice would you give to

company stays ahead in this

in private lending?

industry?

It’s an ongoing team effort with my partner, our staff, and consultants.

We

utilize

technology

as

much

as possible in our operations and reporting to concurrently increase efficiencies and ease of use for our clients. Additionally, we spend a lot

Q: What would you consider to

of time and resources gathering and

be the highlight of your career

sharing current market information

thus far?

The highlight has been creating opportunities

for

other

people.

Growing our

team members

at

Quick Draw, as well as helping our consultants and professionals

someone who has just started out

to keep informed of changes and trends that impact construction projects.

Q: What tools do you use to aid you in your role to be most

Find

your

people.

While

it

is

important to talk to a number of solid prospective employers, to the best of your ability, make sure you are working for the people and culture you identify with the most. There is nothing worse that waking up and not liking where you work every day.

Q: What do you believe to be the best type of real estate investment opportunity available today and why?

I

come

from

the

residential

construction side of the business, so

who all play an important role

efficient, organized, and focused?

in our success, is both gratifying

We were fortunate to hire a young

and humbling.

and smart gentleman, who has a

shortage and high demand that

degree in software engineering, as

doesn’t appear to be abating anytime

Q: What do you enjoy most about

our systems analyst and software

soon. Combine the right property

your job? Least?

developer. From database, to work

with a good basis, leverage, give it

I love the variety my job affords

flow, and our reporting platforms, I

enough time, and it’s pretty hard not

me. Every project is different from

utilize his systems to help keep my

to come out on top.

location and construction type to

role on track. Fear is another great

working with different groups of

motivator. I always seem to start

lenders,

Monday mornings with a bit of fear

26

borrowers,

and

general

I’m going to say entitled lots/land and housing. There’s such a tremendous

For more information, please visit:

https://www.quickdrawfundcontrol.com/

August 2021 Originate Report 27

GOLD SPONSOR

The Bedrock Fund USING SELECTIVE UNDERWRITING TO DELIVER OPTIMIZED RETURNS

By Mark Dewyea, Contributing Writer for Originate Report

S

eeking a real estate investment

renovated over 1500 homes. Their

investors.

option with a proven track

results are a testament to their

McKeller has been a Franchisee and

record of optimized returns

intimate knowledge of the business

Development Agent of HomeVestors

and unparalleled work ethic when it

of America, Inc (the “We Buy Ugly

comes to managing capital.

Houses” Company) through which

year-after-year

with

unmatched

liquidity and flexible terms to boot?

Look no further than The Bedrock Mortgage dynamic

Fund real

(the

estate

Fund)—a investment

In addition, since 2000

he knows over 1200 experienced Originate Report had the distinct

investors who can originate loans

pleasure

with the Fund.

of

talking

with

Mark

fund that is revolutionizing the real

McKeller, Director of Originations

estate investment industry with its

for The Bedrock Fund, who gave us a

There’s a Method to the Madness—

meticulously-targeted portfolio of

proverbial "peak under the hood" to

And it Works

short-term, high equity real estate

better understand the tremendously

The Bedrock Mortgage Fund, LLC

loans

effective

is a uniquely structured real estate

that

produces

consistent

strategy

driving

the

results for its investor pool. That’s

Fund’s impressive rate of returns.

investment

what

ultra-

Mark brings with him a wealth of

short-term, high-equity real estate

experienced group of real estate

experience in the investment space-

loans concentrated in the single and

and financial professionals combine

his companies alone have purchased

multi-family

forces. All combined, the leadership

more than 800 properties across

The secret to their success? The

staff of the Fund have provided

nine major national markets, on

Bedrock Fund only offers financing

financial backing on more than 2500

top of originating over $5 million

to a carefully vetted contingent of

transactions and have bought and

of asset-backed bridge loans to

qualified

28

you

get

when

an

fund

specializing

residential

investors

with

in

markets.

proven

track records of producing optimal returns on well-researched investment

After:

projects. Using its connections with HomeVestors, the Fund is able to tap into a vast network of experienced professional real estate investors who originate solid, safe loans. To date, the Fund has no defaults and not even a late payment on the books.

Even during COVID, not a single Fund investor requested a forbearance or any financing consideration.

This

national investor network can also assist in mitigating risk by securing, repairing and selling any property the Fund needs to acquire in the unlikely event of foreclosure. The Fund loans typically range from one month to one year and provide the

needed

liquidity

for

their

customers to acquire discounted real estate assets, complete any needed renovations and then proceed to resell them at a higher price point or refinance them as income-generating rental properties.

The

Bedrock

Mortgage

Fund

originates commercial residential loans on properties that are valued around the median in a market, which tends to be the least volatile sector with the best rents relative to cost. The Fund loans are secure since they are usually less than 75% of the value of the properties, with a first mortgage position. If a borrower defaults on a loan, the Fund can secure the property and sell it without incurring a significant,

Before:

A real estate investment fund specializing in short term high-equity real estate.

if any, loss. HomeVestors’ national network of investors can help with

The Bedrock Fund: Continues on pg. 24

August 2021 Originate Report 29

The Bedrock Fund: Continued from pg. 23

this if necessary. The Fund will only do loans where there are experienced HomeVestors Franchisees who can, at the Fund’s request, take control of a house, repair and sell it if needed, thereby allowing the Fund to recoup its investment.

monthly basis if they choose to do so.

factors that could have a negative

And because the notes are short-term

impact on investor returns. The end

(one-year commitments), investors

result is an investment vehicle that

have the individual autonomy to

offers returns on par with long-

transfer their capital freely in and

term mutual funds without investors

out of the Fund.

having to lose sleep over the inherent volatility of the stock market.

annually on their deposit balances that can either be collected via

Interest = Higher Return on

monthly cash payouts or reinvested

Investment The loans extended by the Bedrock Mortgage Fund are intentionally exclusively

towards

experienced, full-time real estate investors. The financial experts at the Fund apply stringent underwriting criteria and thoroughly evaluate each and every proposed deal to effectively mitigate any potential risk factors and optimize returns for their clients. Accordingly, these loans require a substantial degree of

formulated to mitigate any risk

The Bedrock Fund pays investors 7%

The Bedrock Advantage: Higher

geared

receive their interest payments on a

equity—generally

over

25%--

and are often not available from

in the Fund for a compounding effect.

Fund

investments

are

available for one year or more, with investors afforded the option to request principal refunds as long as they provide proper notice.

The majority of loans extended by the Fund are fully paid off in under six months, giving the Fund a significant amount of liquidity which

Fund range from $50,000 on the low end to $100,000,000 on the high

the Fund invaluable flexibility to

$25,000,000 requiring a stepped

charge

investment schedule.

typically

Put

aspect so critical for individuals

offers its investors a substantially

considering investing their hard-

more profitable interest rate than

earned money in The Bedrock Fund?

other investment alternatives like

In a word: profitability. The practical

savings accounts or bank CDs while

effect of the Fund’s ability to impose

providing

higher interest rates is that its

essentially the best of both worlds

investors’ returns are consistently

from an investor’s perspective. The

predictable and significantly higher

Fund uses its capital to facilitate

than other alternatives they may

meaningful

have for investing cash assets.

single-family housing sector in a

30

fault you for this thought crossing your mind—but rest assured, the Fund is legit. The Bedrock Fund is fully verified by VeriVest, meaning that it has been fully vetted by the leading due-diligence entity in the real estate industry. VeriVest has confirmed that The Bedrock Fund: •

simply,

diversified

The

Bedrock

comparable

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Had no personal or business bankruptcy

petitions

for

controlling principals in the past seven years •

Had no unfavorably resolved litigation involving allegations of fraud or similar misconduct

• •

standard mortgages. Why is this

fact, investors in the Fund may

sound too good to be true? We can’t

Experienced

zero

regulatory

sanctions in the past seven years

higher than those associated with

In

Does The Bedrock Fund almost

Single investments in the Bedrock

end—with investments in excess of

rates

Bedrock Fund is VeriVest Certified

it leverages to benefit its investors.

conventional lenders. This provides premium

Invest with Confidence: The

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Had no felony criminal convictions affiliated with the Fund in the past seven years

Interested in learning more about how to get involved with The Bedrock Fund?

Contact Bedrock Fund today.

For More Information: (404) 317-7234 mark.mckeller@thebedrockfund.com https://thebedrockfund.com/

August 2021 Originate Report 31

FEATURED ARTICLE

TIPS FOR MORTGAGE INVESTORS TO GET MORE DEALS

By Rocky Butani, Founder & CEO, Private Lender Link

I

ndividual and family office investors who invest their money into mortgages and trust

capital raising is a bit easier for fund

investors, but most loan originators

managers these days.

likely already have a solid network

deeds have likely been experiencing

You can’t blame loan originators for

yourself. Providing originators with

a lot of challenges with finding

exploring these other capital options.

a resume will show that you are

loans to fund over the past 5

The business model of using capital

serious, and it will also make your

years, but 2021 has turned out to

from

individual/family

life easier. Rather than having to

be one of the worst. The biggest

investors can be quite challenging

explain your investment criteria

competition for mortgage investors

and can stunt growth for private

over and over again, you can put

is institutional loan buyers that offer

lending operations. That said, there

loan originators cheaper capital

are still several private lending firms

everything in writing and send the same document to everyone.

and optimum efficiency. Mortgage

in the market that like the model of

investors had a small window of

working with individual investors,

hope in the Summer of 2020 while

and they have no interest in forming

the institutional capital paused for

a fund or selling loans to the Street.

of investors, and you have to sell

multiple

a few months, but now it’s back stronger than ever.

If you’re one of these mortgage investors who invests in individual

The events of 2020 pushed a lot

notes or trust deeds, there are still

of private lending companies to

many opportunities for you, but you

diversify

must put in some work to get more

their

capital

sources,

The resume should include 4 key components: Investment Criteria Make a list of everything a loan originator would ask you in order to send you deals - geographic areas, loan types, property types, min/max loan amount, max LTV, loan term,

deals from loan originators.

target yield, and much more.

mortgage funds and REITs have

TIP #1 - CREATE A RESUME

Transaction History

become more popular and widely

The idea of creating a resume may

Make a list of all the private

accepted by accredited investors, so

sound crazy to many mortgage

mortgage investments you’ve made

and many of them started a new mortgage

32

fund.

It

seems

like

in the past few years and include a few important items like the property type, city/state, investment amount, LTV, note rate, loan term, status (active or paid off), etc.

Portfolio Stats Provide some information about your existing portfolio of loans total dollar amount, average LTV, average yield, etc.

Bio Explain the benefits of doing business with you, how long you’ve been investing in mortgages, your process for evaluating/funding loans, what other sectors you invest in. Write up some personal information about yourself - your career, where you reside, etc.

TIP #2 - PROSPECT Once you have your resume, the next step is to find loan originators that are seeking mortgage investors. This is extremely challenging, mainly because a lot of originators don’t do business with individual investors. Many of them sell all their loans to institutional capital providers, or they manage a mortgage fund, or both. It’s easy to just do some searching online to find originators. You can browse individual websites, and there are also several directories that list multiple private lending firms.

When

browsing

each

company’s

website, check to see if they have a page about Investing. You’ll find many of them are offering a fund investment, but you’re bound to find some that offer note and trust deed investments. If you don’t find

Mortgage Investor Tips: Continues on pg. 24

August 2021 Originate Report 33

Mortgage Investor Tips: Continued from pg. 23

an investing page on the website, move on, because they likely have too much capital, or they are backed by institutional capital.

by

including

your

most

recent

lending companies are advertising to

transaction. If you always have funds

the public. Have conversations with

available to invest, consider sending

multiple originators and ask them

an email every month or every

what it would take for you to win deals

quarter to remind loan originators that you’re still active and ready to

Target the smaller shops with just one person, or no more than five. Many times, you can’t tell a company’s size by looking at their website, but the size of the firm could tell you if they’d be a good prospect.

We have a few trade associations

fund deals.

CONCLUSION

TIP #5 - ATTEND INDUSTRY EVENTS Attending

a

private

mortgage

conference could be a goldmine for expanding your network of loan originators. There are over 12 private lending

without taking on additional risk.

events

that

take

place

The private mortgage landscape has changed drastically over the past decade. The institutional capital is likely not leaving our space, and many mortgage funds will continue to be formed. That said, there are still many quality deals out there

each year. The trade associations

for individual note and trust deed

sources to find loan originators.

mentioned above all host events

investors, so don’t be discouraged. If

I am a member of three of them:

which you can attend without being

private mortgages are an important

California

Mortgage

Association

a member. And there are a few other

part of your investment portfolio,

(“CMA”),

American

Association

organizations that host networking

just work a little harder to get more

of Private Lenders (“AAPL”), and

events for our industry - Geraci Law

National Private Lenders Association

deals, and your effort will definitely

Firm, National Lending Experts,

(“NPLA”). If Arizona is a region you’d

Private Lender Expo.

pay off.

in our industry which can be great

consider, look up the Arizona Private Lender Association (“APLA”).

The

attendance

typically

ranges

from 150 to 500 people, the majority

TIP #3 - NURTURE THE RELATIONSHIPS

of which are loan originators. All

This is a relationship business. Make

website where you can find the

an effort to stay connected with

right prospects, and you can create

the loan originators that send you

a profile to advertise that you’re an

investment opportunities. Call them

zBe sure to clarify that you’re a capital

periodically to chat. If local, offer to

provider, not an originator. If possible,

take them out for a meal once a year.

These personal interactions could keep you top of mind when a new loan request comes in.

TIP #4 - START AN EMAIL MARKETING CAMPAIGN

these events offer a mobile app or

add some info about your investment criteria on the business card.

Rocky Butani is the Founder & CEO of PrivateLenderLink.com, a website where investors and brokers can easily find direct private lending companies,

mortgage

investment

opportunities, and industry service providers. He has been in the private mortgage industry for 10+ years, focusing on lead gen for lenders. CA DRE Broker Lic. 01893537.

TIP #6 - BE REALISTIC WITH YIELDS Borrowers and brokers have lots of options for private lending these

Whenever you have funds available

days, so loan originators won’t send a

to invest, send an email to all the loan

deal to you if your yield requirements

originators in your network. Mention

are not a match for the current

how much money is available and

environment.

make the email more interesting

online to see the pricing that private

34

About the Author

Do

some

research

Rocky Butani Founder & CEO Private Lender Link rocky@privatelenderlink.com https://privatelenderlink.com/

Free Resource to Find Private Mortgage Investments privatelenderlink.com/investments

Mortgage Trust Deeds & Private Mortgage Funds

View investment profiles and contact each company directly.

Access unique content to gain insights about private mortgage investing

privatelenderlink.com/investments Private Lender Link, Inc. CA DRE Broker Lic. 02057741 | (408) 413-2008 | 1963 O'Toole Way, San Jose, CA 95131

August 2021 Originate Report 35

GOLD SPONSOR

Going Against the Grain HOW VOYAGER PACIFIC CAPITAL IS REVOLUTIONIZING THE TRADITIONAL REAL ESTATE INVESTMENT MODEL

T

By Mark Dewyea, Contributing Writer for Originate Report here’s a major distinction

dynamic duo of vehicles: Voyager

devoting millions of dollars in capital

between a casual real estate

Pacific Opportunity Fund II and

to several assets with the hope of

investing approach yielding

Voyager Pacific High Yield Fund III.

profiting from eventual appreciation,

periodic, fluctuating revenue versus a

Originate Report had a chance to sit

Voyager Capital invests in small real

proven cycle-tested strategy designed

down with David Hardcastle, CEO of

estate assets with a concentration on

to garner consistent and reliable

the firm’s Fund II along with some of

cash flow returns.

value from underperforming assets

his colleagues tasked with the much-

that optimizes returns for investors.

anticipated

The

Fund III.

is

latter

investment

incontrovertibility

modality

launch

of

Voyager’s

The idea behind Fund II is deceptively simplistic. For over twenty years,

preferrable,

Voyager has recognized the aggregated

especially given the recent economic

VOYAGER FUND II OVERVIEW

value of small transactions across three

turbulence associated with COVID-19.

“If I had asked the public what they

main asset categories: (1) Vacant

Sustainable passive income combined

wanted, they would have said a

Properties; (2) Rental Properties;

with a growth-minded perspective is

faster horse.”—Henry Ford

and (3) Tax Lien Certificates. Let’s

a winning combination regardless of

take a closer look at each of these

asset class and that’s exactly what

Think of Voyager Pacific Capital’s

asset types to provide an insight as to

investors will find when they choose

Fund II as the ‘Model-T’ of real estate

why they were selected to comprise

Voyager Pacific Capital—a vertically

investing: an innovative, successful

the foundation of Fund II:

integrated

that

deviation from the norm that is

•

utilizes efficient capital deployment

producing consistent results quarter

streams with a track record of

into

after

relative

investment

fragmented

firm

secondary

and

quarter.

The

underlying

Vacant Land: Diversified revenue immunity

to

market

tertiary markets to deliver premium

approach and carefully crafted asset

fluctuations. Sound too good to be

risk

structure is unique in that instead of

true? The good news is that it’s

36

adjusted

returns

via

their

not—and these characteristics

you have a dynamic asset class

line for its investors. In accordance

are exactly why the Voyager

to round out Fund II. Voyager

with these corporate values, COO

Capital team has purchased vacant

Capital acquires tax liens across

David Hardcastle is excited for the

properties consistently over the

29

approach

initial roll-out of the Voyager Pacific

past 18 years across 35 different

maturity and can initiate the

High Yield Fund III. This fund is

states. The broad variety of vacant

foreclosure process.

concentrated on higher value, value-

parcels

•

allows

for

states

as

they

add initiatives in which leverage will

portfolio

diversification while producing

By combining these asset categories

be relied on to optimize IRR. These

attractive cash flow, making it

into Fund II, Voyager Capital is able

investments will focus on assets that

an ideal asset to integrate into

to deliver its investors a number of

deliver reliable revenue streams,

Fund II.

key benefits to include reliable, risk-

consistent growth, expense control

Rental Properties: Rental homes

adjusted, non-correlated returns and

and long-term capital appreciation.

provide consistent income with

a diversified portfolio to support a

the added bonus of improving

variety of exit strategies all whilst

The

neighborhood

via

utilizing extremely low investment

confident that by assembling a

affordable and accessible housing

to value ratio and zero leverage.

diverse and stabilized asset portfolio,

options. The real estate experts

While the major players in the

they

at Voyager Capital leverage their

real

industry

dynamics resulting from the current

wealth of experience and market

focused on primary markets and

insufficiency of affordable housing

familiarity

local

metropolitan areas, Voyager Capital

options. The $100 million Fund

markets where the rental market

is tapping into the mid and smaller

III is open to accredited investors.

is

markets

reduced

The Fund III project will largely be

the acquisition cost is investor-

acquisition costs and higher yields.

spearheaded by Philip Adler, who

friendly

purchase

Data supports that these secondary

brings with him a proven track

these assets through tax lien

and tertiary markets will experience

record of success in the industry

foreclosures, county tax sales

outweighed gains in the near future—

spanning more than thirty years—

or open market transactions

and Voyager Capital’s Fund II is

over the course of which he has

to

perfectly positioned to capitalize on

successfully managed in excess of

this forecasted market trend.

$500 million in asset transactions.

to

performing and

transition

dynamics

pinpoint optimally then

them

to

and

long-

term rentals. Rental property

estate

investment

that

feature

can

Capital

exploit

team

ideal

is

market

Don’t miss out on this unique

assets are inherently resilient to external economic factors as

VOYAGER FUND III

opportunity to tap into Fund III that

there will always be a demand

“The greatest danger in times of

is poised to take advantage of a limited

for quality housing options—a

turbulence is not the turbulence—

market opportunity focusing on value-

key asset feature that makes

it is to act with yesterday’s logic.”

add assets in ideally located, transit-

rental properties a great addition

—Peter Drucker

oriented markets boasting promising job growth and economic trends.

to Fund II. •

Voyager

Tax Lien Certificates: When

One of the first things you’ll notice

it comes to diversification, tax

with essentially every interaction

liens are hard to beat. Add to that

with

significantly low investment to

underlying devotion to the continual

value ratios and a steady source

improvement

of passive interest income and

improving

Voyager

Capital of

the

is

efficiency ultimate

the and

bottom

For More Information: https://www.voyagerpacific.com/

August 2021 Originate Report 37

CONTRIBUTED ARTICLE

The Origin Story That Launched an Industry

By Kat Hungerford, Project Development Manager, AAPL

I

t is 2009 and the Great Recession is in full swing. The federal government has passed

the Secure and Fair Enforcement for

Mortgage

Licensing

(SAFE)

Act and taken control of mortgage giants Fannie Mae and Freddie Mac, foreclosures are at an all-time high, bank bailouts are being approved right and left, and Congress has just been presented with the initial version of what would become the Dodd-Frank

Wall

Street

Reform

and Consumer Protection Act. Risk is high, confidence is low, and only one thing is certain: Uncle Sam’s hammer is about to come down.

In summary, it is an inconvenient time to be in the lending industry.

The Origin Story While banks trembled at the beginning rumblings of sweeping regulatory reform and their mortgage lending practices came to a standstill, the glut of foreclosures on the market was giving rise to a new wave of investors capitalizing on bottomingout real estate prices – and spurring a desperate need for capital in their wake. Seeing the writing on the wall for institutional lenders and forecasting the widening gap between borrower needs and banks’ ability and willingness to lend, Anthony Geraci of Geraci LLP, Jack Rollins of RCG LLC, Tim Brickner of RBA Capital Markets, and Wallace "Kyle" Groves Sam Kaddah, Liquid Logics; Eddie Wilson, AAPL; Linda Hyde, AAPL; Kat Hungerford, AAPL; Nema Daghbandan, Esq., Geraci LLP; Jeff Tesch, RCN Capital; Chris Ragland, Ragland Realty and Management; Matt Gutner, RCN; Tom Meade, TCP Funding; Melissa Martorella, Esq., Geraci LLP

38

Anthony Geraci, Esq., Geraci LLP, Founding Member of AAPL

(Left to Right) Tim Bricker, RBA Capital Markets, Founding Member of AAPL; Lorna Farell

(Left to Right) Crissy Rollins;

Bill Worsley (L); Holiday Homes, LLC; Wallace "Kyle" Groves (R),

Jack Rollins III,

Blue Heel Development, Founding Member of AAPL

RCG LLC, Founding Member of AAPL

of Blue Heel Development collectively

together in a cramped meeting room

from institutional lenders’ hubris:

committed $100,000 toward creating

at Caesars Palace Las Vegas.

namely, that private lenders too would

the National Hard Money Association.

Next, they needed ideas about how to move the industry into the mainstream and ensure its continued viability.

First to the chopping block was the “hard

money”

terminology.

The

phrase no longer accurately defined the

industry’s

current

business

practices, and its connotations were

With the SAFE Act’s passage into law,

less than positive after the Wild

hard money lenders for the first time

West of lending that had snowballed

fell under federal regulators’ purview

into the present financial crisis.

– and more pervasive legislation was in the offing.

Enter a small caucus of hard money

find their wings clipped and their operational gap welded shut absent a degree of self-oversight and adherence to established best practices.

Identifying the need for structure was straightforward, but administering it was something else entirely. The caucus acknowledged that endemic to

Out of much discussion came a modern appellation for an ancient vocation: private lending.

and service provider movers-and-

A new, self-styled sobriquet in place,

shakers from across the U.S., huddled

our intrepid group next sought to learn

the profession is that what allows for the demand gap – limited regulation – also makes private lenders’ wholesale identification next to impossible.

AAPL Origin Story: Continues on pg. 46

August 2021 Originate Report 39

How do you provide for the future needs of a trade that, by its very nature, is extremely decentralized?

Today, the caucus’s participants cannot name whom among their small group originally put forth the idea, but by the meeting’s end, all attendees named themselves as inaugural members of the first and only (and newly retitled) national

association

pledging

to

safeguard the private lending industry.

The American Association of Private Lenders (AAPL) was born.

its

keeping

small pace

beginnings with

in both print and digital formats, it

by rule of law. This ensures that

serves as a way for all practitioners

not only can borrowers, investors,

– whether members or not – to keep

and partners trust members as

up with best practices.

standard

an extension of the association’s nonpareil reputation, but that the

Government Relations Committee

industry can point to the Code –

Since

and AAPL’s complaint process – as

Government Relations Committee

proof that its internal checks and

has had a 100 percent success rate

balances are more than adequate.

in blocking the passage of legislation

Today, AAPL remains the public’s

that would prove harmful to private

only mainstream avenue to report

lenders. The Committee has thrice

private lender ethics violations.

defeated business-purpose mortgage

AAPL’s member directory has gone but

aggressive

expansion of the industry itself, AAPL has grown to become the oldest and largest trade association for private lenders. It has continued its history of private lending industry firsts, some of which you may now recognize as trade standards:

through many iterations, but today it stands as the premier place for borrowers and investors to validate membership

and

find

reputable

partners. Visitors filter members by service area, business sector, loan type, and more, with members able to create and update their own profiles with contact info, company description, images, and video.

National Conference Member Emblem

reconvenes at Caesars Palace Las

Throughout

Vegas to continue its mission of

materials, members may use the

supporting best practices. From its

association’s

is today the largest national private lender gathering and continues to be the choice event among industry executives.

The

association

also

became the first to host a hybrid conference with both in-person and

inception,

AAPL’s

their “Proud

percent sales price tax on flips and later a commercial licensing bill in New York, a licensing proposal for self-serviced loans in Colorado, and a California bill that would have required mandatory COVID-19 foreclosure

forbearance

vacant

any proof of hardship. Federally, the SEC cited AAPL’s comments in support of the expansion of the accredited

investor

definition,

and the Committee is beginning to see traction in its Day on Capitol

Each year since its debut, AAPL

humble beginnings, #AAPLANNUAL

its

licensing bills in Florida, a 20

Member Directory

Launching an Industry From

established

minimum

AAPL Origin Story: Continued from pg.17

marketing Member”

insignia to publicize their standing.

In turn, AAPL traces the emblem’s usage to ensure only active members gain the benefit of affiliation.

Trade Magazine

Hill advocacy efforts. AAPL stands today as the only trade association advocating nationally on behalf of private lenders.

Trade Certifications For

those

members

looking

to

demonstrate their knowledge and commitment, Private

AAPL’s

Lender

Certified

Associate

and

Private Lender is the industry’s

Certified Fund Manager designations

quarterly source for the latest market

are the only private lender trade-

and accessibility.

trends, executive interviews, and

specific

deep-dive exploration of operations

subject-matter experts and active

Code of Ethics

and strategy, all targeted at a

practitioners,

AAPL expects its members to adhere

specifically private lender audience.

available online, with CPLA to follow

to a code of conduct above the

Available to the public at no cost

by the end of 2021. AAPL continues

virtual attendance, continuing its goal toward increasing inclusiveness

40

credentials.

CFM

Taught is

by

currently

Eddie Wilson

Linda Hyde

Kat Hungerford

CEO, AAPL and ThinkRealty

Managing Director, AAPL

Project Development Manager, AAPL

antecedent

using the data to support advocacy

for the industry’s dedication to

coursework with in-person training

efforts and measure market change.

best practices, instilling oversight

to

expand

on

the

at its annual conference and select Online Education & Resource Portal

partner events.

AAPL’s Industry Awards While AAPL’s Excellence Awards model is now ubiquitous among private lender events, the honors program

that

recognizes

a

Rising Star, Service Provider and Lender Members of the Year, and Community Impact awardees is the gold standard for distinction among private lenders.

gives

downloadable checklists, templates, and guides to educational video archives, a vetted service provider directory, and compliance center.

The dashboard also serves as a central location for AAPL programs through which members can gain industry-wide recognition.

quarterly

survey

organization to offer company-level

marketing

poll practitioners on benchmark data

differentiation in the association’s

like loan terms, foreclosure rates,

member directory.

receive

an

anonymized and aggregated insight report from the results, with AAPL

has safeguarded the private lending profession’s

exponential

growth

and advancement into mainstream acceptance, its

demonstrating

practitioners

are

that

organized

and trustworthy. We are proud to

be

an

industry

trailblazer

while maintaining a longstanding reputation for excellence, integrity,

our

members

and

the

private

lending profession.

which members can display a globally

mechanism of its kind to regularly

respondents

commitment

background checks – a process by recognized verification badge on

Survey

This

to many more years of supporting

is the first – and to date, only –

and market-confidence assessments.

encroachment.

and inclusiveness. We look forward

AAPL is the first private lender trade

Open to any active private lending the

dashboard

Background Checks

Quarterly Benchmark Survey company,

online

members access to everything from

processes, and fighting regulatory

materials

and

gain

Continuing the Mission Throughout this lengthy journey of firsts, AAPL has held true to its

inaugural

mission:

providing

Kat Hungerford Project Development Manager AAPL khungerford@aaplonline.com https://aaplonline.com/

August 2021 Originate Report 41

GOLD SPONSOR

FLIP FACTORY APP’S Programmable Cashflow Transforms the House Flipping Industry

By Mark Dewyea, Contributing Writer for Originate Report

42

delayed payments for GCs and Sub-

held up or misappropriated. Lenders

Contractors. It’s a utopic real estate

will appreciate the ease in which

investment experience that the Flip

they can evaluate prospective clients’

Factory App team has made into

project proposals and keep tabs on

reality. By using new technology

the status of ongoing work thanks

to

and

to status updates and geotagged

customizable cashflow, Flip Factory

photos, all accessible from a single

App is the very first Fintech platform

online platform.

generate

programmable

to provide a truly end-to-end solution for payment and project management.

The web-based program seamlessly

Programmable Cashflow System

integrates secure project budgets

The key behind Flip Factory App’s

for Lenders, proven processes, and scalable production for Investors, and next-day payments for GCs

Built from the Ground Up by two

its magic. Upon sign up, every entity

of

C

real

estate

investing and lending, failure

is imminent if the distribution of funds is delayed or exceeds budgetary constraints. Two Raleigh-Durham General Contractors

know

these

problems all too well and created Flip Factory App to make them a thing of the past for everyone involved in a project—from the Lenders and Investors to the General and SubContractors. Through an innovative and

programmable

platform,

expert

cashflow

templates,

and

management system. Right after a estate asset, the app starts to work

General Contractors with decades

In

not reactive, cashflow and project real estate investor acquires a real

It was two Raleigh-Durham-based

lifeblood.

success is that it’s a pro-active,

and Sub-Contractors.

GCs from Raleigh-Durham

ash flow is every project’s

The Genius Behind Flip Factory App’s

combined

industry-specific

experience who built Flip Factory App from the ground up. During their careers, Jake Harris and Juan Huerta recognized a plethora of major sticking points in the house-flipping process that consistently tied up projects

and

depleted

financial

resources. “Mistrust and misuse of funds are the biggest issues,” said Harris, Co-Founder of Flip Factor App. Along with Huerta, his partner, the duo teamed up with a tech company to create a user-friendly app that seamlessly connects all major players to a given real estate investment project, and assists them

intuitive project management tools,

in locating, planning, executing, and

projects under Flip Factory App can

paying for the entire project, from

be completed faster, smarter, and

start to finish. With the use of Digital

with less risk. No more mismanaged

Wallets, every dollar of a project is

funds or a lack of communication

safely and securely funneled from

for Lenders. Better tools, planning,

Lender to Sub-Contractor, effectively

and support for Investors. No more

mitigating any risk for funds to be

in the app receives a complimentary FBO account located inside Flip Factory

App’s

banking

partner.

The account is owned by the entity and carries the industry standard $250,000 FDIC insurance.

When a project is registered by an Investor, that project also receives a separate FBO account, owned by the Investor, that is called a “Project Wallet.” Initial funds deposited in the Project Wallet come from either the Investor or the Lender via bank-tobank ACH, wire transfer, or the most common route: a transfer from their own Flip Factory App Digital Wallet.

Have you ever heard of the “envelope” budgeting method that uses separate envelopes to create and adhere to an itemized payment schedule? You can think of each line item in the app as an individual envelope. Funds in the Project Wallet are unspecified and awaiting assignment. The Investor Flip Factory App: Continues on pg. 20

August 2021 Originate Report 43

Flip Factory App: Continued from pg. 23

must select and release funds to each line-item envelope to fund that specific scope of work. Funds released into envelopes are held in reserve for a specific and definite purpose and may only be used for that purpose—eliminating the risk of misappropriated funds.

When it comes to creating a project budget, Investors won’t have to go it alone. The Flip Factory App’s user-friendly features assist the Investor in creating their project

(Left to Right) Jake Harris, Co-Founder & CEO, Flip Factory App; Juan Huerta, Co-Founder & COO, Flip Factory App

budget, timeline, and statement of values through expertly crafted, customizable

templates

that

compile all pertinent information, aggregated organized,

into

a

professional

logically business

model that is ready to be presented to potential Lenders when it comes time to obtain funding.

Once the Investor has funded the line-item envelopes, the General Contractor contracts out the work through the app itself. The flow of funds from each digital envelope to a Sub-Contractor’s or Material Provider’s Digital Wallet can only be triggered by an invoice, with geotagged

photos

showing

the

completed work. Invoice approvals require the submitter and approver to be separate entities. Once the invoice is approved, the funds flow from the digital envelope to the SubContractor’s Digital Wallet, and the

day ACH transfer—no more waiting

Revolutionizing the House

for weeks on delayed payments.

Flipping Model

When the project is completed, any

It’s

remaining funds in the project wallet

successfully and consistently is a

are transferred back to the Investor.

challenging task, even for experienced

secret:

flipping

houses

real estate professionals. The Flip Of course, unanticipated costs are

Factory App makes the process more

the one universal constant when it

manageable by distilling years of

comes to the house flipping industry,

industry experience into easy-to-

and issues arise when least expected.

The Flip Factory App also provides the requisite flexibility to handle these unanticipated developments in an expedient and cost-effective manner: from the Lender to the SubContractors, all parties associated with a project remain informed and can easily collaborate to craft viable solutions. If the General Contractor runs into an unexpected challenge or recognizes a potential value-add

follow processes and procedures that helps plan, fund, manage and pay for projects—all integrated into an easy-to-use online platform where information is safely stored and intuitively organized. Lenders and General Contractors can provide input and exchange information quickly and efficiently to keep the project ontrack and on-budget, ensuring optimal return on investment with a steady, collaborative workflow. Get started with Flip Factory App today!

opportunity that requires a deviation from

the

pre-approved

project

standard 3% transaction fee flows to

timeline or budget, he or she can

the Flip Factory App. Next, the Sub-

submit a digital change order to the

Contractor can transfer that money

Investor to improve and allocate funds

to their personal bank via a next

to cover any additional expenses.

44

no

For More Information: jharris@flipfactoryapp.com https://flipfactoryapp.com/

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TRAILBLAZERS

P R I VAT E L E N D I N G

TRAILBLAZERS Nicole Andrews

President, Fastapp Appraisal Management

46

Q: What has been the highlight so far in your career?

Building a nation-wide AMC that holds licenses in all 50 states.

Q: What piece of advice did you personally receive early in your career that has helped shaped decisions you’ve made?

Always stay true to who you are and what you know. Stay in your own lane.

Nicole Andrews

President Fastapp Appraisal Management Q: How many years have you been in Private Lending and why did you enter this field?

I’ve been in private lending for 12 years. When I first started in the

Q: How have you seen your company grow in spite of or because of current market conditions?

funds for leukemia and lymphoma

The past year’s climate has many of

and advancements against cancer.

our competitors struggling, but we

AMC industry some of my first

have utilized our strong relationships

clients were in Non-QM. I entered

with appraiser’s to continue to

this field to help bridge the gap

service our pre-existing clients and

between the appraisers and the

put in the work to foster and build

appraisal management companies;

relationships with new clients.

with the industry appraisers aging there seemed to be a disconnect between appraisers and appraisal management companies.

Q: What do you do for your firm?

I’m the President of Fastapp.

Q: How do your contributions affect your company at large?

I

help

to

run

the

day-to-day

operations. I’ve been in the industry for over 20 years and I have built many relationships with clients that

Q: Tell us about a person or organization you admire. Team In Training. How have they made an important impact on you, the industry, or the world?

Team In Training has been raising for decades. They raise money to provide

groundbreaking in

research the

fight

Q: How have you turned a career mistake or failure into success in your career?

When the crash happened in 2007 I was working for a single client.

Q: What are some of your goals for 2021 and beyond?

One primary goal is to continue conducting and facilitating outreach programs to educate our clients and vendors, with the goal of building awareness and ensuring the integrity of our field as a whole.

Since that day I’ve been intentional

Q: What does success look like for you?

Peace and happiness. For me, spending time with my family is imperative for my own personal peace and happiness.

Q: What is the best advice you could give someone thinking about making a leap into Private Lending?

Thoroughly research the industry

about not putting all of my eggs in one basket.

Q: If you had a clean slate to start over and do anything you wanted to do, what would that be?

A pilot.

standards, try to gain some experience prior to jumping in fully, or consult

have a footprint on the industry.

These relationships with people who

Q: What is something most people

with a mentor who knows the

have industry knowledge help us stay

don’t know about you or your

industry well.

ahead of some of our competitors

company?

in regard to what is needed to be

I’m a military veteran and an avid

cutting edge.

sports fisher.

For more information, please visit: https://www.fastapp.com/

August 2021 Originate Report 47

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https://geracilawfirm.com/lender-lounge/ August 2021 Originate Report 49

FEATURED ARTICLE

FUND RAISING CONSIDERATIONS A CPA’S PERSPECTIVE

By Henry Chavez, Principal, Spiegel Accountancy Corp.

F

und raising is an exciting

a

preferred

return

event in the life of a fund and

one solely based on allocable net

for fund managers. It’s the

profit. Accordingly, it’s important

excitement of building something

to

new or taking it to the next level.

preferred return.

understand

the

rather

basics

than

of

a

Fund raising is also competitive

what type of preferred return you should offer.

Is it compounded or noncompounded?

Compounded means the calculation

with many types of deal structures

WHAT ARE THE MECHANICS OF A

of a preferred return’s periodic

to entice potential investors. The

PREFERRED RETURN?

growth amount comes from the

most common trend today involves

There are certain questions to consider

amount of invested capital plus

mortgage or debt funds offering

when it comes to understanding

all previously earned but unpaid

50

preferred return amounts. In our

net profits. If a net profit does not

that are not based on net profit,

experience, many funds generally

exist, or there is insufficient net

they will be considered taxable

offer a compounded return for those

profit to meet the preferred return

income to the investor and an

investors who elect to reinvest

promised to investors, then the

expense

their return.

preferred

The tax rules and related case

return should not be

to

the

partnership.

paid. However, if preferred returns

law

Is it cumulative or non-

are paid to the investor when

unclear, complicated, and require

cumulative?

there is insufficient net profit to

consultation with legal counsel

actual

pay them, these distributions are

and the tax CPA performing the

earnings fall short of the preferred

either considered returns of capital

tax preparation services and are

return and the shortfall is carried

or guaranteed payments—interest

beyond the scope of this article.

forward to the following period until

expense. There are tax implications

the cumulative earnings of the fund

related to guaranteed payments,

Operations

reach the preferred return. Many

which are discussed below.

•

Cumulative

is

when

the

around

issue

are

The fund manager must divert valuable

funds have this option. In particular,

this

capital

resources

real estate or traditional private

WHAT HAPPENS IN PRACTICE?

away from revenue-generating

equity funds that invest in real

In our experience, we have seen

activities as a result of making

estate have this option because the

certain funds continue to pay out

profit distributions greater than

revenue is sporadic or one-time in

preferred

actual profit.

nature (gains on sales of the assets).

there is insufficient net profit to

It is also to incentivize investors to

pay them. These excess payouts

complied with the terms of its

capture the capital gain treatment

are not profit distributions; rather,

private placement memorandum,

upon sale, refinance, and/or other

they

of

depending on how the preferred

realization event.

capital or, potentially, guaranteed

return language is structured.

are

returns

even

considered

though

returns

•

The fund potentially has not

payments. A return of capital does On the other hand, non-cumulative

not carry any tax implications but

Financing

means

will reduce the amount of capital

•

the

shortfall

of

actual

which

earnings does not carry forward to

upon

the following period. The preferred

generate future preferred returns.

returns do not accrue, and the

If

investors are not entitled to any past

investors with unsolicited returns

to explain to investors, who

unearned preferred returns. Non-

of capital, it needs to disclose this

received returns of capital or

cumulative preferred returns are

fact since failure to do so can have

guaranteed payments, the effect

common in mortgage funds. Fund

securities law implications related to

on

sponsors and their attorneys should

disclosure omissions.

taxability of the distribution.

fund

the

investor

management

can

The fund must perform additional

provides

capital raising to replace the excess funds distributed.

•

The

fund

their

will

capital

be

required

account

or

carefully strategize how to structure preferred returns in accordance with

The implications to the fund for

the fund’s business plans.

paying out returns of capital or guaranteed payments are as follows:

Can a preferred return be paid when there is no net income?

Taxes

The short answer is no. By definition,

•

a preferred return is a claim against

If preferred return payments are deemed guaranteed payments

ALTERNATIVE SOLUTIONS TO STRUCTURE PREFERED RETURNS Allocation of Net Profits Rather than having a preferred return model, allocation of net profit Fund Raising: Continues on pg. 20

August 2021 Originate Report 51

Fund Raising: Continued from pg. 29

allows the fund to only pay out net profit earned on either a monthly or quarterly basis. This method allows the fund to conserve cash for operating transactions without the burden of determining how much available cash must be set aside or borrowed to pay for preferred returns that may not yet exist. While this strategy is not commonplace, it exists, and funds have still been

commitments. This method is not

successful at raising capital.

Fund management should consider

normally documented in a fund’s

which

private placement memorandum;

meets their needs and the expectations

Accrual of Cumulative Preferred

however,

Returns

management

For any funds that have cumulative

their

preferred returns, the fund manager

return requirements.

may

accumulate

such

we

fees

have

seen

periodically to

meet

fund waive

preferred

capital-raise

strategy

best

of their investor base.

About the author As a Principal with Spiegel Accountancy

unearned

Corp., Henry Chavez provides assurance

preferred return as an off-balance

Debt Raise Instead of Capital Raise

sheet obligation. To the extent

A debt raise is a method that allows

and business consulting services to

fund management goes to market

the fund to solicit funds through

private equity companies in the financial

with a cumulative preferred return

debt rather than capital financing.

services, manufacturing and distribution,

option for prospective investors,

This method does not diminish the

technology, and non-profit sectors.

the cumulative preferred method

ultimate cash payout. Instead, it

allows the fund to acknowledge its

Henry serves as a strategic resource

categorizes the return on debt as

commitment while still enabling it

an interest expense rather than a

for growing organizations, guiding

to maintain liquidity for operations.

preferred return. To the extent there

This method is commonplace since it

is insufficient net profit to pay a

enables the fund to have a stipulated

preferred return, this method allows

preferred return and concurrently

for the guaranteed payout of funds.

conserve operating cash as the

This is a suitable alternative for a

need arises.

fund that is interested in paying

their

development

and

success.

He is seasoned CPA, licensed in California, and an active member of

private

equity

and

mortgage

banking associations.

a fixed return irrespective of the Management Fee Waiver

profitability of the fund.

This option provides a triggering event for management to waive

CONCLUSION

(not defer) its normal fee for asset

Regardless of the form of profit

management and loan originations,

distribution,

among other fees, in an effort to

an essential component of capital

ensure that required net profit is

raising,

sufficient to meet preferred return

alternatives from which to choose.

52

and

investor there

return are

is

many

Henry Chavez Principal Spiegel Accountancy Corp. henry@spiegelcorp.com https://spiegelcorp.com/

UPCOMING EDITIONS

ORIGINATE REPORT October:

GROUND UP CONSTRUCTION AND BRIDGE LENDING December:

THE HIGHS AND LOWS OF 2021 YEAR IN REVIEW

If you have an article you would like to submit for one of our upcoming editions, reach out to us at: submissions@originate.report August 2021 Originate Report 53

GOLD SPONSOR

(Left to Right) Brett Crosby; Founder & CCO; Brew Johnson, Founder & CEO, PeerStreet

PeerStreet

DEAL FLOW IS CUSTOMER SERVICE

By Charles Peckman, Contributing Writer for Originate Report

I

nvesting in real estate debt can

“We used the time to focus on the

"We've seen a lot more capital come

be a complicated process. To the

health of our portfolio, streamline

flooding back into the space, which

staff of PeerStreet, however, it

many of our core services and

has brought creativity and appetite

is their bread and butter. The Los

operations, develop our platforms,

for many more loan products, but

Angeles-based

services

and launch new products,” he said.

the biggest volume increase has

accredited

“We’re now fully operational, hiring

been in buy-to-rent and bridge

a

company

marketplace

where

investors and institutions can invest in and purchase real estate loans.

Originate Report sat down with the group’s Co-Founder and CCO, Brett Crosby, to discuss the importance of streamlining processes and simplifying the mortgage finance system.

Looking back on a tumultuous year, Crosby

said

that

the

COVID-19

pandemic wasn’t easy for anyone.

incredible

talent,

and

ramping

volume. Now that the market has begun to normalize, we have been able to launch extremely competitive products for our lending partners.”

The Los Angeles-based firm is also embracing a hybrid work model and

aggressively

hiring

remote

employees. In addition to adopting new work protocols, Crosby said it is

loans," he said. "We're also seeing a lot of multifamily and ground-up construction loans and may have some exciting news around those loan types in the near future."

When studying the ebbs and flows of different deal structures, paired with the cyclical nature of real estate markets, Crosby said it could often seem overwhelming, from a client's perspective, to navigate the complexities

With that said, however, he added

critical to ascertain emerging market

that PeerStreet sought new and

areas, whether that means areas of

added, is understanding a borrower's

innovative ways to continue operating.

positive growth or general decline.

business plan.

54

of the market. What remains crucial, he

PeerSteet Olympics "Great things in business are never done by one person; they're done by a team of people." – Steve Jobs

“When PeerStreet is approached

Brew Johnson. “The goal is to take

investing as fast and easy as buying

with an opportunity to acquire

the positives from the traditional

and selling stocks."

or fund a loan, we always want to make sure we understand the borrower’s business plan, that they have the experience and financial wherewithal to execute the business plan, that the market can support such a project, and that the leverage and cost of the loan accurately reflect the risk of the transaction so that it is sellable in the market,” Crosby said.

Behind this analysis and continued customer service, Crosby said, is a hard-working and driven team.

Taking different deal structures into consideration, he added that the interconnectedness of PeerStreet’s team is shown through relationship managers, underwriters, and capital market professionals working with lenders, their borrowers, and retail/ institutional investors.

securitization markets, understand the issues that led to the financial crisis,

and

use

technology

to

create a better type of marketplace for private lending — one that is transparent, data-driven, and has fewer intermediaries,” he said.

As

COVID-19-related

team-centric

restrictions

begin to ease, Crosby said there are

is

echoed by Co-Founder and CEO

continue to devote resources to providing an unparalleled borrower, lender,

and

investor

experience.

marketplace benefits everyone is of the utmost importance, and he

numerous goals the team is laser-

said he believes that most lenders

focused

understand that the team is trying to

on

accomplishing;

and

since the group’s inception during

create value for them.

the aftermath of the 2008 financial crisis, he said the continued growth

“At the core of everything we do is our

of the PeerStreet family has been

award-winning culture,” Crosby said.

rewarding to see.

“We work to empower employees

"We'll [be making] many announcements over the coming months, primarily around opening new loan types, hiring

and give them both the vision and freedom to execute in their roles as effectively as they can.”

key people, further streamlining operations,

mindset

is that the PeerStreet team will

The idea of how the PeerStreet

and

launching

new

products and features," he said.

This

What this means, Johnson added,

"PeerStreet's

core

focus

is

and

always has been to make real estate

For More Information: brew@peerstreet.com https://www.peerstreet.com/

August 2021 Originate Report 55

CONTRIBUTED ARTICLE

The Advantages of Relationship Lending

By David Nielson, Partner, Boomerang Capital Partners

T

here are many kinds of lenders out there, but a relationship lender is

different.

A

relationship

lender

Given the familiarity with the project, a relationship lender is usually empowered to make decisions, ours

works with you from the start of your

certainly are.

project right through to the end, and

importance as the project develops.

then on to your next one. This type of relationship lending offers a number

This is of utmost

For example, when it's time for draws the lender will be familiar

of advantages to the borrower.

with the budget and progress to date.

Core to the benefits is that the

modification, extension or revision

relationship lender knows the history of the borrower and knows the project. As in any relationship, having history and knowledge creates better lines of communication and smooths out

the

back-and-forth

between

lender and borrower. Not only does this save the borrower from having to re-explain everything at each step of the project, but the lender, because of their shared experience, will more clearly understand issues when/if they develop and may even actually anticipate them. Being so familiar with the history of a borrower and

And when or if there is a need for a to the loan, a borrower isn’t forced to start all over with a less than enthusiastic second (or third) lender.

A lender that knows you and your project also means a faster and more

efficient

process.

Glossing

over formalities is not what we advocate, because this is a formal business

arrangement

after

all.

However, while there may be the standard preparation required of the borrower, the net effect is a quicker and more efficient process. Focus, and therefore efficiency comes from knowing what forms and discussions

frequently

meet

borrowers

who

complain of the ‘run around’ they get with other lenders. Obstacles after obstacles that could have been cleared up had the borrower been able to jump on the phone with someone familiar with their project, and not just a person reading someone else’s notes in a system.

Issues like this are multiplied, the more

underlying

investors

that

are involved. If a loan is sold, for example, to 3 different investors, each with a portion of the loan, a borrower

could

find

themselves

negotiating with 3 parties, all with different agendas and timelines. On top of the communication confusion, the drain of time and resources, borrowers are often subjected to an excess of fees because everyone

require attention.

who touches a loan will want to get

where there is room in terms of time

Dealing with a single decision maker

rate, much of which occurs through

and money, and where there is not.

streamlines the entire process. We

hidden or surprise fees.

their past project history means that the lender may be able to anticipate

56

paid, increasing the net borrowing

A skilled and experienced relationship lender is an asset to any project.

While borrowers are just a set of numbers on a page to a transactional lender, a relationship lender is not a passive position. As a borrower, you can call and talk to your lender or meet face-to-face, this is what makes this type of relationship work.

As a lender we are plugged-in, seeing approximately 5000 loans per year, whereas an individual borrower may see just a handful.

This means, as lenders, we have extensive experience and up-to-date information on rates, contractors (to use or avoid), trends, realtors, shifts in the industry, new products, and services and more. Our knowledge, and willingness to share it, can help to improve the end-results, and at the end of the day, that means borrowers Ask if the lender sells your loan.

About the author

money. Don’t settle for a lender that

If this is a possibility, there is a

David

is absent, difficult to contact, and

high likelihood the originator will

Boomerang Capital Partners where

lacks concern for your success.

not be involved in any of the loan

he serves as the Director of Lending.

support or possible modifications.

Borrowers

avoid headaches and make more

•

We aren’t the only relationship lender out there. Respect goes out to all the lenders who are working hard to improve the borrower/lender business. Here are our 3 tips for those looking for a true lender relationship: •

Ask who you will be dealing with, not just during loan origination but also when you are making payments, and later if you need to discuss modifications. When it comes to clarifying the stream of

communication, the

more

specific the better.

•

Ask what the actual process is for a modification. Knowing ahead of time, can help borrowers plan and prepare.

Lest you think this type of arrangement only benefits the borrower, note that relationship lending is good for the lender too.

Knowing the client and the project, while staying involved, leads to lower default rates, which is a win for everyone. Savings can be passed to the borrowers via lower rates, again cementing a mutually beneficial lending relationship.

lending

Nielson

is

a

appreciate

with

Partner

at

relationship

transparent

pricing

while LPs enjoy strong yields with low volatility via a REIT structure.

The Firm was started in 2006 and has been lending throughout past and current crises.

Developing this type of relationship has long-term benefits. A lender that understands a borrower’s history, experience, and successful results, is eager to create a smooth loan process and fund future endeavors.

David Nielson Partner Boomerang Capital Partners david@boomerangcapital.com https://boomerangcapital.com/

August 2021 Originate Report 57

HOW TO GENERATE QUALITY LEADS AS A PRIVATE LENDER BE CLEAR ABOUT YOUR PREFERRED DEALS Always make it clear as to what types of deals you are looking for (LTVs, mortgage positions, and loan types, such as construction, residential, etc.). If you tell people to send you everything, you will end up spinning your wheels and wasting time on deals you would never write anyways.

HAVE THE RIGHT CONNECTIONS FOR THE RIGHT TIMING Network and build your relationships with other lenders who reject business you would write.

RELATIONSHIPS ARE EVERYTHING Do what it takes to build relationships in the industry, even if that means making little to no money on the first few deals. Network and attend trade shows, join Facebook and LinkedIn groups, etc.

CHARACTER COUNTS Treat your brokers and borrowers right, and they might tell their friends or business associates about you and your company. This could mean more potential leads for you.

TEAM UP WITH OTHER PROFESSIONALS IN THE INDUSTRY Work with a builder to help their buyers close the transactions if the banks back out or the buyer can't get financing. A realtor could be a good person to team up with as well.

L E A R N M O R E A T M O R T G A G E A U T O M A T OR . C OM / B L OG

58

Save for the Future and Borrow to Invest For over 6 years McLeod Capital Fund has been a name that clients can trust.

Our unique approach to financial education has always centered around families, businesses and Real Estate Investors. We believe that financially strong homes and businesses today, lay the foundation for bright futures for tomorrow’s generation.

McLeod Capital Fund Inc

Private Mortgage Lender/Mortgage Broker, Investor, and Financial Advisor

Our Success Lies In: Catering for the needs of our Real Estate Investors.

Focusing on asset-based business purpose loans, non-conventional owner occupied mortgages, and non-owner occupied mortgages.

Recognizing and celebrating the true value of our entire database.

Taking care of our borrowers regardless if we are funding directly or brokering the deal with the utmost speed and efficiency.

Working closely with clients to understand their needs.

We don’t just lend, we advise!

2719 Hollywood Blvd #233, Hollywood FL 33020 (954)257-2730 | sbi@mcapfunding.info | https://mcapfunding.info/

August 2021 Originate Report 59

INDUSTRY NEWS

INDUSTRY NEWS

60

PRESS RELEASE

Applied Business Software Announces SOC 2 Compliance LONG BEACH, CALIF., June 30, 2021 - Applied Business Software, Inc., (“ABS”), leader in loan servicing and origination software in the lending industry, announced today the receipt of the Service Organization Control (SOC) 2 audit certification.

This rigorous certification process, conducted by one of the nation’s top accounting firms, Armanino LLP, ensures the integrity of Applied Business Software’s procedures, policies, practices, infrastructure, security, confidentiality, and privacy in the handling of their customers’ data. The comprehensive and complex endeavor attests Applied Business Software’s current operational protocols meet the highest of security standards.

Jasen Portero, COO, who spearheaded the process said: “We underwent this extensive and intensive process as the security of our customers’ data is of the utmost importance to us. Transparency and trust are at the forefront of our continued commitment to our customers in delivering world-class loan servicing and origination software.”

Applied Business Software continues to be the leader in the private lending software market, with customers across the globe. This certification is just one of many initiatives that ABS has earmarked for 2021 and will play a critical role as they expand their list of enterprise lenders. Last year ABS reported their best year ever in annual recurring revenue and gross profit margins in their 42-year trajectory.

About Applied Business Software, Inc. Applied Business Software is a market leader and global provider of software systems and solutions to the lending industry. ABS offers a complete suite of software products designed from the ground up to specifically address the needs of those who originate and service loans. All our products are consistently rated superior in design, system interface, expandability, and ease of use. ABS is based in Long Beach, California. For additional information about ABS’s products and services, visit www.themortgageoffice.com or call (800) 833-3343.

For More Information, Contact: Elizabeth Morales, Chief Marketing Officer elizabeth@absnetwork.com | (800) 833-3343 | https://www.themortgageoffice.com August 2021 Originate Report 61

PRESS RELEASE

RCN Capital Celebrates Grand Opening of Office in North Carolina Event Signals Company’s Continued Expansion & Growth in the Private Lending Industry

SOUTH WINDSOR, CONN. (July 1, 2021) – RCN Capital, a leading nationwide private lender specializing in providing financing for real estate investors, officially announced the opening of a new office in Charlotte, North Carolina to accommodate the company’s rapid growth and to support the company’s ongoing expansion strategy.

The company also has a corporate headquarters in South Windsor, CT. “It brings me such pleasure to say that the hard work and efforts of all employees of RCN have given us the ability to open an office here in Charlotte, bringing a place I’ve always considered home into my hometown,” said Justin Parker, RCN Capital’s Chief Financial Officer and Charlotte native. “We are so thrilled to expand our footprint into the Carolinas and are thrilled to continue instilling the RCN way throughout the country.”

2021 continues to be a notable year for RCN Capital as the company is currently on track to exceed $1.1 billion in originations for the year. The company also recently reached the impressive milestone of originating over 10,000 loans since inception for over $2B. About RCN Capital RCN Capital is a South Windsor, CT based national, direct, private lender. Established in 2010, RCN provides commercial loans for the purchase or refinance of non-owner occupied residential and commercial properties. The company specializes in new construction financing, short-term fix & flip and bridge financing and long-term rental financing for real estate investors. For more information on RCN Capital and RCN’s loan programs, visit www.RCNCapital.com.

For More Information, Contact: Erica LaCentra, Chief Marketing Officer elacentra@rcncapital.com | (860) 432-4782 | https://rcncapital.com/

62

PRESS RELEASE

Applications Now Open for PeerStreet’s Evolving Neighborhood Uplift Fund Underserved real estate entrepreneurs can apply for mentorship, training and funding through the program.

LOS ANGELES - (BUSINESS WIRE) - PeerStreet, an investment platform that drives wealth creation through real estate, has announced that applications for their E.N.U.F. Mentorship program is now open. The E.N.U.F. project was launched in February 2021 and is now accepting qualified applicants to apply for seed capital and mentorship through the program.

E.N.U.F. is a program designed for real estate entrepreneurs from underserved backgrounds who are committed to improving their communities and closing the wealth gap using the power of real estate. Ideal applicants have the talent, drive and commitment to invest in real estate but face barriers to mentorship and capital. The program created by PeerStreet includes a fund component carried out in partnership with the Tides Foundation, a philanthropic partner and nonprofit accelerator dedicated to building a world of shared prosperity and social justice.

Entrepreneurs who have identified a property may apply to E.N.U.F for seed capital in the form of an equity investment and will receive mentorship and training from industry experts that are passionate about helping others create wealth. Founding mentors include Ashley Flucas, GP of Flucas Ventures; Cheta Ozougwu, Investor at Tidal Loans; Ndukwe Kalu, Managing Member and Head of Operations at Tidal Loans; Jason Lewis, Chief Executive Officer and Founder of Aryming Capital LP; and others.

Ten entrepreneurs will be selected as the first cohort for this program and applications opened on April 1, 2021 and will be accepted on a rolling basis. For entrepreneurs selected to move forward in the application process, interviews will take place in June and July, and accepted applicants will be announced in August.

“We’ve all heard the proverb ‘give a man a fish and he will eat for a day. Teach a man how to fish and you feed him for a lifetime.’

Instead of fishing, we’re focused on real estate,” said Brew Johnson, CEO of PeerStreet. “We want new entrepreneurs to learn the entire investment lifecycle: find deals, analyze numbers, pick comps, secure financing, work with contractors, etc. Our hope is that they can take on real estate projects and replicate success, ultimately building a cycle of wealth creation for small businesses, job creation, and property ownership in the communities they live and work in.”

“The best corporate social programs create lasting change, and the PeerStreet E.N.U.F. program is structured to do that,” said Edward Wang, Director of Corporate Social Impact, at the Tides Foundation. “By ensuring that program participants receive the skills and guidance they need to independently achieve success is so much more valuable than just providing funding alone. We’re excited to see graduates of this program be representative of a diverse group of entrepreneurs making a difference in America’s housing market.”

Real estate entrepreneurs who are interested in applying for the Mentorship program can visit www.peerstreet.com/enuf for more information. For any questions, please reach out to us at enuf@peerstreet.com.

For More Information, Contact: enuf@peerstreet.com https://www.peerstreet.com/enuf August 2021 Originate Report 63

PRESS RELEASE

Voyager Pacific Capital Establishes Fund III New Real Estate Fund Focuses on Affordable Housing MIAMI, FL., June 29, 2021 – Voyager Pacific Capital, a national real estate sponsor and operator, announced today the launch of their new $100 Million Multifamily Real Estate Investment Fund, Voyager Pacific High Yield Fund III (“Fund III”). Fund III will complement Voyager’s Single-Family Real Estate Fund, Voyager Pacific Opportunity Fund II (“Fund II”) by taking on larger and leveraged value-add projects. The goal of Fund III is to primarily purchase, acquire, re-invest, lease, add value, repair, or sell commercial real properties and consistently generate superior risk-adjusted returns over the long-term. The Fund’s value-add real estate investments focus on repositioning undervalued assets that produce stable, predictable cash flow, revenue growth, expense control and present long-term capital appreciation.

Without the utilization of any credit facilities or asset specific debt, Fund II has generated a 16.42% IRR since inception until December 31, 2020. Since 2015, Fund II has distributed +$11 Million of profits to investors and has maintained and distributed a +10% unlevered annual cash dividend. With compelling market demographics and the availability of historically low-cost debt, Voyager Pacific High Yield Fund III provides investors a tax efficient, low risk, turnkey solution to cash flowing real estate opportunities.

“We’ve received very robust interest from both our long-term investors as well as new investors looking for additional diversification within their real estate portfolio. Fund II is coming off one of its best quarterly earnings ever; we’re going to translate that success over to Fund III,” said David Hardcastle, Managing Principal & CEO of Voyager Pacific Opportunity Fund II. “Our investors loved the idea of a more conventionally financed value-add multifamily fund complementing our unleveraged Fund II.” Voyager Pacific High Yield Fund III plans to invest more than $300 Million, including debt – targeting value-add, distressed, and special situation residential housing opportunities with an emphasis on well-located, transit-oriented, workforce housing in markets with favorable job growth and employment trends. Their goal is to unlock long-term value through identifying and capitalizing on differentiated real estate opportunities. Fund III has been accepting capital from new accredited investors as of June 1, 2021.

“I like to say that we can do good and do well,” commented Philip Adler, Managing Principal & CEO of Voyager Pacific High Yield Fund III. “One of [Fund III]’s main focuses is to increase the availability of affordable housing in the communities we work in. At the same time, we’ve created a high-quality, stable cash flowing product that’s successful in all economic scenarios.”

About Voyager Pacific Capital: Voyager Pacific Capital is a vertically integrated real estate investment firm focusing on middle market, residential real estate investments.

Voyager targets premium risk adjusted returns by efficiently and effectively deploying capital into highly fragmented secondary and tertiary markets. The Firm’s cycle-tested investment strategy is designed to extract long-term value from underperforming assets, maximizing returns for investors. Through their two complimentary vehicles, Voyager Pacific Opportunity Fund II and Voyager Pacific High Yield Fund III, the firm pursues a disciplined process for acquiring, improving, and selling high-quality, cash flowing assets emphasizing capital appreciation, long term cash flow and risk management.

For More Information, Contact: Investor Relations invest@voyagerpacific.com | (954) 884-0000 x1 | https://rcncapital.com/

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PRESS RELEASE

Temple View Capital Partners with Geraci LLP to Provide Dynamic Loan Document Solution for Lending Partners BETHESDA, MD, JUNE 29, 2021 – Temple View Capital (“TVC”) and Geraci LLP have partnered via Geraci LLP’s Lightning Docs™ platform to provide instantaneous, cloud-based loan documents to all of Temple View Capital’s loan originators.

Lightning Docs™ is an instant loan document software that empowers loan originators to prepare attorney-grade loan documents at the click of a button. The documents are easily customizable, easily accessible after use, and available in all 50 states. These features make the software the ideal solution for TVC’s needs.

Nema Daghbandan, Esq., Partner at Geraci LLP, expressed excitement at beginning this new partnership. “Geraci LLP is honored that Temple View chose Lightning Docs™ for their Correspondent Lending,” he said. “Temple View’s partnership with Lightning Docs™ will give their loan originators access to the private lending industry’s gold standard for loan documents.”

“Temple View and its strong leadership team remain at the cutting edge of technology and at the forefront of streamlining the user experience for its partners,” Daghbandan continued. “Lightning Docs™ will provide instantaneous online loan documents for Temple View’s lending partners nationwide.”

“We’re excited to add Lightning Docs™ to our loan documentation process, as we know it will make working with us easier than ever for our correspondents and brokers,” said Temple View Co-Founder and Partner Michael Niccolini. “We worked hard in 2020 to expand our lending capacity and our technology to provide even greater value to this channel as we continue our growth in 2021.”

About Temple View Capital Temple View Capital is a national private portfolio lender that offers flexible financing for investors in residential real estate. Founded by entrepreneurs with more than 20 years of residential mortgage and real estate investment experience, Temple View has been at the forefront of innovative product development since its inception in 2007. Utilizing a common-sense underwriting approach, deep commitment to customer service and a well-capitalized balance sheet, Temple View enables real estate investors, correspondent lenders and brokers nationwide to optimize financing efficiency on real estate investment projects and rental properties. TVC is headquartered in Bethesda, MD, with regional offices in Centennial, CO and Pasadena, CA. For more information on Temple View Capital, visit: https://www.templeviewcap.com/ About Geraci LLP Geraci LLP is the nation’s largest law firm dedicated almost exclusively to the private/non-conventional lending space and is the leading legal resource for specialty lenders, asset-based lenders, private lenders, and non-bank institutions. Our legal departments include Banking & Finance, Corporate & Securities, and Litigation & Bankruptcy, while our Geracicon conference line provides networking and educational opportunities to the industry at large. For more information on Geraci LLP, visit: https://geracillp.com

For More Information, Contact: Jeff Goldscher, Temple View

Lesley Boyd, Geraci LLP

jgoldscher@templeviewcap.com | (240) 475-8174

l.boyd@geracillp.com | (949) 379-2600 August 2021 Originate Report 65

PRESS RELEASE

Corridor Funding Rolls Out A Comprehensive Range of Funding Solutions for New and Experienced Real Estate Investors San Antonio, Texas – Corridor Funding is excited to share their new rates and terms on their enhanced loan programs.

Whether you are rehabbing a rental property or fixing up your next flip, there is a loan product that is right for every real estate investor. Corridor Funding believes there is a need for private lenders to offer loans that cater to each individual investor and that is exactly what they’ve done.

Corridor Funding strives to promote an environment that delivers longevity in investments without the hassle of the traditional bank application process. Their unique and innovative approach enables investors to accomplish goals that they otherwise could not with banks or traditional hard money lenders, which is why 84% of their business is from repeat borrowers.

Jason Hirko, Managing Partner at Corridor Funding stated the following: “It doesn’t matter whether you are renovating a promising fix-and-flip property in the perfect location or diversifying your portfolio by acquiring a revenue-generating multi-family development, our new loan programs offer a wide range of flexible, efficient and transparent funding options—all of which feature ideally-structured terms and the client-centered approach that our organization prides itself in. We take on the role of more than an advisor; we are your confidante, friend, and mentor, Lending the Way throughout the process.”

In order to deliver the utmost in knowledgeability and insight to each and every one of their borrowers, Corridor Funding only lends in locations in which they are experts with the trends, data and projections that collectively influence the viability of their client’s projects. Presently, Corridor Funding serves hundreds of loyal real estate investors in Texas, Missouri, Kansas, Tennessee, North Carolina, South Carolina, Georgia, Tennessee, and Florida. If you are considering an investment in one of these states, contact Corridor Funding today to learn more about how they can help you make your real estate investment dreams a reality.

Jasen Miller and Jason Hirko founded Corridor Funding in 2016 after noticing an absence of debt liquidity available in the short-term value add space of real estate investing. Jasen and Jason take pride in their partnerships with investors to help bring their goals to fruition.

For More Information, Contact: Jasen Miller, Managing Partner Jasen@corridorfunding.com | (210) 941-3916 | https://corridorfunding.com/loan-products/

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THANK YOU, GOLD SPONSOR PRESENTERS Philip Adler, CEO & Managing Principal, Voyager Pacific Capital Philip Adler is a seasoned investor and developer of suburban real estate & has a proven track record spanning more than three decades. He is an expert in sourcing, analyzing, structuring, and monetizing real estate investments. He has successfully unlocked value through acquisitions, strategic capital investments, cost controls, and market knowledge.

Philip has managed more than $500 million of transactions in projects including value-add, new construction, multi-family, retail, office properties and specialty assets. https://www.voyagerpacific.com/ Jake Harris, Co-Founder & CEO, Flip Factory App Jake Harris has a heavy background in large-scale commercial renovations working with Marriott and Omni on some of their largest projects throughout the country, renovating more than 100 hotels in 33 states. In 2018, Jake turned his attention locally to Raleigh/ Durham, NC, and focused on Single Family Residential projects as an Investor/GC. Jake would not have been able to complete so many successful projects without his inherent love of process and procedure. That passion continues to drive him to seek a better way in all aspects of construction and project management. This led to the advent of Flip Factory App where Jake and his Partner Juan founded the first Fintech with programmable cashflow. https://flipfactoryapp.com/ Brew Johnson, CEO, PeerStreet Brew Johnson is the co-founder and CEO of PeerStreet, a platform for investing in real estate backed loans. Brew's experience with technology platforms, real estate, and law culminated in the unique PeerStreet concept. Prior to PeerStreet, he worked as General Counsel at VirtualTourist where he oversaw the company’s $85 million sale to Expedia/TripAdvisor. Before that, he was a real estate attorney at Allen Matkins Leck Gamble & Mallory and a technology attorney at Brobeck Phleger & Harrison. At Allen Matkins, Brew advised some of the largest real estate development and investment firms in the country on a wide variety of complex real estate transactions. He continues to advise startups and is an active real estate developer, investor, and private lender. Brew graduated from the University of Southern California with degrees in international relations and history and earned his JD from the UCLA School of Law. https://www.peerstreet.com/ Mark McKeller, Director of Acquisitions, The Bedrock Fund Mark McKellar is an experienced real estate investor having bought and sold or rented over 800 houses. Prior to Bedrock, he also originated more than $5 million of asset-backed bridge loans to other investors. The Bedrock Mortgage Fund borrowers include the most experienced and successful HomeVestors of America (We Buy Ugly Houses) Franchisees. Mark connections within that network are catalysts for quality loan volume and property valuation, which helps make investments in the Bedrock Fund safe, reliable, and predictable. https://thebedrockfund.com/ Alex Offutt, Managing Director of the Wholesale and Correspondent Divisions, Constructive Loans Alex Offutt currently serves as Managing Director of the Wholesale and Correspondent Divisions of Constructive Loans. Prior to Constructive, Alex served as a Vice President at Goldman Sachs, where he was responsible for loss mitigation servicing oversight for over $20 billion in non-performing residential mortgages. Before Goldman Sachs, Alex was Vice President for Portfolio Strategy at PennyMac Loan Services, where he oversaw their entire $3 billion of non-performing and re-performing whole loans.

Alex also has served as Portfolio Manager for a San Francisco-based non-performing residential loan (NPL) fund, and was a co-founder of Fay Financial, LLC. https://www.constructiveloans.com/ Ray Sturm, Founder & CEO, AlphaFlow Ray Sturm is the Founder & CEO of AlphaFlow, a capital partner to private real estate lenders. AlphaFlow works with private lenders around the country to expand their balance sheets and helps them grow their businesses through new loan products and industry-leading technology. Prior to launching AlphaFlow, he founded RealtyShares, one of the industry's top platforms for real estate investing. His early career in finance included investment banking at Bear Stearns and Lazard Frères and private equity at CCMP Capital. Ray has a BBA in Finance from the University of Notre Dame and a JD/MBA from the University of Chicago. https://www.alphaflow.com/

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THANK YOU TO OUR MODERATORS AND PANELISTS Eric Abramovich, Co-Founder & Chief Credit Officer, Roc Capital Eric Abramovich is the Co-Founder and Chief Credit Officer of Roc Capital and has pioneered its Residential Private Lender Program which has contributed in originating over $3 billion in loans. Previously, Eric 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 which invested in distressed residential real estate assets post the financial crisis. Eric holds a B.A. in Finance and Actuarial Science from the Stern School of Business at New York University. https://roccapital.com/

Lisa Alberti, Vice President, Western Alliance Bank Lisa Alberti is Vice President, Commercial Banking, of Note Finance for Western Alliance Bank. Lisa supports her clients by providing tailored solutions including revolving lines of credit to institutional debt funds, non-bank financial institutions, and family offices that originate or acquire short-term mortgages and bridge loans secured by real estate. With more than $50 billion in assets, Western Alliance Bancorporation (NYSE: WAL) is one of the country’s top-performing banking companies. Western Alliance Bank was the #1 best-performing of the 50 largest public US banks in the most recent S&P Global Market Intelligence listing and ranks high on the Forbes “Best Banks in America” list year after year. https://www.westernalliancebancorporation.com/

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Sarper Beyazyurek, Managing Director, Churchill Real Estate Sarper Beyazyurek, is a Managing Director of Churchill Real Estate. Prior to Churchill, Sarper was at Wells Fargo Securities where he managed the $10B Mortgage Finance While Loan portfolio, overseeing the analysis, valuation, and pricing for non-performing, re-performing, and REO assets. Sarper holds a B.S. in Economics and Finance from Marmara University in Istanbul, Turkey, and an M.S. in Information Technology with a concentration in Finance from the University of North Carolina, Charlotte. https://www.churchill-realestate.com/

Ted Bruenner, Portfolio Manager & Managing Director, Fort Point Capital Partners Ted Bruenner is a Portfolio Manager and Managing Director at Fort Point Capital Partners. In this capacity, he directs due diligence and portfolio management for external managers, as well as serves as a member of the firm’s Investment Committee.

Prior to joining Fort Point, he was a Portfolio Manager at Cypress Point. Prior to Cypress, Ted was a Senior Analyst in the Manager Selection Group for Soros Fund Management LLC (“SFM”), a multi-strategy private investment office organized primarily for the benefit of the Soros family. Prior to SFM, Ted was the analyst and trader at Tambour Capital Management, LLC (“Tambour”) focused on global developed market equity. Before Tambour, he was the analyst and trader at Monteagle Capital Management Inc., a global macro hedge fund, and before that was the analyst and trader at Graham Capital Management, L.P. in the discretionary global macro group. Ted began his career in New York as a currency trader in the foreign exchange departments of Union Bank of Switzerland and then Chase Manhattan Bank. Ted received an A.B. in Government from Harvard University and is a CFA Charterholder. https://fortpointcap.com/

Josh Craig, CRO, Lima One Capital As CRO, Josh Craig oversees all sales channels and marketing activities for the firm, leading the company to record levels of loan production. Prior to joining Lima One, Josh worked for Finance of America Commercial as part of the core leadership team accountable for the company’s exponential growth. His responsibilities were diverse, spanning the organization from sales leadership to product development to strategic planning and competitive positioning. Prior to that, Josh worked for Wells Fargo in various capacities including strategy consulting, project management, and consumer lending leadership.

Josh is extremely passionate about all things real estate investing and is an active SFR investor himself. He earned his MBA from Wake Forest University and his B.S. from Kentucky Wesleyan College. He was named one of HousingWire’s Rising Stars in 2021 for his work at Lima One. https://limaone.com/ Brendan DeTommaso, Associate Director, Fidelis Investors Brendan DeTommaso is an Associate Director in the Mortgage and Real Estate Debt Alternatives group. Prior to joining Fidelis Investors, Brendan served as an Assistant Vice President at Smith Graham Investment Advisors. There, he was responsible for managing the day-to-day of a $500M residential loan portfolio. Previously, he had been an analyst with Five Mile Capital Partners Residential Mortgage group since June 2015. His primary responsibilities were to create proprietary asset management technology and serve as Transaction Manager, executing over $450 million Bridge Loan transactions during the course of one year. Brendan received his BA from Princeton University. https://www.fidelis-investors.com/

Huy Do, Principal, PrideCo Capital Huy Do is one of the principals of PrideCo and has been with the company for over 13 years. He is responsible for new investment opportunities and estate management for the founding family office. Huy has led investments in private equity/venture capital, debt and equity funds, and originated over $350mm of private loans for the family fund. Prior to PrideCo, Huy held positions at Wells Fargo, Arthur Andersen, and Aramark. A graduate of Pepperdine University, Huy received a BS in Accounting. Additionally, he completed his MBA, with an emphasis in Entrepreneurship, at the University of Southern California. He is also a Certified Public Accountant in the state of California and Florida (inactive). Huy serves on the Board of Directors for Great Scott Tree Service, Mariners Church, and several other non-profits. He enjoys traveling and has been to 35 countries. http://www.prideco.com/

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Ben Fertig, President, Constructive Loans Ben Fertig currently serves as President of Constructive Loans. Constructive originates, services, and securitizes single-asset rental loans, and originates and services fix-and-flip loans. Prior to Constructive, Ben ran Credit and Asset Management at Finance of America Commercial; and, 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. https://www.constructiveloans.com/

Jason Gilbert, Partner, Armanino LLP Jason Gilbert has more than 15 years of public accounting experience, with specialized expertise in the investment fund sector, including private equity and real estate funds. In addition to annual assurance services, he helps these clients with day-to-day accounting, the structuring of offering documents, financial close, back office operations and fund management software.

Jason is a member of the American Institute of Certified Public Accountants, the California Society of Certified Public Accountants, the California Mortgage Association, and the American Association of Private Lenders. He earned his BS in business administration and his MBA from California State University, East Bay. https://www.armaninollp.com/

Scott Hadley, Private Wealth Advisor, Silverhawk Financial Scott Hadley has twenty-four years' industry experience and is part of Silverhawk Private Wealth making use of comprehensive financial solutions for high-net-worth, high-income individuals to protect and grow wealth. We don't feel that clients should be in the stock market only and utilize the TRIA Formula to help manage risk without inhibiting returns. www.SilverhawkFinancial.com

Whit McCarthy, Senior Vice President, Civic Financial Services Whit McCarthy is the Senior Vice President of the Correspondent Lending division at Civic Financial Services. As one of CIVIC’s original founders, Whit has been involved in almost every aspect of the firm’s growth over the last 8 years, including CIVIC’s recent acquisition by Pacific Western Bank. Whit currently runs CIVIC’s Correspondent Lending division, overseeing CIVIC’s efforts in providing low-risk and cost-effective capital to other lenders in the marketplace for the origination of business purpose loans. https://www.civicfs.com/

Ketan Parekh, Managing Director & Head of Business Development & Capital Markets, Toorak Capital Partners Ketan Parekh is a Managing Director and Head of Business Development & Capital Markets at Toorak Capital Partners. In this capacity, Ketan manages lender relationships, loan trading, and securitization activities. In addition, Ketan is a member of the Toorak management team. https://www.toorakcapital.com/

Jay Pelham, President, Kaufman Rossin Wealth As president of both Kaufman Rossin Wealth and Kaufman Rossin Insurance Services, Jay Pelham leads the wealth management and insurance affiliates of CPA and advisory firm Kaufman Rossin, where he serves as client services principal. For more than 30 years, Jay has worked with high-net-worth individuals and families in the South Florida market to address their financial needs, leading wealth management and private banking teams in his tenure at SunTrust, BankUnited, Gibraltar Private, and TotalBank.

He is a current member and past president of the Financial Planning Association of Miami Dade, and a board member for United Way of Miami Dade and the Greater Miami Chamber of Commerce. He has been a CERTIFIED FINANCIAL PLANNER™ practitioner for more than 15 years. https://kaufmanrossin.com/

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Salvatore Salzillo, Senior Vice President, Axos Bank Salvatore Salzillo has over 35 years of leadership experience in the financial services industry. At Axos Bank, he built a nationwide real estate lender finance business to serve debt funds which originate pools of investment single family, multi-family, and commercial real estate bridge loans. Previously, he held leadership positions at KeyBank, GE Capital, and Marathon Asset Management. He is a graduate of American University with a Bachelor of Arts in Economics. https://www.axosbank.com/

Kristina Sawyer, Vice President of Lending, Arixa Capital Kristina Sawyer has extensive experience in multiple segments of the real estate industry. She has played an integral role in more than 1,600 loans and counting. In her nine-year tenure at Arixa, Sawyer has spearheaded strategic priorities for the firm that have enabled the company to expand their offering and deliver exceptional client service. https://www.arixacapital.com/

Scott Taylor, Founding Principal & CEO, Artes Capital Scott Taylor is a veteran of the finance industry and a Founding Principal at Artes Capital. After earning his degree from Cal Poly San Luis Obispo in Business Administration and Finance (minor in Economy), he began his career in the banking industry. After spending eleven years at Wells Fargo managing a complex real estate loan portfolio, Scott served as Managing Director of Partners Capital Solutions, a private portfolio lender with over $250 million in private portfolio funds under management. https://artescapital.com/

Shireesh Verma, Chief Investment Strategist, 3Strand Investment Decision Science Shireesh Verma is the Chief Investment Strategist at 3Strand Investment Decision Science where he is responsible for providing research, advisory, and portfolio management services. He has experience with credit, equity, and derivative strategies across the sector and liquidity spectrum in financial markets spanning the U.S., Europe, and Asia. His investment process integrates the three prongs of behavioral, fundamental, and quantitative analyses. Prior to his investment management avatar, Shireesh held leadership positions in the semiconductor and software industry at Intel, Conexant, Marvell Semiconductors, and Qualcomm. He has also published 20+ technical articles in reputed peer reviewed international trade journals and magazines. https://www.linkedin.com/company/3strandids/

Darren Weaver, Vice President, Man GPM Darren Weaver is Vice President, U.S. Debt for Man GPM. Man GPM offers lines of credit, whole loan acquisition and other capital solutions tailored for the private lending industry. Prior to Man, Darren was a Director at Toorak Capital Partners where he also served as the Head of Asset Management. Darren holds a B.S. in Finance from the University of Delaware and an M.S. in Accounting from the University of Virginia. https://www.man.com/

Eddie Wilson, CEO, AAPL and ThinkRealty An entrepreneur and visionary by nature, Eddie Wilson's widespread interests have led to successful ventures across the globe, from operating non-profits and owning an ad agency that worked with household brands, to investing in hundreds of real estate projects and building a nationally syndicated radio show. Today, he guides AAPL and Think Realty with his marketing, funding, and real estate investing knowledge to ensure their establishment as the premier organizations in their sectors.

Eddie graduated from The Ohio State University with a degree in Broadcast Sales and Marketing. He also studied marketing at Georgia Tech and business management at Emory University. https://aaplonline.com/ | https://thinkrealty.com/

For More Information About Our Conferences & Events: Ruby Keys • (949) 379-2600 • r.keys@geracillp.com • https://geracicon.com/ August 2021 Originate Report 71

WE PROVIDE PEACE OF MIND Geraci LLP is a full-service law, media, and consulting firm, specializing in representing non-conventional lenders.

OUR SERVICES CORPORATE & SECURITIES

BANKING & FINANCE • Foreclosure/Loss Mitigation • Nationwide Loan Documents • Nationwide Lending Compliance • Lightning Docs - Fully Automated, Customizable Loan Documents

LIGHTNING DOCS

• Securities Offerings and Compliance • Entity Formation • Corporate (Governance, M&A, Capital Marketing) • Mortgage Licensing

• Fully Automated, Customizable Loan Documents • Documents Constantly Updated and Approved by Local Attorneys • Available in all 50 States • No Re-Draw Fees, Upfront Costs, or Contract Period

LITIGATION & BANKRUPTCY

GERACI MEDIA

• Documents Constantly Updated and Approved by Local Attorneys • Available in all 50 States • No Re-Draw Fees, Upfront Costs, or Contract Period

• Conference Line Tailored to the Non-Conventional Lending Industry • Originate Report Magazine • Lender Lounge Podcast

CONNECT WITH US (949) 379-2600 90 Discovery Irvine, CA 92618 https://geracilawfirm.com/ • https://geracicon.com/ • https://lightningdocs.com/ 72