Originate Report - March 2019

MARCH 2019 THE OFFICIAL MAGAZINE OF GERACI

Industry Spotlight:

Cities to Watch:

Philadelphia, Pennsylvania

Ray Sturm AlphaFlow

Also Inside

March:

Adonis

Upgrade Your

Taking Damage Control to the

DECK

Lockett is

NEXT LEVEL

PITCH

Hard Money

De-Risking CONSTRUCTION www.originate.report 1

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contents MARCH 2019

Features

12 De-Risking New Construction Development Through Project Marketing

14

Jonathan Bursey, Urban Mutual

14 The Elements of a Successful Pitch Deck Ruby A. Keys, Geraci LLP

18 Allowing a Lender to Cross Collateralize Against Additional Property Edward Brown, Pacific Private Money

20 The 9 People Who Use Hard Money

10

Romney Navarro, Streamline Funding

Who to Know 6 Profile

Adonis Lockett: Applying Damage Control to the Housing Market Charles Peckman, Originate Report

10 Industry Spotlight

Ray Sturm, AlphaFlow

6

12

In Every Issue 8

Industry Job Watch

22 Cities to Watch

Philadelphia, Pennsylvania Charles Peckman, Originate Report

24 Upcoming Events 26 Loan Home

22 www.originate.report 3

4 Originate Report | March 2019

CEO Geraci LLP

ANTHONY GERACI Anthony@Originate.Report Vice President Geraci Media

RUBY KEYS Ruby@Originate.Report Editorial Director

MAX BERGER Max@Originate.Report

Letter from the Editor

Art Director

PAM HUBER Pam Huber Designs

CONTRIBUTORS Max Berger • Edward Brown Jonathan Bursey • Charles Peckman Ruby Keys • Romney Navarro

FOUNDING UNDERWRITERS

Welcome to our March Edition of Originate Report!

As always, we want to thank you for reading the latest edition of Originate

MARK HANF President, Pacific Private Money

Report and supporting the first-rate companies who write and advertise with us each month. This time we are highlighting Adonis Lockett of Lockett-N-

Homes, a man who walked away from a career in engineering to enter the real estate world after the crash of 2008. Read his story to find out how he evolved

ORIGINATE ONLINE www.originate.report

GERACI ONLINE www.geracilawfirm.com Interested in advertising in Originate Report? Please reach out at Submissions@Originate.Report For Advertising Submissions, Article Submissions, and Inquiries contact Submissions@Originate.Report

ORIGINATE MAILING ADDRESS Geraci LLP 90 Discovery, Irvine, CA 92618 PHONE (949) 379-2600

his company and created a way for home buyers to improve their credit scores.

You’ll also be introduced to our Industry Spotlight for the month, Ray Sturm of Alpha Flow.

We hope the articles in this edition provide value and inspire you to think differently about your business. If you would like to join our esteemed line of content writers and use your expertise to provide value to others, do not hesitate to reach out!

Max

Max Berger

Originate Report Editorial Director

GERACI CONFERENCES www.geracicon.com

www.originate.report 5

PROFILE

A regular fixture at Geraci conferences (all four images in this article) , Lockett knows networking with other powerhouses is key in this industry.

Adonis Lockett

Applying Damage Control to the Housing Market

“I

By Charles Peckman, Originate Report remember the day I quit engineering,” recalls Adonis Lockett, “I had just sold my first house and was looking at a large check. My manager came by and stood in the entrance of the cubicle for eight or nine seconds. He said ‘if you spent as much time working as you did daydreaming, you might get something done.’ I got up, got my stuff, and went home – I put in my notice the next day. His comment pushed me over the top.”

To some, walking away from a career in engineering to peruse the real estate world may seem outlandish. But to Lockett, director of operations of Lockett-N-Homes, that change is a normality. After spending half a decade as an engineer, Lockett took his passion for damage control to the housing market during one of its most tumultuous times; after the 2008 financial crisis. Currently, Lockett-N-Homes, which is Adonis’ brainchild, offers a multitude of lending programs for buyers of every caliber.

6 Originate Report | March 2019

Originate Report (OR:) How did you get involved in hard money lending and real estate? Is this a field you’ve always had an interest in?

Adonis Lockett (AL:) My background is in electrical mechanical engineering. When I graduated college, I worked for Boeing as a satellite antenna design engineer and I also worked as a rocket propulsion test engineer; my background was heavy in testing, failure analysis, and process improvement. My job at all of these big companies was to identify failures, source it down to the smallest details that caused the issue, recreate the failure, and figure out a way – in its infancy – to prevent it from happening in the future. My goal was to take any broken process, recreate it, and make processes as efficient as possible without sacrificing quality. We had a very robust training, and I got very good at it.

What prompted me to get into real estate was the financial crisis of 2008. In my first four years after school, I was involved in five rounds of layoffs – that taught me that my sense of job security was a fallacy; I was with

people who had been at the company for six months, and people who had been there for 40 years who were laid off.

I decided to start flipping houses in 2010. I was smart enough to research the market and not ride the wave of 2008 – I waited until the market bottomed out to buy my first house. I spent two years learning about the real estate market, and when I sold my first house, I did the work myself and listed the house ‘for sale by owner.’

What I learned from buyers at the time was everyone had bad credit – many of them had good jobs and consistent income, but were impacted in some way by the crash. I said to myself, instead of just having a real estate business, I wanted to have a real estate and credit business; I wanted to create a program that helped people in those situations. Lockett-N-Homes initially started as a house-flipping credit service business. What I learned as part of my credit service was dispute letters are not the way to go; I evolved the company into a credit score improvement home buying program.

That’s where our Easy Qualifier (EQ) program came in. Fixing people’s credit was only a facet of getting a loan – I partnered with an independent loan officer; she told me the criteria these customers needed to qualify for a home loan. I would help get their credit scores up to the point of qualification, but I would also get collections removed by dealing with creditors directly – that’s something I wanted to do, and because of my background in engineering, I knew how to manage the numbers. By the time I sent that person’s profile to a loan officer, they were quickly approved and would buy my house. Once we got traction with that, we grew it in the Dallas area and then in Los Angeles.

While this was happening, Lockheed Martin (who I was working for at the time) decided they wanted to do another wave of layoffs. I decided to leave Lockheed voluntarily as a part of that wave, so I left engineering in 2011. Lockett-N-Homes was still in its infancy at that point, but with that first house I flipped I made more in 62 days than I did in a year as an engineer. When that wave of layoffs came, I realized that I had proven my concept twice over, so I said to myself, “I think it’s time to take this concept and grow it on my own.”

OR: You mentioned your experience in failure management. Do you feel as though this helped you better navigate the housing market, especially post-crash of 2008?

AL: I did find it useful, but in certain situations. After my first few times flipping houses, I took feedback from clients and colleagues and continuously restructured and revised the input I found credible. Constantly refining my process is something I took very seriously.

OR: I can imagine that there isn’t a lot of consistency in the real estate business – what does a typical day look like?

AL: I would say every day is a new challenge – the structure of every day is consistent, but each day has its own set of challenges. The reason for that is, if I’m doing ten straightforward single-family hard money loans, that will be ten completely different experiences. The structure of the day will be pretty much the same; even though we have a pretty consistent meeting schedule, the properties’ files will be different because of the personalities associated with all involved parties.

The differences come into play depending on the position of the person who is the most stressed or has the most to gain, etc. To put some context to that, I’ve been in situations where we hear from the seller more than anyone. Often to their detriment, they have spent a lot of the money, or have spent the money within a certain timeframe. This, of course, can cause a myriad of issues in and of itself.

OR: So what are some of the biggest concerns of those sellers? Where do those concerns come from?

AL: I wouldn’t say this is a concern, but one of the biggest misconceptions I hear is a lot of sellers – especially

if they’re not in the investment business – assume that an appraisal’s completion means we’re going to close the next day. They have a real disconnect from what the process entails, and it gives them a skewed perspective of what the process looks like, and the timeline associated with that process.

“You watch shows like “Million Dollar Listing,” and you latch onto the idea that you can talk to the people who are involved in a transaction in any way – you think you can get away with making demands and not showing respect.”

I think a lot of those misconceptions come from TV. You watch shows like “Million Dollar Listing,” and you latch onto the idea that you can talk to the people who are involved in a transaction in any way – you think you can get away with making demands and not showing respect, saying, “We’re gonna do it, we’re gonna do it my way, or I’m going to walk.” A lot of times, they don’t realize that the process has a lot of moving parts, a lot of interfaces, and they get attached to the Hollywood lifestyle and it is not realistic. I’ve seen this go up in recent years as these shows have become more popular – it’s a Catch 22 as well because someone could call me and say, “Stop talking, you need to listen to me, you have X amount of days to perform, or the deal is off.” In that situation, they forget that they’re dealing with another person at the end of the line; we’re all professionals, but at the end of the day we’re all human. What typically happens is we get put in a compromising position – do I as a person maintain my self-respect and listen to them as they tell me to shut up, or do I understand their frustrations? I often find myself in that crossroads; do I stand for my self-respect and dignity, or stand our ground at the cost of our buyer’s deal?

OR: In the wake of the 2008 financial crisis, what were your initial clients’ reactions to the services you offered?

I can imagine there weren’t many people offering credit help and real estate deals at once.

AL: They felt uncertainty, disbelief, and they seemed unconvinced – many people at the time had credit repair programs and many had bad reputations for non-performance. The irony about my story is every time I tell it people say it’s awesome, but they don’t realize that in my haste I didn’t factor in many things. The stigma of a new business is always present – I was confident in my ability to run the business, but when potential clients would research Lockett-N-Homes, other companies were established eight months or a year before. I was just a guy out pitching a service that no one else was pitching and some just didn’t believe it. The first eight or nine months I struggled extensively – I sold houses, but part of creating the legitimacy of my business was purchasing commercial office space. One thing I didn’t realize was that selling houses differs from having an every-other-week paycheck in engineering, and I was overextending myself a lot. This got easier with time, though.

When clients would have apprehension, I never took it personally – a lot of people had a story that they would cite as the root of their suspicion. What I started to do was bring people into the office and give them real-time examples. I pulled up their reports and walked them through the process of what was affecting their credit, showing them the requirements needed to get their situation qualified. Even though I was doing ‘freebies,’ it was essential in building my credibility.

OR: Since Lockett-N-Homes’ inception, how has the company grown? Do you feel satisfied with your firm’s success thus far?

AL: In 2011, it was one other person and me. Now, we have 11 offices in nine states and are no longer just a credit and house flipping company, we are a real estate investment firm. We are a real estate brokerage, mortgage brokerage, hard money lending company, and a holding company.

Three years ago, I would have said: “Yes, at the end of the day I feel happy about how far my company has come.” Today, I say that I’m a little disappointed because I feel like I’ve gotten complacent.

Adonis Lockett: Continues on pg. 8

www.originate.report 7

Adonis Lockett: Continued from pg. 7

OR: Technology is continually changing, and this change impacts every industry. What are some of the trends in hard money lending or real estate that concern you, and are there any that excite you?

AL: I became a hard money lender for two reasons – first of all, being part of a real estate brokerage that wholesales properties to investors, I found myself referring business to hard money lenders and making them tens of thousands of dollars with nothing to show for it.

One of our main goals at the time was to realize that the revenue associated with lending is a necessary piece of the operation. Secondly, I wanted to start a hard money division because of the void that existed in the hard money lending space. That void is a true understanding of how investors and investments work. I know that’s a borderline controversial statement to make because as lenders we’re always supposed to err on the side of caution. The irony about that is the way lending is now- everything is by-the-book, and a lot of the common sense underwriting seems to get lost.

That is one of my biggest issues with lending today.

When I first got involved in the space, I saw a more discretionary position. Lenders would say, “I’m going to go off of my gut,” but I feel like we’re no longer in the age of discretionary lending – everything now is so by-the-book that when you take some of the realistic

components of the investor or deal out of it, I find that loans are declined that shouldn’t be tossed aside. If you haven’t flipped a deal in two years, some professionals view you as having no experience – that is my number one gripe with the hard money lending industry today.

I feel like there’s such a lack of common-sense underwriting.

With all of that being said, it’s not fair for me to say the industry is all bad – a lot of these lenders took a burn during the 2008 crisis in the same way homeowners did. I understand their position, but I feel as though they’ve overcorrected the industry. As part of their risk mitigation, they went so hardcore that they’ve taken the practical aspect out of what investors go through. I feel like many people become skeptical because they feel as though lenders don’t understand the human aspect of being an investor.

OR: Given your experience and the growth of Lockett-N-Homes, where do you see the company going in the next few years? Where are there opportunities for growth?

AL: One of our biggest accomplishments as a firm – and even for me as a real estate professional – was being able to originate and fund loans on our own and move

away from primarily brokering. Where I see Lockett-NHomes in the next year or two years is growing to a real heavy hitter in the industry to the same capacity as some of our competitors, you know, those companies. I respect them and everything they’ve done for the industry; I would like to contribute to the same capacity that those companies have been able to. With that, I also want to implement the more cutting-edge technology into our process that allows us to stick to our traditions, but also allows us to be forward-thinking into the industry and automating some of the antiquated processes that exist. I see us being on the leading edge of technology in regards to growth, automation, and implementation of our services. Of course, we also have to keep in mind the traditions and processes that the industry is used to seeing and has kept a lot of the larger firms successful.

As Lockett-N-Homes’ website states, “Homeownership is only a phone call away.” Over the course of the past decade, Adonis has grown his company from infancy to success, offering services previously not offered in the loan industry. With a propensity for helping those in precarious financial situations receive the assistance they need to gain monetary independence, it is easy to hear Adonis’ passion for the real estate market – both over the phone and in person.

CONTACT: For more information on Lockett-N-Homes, visit lockettnhomes.com

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SPOTLIGHT

Industry Spotlight:

Ray Sturm CEO, AlphaFlow

10 Originate Report | March 2019

ship with Lehman Brothers while in business school.

This was 2006 and an absolute bull market, but I completely blew the numbers on an important client pitch.

Lehman aside, it was still an incredibly valuable lesson in teaching me the importance of having great attention to detail and it’s made me a better investor. My biggest success was probably leaving a potential career in private equity for the startup world. Large cap PE can be enthralling, as you’re intimately dealing with some of the world’s best companies and their management teams.

However, I found that I was chasing perceived achievement vs actual fulfillment. I’ve launched two companies and I can’t imagine doing anything else, so I’m grateful for the support I received in taking that leap.

A

Ray Sturm, AlphaFlow

s co-founder and CEO of AlphaFlow, Ray is obsessed with ensuring that users have a good experience while getting up to speed within the real estate investing space. He created AlphaFlow to empower real estate investors with the data, transparency and tracking that used to be accessed only by investment professionals.

Ray is a leading entrepreneur in financial technology (FinTech). 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, Lazard Frères and CCMP Capital and serving as Director of Business Development for SmartDrive Systems. Ray has a BBA-Finance from the University of Notre Dame and a JD/ MBA from the University of Chicago.

Outside of the office, Ray enjoys hiking, camping, and working on his small pinot noir production in Oregon.

Originate Report: How have you seen AlphaFlow grow and expand in the last few years?

Ray Sturm: AlphaFlow has always been a relatively lean firm, but we’ve grown from a firm focused on accredited investors to now investing on behalf of some of the top asset managers in the world. The key to making that possible was the discipline to grow more slowly and maintain a strong track record in the face of investing additional volume. We’re still under 20 people though, so in many ways we’ve stayed small and want to maintain that culture.

OR: What has been one of your biggest successes and one of your biggest failures in your career?

RS: An early career failure that felt deadly at the time was failing to secure an offer during my summer intern-

OR: What have you learned this year that will be game changing in the next year?

RS: As an investment manager, I can’t give away our edge before we’ve put it to work! We learned a tremendous amount in the last six months that is driving our technology roadmap and we’ll make much of that public later this year. Much of that should fundamentally transform real estate bridge lending!

OR: How has your company vision evolved from Day One to Today?

RS: It’s funny to think back to when we launched almost 4 years ago, starting in a small shared workspace down the street from Facebook in Menlo Park. One thing that has been consistent since then though is placing data at the core of our company. We launched as a reporting platform, then created online investing’s first multi-platform real estate funds. From there we built the first automated investing platform, so a lot has changed but the core of each step has been using data to drive decisions. Today most of our capital comes from some of the world’s largest asset managers, which could not have happened without embracing data as the engine for driving credit decisions.

OR: What are some of your goals for 2019?

RS: This year, AlphaFlow is focused on massively increasing our lender partnerships. Our relationships have been very successful as we’ve strived to be a reliable and transparent capital partner, and with the addition of new capital, we need to expand our lender network to grow while continuing to provide great performance to our investors.

OR: What is something that most people don’t know about your company?

RS: AlphaFlow is highly driven off of proprietary technology and as a result, our team is much smaller than many people assume. In summer 2018 we were still a seven person company and even today, after massive increases in our committed capital from institutional investors, we’re have fewer than 20 people. To stay this lean, we’ve built our company on technology we developed in-house to help with everything from underwriting to algorithmic portfolio creation and rebalancing.

OR: What does success look like for you?

RS: I grew up in mortgage offices, with my mom building her own traditional mortgage company and my fa-

ther working in bridge loans. We all know the differences in cost between the two, and much of this comes not from increased risk but rather a lack of capital markets access for hard money lenders. Success to me is working with my team to build AlphaFlow from an investment manager into a larger capital markets force that transforms the industry through lower cost of capital, sale options closer to traditional mortgage, and greater general access to funding sources. We have a long way to go, but we’re off to a good start!

OR: What is one piece of advice you have learned and carried with you throughout your life?

RS: One of the best pieces of advice I ever received had to do with people. When you come across great people, make sure to find a way to work with them. Hire them... bring them on as an advisor...partner with them...invest in them...Just find a way. Those relationships eventually make your career. That’s certainly been the case for me and speaks to how I’ve tried to build the team at AlphaFlow.

OR: What mistakes have you seen others make in this industry? How does AlphaFlow avoid making those same mistakes?

RS: In the online investing world, where companies are typically fueled by venture capital, volume often trumps credit. If you have a need to grow in order to raise new money or justify a previous round, the easiest way to do so is often by lowering your underwriting standards.

We’ve seen this countless times and can often tell when a company is out to raise money by seeing a measurable drop in their deal quality. We made a conscious decision at AlphaFlow to not grow faster than the volume of quality deals we could source. To do so, we needed to stay lean and raise less venture capital (we’ve raised less than $5M today, almost 4 years since launch) and as the CEO, I needed to set an example of never putting volume over credit. It took time, but the result is that our delinquency rate is a fraction of what investors typically see elsewhere and we are now turning away institutional capital. Your track record is oxygen in this space, and embracing that reality has helped to make us a resilient company.

OR: How do you feel that AlphaFlow has changed the world of real estate investing?

RS: AlphaFlow’s main contribution to date has been to give investors a way to access the real estate bridge loan space in a way they can’t get anywhere else: totally passive, professionally managed (we are a registered investment adviser), and built using institutional-quality underwriting tools we built ourselves. We’re just getting started though, as we’ve found that traditional lenders have a huge need for a capital partner who can also help them to grow their businesses strategically and improve their underwriting. I can’t share too much yet, but we’ll be doing a lot this year to help build those partnerships and give lenders access to world-class tools.

CONTACT: AlphaFlow.com | (415) 910-0713 www.originate.report 11

the U.S. very few are sold via this methodology and so far mostly in California, New York, and Florida.

FEATURE

Having spoken to hundreds of Realtors about this topic, many have an idea of pre-sales, but the understanding is either akin to regular MLS sales, i.e. listing the property during construction, or from representing home builders where a display home is already built, and where typically owner-occupiers rather than investors purchase the next available home on their preferred lot.

De-Risking New Construction Development Through Project Marketing

By Jonathan Bursey, Urban Mutual

F

or the last twenty-five years, residential Development Project Marketing has been a highly effective pre-sales strategy used by the most successful international real estate companies such as Christie’s, Knight Frank, Savills, and Sotheby’s for selling new build residences like condos, townhomes, and SFRs prior to the commencement of construction. Residences in new development projects are sold to homebuyers and investors prior to construction breaking ground, but usually after the planning permits for the project have been obtained by the developer. Project Marketing does not apply to multi-unit single-titled buildings (multi-family apartments). Curiously, the concept of the multi-family apartment building is uncommon in most international markets, which is part of the reasons why Project Marketing is one of the most effective ways to access large pools of residential investors in many international real estate markets.

The primary target buyers are residential real estate investors, and thus, Project Marketing is also known as Residential Investment Sales. For many international development projects, the targeted buyer pool is sophisticated international investors residing in a multitude of countries throughout Asia, the Middle East, Europe, and North America. However, it is unsurprising to hear that China consistently represents the largest buyer pool.

By way of background, Project Marketing originated as a primary solution for construction lenders who required a process for de-risking their position in new development projects, specifically the sales and market risk.

In many instances, lenders will only provide construction finance to a project that has a minimum of fifty percent of residences in the project pre-sold prior to construction commencing, and often, the financier will require 100% of their debt to be covered by pre-sale contracts to provide further coverage against a market correction or the inability of the developer to sell the project’s homes in the allocated time frame – prior to end of the loan term. With a minimum of half of the

12 Originate Report | March 2019

project sold prior to building commencing, both the lender and developer can feel confident in the exit strategy of the project, a significant determining factor in the overall success of a project and more importantly, the ability of the lender to fully recover their loan. To further strengthen the outlook for the lender and developer, typically larger earnest money deposits (10% is common) are provided by the residence’s homebuyers and are held in escrow, as well as having an irrevocably binding purchase and sale agreement in place.

With that said, the settlement of the residences in the project are always based on the provision that the developer will finish the project to the exact advertised standards and specifications, otherwise the buyer will not have to close the purchase. Reports mention that when a residence is not quite perfect or up to the buyer’s expectations, buyers may overlook these minor ‘faults’ if the property has gone up in value during the 12-48 month construction period while the development was being built. A 10%+ increase in value based upon a 10% initial earnest money deposit could effectively earn a 100%+ cash on cash capital gain.

Interestingly, the largest commercial brokerages such as CBRE, Colliers, Cushman & Wakefield, Knight Frank, and JLL, coupled with specialist Project Marketing firms, are the most voluminous sellers of new development projects, transacting on hundreds of thousands of residences per year using this methodology.

A specialist Project Marketing firm may only employ 30 or less sales staff, who are responsible for selling up to 3,000 residences per year! It is also not uncommon to sell 100+ residences in one project in only one or two days at a sales launch event.

If you’re thinking, “I’ve never heard of Project Marketing and had no idea that the largest international residential and commercial brokerages sell hundreds of thousands of homes off-the-plan,” you’re not the only one. Although Project Marketing is the main sales strategy for new development projects in major global cities – Dubai may be the greatest recent example – yet within

You may be thinking that a Project Marketing salesperson is a Realtor that focuses on pre-sales, and you would be correct. However, there are additional integrated responsibilities, as well as a heightened level of proactivity and occasionally, the risk of a financial penalty that come with the territory.

Insightful descriptions of the Project Marketing service can be found on many websites of tier-1 brokerages such as Knight Frank, “From small scale boutique residential projects to multi-stage master planned community developments, Knight Frank Project Marketing provides a complete consultancy service for residential development, backed by our extensive market knowledge and experience. Our end-to-end consultancy services take clients through from initial design concept to that final sale, ensuring maximum returns in the shortest possible timeframe.”

Christie’s describes their Project Marketing service as, “a program specifically designed to launch, market, and sell residential, resort, and urban developments. Consultation from the beginning assures that every aspect of each development is market driven and supported by a sound plan to generate sales through careful positioning and branding.”

I am interested to see if Project Marketing, and more specifically, international sales and marketing of development projects to investors, will become more widely adopted in America. In addition, I’m interested to see if more lenders will drive the requirement for pre-sales to further de-risk a project or if developers will simply seek additional pre-sales channels to better ‘insure’ their profit margin and enhance their offering, by providing a safer investment environment and higher IRR/ROI for their equity and debt participants.

ABOUT THE AUTHOR:

Jonathan began his career as an accountant at the National Audit Office in London. He then transitioned into the Quantitative Finance field in order to be in a front office position. In 2012, Jonathan presented the company’s business plan to the US Embassy in order to expand into America. As Director of Business Development, Jonathan formed relationships with some of the largest investment banks, asset managers, and proprietary trading firms.

As Operations Director at Urban Mutual, Jonathan manages logistics and operations, while continuing to grow the fund’s investment activities by creating relationships with high-volume residential developers.

CONTACT: urban-mutual.com | info@urban-mutual.com

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FEATURE

The Elements of a Successful Pitch Deck

O

By Ruby A. Keys, Geraci LLP n average, potential investors spend 3 minutes and 44 seconds looking over every pitch deck that comes across their desk. But what exactly is a pitch deck, and how can entrepreneurs make their presentations more conducive for investment? Simply put, a pitch deck is a presentation entrepreneurs put together to secure funding from potential investors – these presentations contain pertinent information about the product or service, and are usually around 19 slides long.

Ultimately, the founders of startups need two different, yet equally important, pitch decks. The first iteration focuses primarily on information and will be disseminated internally via email. Where this version has a litany of text and information, the second “version” usually has more visuals, which can help investors envision the usefulness of your product or service. At the end of the day, a successful pitch deck has three overarching qualities: clear and concise, compelling, and easy to act on.

14 Originate Report | March 2019

In addition to these criteria, the slides included in a pitch deck fall into these nine categories: • Problem • Solution • Market • Product • Traction • Team • Competition • Financials • Capital needed/raised

Each of these categories will be discussed at length, but it is important to note that even though each slide is vital in its own way, DocSend, the organization that said investors spend an average of 3 minutes and 44 seconds per pitch deck, also said investors spend the most time looking at slides dealing with competition, financials, and team. This is important to keep in mind while constructing your pitch deck.

1. Problem:

Exploring Gaps In The Market

The slide dealing with the “problem” your product or service addresses should clearly state the gap you are filling in the market. Although the actions and failures of your competition will be covered in the aptly named competition slide, it is crucial to explain your position and the problem you wish to solve, not the pitfalls of competitors (in this slide at least.) If you begin your pitch deck by explaining what is wrong with other companies, it may sound like a lack of confidence to potential investors.

The problem you are addressing should be concise, and not include more than one problem – the reason the problem and solution slides are separate is because a single slide with a problem/solution may overwhelm investors right off the bat.

In addition to keeping your problem concise, it is also wise to show that others commonly feel your problem; this will make it easier for investors to sympathize with the potential customer. After all, your product or service will spark the interest of an investor for the following reasons: • The investor has experienced the same problem in the past or knows many people who have • There is a clear sense of ROI in the future Successful Pitch Decks: Continues on pg. 16

You’re going places.

Don’t stop until that place is the top.

If you’re a loan originator looking to build your business and gain insight from the nation’s top mortgage brokers, bankers, lenders, and lawyers, Originate Report is for you. Distributed to 35,000 professionals in the private lending industry every month, this is where you come to see and be seen.

To discuss submitting original articles, or for general Originate Report questions, email us at submissions@originate.report.

behind you all the way. find us online at www.originate.report www.originate.report 15

Successful Pitch Decks: Continued from pg. 14

•T hey understand the niche where your product or service falls (i.e., you wouldn’t pitch a healthcare startup to a group of Silicon Valley techies)

2. Solution:

Why You Can Solve The Problem.

A key attribute of your proposed solution is scalability – essentially, what makes investors salivate is the potential of your venture to grow. How will your venture increase output as demand increases? Explaining this in a clear, concise way will help reassure investors that you know your industry and understand how more will be needed as the demand grows. Scalability is especially crucial in technology startups because the technology sphere is incredibly fast-paced and everchanging.

If entrepreneurs and investors can learn anything from the diffusion of innovations, it is incredibly important to introduce your venture at the right time in history – if you are too early or too late, even if your product solves a clear problem, the venture will fail. In your solution slide, explain why it makes sense now.

“Explain why your idea can give potential investors a sizable ROI without making grandiose claims that cannot be backed up – this is where some entrepreneurs get into big trouble.”

3. Market:

Where Are The Returns?

The size of the market you are trying to enter may impact an investor’s likelihood of giving you capital – the unfortunate reality of seeking funding is the market size (whether too large or too small) may be a turn off for some investors. On the “too small” side, a market size below $1 billion may not seem attractive to someone in a hyper-growth business. On the other hand, grouping your venture into a $100 billion market (for example) may cause investors to worry about your venture getting lost in the shuffle.

The reason many investors look for ventures in a $1 billion market is because they are looking to put capital into an idea that can give them a 10x return within 5 to 7 years. Although this may be the case, explain why your idea can give potential investors a sizable ROI without making grandiose claims that cannot be backed up – this is where some entrepreneurs get into big trouble.

4. Product:

See It In Action.

This slide (or slides) has to be incredibly visual. How is an investor supposed to envision your product in the hands of consumers if there is only text on this

16 Originate Report | March 2019

slide? Throughout these slides, show all the features and benefits of your product – and for good measure, use testimonials from beta users or current customers to prove your product’s superiority. This is the point in the presentation where you have an opportunity to let your product shine, so don’t waste it.

5. Traction:

How Is Your Venture Growing?

This is the slide where investors hope to see a graph bearing a “hockey stick,” or a month over month growth that seems to go up exponentially. This is an opportunity to include metrics, sales figures, or any bit of pertinent information that shows investors that everything, quite literally, is on the up and up. One piece of advice, though – if your venture is in a very early stage of development or growth figures aren’t incredibly interesting, there is no need to include that information. In doing this you aren’t being “sneaky” or hiding anything from investors, you are just attempting to increase the likelihood of securing an investment. If your venture is in an early stage of development, why should that hurt you?

6. Team:

The People Behind The Pitch Deck.

In any pitch deck, the team portion is one of the most important elements – after all, an idea may be great, but if all-star players don’t lead your venture, then what sort of longevity will it have? Because the reality is there have probably been 100 people who have thought of your idea before you, your venture is 10% about the idea and 90% about its execution.

When showcasing team members, highlight those who are the most crucial to the venture’s longevity. Utilize bullet points to list two or three accomplishments of these team members, making sure those accomplishments are related to the venture (sorry, no ‘7th-grade chess club champ’ here.)

While you are introducing investors to critical team members, be sure to include pictures of those team members – although this may seem trite, ‘putting a name to a face’ can help humanize your members.

After all, a stack of bullet points isn’t very friendly.

7. Competition:

Where Do You Stand?

Contrary to what you may believe, providing context is one of the most critical aspects of the competition portion of your pitch deck. Of course, you have already discussed what sets you apart from the competition

in previous slides, but now is the time to review how much capital your competition has raised in the past, and more important, at what valuation.

In this portion of your presentation, you need to show what makes you unique – if you have already discussed this at length in previous slides, provide essential bullet points here. It may also be wise to include a diagram of where you fall compared to your competitors, and where your value proposition comes into play.

8. Financials:

Show Me The Money.

Even though any sort of projection is a shot in the dark when it comes to startups, giving a general picture of where your venture is going helps contextualize it for investors. It is relatively standard to include three years of projections, but this will depend on the space your venture wishes to enter and the requests of potential investors – some venture capitalists require five years of projections.

One of the worst things you can do in this slide is over-promise. Similar to exaggerating the size of the market you wish to enter, showing grandiose projections may get investors excited, but will cause great stress to you as you struggle to live up to those proposed figures. Even though it stinks (for lack of a better word,) always be on the conservative side when it comes to sales projections.

9. Capital needed/raised: What’s The Magic Number?

When it comes to the “ask” portion of the pitch deck, do not include a specific number, include a range.

Although this may sound counterintuitive, there is a reason for the lack of concrete numbers in this slide.

Say a company has a limit of $4 million it can invest in a single venture. If you say in your pitch deck that you are seeking $5 million, then this company may automatically pass. But if you say you are seeking between $3 and $5 million, they know they have the capital to invest in you.

Overall, your pitch deck gives you an opportunity to make your venture shine. Before sending your pitch deck to investors, have your employees and professionals with an understanding of sales psychology look it over. A small re-phrasing or image placement change could mean a difference of thousands, if not millions of dollars.

ABOUT THE AUTHOR: Ruby Keys is the Vice President of Geraci Media. She joined Geraci LLP in 2015 as the Marketing Coordinator for Geraci Law Firm. As she enters her 4th year with Geraci, she is now the Vice President of Geraci Media, a full service marketing agency, which caters to the Non-Conventional Lending space. Geraci Media was founded in 2016 and began as an event line. Ruby has helped grow and manage Geraci Media to where they now host 5 conferences a year, produce a monthly magazine for Loan Originators, and offer marketing services for lenders nationwide. Ruby Keys is a graduate from Vanguard University with a degree in Marketing and Public Relations. She is very happy to have found a place where her talents and education are put to use and loves being a part of the growth at Geraci.

CONTACT: (949) 379-2600 | r.keys@geracillp.com | geracimediagroup.com

Revenue diversification

Fix N’ Flip, Bridge, Refinance, Ground Up & Small Balance Commercial

TODAY’S MARKET OPPORTUNITY: •

•

•

100 billion dollar non owner-occupied investment space SFR ’s 1-4 Fix N’ Flip, Bridge, Refinance, Ground Up & Small Balance Commercial Diversify product offering and add new revenue opportunities you may be missing out on Legally compensate your most prized relationships (Realtors) for referrals

WHAT TO LOOK FOR IN A BROKER + CAPITAL PARTNER RELATIONSHIP: • • •

Concierge across product offering with underwriting, training, service and support Dedicated call center for loan origination support and fund control Marketing materials provided including product tear sheets, pitch decks and web banners

In today’s market, refinancings have limited availability and there’s not much new housing inventory to lend against. For mortgage Brokers, this means the obvious; there are a lack of transactions in the market to profit from.

For shops that are only doing refinance or traditional mortgages, opportunities only come around every 5-7 years. You’ve got to have a big client base to have volume. With financial products across SFR ’s 1-4 Fix N’ Flip, Bridge, Refinance, Ground Up & Small Balance Commercial, the sales cycle is faster, there is significantly higher recurring business, and a few lenders have teams dedicated to helping you succeed.

BROKERS, PARTNER TODAY

Think of it as a new product offering which results in the diversification of your potential revenue. All of this is well within reach, and much easier than you may think.

The NON-O/O investment space is a 100 billion dollar industry that has come full circle since the last market downturn. Over the last decade private lending has been growing, and the comeback of property investors is at an all-time high.

Here’s what it takes to do these types of loans and a good private lender will handle these things for your Brokerage…

• • • • • • •

Review and process loan applications Document collection Facilitate Appraisal Coordinate Title & Escrow Complete underwriting Facilitate Funding Pay you

Traditional Realtors and Mortgage Brokers have the misconception they need an NMLS license to be a lender in this product space. The main point in dealing with a private lender is while they primarily fund SFR’s, these loans are governed under commercial guidelines.

Thus we are not governed under RESPA, TRID or TIlLA. These loans are funded only into business entities allowing 7-10 business day closings and can pay anyone under a Brokerage license a referral fee or commission on the HUD at closing.

There are two avenues a Brokerage launching this type of product to Real Estate professionals can expect to see. You can be a Correspondent Partner (the lender would fund in your name)

http://triumph.capital/brokers

or an Origination Partner (the client would see the lender’s name on the HUD). Most deals are funded under a single set of product guidelines allowing training, underwriting and servicing to be easily understood.

CORRESPONDENT PARTNER (CP): You look and feel like the lender, a complete white-label product.

ORIGINATION PARTNER (OP): Traditional Broker + lender relationship, lender shows on HUD. A full concierge service for Broker partners handling everything from A-Z is an entirely new model for private lending and Mortgage Brokers / Real Estate professionals. Working with a direct lender enables Mortgage Brokers to keep the lion’s share of the profit and have the potential to earn from the yield spread as well, all while monetizing on much more frequent lending transactions, instead of the normal 5-7 year customer lifecycle.

There many private lenders chasing this strategy and it’s safe to be wary of who to work with.

While choosing a partner, look for someone who understands the business and has a strong reputation for closing transactions. You’ll also need support with marketing materials. Having the right documents and product tear sheets (one-pagers) for conversations, trade shows, etc. is helpful in positioning the opportunity with your existing book of referral business from Realtors.

For more information call

877-450-9741

ROB JENNINGS robert@triumph.capital

GEORGE O. FLINT goflint@triumph.capital

www.originate.report 17

FEATURE

Allowing a Lender to Cross Collateralize Against Additional Property

By Edward Brown, Pacific Private Money

T

they are paid in full. For example, let’s say the bor-

rower owns a rental house that is worth $500,000 and there is a first mortgage in place for $200,000. The borrower wants to buy another rental for $800,000 and has $250,000 to put as a down payment. The

borrower asks a lender to loan the remaining needed $550,000, but the lender is not comfortable with the LTV [68.75%], so the lender asks what other real

estate the borrower owns, so it can cross collateralize its $550,000 loan. The borrower mentions the other

rental, and the lender decides to ask for crossing on

here are times when a lender is going to

In many cases, this cross collateralization may not be

in order to make a borrower a loan. The

er intends to pay the lender in full. The general plan

is not enough equity in the target property. Other sce-

at a point where a new lender does not require cross

Now, let’s say that the borrower receives an unso-

existing lender releases both properties; however, what

wishes to accept it. If there was no cross collateral

ask for additional [real estate] collateral most likely scenario for this is when there

narios include a borrower with less than stellar credit,

or the type or quality of the target property may not be enough to satisfy the lender to make the loan, as most lenders are more interested in making loans that will pay them back instead of facing foreclosures. For

this reason, the lender may ask the borrower to put up

additional collateral satisfactory to the lender so as to

give the borrower an incentive to avoid defaulting on the loan.

18 Originate Report | March 2019

something the borrower worries about, as the borrow-

is for the borrower to refinance the target property

collateralization, pay off the existing lender, and the happens when the borrower sells the crossed property,

or has the opportunity to refinance the target property,

and there is not enough to pay off the current lender who crossed?

The danger here is that the lender may hold up the

sale because it does not want to release their lien until

the first rental. Thus, the lender has lowered its risk because of the equity in the first rental.

licited offer for the first rental of $525,000, and he

against this property, the borrower could accept the offer, pay off the existing first of $200,000, and pocket the $325,000 remainder. However, because the rental has been crossed, the lender has $550,000 against the

property in second position. That means that there is technically $750,000 of liens showing up against the property. The borrower cannot accept the $525,000

offer without having the second [the crossed loan] release its lien.

For this reason, it is imperative for there to be an agreed upon release price in which the lender agrees

ahead of time to release its interest in either properties for a specific sum. It does not necessarily have to be just the remaining equity in the first sale [$325,000 in our example]. The release price could be a smaller

amount. It could also be a larger amount [up to what

the lender is owed]. If the lender desires more than the $325,000, the borrower would have to come up with

additional cash in order to transact the sale. This may not be all bad, as the crossed lender’s loan has then been reduced.

For example, if the crossed rental was sold at a 5 CAP

rate, and the crossed lender’s interest rate was 7%, the borrower may choose to sell the rental and come up

with money to satisfy the lender should the lender want more than the $325,000 net proceeds from the sale. In

other words, there are times when it makes economic sense to come up with money in order to sell property.

Another similar scenario like this occurs when there is

a blanket loan covering multiple properties, as is the case when an apartment building has been converted

to condos and the owner of the building desires to

sell off one condo at a time. A typical lender on the building will usually have release prices [agreed ahead

rental was purchased for $800,000,

the

lender

would be fine with a loan balance

of

$440,000.

Thus, in order for the lender’s exposure to be

reduced from its original loan of $550,000, it

may be willing to accept $110,000 from the sale

of the first rental in order for the lender to release its crossed lien. In this case, the borrower would

sell the first rental for $525,000, pay off the first mortgage of $200,000,

and pay the lender in second position $110,000

[to release its crossed lien of $550,000], and pocket

the rest of the proceeds from the sale [$215,000].

The borrower would keep $215,000 from the sale,

and the only debt on the

second rental would be the lender [who crossed] of $440,000.

tional costs of foreclosure, if needed on more than one

property, as well as having to deal with an existing first mortgage [keeping them current, so that lender does not foreclose] may not be a desirable solution to

of time] under which the lender will allow each unit

Borrowers who overlook release prices [a specific

percentage of each sale] as a pay-down of its loan.

crossed lender after the fact under what circumstances

This is the primary reason why typical banks do not

ty. If there is no agreement ahead of time, the borrow-

not like a lot of moving parts. They want to focus on

to be sold and the lender takes a specific amount [or

“Having more than one property as collateral sounds good in principle, but the added exposure of having a loan spread out amongst more than one property may not be worth the risk.”

The release price can be negotiated between borrower

and lender. Because the lender did not take the new property alone due to the high LTV, many times the

lender will reduce its pay-down to where it feels com-

fortable with a specific amount of its loan on the remaining property. To make this point clear, let’s say

that the lender usually makes loans for rental properties at an LTV of no more than 55%. Since the new

clause in the loan documents] risk having to ask the the lender would be willing to release the first proper-

er runs the risk of being at the mercy of the lender, as the lender does not have an obligation to release its lien for less than what it is owed.

Many lenders may be willing to work out a reason-

able amount for releasing either property, as it is in the lenders best interest to reduce the borrower’s de-

fault risk. Having more than one property as collateral sounds good in principle, but the added exposure of

having a loan spread out amongst more than one prop-

erty may not be worth the risk. Each situation will be

protecting the lender’s interest.

usually cross collateralize their loans. Most banks do one property and the risk associated with it.

Borrowers should make sure that the lender does not

hold any of the borrower’s properties hostage and that release prices are set at a point where the borrower feel comfortable.

ABOUT THE AUTHOR: Edward

different, but, as a general rule, it is more conservative

Brown is in the Investor Relations department at Pacific Private Money in Novato, Calif.

property compared to having crossed on one or more

(415) 883-2150 pacificprivatemoney.com

from the lender’s viewpoint to have a low LTV on one additional properties that have a higher LTV. Addi-

CONTACT:

www.originate.report 19

Deal Types: Fix & Flips, Residential New Construction and Landlord properties.

FEATURE

The

3. The G.C. (General Contractor)

You know what a General Contractor is but, when it comes to real estate investing, the General Contractor stands out because they get things done right. This is someone who has made a career in construction and knows how to build. These folks often come from a project management or project superintendent background and enter the world of real estate investing because they know they can do it better than the next guy.

On the job site, few are better at logistics and know how to put the right people in the right places to deliver an above-average product and to do so well within budget and in a timely manner.

Superpower(s): Project management and logistics Types of Deals: Fix & Flips, Residential New Construction and (with time) may graduate to Community Developments.

4. The Industry Pros

People Who Use Hard Money

By Romney Navarro, Streamline Funding

T

here’s a myth that people who use private sources of capital are somehow not “bankable”, that they’re unable to obtain financing through traditional channels. This myth exists in large part because the cost of alternative financing (referred to as private money or hard money) are more expensive than traditional sources of funding. During the recession, private capital gained more traction with investors because traditional banks essentially froze lending operations. As a result, many entrepreneurs had to pass on great opportunities that were snatched up by those with deeper pockets. But the advent of private money has broadened access to real estate investing for many more would-be entrepreneurs.

Private money began entering the lexicon of some of even the most bankable and well-respected people in the industry. Once banking regulations relaxed, many of those people decided to stay with private capital because it allowed them to scale their vision and their businesses far beyond what they could have achieved through traditional lenders. This is partially because private lenders typically take on more risk than the bank and may not require nearly as much equity, but also because it is quicker, more predictable, and more reliable.

Here is a breakdown of the types of entrepreneurs who prefer private capital and some of their unique characteristics:

20 Originate Report | March 2019

1. The Freshman

The most enthusiastic of the group, the Freshman has been eyeballing real estate investing for some time and is now finally taking the leap. Before they are considered Freshman, they are just spectators, the only difference between the two being action. That is because the Freshman acts and the Spectator watches from the sidelines. People graduate to Freshman from all walks of life from service and labor workers to office professionals to Ivy League MBA’s. Every real estate entrepreneur starts as a freshman at some point in their life.

Superpower(s): Enthusiasm, burning desire to do something special, beginner’s mindset – having an attitude of openness and eagerness with a lack of preconceptions.

Deal Types: Fix & Flips and Landlord properties.

2. The Craftsman

If the Freshman is the most enthusiastic, the Craftsman is the proudest of their efforts. They take great pride in their work, far beyond what any other home builder or remodeler will ever be able to stake a claim to. Craftsmen are meticulous. Nothing is more important to them than the look and feel of their one-of-a-kind creations.

Craftsmen stick to one or two projects at a time, but those projects often yield the highest returns in the industry because the quality of their finished product is unrivaled.

Superpower(s): Pride in craft

Probably the most active of the bunch in the real estate investment circuit, the Industry Pro is the ultimate networker and deal finder. The Industry Pro may be a full time real estate agent, mortgage professional or wholesaler (the people who find properties at a discount and resell them to willing and able investors at a profit).

While their pedigree may not be in real estate investing, per se, they are immersed in this world, so they have access to just about any tool they need.

Superpower(s): Their network and ability to spot deals Deal Types: Fix & Flips, Residential New Construction and Landlord properties. Sometimes they may even participate in conjunction with more experienced operators in Multi-family deals and Community Developments.

5. The Professional Flipper

If you think you can already have your very own HGTV show, then you are probably a Professional Flipper. Professional Flippers are just that – people who make a living solely by flipping houses. Even in a saturated market, Professional Flippers know how to spot winning deals and have a knack for multi-tasking to maximize profits. To truly be a Professional Flipper, one must be equal parts entrepreneur, contractor, marketer and networker but also 100% a “boss”.

Superpower(s): Juggling and creativity Deal Types: Fix & Flip with the occasional Residential New Construction and Landlord property.

6. The Portfolio Builder

Take all of the best attributes of a Professional Flipper and sprinkle in a little more financial modeling with aspirations to build a portfolio of rental properties with significant size and scale, and you have the Portfolio Builder. The Portfolio Builder does not take as many “shots” as some of the others on this list as they patiently await those opportunities that make sense for their model. Some of the most prominent Portfolio Builders exercise great discipline by sticking to what they know and never deviating.

Superpower(s): Discipline Deal Types: Landlord properties with the occasional Fix & Flip

7. The Investor

In some capacity, everyone trying to earn a yield in real estate can be considered an “investor”, but this “investor” is not like everyone else. The “investor” that I’m referring to is not a “real estate guy”. Instead, this is a person who diligently looks for opportunities to find high returns and often lands upon a real estate opportunity that does just that. Mostly passive, the Investor is likely to be an executive or high wage-earner who has made a career of making good decisions. Unlike the Craftsman, the investor may not understand (nor care to understand) the intricacies of a project but they sure do know numbers. Not only are they masters of the spreadsheet, they are also masters of the gut instinct.

When both of those things align, the Investor pounces and more often than not hits the target return.

Superpower(s): Rational and opportunistic Deal Types: All deals, with an emphasis on Multi-family and Community Development

8. The Home Builder

What do you get when you mix a General Contractor and a seasoned Business Person? You get a Home Builder. Home Builders are the ultimate scalers on the list. They take a concept and convert it into a business far beyond the one-off spec home. Above all else, the

Home Builder is an expert operator. The Home Builder understands the importance of the craft in his line of business but is more business savvy. You will not find a Home Builder at a job site swinging a hammer or managing crews, yet somehow the Home Builder builds more homes than just about anyone on this list. These people run construction companies with full-time staff and every year become more efficient which leads to more profits for their organization.

Superpower(s): Business savvy, operations and logistics Deal Types: Residential New Construction and Community Development

somehow, they wear them oh so well. Developing real

What is timid, weak and forgiving? I don’t know but it certainly isn’t the Developer. The Developer is a machine. While they may not have been born into development, they once had the courage to take the leap, and now they are in it for life. Much like the Professional Flipper, the Developer excels in just about every part of their business because they wear many hats – yet

To learn more about this topic and to hear directly from

9. The Developer

estate from trees to keys, as they say, is the only thing that the Developer works on; it is their passion and success that motivates them. The Developer is busy, al-

ways looking for a deal yet spending the majority of the days organizing project logistics (from financing to

construction). Yet they still find time every evening to reconcile projects.

Superpower(s): Tenacity, multi-tasking and logistics

Deal Types: Community Development, Multi-family and the occasional Residential New Construction.

the people who structure loans for people just like these,

tune in to Streamline Funding’s Firestarters podcast and download the episode “The Nine People Who Use Hard Money.” It’s available wherever you get your podcasts!

ABOUT THE AUTHOR: Romney Navarro is a Managing Partner of Noble Capital and the

Chief Lending Officer of its subsidiary company, Streamline Funding. With more than 17 years of experience in the real estate investment industry, he specializes in financing construction projects through private capital and oversees business development, underwriting and closing for the loan originations division. Having designed and implemented numerous alternative lending products, Romney has facilitated the origination of nearly $1B in loans to Texas real estate investors. He co-hosted The Noble Capital Radio Hour and is currently the host of the highly acclaimed Firestarters podcast.

CONTACT: rnavarro@streamlinefunding.com | O: 512.492.3820 | streamlinefunding.com

www.originate.report 21

CITIES TO WATCH

Cities to Watch:

Philadelphia,

Pennsylvania

By Charles Peckman, Originate Report

E

stablished by Quaker William Penn in the

tance, Philly also takes the cake on another level; it was

pressed to find a more important square mile in the U.S.

of brotherly love– has certainly come a long

and the signing of the Declaration of Independence.

“the birthplace of American democracy,” this space in-

1600s, the city of Philadelphia –or the city

way since its humble, colonial beginnings. Currently, the

the meeting place of the Second Continental Congress

Around every corner in this historic city, you will find

than Independence National Historical Park. Called cludes the Liberty Bell Center, Independence Hall,

something to do, eat, and dance about.

and the President’s House (the nation’s first executive

of over 1,500,000. Its location along the Delaware and

Must-see locations

history, modern accouterments – mainly museums and

line, and the city also has the highest “population” of

there is no shortage of historical sites to visit. Read-

city is the sixth-most populated area in the country (and

largest in the state of Pennsylvania,) with a population Schuylkill Rivers accentuates its scenic and iconic sky-

outdoor murals and sculptures.

Because ‘Philly,’ as it is affectionately called, was estab-

lished hundreds of years ago, it has been the location of many American firsts; among them, the first library,

hospital, medical school, and zoo. In terms of impor-

22 Originate Report | March 2019

Naturally, Philadelphia’s 300-year-old history means ing Terminal Market, the oldest farmer’s market in the country is a food lover’s paradise. Open on Tues-

days-Saturdays and boasting more than 80 vendors,

mansion.) While immersing yourself in the city’s rich cultural centers – help strengthen the strong sense of history. “This is the birthplace of American history,” au-

thor David McCullough once said in an interview on 60 Minutes.

the Market’s thousands of annual visitors can choose

Nightlife

meat. In terms of historical impact, you will be hard-

ing in the nightlife department. With scores of late-night

from everything from Amish goods to fresh cheese and

Despite the city’s storied past, Philadelphia is not lack-

Philadelphia, PA Economy:

• Major industries: Manufacturing, oil refining, healthcare, biotechnology, and communications • Minimum wage: $7.25/hour • Cost of living: 4% lower than the national average

Housing:

• Median household income: $59,195 (according to the most recent data)

your run-of-the-mill hungry, but starved. Luckily, you’re

fashioned outdoor time,) Philadelphia has cemented it-

linary offerings. World-renowned publications like The New York Times have discussed Philly’s increased pres-

ence in the culinary world, and with reason – the city has

open arm guiding you into its diverse and action-packed nightlife. With Silk City, for example, its dress code-

less atmosphere and late-night eats – married with a

large dance floor – cement the club/bar as a must-visit location for locals and travelers alike. Philadelphia also

has a thriving LGBTQ+ population – the historic ‘Gayborhood,’ as it is called, is home to many gay nightclubs, including Franky Bradley’s, which has a second story

dance floor that keeps funk and soul tracks spinning all

night long. Without traveling very far in this historic

a hodge-podge of restaurants with food from all corners of the world. Suraya, for example, is a 12,000-square-

foot all-day Lebanese market, café, and coffee shop. You will be sure to soak up a healthy dose of Lebanese cul-

ture while sampling foods you may not have even seen before, but will surely remember for quite some time.

But if you close your eyes and walk across the city, you

(and, coincidentally, are looking for some good-old-

self as a haven for those looking for outdoor, urban adventures. There are dozens (literally) of outdoor spaces,

parks, trails, and paths for you to explore – some of them, in fact, are as old as the city itself. In addition to

being the meeting place for America’s founding fathers, the city also holds a more zoological place in the hearts

of its inhabitants as well; after all, it is home to the U.S.’s

first zoo. To this day, thousands of annual visitors take

in the majesty of the tiger and mischievousness of the snake (to name a few.)

will be suddenly transported to a French brasserie called

During the oft-frigid winter months, there are still nu-

Starr.) Here, you can sample mussels simmered in Dijon

go around.) Dilworth Park, which is located in the

Parc (from James Beard award-winning chef Stephen broth, mouth-watering onion soup, and a plethora of freshly-baked bread.

city, actually, you will be able to find a late-night spot

Attractions

or see and be seen.

age of historical sites in this city. If you need a break in

that suits your fancy, whether you are looking to lay low

• Forbes List: Best places for business and careers—#73 • Unemployment: 5.2% • Job growth: 1.6 percent • Loan originator average salary: $68,353/yr (according to Glassdoor)

between visiting the scores of museums and art galleries

in a city that has an incredibly diverse universe of cu-

ers’ need to dance, the city of brotherly love extends an

Job Market:

Dining

Picture this: it’s a Friday night, and you are hungry. Not

clubs and eateries to cure even the pickiest of travel-

• Median home price: $158,000 •H ome price change: 3.8% increase (in the past 12 months) • Homeownership: 55 percent • Median rent: $2,021/month (2 bd apartment)

As we’ve already pointed out, there is certainly no short-

merous outdoor offerings (and plenty of hot cocoa to

center of the city, transforms into a winter wonderland starting in late November. Bustling with an ice skating rink and a ‘Made in Philadelphia’ Holiday Market, even the hardest-core Scrooges will be able to find some holiday cheer.

www.originate.report 23

UPCOMING EVENTS

Upcoming Events Don’t be left out! Showcase your upcoming event here!

Contact a.carter@geracillp.com for more information.

Non-Conventional Investor Club 2019 April 5 • Los Angeles, CA www.geracicon.com

The Broker Exchange 2019 May 9-10 • Dallas, TX www.geracicon.com

Captivate 2019 August 21-23 • Las Vegas, NV www.geracicon.com

All event dates subject to change. Please visit conference websites for agendas and details.

24 Originate Report | March 2019

You have knowledge. You have ideas.

Let us showcase your voice.

Currently we’re looking for articles showcasing: Business Development • Fintech/Newest Loan Programs • Automation in Today’s Evolving Society • Upcoming Trends & Changes • Marketing & Outreach Essential Tools & Technologies • New Legal Issues and Regulations.

Another idea? We’d love to hear that, too.

Write for us. Email submissions@Originate.Report for more information.

www.originate.report 25

LOAN HOME

Help Make Dreams Come True TYPES OF LOANS

AN LO M

XI M

MU www.atgcapitalfunds.com bobby@atgcapitalfunds.com Tarzana, CA

400K 3.5M √

√

√

√

√

√

√

√

65-70/ 12-18

√

√

√

√

√

√

√

√

√

Direct Lender

Fidelity Mortgage Lenders, Inc.

www.fidelityca.com psteigleder@fidelityca.com Peter Steigleder (818) 422-8879

Helvetica Group

www.helveticagroup.com loans@helveticagroup.com (310) 575-3301

50K 15M

Direct Lender

www.jcap.net info@jcap.net (949) 236-6600

√

√

√

√

√

√

√

√ 55/30 √

√

√

√

√

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√

√

CB Real CALBRE 00388229

100K 10M √

50K

5M

√

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√ 75/30 √

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*All 50 States

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100K 50M √

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75/2

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AL, AK, AR, CA, CO, CT, DE, FL, GA, HI, IL, IN, IA, KS, KY, LA, ME, MD, MA, MI, MO, MS, MT, NE, NH, NJ, NM, NC, OH, OK, PA, RI, SC, TN, TX, VA, WA, WV, WI, WY

√

√

√

√

√

√

√

90/30

√

√

√

√

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√

√

√

2019

Direct Lender

AK, AZ, AR, CA, CO, CT, DE, FL, GA, IL, IN, AI, KS, KY, LA, MD, MA, MI, MN, MS, MO, MT, NE, NV, NH, NJ, NM, NY, NC, OH, OK, OR, PA, RI, SC, TN, TX, UT, VT, VA, WA, WV, WI, WY

Let Lenders know you found them in Originate Report!

Are you a lender? Advertise with Originate Report’s Loan Home and be seen by 35,000 industry professionals each month.

Contact our Loan Home director at (949) 629-3961.

26 Originate Originate Report Report || March March 2019 2019

√

Rev. 01.14.19

www.lockettnhomes.com Info@lockettnhomes.com

√

* AZ, CA, NV

Direct Lender

Lockett-N-Homes

√

CA, TX, WA

Direct Lender

JCAP Private Lending

√

* = states lending in

ATG Capital

MA

MI

NI

LENDER

$ U Co mm M L O AN Co erci ns al $ um e Br idg r e Co rpo r Ac at io qu ns/ isi T No tion rusts tes s a / L nd ega Pu De l E rch ve ntit lop ies Re ased me ha nts b/ Bla Re m nk od e Se t Lo eled an co s / Re n no Jo d M va int ort ted Ve ga Fo ntu ge s rei r es g Ot n Na he t i on r als MA XL oa nCh urc to-Va lue he La s (% nd / Te (B mp ) / MA a le Au tom re/ C s/ S X Te rm y o Re otive mm nag (yr erc og s) tai u l (S ial e s /L En ho ot) ter p ta s/ Ga inm Strip s S en Ma t lls Le tatio ) isu ns re Ho (G sp olf it C Mi ality our s xe d-u (Hot es/ M Re se els) ari sid Pr na I o nd e ) Ra ntia per t ustri l a ies nc I l n v h Se es a estm lf-s nd e tor F nt Re ag arm Prop sta e ert s ies u Of rant fic s e

Let lenders know you found them in Originate Report!

TYPES OF PROPERTIES WE LEND TO

TYPES OF LOANS

TYPES OF PROPERTIES WE LEND TO

MI www.pacificprivatemoney.com loans@pacificprivatemoney.com (415) 883-2150

150K 5M

√

√

√

√

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√

70/30

√

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√

√

√

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Direct Lender

www.patchofland.com originations@patchofland.com (888) 250-2216 Sherman Oaks, CA 91403

Redwood Mortgage Corp. www.redwoodmortgage.com RMC@redwoodmortgage.com (800) 659-6593 San Mateo, CA 94402

Sandstone Capital, Inc. www.sandstonecapital.net josiah.p@sandstonecapital.net Josiah Puder (310) 909-8555 Ext. 1040

Sunset Equity Funding www.sunsetequityfunding.com lending@sunsetequitygroup.com (833) 786-7381 Los Angeles, CA 90010

√

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85/2

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100K 10M

√

Direct Lender

*65% For commercial and mixed-use and 70% for multi-family and residential investment. 5 years (custom terms are available)

100K 10M

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65/5*

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70/5*

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75/5

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CA, CO, HI, TX, WA

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90/2

Direct Lender

2M

√

* CA

Direct Lender

50K

√

AL, AK, AR, CA, CO, CT, DE, FL, GA, HI, IL, IN, AI, KS, KY, LA, ME, MD, MA, MI, MS, MO, MT, NE, NH, NJ, NM, NY, NC, ND, OH, OK, OR, PA, RI, SC, TN, TX, VT, VA, WA, WV, WI, WY

Direct Lender

50K 50M

√

√

√

NATIONWIDE EXCEPT ALASKA, SOUTH DAKOTA, NORTH DAKOTA

√

√

√

√

√

90/2

2019

www.zincfinancial.com office@zinc.net Tom Valentino

3M

Rev. 01.14.19

Zinc Financial Inc.

50K

* CA

SFR

Patch of Land

√

* = states lending in

Pacific Private Money

XI M

NI

LENDER

MA

MU

M

LO

AN

$ U Co mm M L O AN Co erci ns al $ um er Br idg e Co rpo r Ac at io qu ns/ isi T No tion rusts tes s a / L nd ega Pu De l E rch ve ntit lop ies Re ased me ha nts b/ Bla Re m nk od e Se t Lo eled an co s / Re n no Jo d M va int ort ted Ve ga Fo ntu ge s rei r es g Ot n Na he t i on r als MA XL oa nCh urc to-Va lue he La s (% nd / Te (B mp ) / MA a le Au tom re/ C s/ S X Te rm y o Re otive mm nag (yr erc og s) tai u l (S ial e s /L En ho ot) ter p ta s/ Ga inm Strip s S en Ma t lls Le tatio ) isu ns re Ho (G sp olf it C Mi ality our s xe d-u (Hot es/ M Re se els) ari sid Pr na I o nd e ) Ra ntia per t ustri l ies al nc I n v h Se es a estm lf-s nd en t t Re orag Farm Prop sta e ert s ies u Of rant fic s e

Look for this Lender’s Ad in this issue of Originate Report

Direct Lender

AZ, CA, CO, IN, MI, NM, OH, TN, TX, WA

www.originate.report www.originate.report27 27

28 Originate Report | March 2019