BigMikeFund

Welcome to The Big Mike Fund Podcast. Today I’m talking with Nathan Trunfio, a new brother from the Collective Genius Mastermind. Nathan hales from Bethlehem, Pennsylvania and has done over a billion dollars in loans on single-family and multi-family assets. He has spent his entire career in real estate as a lender and an equity investor. Now he works as the president of DLP (Direct Lending Partners). Today we’re going to talk about what DLP does, Nathan’s predictions for the real estate market and what trends he sees now, as well as his average costs and returns on flips and new builds.

Minute Markers:

00:22 – Welcome to the Big Mike Fund Podcast

00:48 – A bit about Nathan Trunfio

04:00 – What does DLP do?

06:39 – What does Nathan think about the market today?

13:35 – The trends Nathan has been seeing in real estate

19:00 – The average return on flips, margins, and yields

21:11 – Mike’s Golden Max Ratio

22:24 – New construction trends

25:18 – Construction build costs and DLP models

29:20 – Final thoughts and how to contact Nathan

31:09 – Thank you for listening to the Big Mike Fund Podcast

Quotes:

“It’s a lot of hard work because I’m not naturally that smart. You just got to work hard to try to learn and retain.” – Nathan Trunfio

“There’s still a ton of opportunities for good acquisitions and good value creation. You just had to be super disciplined and really know what you’re getting in and out of.” – Nathan Trunfio

“You see a lot of deals falling out because a lot of debt nowadays, especially in the agency type side, is debt service constraints, which again, is a sign of good diligence as lenders in restricting the amount that they’re looking to give them leverage.” – Nathan Trunfio

“The average return on flips was around like the high $60,000 about a year ago. That’s not taking into account renovation amounts because they can’t pull the data to know how much renovation was spent..” – Nathan Trunfio

“I think there’s a lot to say about the build-to-rent space, but I think a lot of real estate investors are also becoming and falling in love with that terminology. To me and to us, the build-to-rent space really only works in scale and in bulk..” – Nathan Trunfio

“If you have the liquidity and the experience to build in bulk whether that’s 20, 30, 40 plus starts and or builds in a given year, quarter, or half a year, then the build-to-rent model can make some space, especially since there’s a huge appetite for a lot of the hedge funds out there to buy the end product..” – Nathan Trunfio

“If you’re not learning, you’re dying. Some of the most successful people in the world (from a business standpoint) are also almost always heavy and avid readers.” – Nathan Trunfio

“I like to use the 75% as the golden max ratio. If you’re a rehabber, your purchase with rehab should not exceed 75%. I know a lot of California guys and they push you sometimes to 83%–84%. It’s crazy. You look at this and it’s like a game of perfection. As long as the prices keep climbing up, it works.” – Mike Zlotnik

Resources:

Nathan Trunfio, email: [email protected]

What It Takes: Lessons in the Pursuit of Excellence (Autobiography) by Stephen Schwarzman