Lender Lounge with Kevin Kim

Kevin Kim hosts a live episode of Lender Lounge from the Captivate Conference at the Encore Hotel in Las Vegas. Joining him are industry veterans Evan Stone, CEO of Champions Funding and Chairman of Community Savings, Dustin Wells, President of Dominion Financial Services Wholesale, and Dave Orloff, CEO of American Heritage Lending. This discussion explores the evolving landscape of private lending, particularly the intersections of consumer and business-purpose lending. The panelists dive into their experiences transitioning from consumer to business-purpose lending, the distinct challenges of each, and the nuances of RTL and DSCR products. The conversation also highlights the importance of understanding credit risk, borrower psychology, and the growing role of brokers in non-agency lending. The episode provides valuable insights into market trends, capital strategies, and the future of private lending in a rapidly changing economic environment. 

Bullet Points: 

[00:00:57] Kevin introduces the Captivate Conference and the episode’s panel. 

[00:03:02] Discussion on the difference between consumer and business-purpose lending. 

[00:05:03] Panelists share their preferences between consumer and BPL. 

[00:09:01] The evolution of liquidity and secondary markets in BPL since 2018. 

[00:12:03] Dominion’s unique approach to RTL and partnership with life insurance companies. 

[00:16:05] The role of banks in BPL and managing liquidity through term financing. 

[00:20:02] Initial reactions of consumer lenders entering BPL and adapting to its unique challenges. 

[00:25:04] The critical role of understanding credit risk and the differences in underwriting BPL versus consumer loans. 

[00:33:07] Exploring borrower profiles and their impact on RTL underwriting decisions. 

[00:39:10] DSCR as a growing product category and its current market conditions. 

[00:45:12] The psychology of borrowers and the impact of rate fluctuations on market behavior. 

[00:50:06] Discussion on the potential long-term stability of rates and borrower expectations. 

[00:55:05] Concerns about commoditization and standardization in the RTL sector. 

[01:00:09] Champions Funding’s focus on staying specialized and cautious about market overextension. 

[01:05:07] Insights into the factors that contribute to the success or failure of consumer shops entering the BPL space.

Links: 

Learn more about Champions Funding at https://www.champstpo.com/ 

Learn more about Dominion Financial Services at https://www.dominionfinancialservices.com 

Learn more about American Heritage Lending at https://ahlend.com/ 

Learn more about Geraci Law Firm at https://www.geracilawfirm.com 

Subscribe to the Lender Lounge newsletter for episode notifications and exclusive content at https://www.geracilawfirm.com/lender-lounge-podcast 

Subscribe to the Geraci Law Firm newsletter at https://www.geracilawfirm.com/sign-up 

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In this episode of Lender Lounge with Kevin Kim, Mike Hoffman, CEO and President of Longhorn Investments, joins Kevin to share his journey into private lending and the growth of Longhorn Investments. Starting from a background in law with no real estate experience, Mike stumbled into the world of hard money lending during the 2008 financial crisis. He shares the origins of Longhorn Investments, its expansion beyond Texas, and the unique challenges of building a successful private lending business. Mike also discusses how the company adapted to market changes, including the decision to start a fund and the impact of institutional competition on their strategy. The conversation dives into the nuances of operating in multiple states, the challenges of raising capital, and the importance of maintaining a solid relationship with investors. Tune in to hear Mike’s insights on navigating the evolving private lending landscape, maintaining discipline, and his perspective on future opportunities.

Bullet Points:

[00:00:37] Introduction of Mike Hoffman and Longhorn Investments.

[00:01:00] Mike’s unconventional entry into the lending industry.

[00:02:11] Early challenges and learning about hard money lending.

[00:03:12] Transition to a fund model and challenges of raising capital.

[00:07:00] Expansion strategy to other states and diversifying investments.

[00:10:02] Evolution of the Texas market and branching into the Midwest.

[00:14:00] Adjusting business strategy to handle increased competition.

[00:21:03] Importance of maintaining investor relationships and discipline.

[00:28:20] Discussion on institutional partnerships and capital raising.

[00:33:57] Mike’s perspective on selling notes and loan servicing.

[00:38:58] The potential and challenges of securitization in private lending.

[00:43:33] Maintaining a single fund strategy versus multiple funds.

[00:47:00] Hiring and team development for scaling a lending business.

[00:52:22] Focus on growth, new products, and strategic planning for the future.

Links:

Learn more about Longhorn Investments at https://www.longhorninvestments.com/

Learn more about Geraci Law Firm at https://www.geracilawfirm.com

Subscribe to the Lender Lounge newsletter for episode notifications and exclusive content at https://www.geracilawfirm.com/lender-lounge-podcast

Subscribe to the Geraci Law Firm newsletter at https://www.geracilawfirm.com/sign-up

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In this episode of Lender Lounge, Kevin Kim welcomes back Ben Fertig. Ben is the founder and President of Constructive Capital, the leading national capital provider for DSCR Rental Loans and Residential Transitional Loans (RTL or Fix and Flip Loans). Prior to Constructive, Ben led Credit and Asset Management at Finance of America Commercial; 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. Ben began his Mortgage Banking career over 25 years ago and has served in a Senior Leadership role in the Residential Investor Loan Market since 2012.

Ben delves into the rapid growth of Constructive, highlighting the company's journey from its inception in 2017 to becoming a nine-figure monthly producer. The discussion covers key milestones, strategies for risk management, the importance of capital diversification, and how Constructive navigated the challenges posed by the COVID-19 pandemic and subsequent market volatility. Ben also shares insights on leadership, the impact of economic cycles on the lending industry, and the increasing importance of managing fraud and maintaining solid client relationships in today's market.

Bullet Points:

[00:00:50] Introduction of Ben Fertig and Constructive Capital.

[00:03:59] Key milestones in Constructive's growth from 2017 to 2021.

[00:05:54] Strategies for risk management and capital diversification.

[00:08:27] Impact of COVID-19 on Constructive's operations and market conditions.

[00:11:02] Constructive's decision to partner with a life insurance company for stable capital.

[00:14:57] Managing a lean team and maintaining high production levels.

[00:20:11] The importance of client relationships and operational efficiency.

[00:28:30] Challenges in the current lending market, including fraud and market volatility.

[00:37:41] Technological tools and processes used by Constructive to maintain efficiency.

[00:45:55] The impact of rising interest rates and economic uncertainty on loan performance.

[00:53:09] Discussion on fraud issues and the need for industry-wide solutions.

[01:00:24] The potential for regulatory challenges in the private lending space.

Links:

Learn more about Constructive Capital at https://www.constructiveloans.com

Learn more about Geraci Law Firm at https://www.geracilawfirm.com

Subscribe to the Lender Lounge newsletter for episode notifications and exclusive content at https://www.geracilawfirm.com/lender-lounge-podcast

Subscribe to the Geraci Law Firm newsletter at https://www.geracilawfirm.com/sign-up

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The Lender Lounge is pleased to host a special guest speaker series. Leading up to our next season, we have John Beacham of Toorak Capital Partners as our guest for an open conversation about his career and success.

John Beacham, CEO of Toorak Capital Partners, joins Kevin Kim for a special episode of Lender Lounge, produced in collaboration with the American Association of Private Lenders. John shares his extensive journey in the finance industry, detailing his transition from investment banking to leading one of the most recognized firms in the private lending sector. The discussion covers the evolution of real estate finance, the impact of market crises, and the strategic maneuvers that have shaped Toorak's success.

John is an experienced entrepreneur who has completed more than $50 billion in transactions over his 25-year career and has structured CMBS or financings that were honored with multiple “Deal of the Year” awards. Prior to Toorak, Mr. Beacham was the founder and President of B2R Finance, the leading mortgage origination company focused on the single-family rental (SFR) and residential bridge loan markets. B2R Finance (now Finance of America Commercial) is a Blackstone portfolio company. Before founding B2R SFR platform, Mr. Beacham originated large balance commercial real estate loans in the CMBS group at Deutsche Bank and worked in the financial institution’s investment banking groups at Deutsche Bank and Credit Suisse First Boston.

Key Points:

[00:01:09] John's background and early career in investment banking

[00:03:25] Founding of Toorak Capital Partners and its growth trajectory

[00:04:26] Challenges and strategies in the residential bridge loan market

[00:06:15] Evolution of private lending and the importance of institutionalization

[00:10:45] Impact of the financial crisis on real estate finance

[00:14:22] The creation of new loan products and securitization

[00:20:35] Addressing industry accusations and market competition

[00:23:54] Toorak's approach to partnering with lenders and homogenizing the industry

[00:28:36] Future outlook for Toorak and the private lending market

[00:34:12] Importance of adapting to market changes and fostering innovation

[00:40:15] Detailed discussion on the impact of market volatility and strategies to mitigate risks

[00:46:28] Insights into the operational efficiencies and technological advancements at Toorak

[00:51:44] John's perspective on leadership and team building in a dynamic industry

[00:57:10] Discussion on the regulatory landscape and its impact on private lending

[01:02:33] Real-life examples of successful projects and deals by Toorak Capital Partners

[01:08:57] The role of community and client relationships in Toorak's business model

[01:15:21] Final thoughts on the future of private lending and John's vision for Toorak

Links

Learn more about Toorak Capital Partners at https://www.toorakcapital.com

Learn more about Geraci Law Firm at https://www.geracilawfirm.com

Subscribe to the Lender Lounge newsletter for episode notifications and exclusive content at https://www.geracilawfirm.com/lender-lounge-podcast

Subscribe to the Geraci Law Firm newsletter at https://www.geracilawfirm.com/sign-up

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In this concluding episode of Season 4, Kevin Kim reflects on the insights gained from our guests and addresses common questions from our listeners, particularly those new to private lending. Kevin discusses licensing for private lenders, emphasizing the variation in requirements across states and the importance of compliance and understanding securities laws, even when raising funds from family and friends. He also explores the challenges and opportunities of raising capital from international investors and the intricacies of fractionalized loans. He shares his observations on the entrepreneurial spirit, discipline, and focus he witnessed in interviews throughout the season. Kevin highlights the importance of adding value to the marketplace, creating a strong team culture, and maintaining financial discipline to ensure the longevity and success of your private lending business.

Kevin Kim leads Geraci LLP’s corporate & securities practice. His expertise lies in fund formation, private placements, and other securities offerings for private lenders, real estate developers, and investors of all sizes. Kevin is also the lead instructor for the American Association of Private Lender (AAPL)’s Certified Fund Manager courses, where he teaches mortgage fund managers throughout the United States on fund management and securities laws. And, of course, he hosts the Lender Lounge with Kevin Kim podcast.

Key Topics:

[00:01:30] Kevin answers frequent questions he receives as a private real estate lending lawyer specializing in corporate and securities law

[00:01:40] FAQs on licensing in private lending

[00:04:13] FAQs on raising money from family and friends

[00:06:20] FAQs on raising money from international investors

[00:08:05] FAQs on fractionalized/co-lending/multi-beneficiary loans 

[00:10:45] FAQs on being successful in private lending

[00:14:40] Kevin talks highlights and takeaways from Season 4 of Lender Lounge 

[00:16:22] Embodying the entrepreneurial spirit in private lending

[00:20:46] Maintaining focus and discipline in business operations

[00:24:02] Cultivating a positive and value-driven team culture

[00:25:55] Positivity in the marketplace today

Links

Learn more about Geraci Law Firm at https://www.geracilawfirm.com

Subscribe to the Lender Lounge newsletter for episode notifications and exclusive content at https://www.geracilawfirm.com/lender-lounge-podcast

Subscribe to the Geraci Law Firm newsletter at https://www.geracilawfirm.com/sign-up

Follow Lender Lounge with Kevin Kim on LinkedIn and YouTube

Beth O'Brien, a dynamic leader and innovator in the private lending industry, joins Kevin Kim on this episode of Lender Lounge. With her rich background in law, real estate, and securitization, Beth currently spearheads Encore Finance Capital. Her journey encompasses an impressive trajectory from working at renowned institutions like Goldman Sachs and Citi to pioneering her own private lending ventures. Beth's strategic insight and deep understanding of the residential and commercial real estate sectors empower her vision at Encore. This conversation expands on the nuances of private lending, the challenges of market volatility, and the evolution of securitization in private lending. Beth O’Brien is the founder and CEO of Encore Finance. She has over 30 years of experience in almost every aspect of the mortgage industry, as both a principal and an advisor. She has overseen more than $25 billion in transactions and has won numerous industry awards. Beth previously founded CoreVest, serving as CEO and growing the company into the nation’s premier private real estate lender. Before that, Beth was Executive Vice President at Auction.com, where she ran residential capital markets, and was President and Co-Founder of AuctionFinance.co. Beth also held prior positions in RMBS trading and securitization at Citigroup and in Real Estate Private Equity at Goldman Sachs. Beth holds degrees from the University of Pennsylvania and Georgetown University Law Center.

Key Points

[00:01:00] Beth's journey from lawyer to private lender

[00:03:35] Pioneering institutionalization in private lending and the evolution of the market

[00:05:59] Encore's approach to lending

[00:07:09] The importance of discipline and consistency in lending practices

[00:10:06] Encore's involvement in construction lending, especially in the build-to-rent space

[00:14:01] Beth's motivation for re-entering the private lending market

[00:16:16] The challenges and strategies in securing the right capital partners

[00:20:38] Insights into the entrepreneurial mindset and the decision-making process

[00:22:35] Finding alignment with capital partners rather than focusing solely on control

[00:29:30] The current state of capital sourcing in private lending

[00:33:46] Anticipation and impact of rated securitizations in private lending

[00:37:10] Potential benefits of rated securitizations for the investor base

[00:39:32] Market trends and the resurgence of specific loan types

[00:44:13] Future outlook of the private lending market

[00:47:07] The growing interest in workforce housing and revitalization of neighborhoods

[00:51:28] Challenges in financing multifamily properties and the current state of the market

Links

Learn more about Encore Finance at https://www.encorefinance.com/

Learn more about Geraci Law Firm at www.geracilawfirm.com

Subscribe to the Lender Lounge newsletter for episode notifications and exclusive content at www.geracilawfirm.com/lender-lounge-podcast

Subscribe to the Geraci Law Firm newsletter at www.geracilawfirm.com/sign-up

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Adham Sbeih is an exemplary leader in the private lending industry. As CEO of Socotra Capital, he has built the company to a team of 33 and roughly $500 million in capital distributed across four funds, positioning it as a dynamic lender and trusted partner for their clients. In this episode, Kevin Kim and co-host Nema Daghbandan sit down with Adham to discuss where his lending journey began, the inception of Socotra, and his thoughts on business strategy, team culture, and training security dogs!

Adham’s roots are “all world.” His parents met in Beirut where his mother was working for the Red Cross and his father, a recent Yale graduate, was working as an engineer. They moved to Palo Alto, and then later to Roseville. Adham went to Oakmont High School and later Sacramento State University. He was a 4-time national cycling champion including winning the2000 Olympic Cycling Trials.

In 2003, he started working for Five Star Bank as a business development officer and then later FCI Commercial Capital as a commercial real estate lender. Adham began working on the creation of Socotra Capital in 2007 in anticipation of the credit crunch. He was Toastmaster of the Year in 2008 and past President of his Toastmasters Club.

Adham is on the Sacramento Zoo Board of Directors, and he is an active supporter of the Crocker Art Museum and has been a member of the Director's Circle. Adham’s family values and core beliefs make him a champion in all aspects of life, be it at home, on the bike, racing even now, or in making deals at the office.

Key Topics

[00:01:38] An overview of Socotra Capital and Adham’s professional background

[00:09:18] The inception of Socotra Capital during a casual dinner discussion

[00:17:05] Socotra Capital’s expansion strategy

[00:19:53] Prioritizing collective accomplishments over individual recognition

[00:24:19] Emphasizing detailed performance tracking to drive business efficiency

[00:32:46] Embracing their "Hard Money" identity with pride and humor

[00:35:32] How Socotra Capital's sales-driven approach evolves with constant 1% improvements

[00:44:45] Valuing autonomy and direct investor benefits over debt reliance

[00:48:45] Strategic acquisition of Herzer Financial to diversify into residential construction finance

[00:51:13] Crafting a future-proof business by empowering the next generation of company leaders [00:54:20] Adham’s passion for training Belgian Malinois dogs

[00:59:54] Leveraging Toastmasters to master the art of public communication

Links

Learn more about Socotra Capital at https://socotracapital.com

Learn more about Geraci Law Firm at https://www.geracilawfirm.com

Subscribe to the Lender Lounge newsletter for episode notifications and exclusive content at https://www.geracilawfirm.com/lender-lounge-podcast

Subscribe to the Geraci Law Firm newsletter at https://www.geracilawfirm.com/sign-up

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In this episode, Kevin Kim engages in a dynamic conversation with Matt Podesto and Brock VandenBerg, two successful private lenders who have taken the leap into fund management. From the early days of local hard money lending to the influx of institutional capital and white label programs, our guests provide valuable insights into the changing landscape and how it has affected the present. They emphasize the importance of proper underwriting and servicing while cautioning against entering new transactions without sufficient knowledge. Matt and Brock also share their invaluable personal experiences, mistakes made, and lessons learned, offering an inside look into their journeys. They dive into the challenges of scaling a lending business, the significance of segmenting functions, the importance of choosing the right partners, and the need for good service and ethical lending practices in the industry. Get ready to dive deep in this captivating episode of Lender Lounge.

Brock VandenBerg established TaliMar Financial in response to elevated uncertainty within the banking industry and to provide an innovative alternative to the restrictive practices of traditional lenders. With more than 14 years of experience in real estate finance, Mr. VandenBerg has earned the trust and respect of a strong network of clients and business partners. Mr. VandenBerg’s experience includes serving as Vice President of KeyBank’s Private Equity Group, where he assisted in funding more than $200 million in mezzanine debt and joint equity investments, and three years with the FDIC, where he supervised the orderly dissolution of failed financial institutions and was responsible for the sale of more than $500 million in performing and non-performing loan assets on behalf of the FDIC.

Matt Podesto has been involved in real estate since 2016, where he initially partnered with other investors to fix and flip properties throughout Texas. In 2018, Black Label Capital was founded to deploy personal capital on the side as a true private lender while still being involved in renovations. After gaining the attention of several investors, Black Label Capital eventually evolved into a day-to-day operation deploying personal and investor capital. As the CEO and Fund Manager, Matt manages the debt fund, asset management, loan sales, construction draws, marketing, capital raising and investor relations. Matt is also a former U.S. Marine Corps Scout Sniper, serving several combat deployments overseas, until being Honorably Discharged in 2009. Matt continued his service overseas for the next 7 years, providing Diplomatic Security for the U.S. Department of State, and most notably serving on the U.S. Ambassador's Protective Detail in both Iraq and Afghanistan.

Bullet Points

[00:03:11] Matt and Brock explore their entrepreneurial journeys

[00:05:19] A lottery winner's successful transition into private lending

[00:13:18] High net worth individuals and private lending strategies

[00:17:50] Strategies for segmenting business, outsourcing specialized aspects, and employing knowledgeable people

[00:21:28] Local lenders are adapting and thriving against growing national competition

[00:25:02] Recent transformations in private lending shifting focus from hard money lending to diverse practices

[00:29:57] Texas's lending landscape

[00:31:42] Borrowers' increasing need for private lenders to fulfill specific requirements

[00:36:10] Exploration of capital management, loan strategies, nationwide scalability, and market and portfolio construction

[00:41:39] Investors uniting and transitioning seamlessly into a fund model

[00:43:23] Successful fund launch with trustee investors and accomplished transition

[00:49:16] Wisdom and advice for newcomers to the lending industry

[00:53:50] Friendly competition, abundance mindset, camaraderie thriving in the industry

Links

Learn more about Black Label Capital at https://blacklabelcapital.com/ Learn more about TaliMar Financial at https://www.talimarfinancial.com/ Learn more about Geraci Law Firm at https://www.geracilawfirm.com Subscribe to the Lender Lounge newsletter for episode notifications and exclusive content at https://www.geracilawfirm.com/lender-lounge-podcast Subscribe to the Geraci Law Firm newsletter at https://www.geracilawfirm.com/sign-up Follow Lender Lounge with Kevin Kim on LinkedIn and YouTube

The leadership at Geraci LLP collectively has decades upon decades of private lending industry experience. For this episode, Kevin asked Geraci’s seasoned professionals to offer their foresight into the private lending industry for 2024 – what does the industry need to know as we head into the new year? Kevin and the Geraci team explore anticipated economic trends, such as preparing for potential litigation challenges and strategizing for effective hiring in the evolving market landscape. They also delve into innovative lending practices tailored for the year ahead, emphasizing the necessity of rigorous risk management, stringent compliance protocols, and more. This episode features Anthony Geraci, Nema Daghbandan, Melissa Martorella, Dennis Baranowski, Jennifer Young, and Steven Ernest.

Key Topics

[00:01:20] Litigation and bankruptcy predictions

[00:03:25] The continuation of trends from 2023

[00:05:23] Recession predictions and the likely persistence of high-interest rates

[00:06:48] The shift toward balance sheet lending and the necessity for creative loan structures

[00:08:45] The importance of proper loan underwriting and compliance

[00:13:08] Managing business risks and capital demands

[00:17:13] Advice for new market entrants in private lending

Links

Learn more about Geraci Law Firm at https://www.geracilawfirm.com

Subscribe to the Lender Lounge newsletter for episode notifications and exclusive content at https://www.geracilawfirm.com/lender-lounge-podcast

Subscribe to the Geraci Law Firm newsletter at https://www.geracilawfirm.com/sign-up

Follow Lender Lounge with Kevin Kim on LinkedIn and YouTube

For this episode, our host Kevin Kim welcomes industry experts Erica LaCentra and Rocky Butani for a deep dive into the nuanced world of private lending marketing. They highlight the importance of industry conferences and share insights on how emerging companies and entrepreneurs can smartly use marketing to stand out in a crowded field. With a focus on the power of content marketing, targeted email campaigns, and maintaining transparent communication in challenging times, Erica and Rocky offer strategic tips for building brand recognition, nurturing relationships, and succeeding at industry conferences. Settle in as these industry-known marketing experts delve into the practical and technological facets of marketing within the private lending sector.

Erica LaCentra is the Chief Marketing Officer at RCN Capital, one of the largest direct private lenders in the United States. She is responsible for planning, developing, and implementing RCN Capital’s strategic marketing plan. Since joining RCN in 2013, her efforts have rapidly expanded RCN’s customer base and elevated the company to a national brand.

Rocky Butani is the Founder and CEO of PrivateLenderLink.com, a site where brokers & investors find direct private lending companies, and learn valuable insights into private lending. He founded the company in 2010 and has developed relationships with hundreds of companies in the private lending industry.

Bullet Points

[00:04:37] Marketing tips for small lending companies

[00:10:38] Website, CRM, consistency crucial for marketing success

[00:13:21] Marketing is becoming more technical and data-centric

[00:20:02] Email marketing, drip campaigns, content marketing, outreach

[00:24:07] Valuable content marketing and email marketing

[00:32:51] Purposeful marketing is essential for success

[00:35:52] High volume of content that lacks value and purpose confuses your audience

[00:45:05] Who excels in marketing and why

[00:48:50] Business development and conference attendance

[00:54:29] Marketing and branding help establish credibility, leading to successful in-person networking and deal closures at conferences

[01:01:29] Networking events essential for resources and connections

Links

Learn more about RCN Capital at https://rcncapital.com/ Learn more about Private Lender Link at https://privatelenderlink.com/ Learn more about Geraci Law Firm at https://www.geracilawfirm.com Subscribe to the Lender Lounge newsletter for episode notifications and exclusive content at https://www.geracilawfirm.com/lender-lounge-podcast Subscribe to the Geraci Law Firm newsletter at https://www.geracilawfirm.com/sign-up Follow Lender Lounge with Kevin Kim on LinkedIn and YouTube