COMMUNITY INVESTOR
SPOTLIGHT: DALLAS/FORT WORTH
Mastering the DFWMarket AS AN INVESTOR AND A LENDER, ROB BARNEY UNDERSTANDS THE NEEDS AND POTENTIAL OF THE AREA.
where he restores the traditional charm of craftsman and cottage-style homes while adding modern conveniences. Barney turned a profit on his first flip because the fundamentals were right. He bought the ranch-style house, on an attractive corner lot complete with pool, at a good price. He realized his initial master bath and kitchen plans didn’t raise the bar high enough, so he spent more in those key rooms. Another plus was getting his real estate license so he could serve as both the listing and buyer’s agent. The result? The house went on the market on a Saturday, got a full-price offer on Sunday and closed within three weeks. Today, Barney and his team at DHLC share their knowledge with borrowers to guide their flip projects to success. Barney, the company’s president, takes a hands-on approach so borrowers make the right rehab decisions, sell the property for a profit and become a repeat borrower.
EVERY DEAL GETS A CLOSE LOOK
If a loan goes bad, Barney takes over the loan and solves the problem. That business model means he reviews every property as if he may own it. His team has the same mind-set, knowing bad deals negatively impact people they know as well as their company. “Our long-term investors are not only happy with us, but the way we’ve treated them over the years, the rate of returns, the way we handle problems and the ex- tremely low foreclosure rate,” says Barney, who adds he makes himself available when investors have questions. Barney says that while he can’t paint or sing, he has fun in the creative pro- cess of remodeling. “My artistic expression is to take a rundown house that a lot of people would scrape and restore it back to its glory,” says Barney. “If you want to be in this business long term, it can be extremely rewarding, but you have to treat it like a business and treat people like you want to be treated,” says Barney. “Do the right thing and try not to take shortcuts, because it will come back to bite you. It’s still a very small industry, and reputations get around.” Whether flipping houses or lending money, both have the opportunity to change lives. Barney says it’s gratifying to give borrowers access to funds and inves- tors a profitable opportunity. “One of the things about hard-money lending that’s cool to me is that we are actually able to immediately and per- sonally impact people’s ability to reach their goals and dreams.” •
AFTER
by Susan Thomas Springer
WHEN ROB BARNEY TEACHES classes on real estate investing, he tells students the mistakes they make on their first house flip earns them their “master’s degree.” Barney earned his own degree on his first flip more than
15 years ago. He describes the educa- tional experience as both fun and scary. That deal gave him an understanding of the borrower’s perspective, which was valuable insight for starting his Dal- las-based hard-money lending compa- ny, DHLC Investments Inc. In addition to running DHLC, Barney continues to flip houses on his own (about 18 and counting) in the historic “M Streets” neighborhood of Dallas,
‘PART OF THEIR SUCCESS’ “Our goal is to create an environment where they can use us as a resource. We’ve funded over $100 million worth of loans—that’s a whole lot of hous- es that we’ve looked at,” says Barney. “That’s different from just treating them as a transaction. We really want to be a part of their success.” Once a borrower applies online, DHLC reviews the application and discusses the scope of work with the borrower. After the inspector and appraiser complete their jobs, Barney looks at the photos or, better yet, walks the property. “There’s so much competition on the market right now that if they don’t do the right amount of work on the rehab, it will sit and languish on the market and they won’t be happy with the price they get,” says Barney. Every house is unique, so DHLC assesses whether it needs only cosmetic updates or a complete gut. Barney says some new flippers think they can “just slap on some paint, new carpet, and call it good.” However, to be competitive, they need to pay attention to basics like plumbing, electrical and new applianc- es. If the margin is too thin to make the house a “Wow!” Barney tries to talk them out of the deal.
HELPFUL HINTS FOR FLIPPERS Key advice for flippers is to visit a new home development in the same price range as the house you’re considering. That way, you can evaluate price and level of finishes. It’s likely that buyers will have toured similar houses in your price range and built expectations based on your competition. Also, listen to the advice of your lender since it has your best interest in mind. In the hard-money lending world, bor- rowers will find a range of interest rates. They are commonly 12 percent to 14 percent, yet some lenders offer 7 percent to 9 percent. Barney advises asking lots of questions to determine if there are high application fees, hidden costs or difficult restrictions such as selling the property in 45 days to avoid a rate hike. Understand the actual costs, not the teaser rate. The personal model is at work on the investor side of DHLC, too. When the company began, investors were friends and family until referrals expanded their number. Investors appreciate that they can simply call the owner when they have questions. “We don’t use pools. Each individual investor looks at the deal, and I personally guarantee every loan,” says Barney.
AFTER
BEFORE
Susan Thomas Springer is a regular freelance contributor to Think Realty Magazine. Contact her at susan@susantspringer.com.
62 | think realty magazine november :: december 2016
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