spends his mornings purchasing houses and then dons his underwriting hat in the afternoon, underwriting
Lewis says that “nothing really went wrong” from the company’s founding until 2007. Up markets have a way of doing that, he says. Then the real estate downturn hit, and despite their best efforts, the calm seas suddenly became very choppy. “As much as we tried to put in place to protect us from the downside, we learned from the down market what happens when you do make errors in judgment and what happens when you extend to the wrong people,” Lewis says. “I would say the down market taught us a hell of a lot, and the stabilizing of the market really taught us a whole lot, too.” Since his arrival at Dominion coincid- ed with the start of the downturn, BeVier experienced an “extremely steep learning curve. I never thought I’d see a lot of the stuff that happened to us directly during that period of time, but we were able to make it through that, which provided the environment for a lot of opportu- nities for the growth of that lending business,” he says. As bad and as nerve-wracking as it was watching competitors go out of business, Dominion’s leaders learned valuable lessons from the down times. For one, they realized they needed to be much more selective about recip- ients to whom they loaned money. The difficult times taught them the most enduring lessons. “We learned a ton from that environment, and that really shaped our approach to under- writing,” BeVier says. The downturn made such a pro- found impression on Lewis and BeVier that they changed their lending style. “One of the main ways that our style of lending has changed over the years is through the focus on the borrower,” Lewis says. “One of the main lessons that we learned as a result of 2007 and 2008 was that ‘skin in the game’ matters, and the financial strength of the borrower matters as much as the quality of the deal.”
PERSONNEL FILE NAMES: Fred Lewis and Jack BeVier
loans for the lending side of the business. His experience in evaluating single-fam- ily real estate provides a unique perspective when he underwrites loans. “I’m able to kind
COMPANY: The Dominion Group
of bring some skills to the table in speaking with our borrowers that I’m really speaking their language, and I really enjoy that because that’s a core part of our busi- ness. When I see one of our borrowers getting a great deal on a house, we get really excited about that,” says BeVier. “We like talking to these guys. We enjoy speaking to flippers because we are flippers.” Lewis’ forte is real estate construction and his knowledge of the real estate business in general, which he says helps investors who are “trying to buy a prop- erty with the goal of holding it for rental and then building a rental portfolio.” He says Dominion “knows ev- ery single nuance of turning an old scratch-and-dent property or beat-up property into a quality rental.” The knowledge is hard won, as Lewis says he has personally been involved with a “couple of thousand” renovations since 2001. “I’ve made every mistake I can make, probably six times, and we’re learned from all of that,” he says. This level of experience allows him to field questions and put out fires in all areas of the business, from the lend- ing side to the fix-and-flip division. SCHOOL OF HARD KNOCKS Even Master Investors get knocked sideways sometimes; the real estate downturn of the late 2000s made sure that BeVier and Lewis weren’t excep- tions to the rule.
HOMETOWN: LEWIS Philadelphia, Pennsylvania BEVIER Annapolis, Maryland EDUCATION: LEWIS The George Washington University BEVIER University of Pennsylvania FIRST REAL ESTATE DEAL: LEWIS “Lending funds to investors purchasing and selling houses in Baltimore.” TECHNOLOGY YOU CAN’T LIVE WITHOUT: BEVIER “We’ve customized Podio to be our operational software. Love that product.” BEST ADVICE EVER RECEIVED: LEWIS “Always strive to create value and a win-win environment.” BEVIER “A rowhouse rental property that I got at the Baltimore City courthouse steps.”
BeVier, left, and Lewis check on one of their Baltimore properties.
and national private lenders enter the space. He says that the new players offer “a bit more professional platforms and certainly lower costs of capital” than previous lenders. Hedge funds are starting to enter the market as well. Any additional new entrants to the market will “have a hard time as a new lender in this environment competing with those entities, including us, from a cost capital point of view,” BeVier says. “It’s not your 15 percent interest in five points business anymore, which is what a lot of people get excited about. I think if you do that, you’re really doing a sub-private investor lending, and you might find yourself more likely in a workout scenario than in getting repaid.”
Having a uniquely multifaceted pri- vate lending business has served Lewis and BeVier well, especially during the downturn, and allowed them to take it nationwide after many of their com- petitors had exited the business. “At the end of the day, what makes us different and makes us leaders in business—and we really enjoy being leaders—is that we don’t have any interest in not providing value,” Lewis says. “It’s all about providing value to our clients, and I think that’s how we approach everything.” •
PRIVATE LENDING IS NOT FOR THE FAINT OF HEART Pressed for advice for those consider- ing entering the private lending space, Lewis and BeVier have two words of ad- vice: Don’t bother. Private lending may seem like a simple business from the outside, yet Lewis says it’s anything but. “It is more akin to brain surgery than it is to general practice. There’s so much nuance in understanding how to under- write the borrower’s exit strategy, the real estate itself, the age of the real estate, how it really sits and does it really fit into what the strategy is for the borrower,” he says. The private lending space has changed in the past 18 to 24 months, according to BeVier, as larger regional
WHATMAKES YOUGET UP IN THE MORNING:
LEWIS “The desire to be the best at our core businesses and to continue to build on the strong foundation established over the years.”
BEVIER “I’m a deal junkie. I can’t wait to buy the next house or make the next loan.”
Robert Springer is a regular freelance contrib- utor to Think Realty Magazine. Contact him at firstname.lastname@example.org.
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