TM INFORM. INSPIRE. EDUCATE. EMPOWER.
SPECIAL LENDING EDITION
The CIVIC Difference CIVIC FINANCIAL SERVICES HAS FOUND THE KEY TO ENRICHING ITS PEOPLE, PARTNERS, AND COMMUNITIES.
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THINKREALTY.COM JUNE 2022
PUBLISHER & CEO
Eddie Wilson
MANAGING DIRECTOR
Linda Hyde
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RHalford@ThinkRealty.com
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David Rodriguez
CONTRIBUTORS
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Katie Bean
Lou Forino
Dana Georgiou
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Tom Berry
Lauren Hoffman-Noark
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Andy Matz
Elizabeth Morales
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CONTENTS
INSIDE THIS ISSUE
8 Revolutionary or Evolutionary? What if your company’s sales growth was based on a strategy that you can create a revolutionary team that progresses the evolution of your firm? by Dana Georgiou
13 How to Build Trust with Your Investors and Borrowers
Lending software can help you increase transparency—and trust—with your investors and borrowers. by Elizabeth Morales
16 No More Keeping
Up with the Joneses Learn how moving beyond private money can take your business—and your returns—to an even greener side of the fence. by Lauren Hoffman-Noark
20 Taking the Bull by the Horns
Kemra Norsworthy’s determined and direct approach to building her business—and living her life—has paid dividends. by Katie Bean
24 The Ins and Outs of Real Estate Investing Insurances
Working with an experienced broker who can provide a well‑written insurance policy will help you put your real estate investing business on a firm footing from the start. by Andy Matz
Virtual Culture: In adapting to the work-from-home era, Tessar takes the set to deliver “Tessar’s Top Ten,” a segment of one of CIVIC’s virtual all-hands events.
28 Partnering With a Lender You Can Trust
4
Keep these tips in mind when selecting the right lender for your real estate transaction. by Lou Forino
COVER FEATURE
The CIVIC Difference
33 Lending on Former Big Box Stores Depending on your funding and experience, these properties can be good investments. by Tom Berry
CIVIC Financial Services has found the key to enriching its people, partners, and communities.
by Katie Bean
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INVESTING WELL
COVER STORY
Unity In Leadership: Tessar and members of the CIVIC senior leadership team meet at the company’s headquarters in Redondo Beach, California.
The CIVIC Difference
CIVIC FINANCIAL SERVICES HAS FOUND THE KEY TO ENRICHING ITS PEOPLE, PARTNERS, AND COMMUNITIES.
by Katie Bean
B ill Tessar fell in love with lend- ing early in his career. During his freshman year of college, he worked as an originator—and he hasn’t looked back since. “The whole ‘love at first sight’ type of thing that people talk about—I think that applies to me and the business,” he said. “It has always remained amazing to me that I can earn a living by helping people make the most important investment of their life.” He’s spent more than 30 years in the business he loves, now as president of CIVIC Financial Services,
a private lender based in the Los Angeles area that specializes in the financing of non-owner-occupied residential investment properties. At CIVIC, he’s helped fashion the business to transform the lives of both clients and employees. JUST GETTING STARTED Tessar joined CIVIC in 2017, at a time when the lending industry was at a crossroads, he said. The financial collapse of 2008 brought intense government scrutiny to conventional lending.
“The margins of profit were paper-thin. The capital requirements were exceptionally high, and the government being your partner changed the way lending was done,” he said. At that time, business-purpose lending was in the “embryonic stage,” Tessar said. He saw an opportunity to bring his experience from conventional lending and apply it to this new space, where he thought “we might be able to do something kind of cool and special.” Five years later, CIVIC has grown from 40 employees to about 420, with
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16 branches in more than 30 states. Its lending volume has skyrocketed from $20 million per month at the company’s inception, to $559 million in loan production for first quarter 2022—and Tessar says this is just the beginning. “I actually think the real movement of this company hasn’t started yet. We’re just getting our sea legs underneath us,” he said. PRODUCT OFFERINGS CIVIC offers a variety of loans for real estate investors and developers, including bridge, fix‑and-flip, rental, and rehab financing. New products rolling out this year are ground-up construction for new developments, short-term rental for vacation rentals such as Airbnbs and VRBOs, 30-year rental, and multifamily rental. Tessar said his company is one of the last to jump into ground-up construction loans—but by design. CIVIC has observed the market for the product and how it has performed, learning the dos and don’ts from other players. CIVIC has benefited from its backing by a new parent company. In 2021, Pacific Western Bank purchased CIVIC from Wedgewood LLC for an undisclosed amount. Tessar said being owned by a publicly traded bank makes the cost of capital significantly cheaper than CIVIC’s competitors and insulates it from the “wild interest rate swings that we’re seeing right now.” As others fight to retool their business model to respond to Wall Street’s changing rates, Tessar said “this is a great time to be wearing a CIVIC jersey.” “If you lend money, don’t run out of it,” Tessar said. “I think we have seen through the pandemic and through these interest rate
changes that it has gotten quite a few companies in a jam.”
“I believe the whole customer service experience begins with ‘hello’ and it never ends,” he said. “If you’re in this business and you are in a position to serve, then that’s exactly what you need to do. … It’s like breathing: It should just always happen.” To ensure satisfaction, CIVIC has an entire department devoted to the customer service experience. It tracks statistics to measure success. Its net promoter score (NPS), which rates customer experience, is consistently around 94, Tessar said—well above industry average. In any cases where the customer isn’t happy, the situation is made known to executives and the team works with the customer to solve the problem or misunderstanding, he said. Another statistic on Tessar’s radar is CIVIC’s repeat customers, which stands around 50%.
COMMITMENT TO CUSTOMERS CIVIC also has what Tessar called an “excessive commitment to technology.” It offers a digital mortgage platform called Origin8 to simplify and streamline the process for borrowers. As a testament to that excessive commitment, Tessar said the company employs 30 coders who are constantly improving the platform. “We believe technology plays a big role in the whole customer service experience,” he said. But CIVIC doesn’t rely solely on technology to attract and keep customers. It impresses five core tenets upon employees: act with honor, be a great partner, communicate clearly, create smiles, and simplify. Tessar calls it the “customer-for-life approach.”
Enriching Our Communities: Tessar presented Tara Nierenhausen, executive director of Community’s Child, with CIVIC’s very first Lending With Love donation. Tara and her husband founded Community’s Child, a transitional home for homeless women and children, in 2005.
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“That’s an inordinately high number,” he said. “I don’t break my shoulder patting myself on the back about the 50. I think about the other 50 that we’re not getting and what we can do to be better. … I would say that it’s an almost maniacal focus on how we can continue to be better for the customer.” CIVIC CULTURE “FEELS DIFFERENT” To provide top-notch service and products, CIVIC has focused on building its culture with employees. Tessar said visitors often comment that “it feels different in here.” “It feels different in here because everyone is treated like family,” he said. Communication is one key to keeping teams engaged. Everyone in the company has a quick morning huddle with their team. That allows everyone to check the pulse of what’s going on, Tessar said. Though the company has traditional hierarchy in management, it doesn’t ascribe to the theory that good ideas must come from the top down. It regularly collects feedback from employees, both anonymously and in meetings. Tessar said teams discuss “keep, stop, starts” throughout the organization to find out what’s working, what could be dropped, and what they should try. “That forces our company to constantly be better, and it also gives a voice to everyone in the firm. There’s not one person’s voice at CIVIC that is valued more than the others. Certainly, mine might be the loudest, but it isn’t the strongest,” Tessar said. “I learned at an early age God gave us two ears and one mouth and to use it proportionately.” The team doles out culture award points throughout the year
Encouraging Recognition: The CORE Challenge grand prize, a Tesla Model 3. CIVIC’s Opportunities for Reaching Excellence is a year-long program encouraging team recognition and development opportunities to achieve business goals — all while having fun through a game and points system.
CIVIC received a host of additional accolades from Comparably: • Best Company Culture • Best Company for Diversity • Best Company for Women
for employees who go above and beyond, and they can be nominated by any team member. CIVIC has an annual celebration where the top point-getters are honored for their commitment. This year, Tessar said, the winner received a Tesla. “If it were up to me, I’d give 10 of them away because of what those 10 finalists did for our firm throughout the year for their community and their co-workers,” he said. “I think if you give people more than they deserve, the company gets back more than it deserves.” That approach has played out well on the public stage too, with CIVIC earning multiple culture awards this year. It was named as the top mortgage company to work for by National Mortgage News, and Comparably dubbed it one of the Best Places to Work in Los Angeles. It was also recognized as having the Best Product and Design Teams and Best Operations Teams. Last year,
• Best CEO for Diversity • Best CEO for Women • Best CEOs 2021 • Best Career Growth
• Best Companies Perks & Benefits • Best Companies Compensation • Best Companies Happiness Among other awards in 2021, CIVIC landed on Fortune’s Best Small & Medium Workplaces 2021, Best Workplaces for Millennials, and Best Workplaces in Financial Services. The fact that CIVIC has reeled in so many honors during the past two years is a testament to its response to the COVID-19 pandemic and how its team
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he said, 30% work from the office full-time, 30% work from home full-time, and 40% are hybrid. CIVIC Anywhere has allowed employees to move to less-expensive areas or to be near family. Going forward, Tessar said he hopes to further support employees working from home by providing anything they need to feel more connected or productive, from standing desks to extra monitors to a poster of CIVIC values. In addition to taking care of its employees, CIVIC places a strong focus on its community. It recently implemented a program called Lending with Love, which takes $10 from each loan funded in a given month and donates it to a charity. Employees can weigh in on what causes matter to them for monthly donation consideration. The company also makes other philanthropic gifts throughout the year and at holidays, including supporting Habitat for Humanity, veterans-related causes, people in need in the Los Angeles area, and local schools. The aim is “perpetual giving,” Tessar said. INDUSTRY INSIGHTS Apropos to the “Industry Insights” monthly Zoom event and podcast that Tessar hosts as a resource for the real estate community, Tessar offered an optimistic view for CIVIC and the industry—even as inflation and interest rates rise. With long-term interest rates going up, Tessar expects a reduction in the volume of refinances by conventional lenders by as much as 70%. With that drop looming, he predicted “massive consolidation” in the industry. Many companies will have to reconsider their business model given the rate changes, he said.
In the residential real estate market, Tessar said supply is the lowest it’s been nationwide in nearly 50 years. Though rising rates may hurt first-time homebuyers, he said, they may also find other ways to get into a home, such as co-signing with a parent or cutting down on other expenses. At the same time, with many other companies adopting a work-from- anywhere approach like CIVIC’s, Tessar said there’s housing demand by workers looking to move to areas where their dollar stretches further or where they prefer the weather. “I just think it’s kind of a reshuffling of the deck, but it’s a great time to own real estate and invest in real estate,” he said. “I’m very, very, very bullish about the real estate market today, probably as much or more than I’ve ever been in my career.” Vacation rentals are also seeing a boom, he said, as those who work remotely can hop around and work for a week or two in different areas of the country. For example, he said, the short- term rental market in the Carolinas “is exploding, absolutely exploding.” Some places in Wilmington, North Carolina, near the shore might fetch $4,000 a month in long-term rents, but as a short- term rental, it might bring in $25,000 to $30,000 per month. “We think that’s a very underserved market that we’re going to be a big part of,” he said. •
has pivoted since. Tessar said moving from an in-person team to 90% remote was scary as a leader, but he’s seen the silver lining of the changes the pandemic forced—changes that may never have been made otherwise. “I was one of those old-school believers that you had to be shoulder-to-shoulder, everyone under one roof, all wearing the same jersey, marching to the same drums,” he said. “And the fact of the matter is, it’s a flawed way of looking at the workforce in this day and age. I’m just a firm believer in that.” Seeing how employees “governed themselves” and managed equal or better output than when they had been in the office led to a new concept: CIVIC Anywhere. “Whatever it is that makes you happy and productive, we should get our arms around,” Tessar said. Since implementing the change to the employees’ choice of workplace,
Katie Bean is a former newspaper and magazine editor who loves telling the stories of businesses and great leaders. She is based in Kansas City.
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INVESTING WELL
SALES GROWTH
SPONSORED CONTENT
Revolutionary or Evolutionary? WHAT IF YOUR COMPANY’S SALES GROWTH WAS BASED ON A STRATEGY THAT YOU CAN CREATE A REVOLUTIONARY TEAM THAT PROGRESSES THE EVOLUTION OF YOUR FIRM?
by Dana Georgiou
T here are usually two strategies when it comes to growing a sales team: hire experienced talent or grow new talent. But there’s another way of thinking about your sales team: It should really be a revolutionary or evolutionary strategy. You’re captivated, right? Well, hold on to your seat! We are going to shatter some percep- tions together! Some people are uncomfortable with the word “revolutionary.” It evokes images of hardship or, in the extreme, maybe even violence. The word “evolutionary,” on the other hand, tends to imply passivity,
take your firm in the right direction, you will be driven by your experi- ence. You’ll also likely be driven by emotion (positive or negative). In a recent “Business Unusual” podcast with Barbara Corcoran, her guest Ed Mylett said something that resonated with me: “You gravitate toward your most common emotion, even if it’s not positive. Getting your confidence is a matter of shifting that.” I couldn’t agree more! What if a sales growth strategy was based on the confidence that you could create a revolutionary team that progressed the evolution of your firm? I will wait while you read that again … revolutionary
a strategy of allowing things to progress somewhat organically.
REVOLUTIONARY SALES STRATEGY EQUALS EVOLUTIONARY GROWTH
I tend to lean more toward the “go big or go home” side of things, the “reach for the stars” mentality that sometimes requires boss moves. Can you see your company at the top of the leader board? Do you believe so deeply in magic that it’s impossible not to see it as reality? Whether you are going against the grain or dealing with the uncertainty of whether an idea or strategy will
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sales strategy creating evoluti- onary growth. But how?
that can take a great salesperson and build them into a high performer within your model. NO. 4 CREATE ENTREPRENEURS IN YOUR ENTREPRENEURIAL BUSINESS. Encourage fast decision-making. Encourage the activities it takes for your salespeople to be successful. Most salespeople have an innate sense of wanting to be big impactors. If you hire someone who tells you they are OK with just being in the top 10, most likely they will be in the bottom 10. COUNSELOR, THE ADVOCATE. Tell your people when they are creating magic for your firm and tell them when they are not. Kind candor is a real thing, and you should consider it one of the most valuable points of feedback you can provide. NO. 5 BE THE CHEERLEADER, THE LEADING THE TEAM Anyone on my current team or past sales team has heard me say, ”As long as you are doing all the things you need to do to accelerate your business, you work for yourself. When you stop doing those, you work for me, and nobody wants to work for me!” It’s a funny way of saying, “Do all the right things and you have my support to take it to any level of success you want!” Revolutionary teams start with a leader who is willing to trust and create accountability—and be held to those standards as well. You will make mistakes (I make them every day), and sometimes you will even repeat those mistakes. That’s OK. But let me encourage you to own those mistakes up and down the food chain. You will win the respect of your team, you are less likely to
make that mistake again because you have acknowledged it as one, and if you’re reporting to someone else, you show a willingness to learn and grow. You may have inferred by now that the evolutionary strategy is less appealing in the fast-paced world of private lending (humbly stated). But it doesn’t mean you should altogether avoid a gradual development. It can be an extremely helpful process for things like the pace of hiring, ensuring a balance between sales
5 MAGIC LEVERS Sales growth itself can be like your favorite roller coaster or the dreaded spinning teacups! Navigate the ups and downs by keeping your group moving forward versus the never-ending spinning of building momentum that ends with nothing but whiplash and an upset stomach. If you have been fortunate like me to build high-performing sales teams, you know there is probably more magic than science in doing so. I lean into the magic, the feeling, the artistry of leadership that makes people not only want to work for you but stay working for you. There are any number of highly rated books that all kinds of industries have used to advance their sales organizations, but I would hesitate to tell you there is one tell-all that will be the one for you. Through the years, I have read many of these and applied pieces from each of them. Here are my five “magical” levers (the order of importance is negotiable): NO. 1 TAKE YOUR TIME. I know you feel like you have to make a hire right now. You don’t. NO. 2 TRUST YOUR GUT. But be willing to “fly the plane while you are building it.” Bad hires will happen. Knowing how quickly to move in a different direction will be the measurement of success. NO. 3 DIVERSIFY YOUR HIRING STRATEGY. Depending on your strategy, your immediate need may be for a highly experienced salesperson with a book of business, but consider a strategy
and ops to create exceptional customer experience, and for
measuring twice and cutting once. Plainly stated, I subscribe to the more magic than science approach in any sales strategy, and I firmly believe when you hire and train the right talent, commit to them in a professional and even personal way, you will build a team that will have others clamoring for your talent. What is more magical than that? •
Dana Georgiou is a seasoned mortgage professional with nearly 30 years of mortgage lending experience, including 15 years of executive management
experience in production and operations. Her expertise includes the development of corporate sales growth and strategy, perfecting and implementing solutions to streamline new loan production, and asset management as well as managing large-scale mortgage operation centers. Georgiou has a deep background in mortgage compliance, including CFPB mock audit efforts. She has worked in all channels of the mortgage business, with the last few years focused on the private lending/business purpose entity lending space. Her proven track record covers operations, credit/risk, and sales and marketing. She is an avid speaker/presenter at numerous mortgage industry events and believes in deep advocacy for education in the private lending space. Georgiou is a published author, with some of her most recent articles appearing in Mortgage Women Magazine. She sits on the advisory council for the National Alliance of Commercial Lending Brokers and is actively involved with Habitat for Humanity in her local area as a financial counselor helping families achieve their dream of homeownership.
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INVESTING WELL
SPONSORED CONTENT
LENDING SOFTWARE
How to Build Trust with Your Investors and Borrowers
LENDING SOFTWARE CAN HELP YOU INCREASE TRANSPARENCY—AND TRUST—WITH YOUR INVESTORS AND BORROWERS.
by Elizabeth Morales
P rivate equity investing is appeal- ing, and it’s also risky. To build trust with investors and borrow- ers, you must offer total transparency. TRANSPARENCY WITH INVESTORS There are several ways you can use software to demonstrate trans- parency with investors.
Investors like to count their money 24/7, so give them a portal that provides portfolio analysis at their fingertips. End-of-year tax forms? Upload them to the portal so they can access them easily when it’s tax time. Have new investment offerings you’d like to present to them? Upload photos and all pertinent information about the properties to the portal so they have it at their
fingertips. You can even map the properties for them. Further, allow your investors to print checks or deposit funds electronically via ACH. Theme: Make it easy and accessible.
TRANSPARENCY WITH BORROWERS You can also use software to create transparency with borrowers. Offer a
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way for them to easily apply online for a loan and provide a portal for uploading the information you require of them. Borrowers need to know the stage their application is in. They also want easy access to their lender. So, give them a way to receive text messages and/or connect via chat. Your borrowers would probably love to be able to make monthly pay- ments or one-time payments over the phone. Offer them that capability.
They also need access to their tax forms, so upload them. Theme: Make it easy and accessible.
clients a secure portal to upload their sensitive documents, you create an added layer of trust. Your borrowers will sleep soundly knowing their documents are secure. Looking for a quick way to impress your customers? Presenting gor- geous reports that reflect the poten - tial investor earnings will make you stand out from your competition and enhance your company’s image. Why does an automated experi- ence create a lasting impression that builds trust? Because software doesn’t forget to pay your investors, send invoices to your borrowers, upload tax forms to their portals, tie loans to various indices, create complex amortization schedules, breakdown construction budgets and costs, electronically transfer funds, collect and track escrow payments … you get the idea! Total openness is one approach you can never go wrong with. Whether you are originating and/or servicing commercial, construction, rehab, or any other loan, The Mort- gage Office makes it easy for you to automate your back office and have all the necessary information ready when it’s needed. Founded in 1978, The Mortgage Office is the leader in lending software. •
MORE TIPS FOR BUILDING TRUST With cyber theft running rampant, it’s good to have extra layers of security. Nobody wants to email you forms that contain their Social Security numbers and bank account information. If you can offer your
Elizabeth Morales is the chief marketing officer at Applied Business Software, makers of The Mortgage Office, the leader in loan origination and servicing
software in the private lending industry. Morales has a proven record in senior
operational roles and is known as an inspirational leader and a data-driven marketer. She has created full-scale marketing platforms and handles media, public relations, and brand management. A strategic planner and forward thinker, Morales is a published author, professional translator, former adjunct faculty, and forever music lover.
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INVESTING WELL
ONLINE DIRECT LENDING
SPONSORED CONTENT
Austin, Texas, rehabbed home financed by Fund That Flip. 2022-ThinkRealty-FullPage_Pwc.pdf 1 4/15/22 3:49 PM
No More Keeping Up with the Joneses Learn how moving beyond private money can take your business—and your returns—to an even greener side of the fence.
We write loans so you can write your success story.
by Lauren Hoffman-Noark
B ack in the early 2000s, a former insurance executive was just cutting his teeth in house flipping and real estate investing, which had been his dream since high school. He was searching for deals on the real estate market and looking for ways to finance them. He met “Manny,” a private lender. After a few weeks, Manny was convinced the young flipper’s goals were legit - imate and lucrative and agreed to provide the financing to acquire and rehab the aged house. The young flipper rejoiced. Until he saw the interest rate, which was unsustainable and cutting into his profits to purchase his next deal. He also encountered unforeseen issues with the rehab, which required more money for the repairs. Manny’s money was tied up elsewhere for the time being, so the young flipper had to find another source of financing. And then the young flipper realized it would be very difficult to scale and turn this into a full-time business with these interest rates, long wait times for funding commitments, and without knowing whether the money would always be there. This is, of course, somewhat the story of Matt Rodak, founder and CEO of Fund That Flip. A few liberties were taken and names were changed to protect good-hearted private money lenders, but the story is the same: Private lending is not always the best way—or only way—to create wealth for real estate developers or investors.
Fund That Flip is the nation’s leading lender of residential rehab loans—and the fastest-growing real estate fintech marketplace. Our platform and team provide funding solutions for real estate entrepreneurs for rehab, new construction, and rental investment projects. Investors have historically earned more than 10% annual returns by passively investing in fractional shares of those loans. Through a people-first approach and proprietary tech, our mission is to help real estate entrepreneurs scale their businesses, create wealth, and transform their communities through real estate.
Building lasting relationships through extraordinary experiences, empowering investors to create wealth while improving communities.
“We met Fund That Flip, they took our business to the next level and helped us grow.” Timario Gayton, T&T Express LLC
“They’ve been fast, flexible, and just have been an absolute pleasure to work with.” Tarry Summers, Ohio Home Company
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REAL ESTATE LENDERS & INVESTORS Who are you, Private Money Lenders?
Doctors, lawyers, business owners, tech-creators, C-suite execs, and entrepreneurs? In other words, you have other things going on in your life. In addition to your careers, you have families, hobbies, bills, vacations, and pets. For many years, real estate investing was limited by “who you knew”—and in your case, it still is. You could be missing out on the most lucrative investment opportunity
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16 | think realty magazine :: june 2022 :: SPECIAL LENDING EDITION
of your life, but you don’t know the team that’s redeveloping the purpose-built multifamily community 15 minutes away, so you’re missing out.
• Does the platform allow auto-investments? • What is the minimum investment? Depending on your investment strategy and goals,
there are other questions you probably have. Sites such as therealestatecrowdfundingreview.com are non-affiliate sites that do in-depth research on investing platforms to help you decide where to invest. DON’T CHASE YOUR PRINCIPAL As an investor, you probably love to chase returns and a deal, but you don’t want to chase your principal. When it’s just your money in the deal, what do you do when a borrower falls behind in payments? Or abandons a project? If you’re a lender on a real estate investment platform, you rely on their team to handle it. Many investment plat- forms have teams who work diligently to resolve issues of loan extensions, late payments, and defaults to get inves- tors their money while providing status reports of what’s going on and discussions taking place. BUILDERS, REDEVELOPERS, AND HOUSE FLIPPERS Crowdfunded real estate investing sites like Fund That Flip launched so builders and redevelopers could stop looking high and low for funding with banks, rich uncles, friends, and their own bank accounts—and get the majority of their financing from one reliable place. These various real estate investing platforms offer a multitude of benefits such as sustainable or low rates, 24/7 support, support for exiting a loan, refinancing, easy technology, etc.
If you still want to do some private lending, there’s always an opportunity. Builders and redevelopers still need private money because most crowdfunded lenders only finance a portion of the loan—assume 90%—so the borrower has some skin in the game. To completely finance their deal, they often turn to private money lenders, giving you another opportunity for great returns with perhaps a little less risk. SIMPLIFY YOUR INVESTMENTS Lending on a crowdfunded investing platform versus with a group of colleagues can make it much simpler to find deals to passively earn income. Investment platforms give you the opportunity to put your private money toward fractional shares of loans for residen- tial rehabs and new construction—virtually the same as you were doing before. However, now you can do it from your laptop or phone while sitting on your couch. You also have greater access to investment opportunities throughout the U.S., and you can sometimes choose to invest with a spe- cific developing team, or in a certain state or community.
GET TO KNOW YOUR INVESTMENT PLATFORM AND BORROWERS
Obviously, there’s risk involved with any investment. Any time you’re investing, you should do your research, as well as talk to a financial adviser. But when you invest on many peer-to-peer real estate investment platforms, real estate analysts and underwriters are also researching every borrower and diligencing every deal before anyone can invest in it. For platforms like Fund That Flip, each deal is completely pre-funded. The area where you’ll want to do a little research is the operations and policies of the investment platform: • How do they decide which deals to finance? • How much visibility do you have into the borrowers’ history and experience before investing? • How often do you get updates on the status of the loan?
Charlotte, North Carolina, rehabbed home financed by Fund That Flip
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One caveat: Many crowdfunded real estate investment platforms only finance a portion of a loan, assume about 90%. This is so you, the builder, have some “skin in the game.” But it also means you need to come up with the additional 10% to completely fund your deal. While this 10% typically comes directly from you, the borrower, some developers parlay their private money relationships into a form of equity on their projects to achieve maximum scale. The point is you don’t just want, but need , a diverse capital stack to scale your business. When you’re relying on a direct lender for the majority of your funding, it gives you more opportunities to make decisions about what is most important to you and your business goals. FLEXIBILITY IN FUNDING You might be thinking that working with a corporation for funding is going to mean really strict terms and no flexibility. Not so. While we can’t speak for every lender— some of them might have strict terms—many direct lenders offer real estate entrepreneurs flexibility in their loan structure. True, there may be more paperwork involved than dealing with a private money lender, but you also get more support and consistency. SLOW LENDERS KILL GOOD DEALS Banks can take 45 to 60 days to close a deal. If your rich uncle is on vacation, he might not get back to you for a week. Good online direct lenders understand how important speed is to your livelihood and your business. When you apply for funding, don’t let them ask all the questions. Here are some you should be asking: • How quickly can you commit to funding? • How much financing am I preapproved for? • How quickly can you close? • What are your requirements for me as a borrower? • What are your underwriting requirements? And if a lender doesn’t get back to you quickly after you apply for funding, move on. If they’re slow to even find out what you need, they’re probably not going to get any faster during the life of the loan.
Fund That Flip is proud to sponsor NHRA drag-racing team MBR.
PEOPLE-FIRST LENDING The next time you’re looking for funding, ask yourself: • When was the last time your lender visited your job site? • Does your current lender (or rich uncle) know your business goals? • Can you easily get in touch with your lender via email, text, or a call? • How quickly does your lender get back to you? • Does your lender explain the benefits of various exit strategies or establishing an LLC for your business? If you answered “no” to any of these, then you’re not working with a lender that puts your business first. Your business is just as important as the lender’s business. We’re all here to make money, but it can’t be at the expense of each other. Builders and redevelopers practically expect to receive less-than-average service from their lenders, but there are many lending platforms looking to change that. Find one that’s interested in helping your business grow, not just make money from your efforts. •
Lauren Hoffman-Noark is a marketing strategist and content creator with more than 15 years of experience. She leads content development at Fund That Flip, focusing on providing information and insights to its entrepreneur and investor clients. She previously worked in the insurance, CPG, and retail industries. Hoffman-Noark is also a long-term renter, residing in a single-family flipped house in the Cleveland, Ohio, suburbs.
18 | think realty magazine :: june 2022 :: SPECIAL LENDING EDITION
INDUSTRY-LEADING STATISTICS $5M PRE-APPROVED 5–7 DAYS TO CLOSE 93%+ RETURN BORROWERS $1.5B LOAN ORIGINATION $100K MINIMUM LOAN AMOUNT 1% LOAN ORIGINATION STARTING RATE 10%+ HISTORICAL ANNUAL RETURNS 99.6% PRINCIPAL RETURN 3-24 MO. TERM LENGTH FOR BRIDGE LOANS 30 YEAR FIXED-TERM FOR RENTAL 30+ STATES & EXPANDING FAST!
We write loans so you can write your success story.
Building lasting relationships through extraordinary experiences, empowering investors to create wealth while improving communities.
“We met Fund That Flip, they took our business to the next level and helped us grow.” Timario Gayton, T&T Express LLC
“They’ve been fast, flexible, and just have been an absolute pleasure to work with.” Tarry Summers, Ohio Home Company
“Fund That Flip has leveraged the business to close faster so I get more deals.” Misty Linn, Core Ohio
Don’t wait another day to fund your next deal. fundthatflip.com | 646-895-6090 | deals@fundthatflip.com
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INVESTING WELL
LENDING OPTIONS
SPONSORED CONTENT
Taking the Bull By the Horns
KEMRA NORSWORTHY’S DETERMINED AND DIRECT APPROACH TO BUILDING HER BUSINESS—AND LIVING HER LIFE—HAS PAID DIVIDENDS.
by Katie Bean
A common thread running to lose. From her time selling cars to many years in the mortgage and pri- vate lending industries, her outlook is “if there’s a will, there’s a way.” She taps that determination as founder and CEO of Bull Funding. The company offers loan options, including ground-up construction, fix-and-flip, commercial and long- term. The company has a new fund launching this year. through Kemra Norsworthy’s career is that she doesn’t like
the car lot. She excelled at car sales—so much that she said her large paychecks caused tension in her marriage. When one of her co-workers left to work in mortgage lending, Norsworthy did the same. She started a mortgage affiliate company focused on residential, owner-occupied loans. In 2009, as the market shifted, she realized she couldn’t beat Bank of America’s rates. “So, I had this mentality: If you can’t beat them, join them,” she said. She took her team to work for the bank’s mortgage division. When the Great Recession changed the game for selling mort- gages, she tried other jobs: commer- cial real estate broker, underwriter,
annuity sales. Each highlighted dif - ferent aspects of her personality. In commercial real estate, Nor- sworthy didn’t like the arrangement of working for another broker who would oversee the deal and pay her a referral fee, even when she was doing all the legwork. She preferred to be her own boss—and not split her commission. Her time as an underwriter brought out her knack for prob- lem-solving. When people were declined for other loans, she used a fine-tooth comb to pick apart their documents and find ways to approve them. In fact, Norsworthy approved so many people that she got audited, she said. The auditors
FROM CAR SALES TO PRIVATE LENDING Norsworthy discovered mortgage lending through a colleague at
20 | think realty magazine :: june 2022 :: SPECIAL LENDING EDITION
found that all her approvals did, in fact, qualify. When the lending team she worked for was shuttered, Nor- sworthy obtained her insurance license and tried her hand at sell- ing annuities. While working with people on their finances, she saw so many people paying such a high interest rate on their home loans that she couldn’t help but refer them for refinancing. “I decided loans are in my blood,” she said. Norsworthy returned to Bank of America to work with the Builder Division team and helped it become a top performer. Although Norsworthy had been working private lending deals on the side as she gained experience in these different roles, she decided in 2019 that it was time to go all in. At Bull Funding, she can help others build their business in real estate, drawing on her experience from all aspects of the industry. Norsworthy said she chose the name of her company because a bull is aggressive and tenacious, like her. She doesn’t like to say no to a loan and will find a way, using her background as both a lender and an underwriter, to make a deal. In her estimation, there’s almost always a way to structure the loan, and then the borrower can decide whether the terms are acceptable. That’s an example of how Norsworthy approaches business: She’s direct and pragmatic. She says she likes lending because it’s clear when the numbers work or don’t. “You can’t be fluffy. You have to be direct and to the point,” she said. “I excel in this area because of how I was raised.” Norsworthy grew up with her grandparents, and her grandfather was retired from the U.S. Air Force. She has three sons and saw in her
parenting that they would miss the point if she talked too much, she said. In her experience, if she com- municates directly—with her kids, clients, or colleagues—there’s less likelihood of miscommunication. WHAT MAKES HER TICK An active member of the American Association of Private Lenders, Nor - sworthy serves on the ethics com- mittee. She sees ethics as important for credibility, both for her business and for the industry. It also touches on her desire for justice. She has a criminal justice degree and at one time wanted to work for the FBI. Norsworthy’s goal is to live life to the fullest. She’s survived bouts with cervical and ovarian cancers, both times without receiving chemotherapy. She said
getting rid of the stressors in her life helped her attain remission. Now, she looks for any excuse to try something new. Norsworthy has learned fly fishing, been certified in scuba diving, and hopes to try sand surfing this summer. She said she’ll even “hop onto to other people’s bucket list,”meaning if she hears an idea for something worth trying, she’s game. That led her to go sky- diving, despite her fear of heights. “I don’t know how much time I have, and I don’t live my life in fear,” she said. “I’m going to do every- thing. I can go all the way to the bitter end. And when it’s time to go, I’m going to go.” •
Katie Bean is a former newspaper and magazine editor who loves telling the stories of businesses and great leaders. She is based in Kansas City.
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SPONSORED CONTENT
Bridge Financing for Commercial Real Estate NOW OFFERING: Unsecured Gap Funding
22 | think realty magazine :: june 2022 :: SPECIAL LENDING EDITION
B ull Funding provides bridge financing for real estate investors with commercial and residential financing needs. We offer fast approvals and funding, com- petitive rates, and reliable service for direct bridge loan financing. A private bridge loan can be funded within a short time for investment property. Private bridge loans from hard money lenders can be approved and funded faster than any other source of bridge loan financing. We also offer softer money lenders. This takes a little more time (usually three weeks for funding, terms are 12 to 18 months). Depending on the property type, factors determin- ing rate are FICO and how quickly you need to fund. INVESTMENT PROPERTY FINANCING Bull Funding provides investment property financing to real estate investors in need of fast and reliable funding. If you are purchasing, refinancing, or seeking a bridge to get ready for a conventional loan, we do it all. We have the needed expertise, experience, and capital to quickly
fund investment and rental property loans for real estate investors.We offer: Commercial: short term and long term; Commercial (multifamily, retail, warehouses) up to 75% LTV; rates depend on score and experience SBA 25-year AM – 7a and 504 Long-term lending for short-term rentals on 30-year or 40-year fixed rate Rates and LTVs vary depending on type of property and loan type
REHAB LOANS (FIX-AND-FLIP) OR GROUND-UP CONSTRUCTION
Bull Funding is your reliable fix-and-flip lender. We are ready to lend on your next fix-and-flip project (rehab loan). We offer quick approval and funding, competitive rates, and professional service. One-to-four unit and 680+ FICO along with a mini- mum of three property rehabs for experience. 90/100; minimum loan amount 100k and 70% ARV;
rates depend on experience and credit score 85% LTC for ground-up construction ARV 75%; rates start at 8% Other property type LTVs available
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INVESTING WELL
INSURANCE
SPONSORED CONTENT
The Ins and Outs of Real Estate Investing Insurance
WORKING WITH AN EXPERIENCED BROKER WHO CAN PROVIDE A WELL‑WRITTEN INSURANCE POLICY WILL HELP YOU PUT YOUR REAL ESTATE INVESTING BUSINESS ON A FIRM FOOTING FROM THE START.
by Andy Matz
24 | think realty magazine :: june 2022 :: SPECIAL LENDING EDITION
R eal estate investing moves fast. Especially in today’s market with rising interest rates, and supply chain issues, you don’t have time to waste. If you find a deal, you need to close—yesterday. Understanding the ins and outs of investment real estate insurance is one way you can avoid delays and costly mistakes. Yes, insurance is boring—at least until something goes wrong. When that happens, your insurance broker can become your best friend or worst enemy, depending on decisions you made at the start of your project. HOW TO CHOOSE YOUR INSURANCE BROKER Before buying properties and lining up renters, you want to find an insurance broker to partner with for your investment insurance needs. An insurance broker can help you because a broker has broader access to underwriters, giving you more options and choices. With so many insurance brokers listed on the internet, how do you choose the right one for you? Be prepared to ask a few dir- ect questions. First, does the broker have a sound understanding of the habitational risk marketplace? In other words, do they write policies for real estate investors for all types of properties? Are they familiar with fix and flips, rentals, and investment property liability policies? If they approach insurance from the standard home ownership perspective, they will likely present you with policy options that do not work for the nuances of real estate investing. Every investor is different, and so are their needs. From the way you set up your business to the types of properties you invest
in, your insurance broker should understand your unique needs and be able to build policies to suit them. Second, can the broker write policies for all types of properties,
REDUCING YOUR RISK IN THE LANDLORD-TENANT RELATIONSHIP Given the many pitfalls of real estate investing, there are a few simple steps—in addition to obtaining the proper insurance coverage—you can take to better protect yourself, your company, and your properties. First, run a background check every time, for every tenant. Identity theft is rampant. Make sure you are renting to someone who is who they say they are. The cost of a background check is minimal, and running a check can help give you peace of mind. Next, require a certificate of rent - ers insurance for every tenant, every time. Just because someone says they have coverage does not mean they do. By requiring a certificate of insurance, particularly for multifam- ily buildings, you assure your tenants you want responsible people residing in the buildings you rent. Additionally, we strongly encourage you to have signed leases for all tenants, even if they are a friend or relative. Signed leases are legal documents that outline the responsibilities of both parties in
wherever they are located? Sometimes referred to as a
“one‑stop shop,” this type of broker can write policies across the country and for very different types of units or locations. It is important for you to realize that writing policies in hurricane zones is different from writing in snowbelts. A great broker can do both. Finally, many investors are inclined to choose the minimum coverage, yet somehow believe they are getting maximum protec- tion for their asset. Remember, you always get what you pay for. Taking the time to talk to a broker about your specific needs and your coverage expectations may mean you spend a little more upfront, but you get the very best coverage for your situation. A great broker will also uncover bundling options and packages that can expand your coverage and maximize protec- tion—without breaking the bank.
Many investors are inclined to choose the minimum coverage, yet somehow believe they are getting maximum protection for their asset. Remember, you always get what you pay for.
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