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EXCLUSIVE: Here Comes the New Guard – B2R Finance Leads Lending Innovation

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What is the world’s most innovative real estate financing laboratory cooking up next?

B2R Finance CEO Jason Hogg has been shaking things up at one of the most exciting lenders we’ve seen emerge in the new real estate landscape. This is the innovative mortgage lender that brought us new residential buy to rent financing, the industry’s first multi-borrower securitization and was established by funds managed by Blackstone Tactical Opportunities. Jason shares what new loan products and tools are being rolled out, and how investors can stay ahead of the curve.

 

The Wayne Gretzky of Mortgage Lending

“A good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.” – Wayne Gretzky

   Gretzky developed a formidable reputation on the ice, by staying ahead of the game. B2R Finance appears to not only wield the physique of a legendary hockey player, but is driving the game with its speed skates on, and hitting the puck into the future.

    The firm has already been disrupting the mechanics of the industry, and paving the way with entrepreneurial lending products. But most don’t realize how much new technology and creative problem solving is set to reshape real estate investment.

    We got a peek inside the brain of the finance giant, and the 411 on what’s next in an exclusive interview with CEO Jason Hogg…

Dwell Finance: The New Deal for Investors

B2R Finance just acquired Dwell Finance. The big move helps B2R dig deeper with an expanding local market presence and adds new investment loan products. Jason Hogg says the Dwell Finance acquisition is significant on three fronts:

1. New Loan Products for Investors
Jason says it “augments the suite of products for customers with fix and flip, and bridge to term lending programs.” This includes a single credit line that facilitates rehabbing and reselling houses, acquiring multiple vacant properties for conversion to rentals, and portfolio refinance loans for buy and hold investors.

2. Integrating the Industry
Not only does the Dwell move help connect the industry, but few realize that it adds to an expanding national footprint with physical regional offices to optimize service for borrowers. This facilitates “business relationships,” including face-to-face time, which Hogg says is “paramount” to the organization and developing new products.

3. New Technology Platform
Dwell provides a simplified front end portal online. This delivers on what the CEO describes as “faster, low friction lending.” It’s not just about beauty in web design either. Behind the curtain is a unified platform which enhances the lender–investor relationship. It even acts as a mobile dashboard for investors to interact and upload documents on the go, as well as monitoring their portfolio performance from anywhere in the world.

This helps further build the relationship by tapping big and small data to provide users better solutions. This isn’t your creepy Facebook stalking-style relationship. It is about getting to know where you want to go, where your portfolio is in relation to that, the DNA of your local market, and how to connect the dots with great financing.

The Big Idea

While some newer real estate investors were griping about access to inventory as we turned the corner into 2015, B2R Finance’s Dwell acquisition and investments in product development suggest bullishness on the US market’s future. We’ve already seen a significant spike in foreclosure activity and distressed properties being leaked onto the market in early 2015.

   Jason Hogg told Realty411 that the firm sees a “huge growth opportunity, worth billions of dollars.” In fact, Hogg says the firm has seen demand for investment property loans nearly double as of May 2015.

B2R Finance’s CEO describes the opportunity as being “ideal for professionals like doctors, lawyers, dentists, and professors looking to achieve higher yields.” He points out the combination of yield and income from an appreciating asset as a far better option for these intelligent individual investors, in addition to professional investors and investment firms. He goes on to highlight how the newly upgraded B2R-Dwell tool chest automates management to make investing “radically easier.”

The Lending Lab

So where does B2R come up with these innovative products, and what’s next?
A peek inside the mortgage lender’s offices reveals that this company is nothing like the stuffy, dark bankers’ corner offices of the past. This is more like Airbnb and Uber meets mortgage lending. In addition to the Dwell Finance acquisition, Jason has headed up a three-pronged approach to driving entrepreneurship in mortgage lending in-house.

This includes:
       1. Active listening
       2. The Idea Incubator
       3. The Lending Lab

There are few, if any other firms where you’ll catch executives, including the CEO, active in the trenches alongside their frontline team members. Hogg says he loves listening in to the origination team in action in the Charlotte office, as well as sitting next to the due diligence staff clearing loans for funding. It is this connection to the daily mechanical challenges and client that will certainly help B2R retain an edge.

The Idea Incubator is where team members get to pose their own suggestions for improving operations and delivering better solutions. The Lending Lab is where Hogg has assembled a team of experts from a variety of other industries to pioneer new loan programs for investors.

   It is here that dynamic “agile development” happens and new pilot programs are launched for live testing with clients.

The CEO says that one of the new game changing product tools coming out of this lab is harnessing the power of predicative analytics, and algorithmic approvals. By summer 2015, this is expected to be revealed in the form of ‘Instant Pre-Qualification’ using just seven fields of information.

The result is to be an even more efficient lending platform which provides low rates and speed in funding, requiring the least amount of data, while retaining sound credit decisions. Beyond the sunnier math of using single credit lines to flip or rehab and manage multiple properties, this creates a more turnkey financing solution so that investors can redirect their time to growing their portfolios versus managing them.

 

Scaling Your Portfolio with Less Friction

Both passive investors and real estate entrepreneurs will find loan solutions like these provide the framework needed to scale their portfolios while the market is ripest. Looking forward, it is finance relationships and the operational edge which will divide those with the best net returns and most time to enjoy their gains from the rest.

Whomever investors have been using for leverage until now, it is worth keeping an eye on what’s coming out of the B2R Finance Lending Lab. For more insight into the minds and intelligence being injected into this mortgage maverick’s DNA, check out B2RFinance.com and DwellFinance.com.

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The Benefits of Using a Private Lender – Special Feature by Carl Schiovone, President of East Coast REIA

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– A Private Money411 Exclusive –

Getting started as a new Real Estate Investor or to bring your existing business to the next level of success will generally require investment capital. More and more investors are taking advantage of using private lenders to achieve their business goals.

The advantages of using a Private Lender over conventional lenders or Hard Money lenders can be summarized as follows:

• You may be able to agree to terms more suitable to you
• You may be able to finance 100% of the project plus expenses (many traditional banks and lenders will require you to have some “skin in the game”)
• Less underwriting scrutiny of you and the particular project
• Quicker response
• Avoid the oversight that many lenders are now putting in place during the life cycle of  the project
• Private lenders may not require you to have any documented experience
Finding Your Private Lenders

Once you have decided that using a private lender is the right and perhaps the only possible direction for you to take, it is now time to explore your opportunities of locating people who may be interested in funding your projects. Generally, a great place to start looking is among your personal and business circle of influence.

This may include the following:
• Family
• Friends
• Co-workers
• Acquaintances
• Local real estate groups

I do get some pushback from people when I suggest that they approach family and friends for investment capital because some feel uneasy asking them for money and the possible implications if things don’t work out exactly to plan.

Just keep this in mind, you are asking them to participate in a business opportunity, not a hand out. Furthermore, many of these people are already taking some form of investment risk; so why not in you?

Keep it Legal and Get it Down on Paper
Just because using a private lender may be a simpler and less formal process than what you would typically experience with either a Hard Money lender or conventional lender, this does not mean you will forgo all of the required documents and due diligence that will protect both you and your private lenders. Make sure to discuss the terms and conditions of the private loan with your attorney and have them prepare all of the necessary documents. It is always advisable to encourage your lender to also have their attorney review the documents.

Positioning Yourself as a Solid Borrower
Even if you personally know the people who will be providing the capital to fund your project, this does not take you off the hook from properly preparing yourself as a reputable borrower. There are some characteristics that your lenders will be expecting from you and include the following:

Knowledge of the Business
Even as a new investor, it will be critical for you to have the basic skill set in order to effectively analyze opportunities that may come your way. In the excitement of the hunt for your project, you will need to know when it is time to move forward or pass on an opportunity.

In fact, as part of your discussions with your lender, you should illustrate why the project is a solid deal by sharing the assumptions and results you have made. In addition, you should proactively identify the barriers and  risks you may face and how you plan on mitigating them.

Remember, by identifying this upfront you will go a long way. Keep in mind that most lenders (or their attorney) will inquire about risks anyway, and it looks much better coming from you without being asked. As part of your Business Plan, you should have identified all skill set shortfalls you may have and include a specific action plan on overcoming the deficiency. If you are a new investor with no or limited experience, it is advisable to have someone who can shadow your decisions and path and guide you along the way.

   As a Performance Coach, all too often I see new investors jumping into their first project without the proper skill foundation and many experience some challenges that could have been prevented.  

Transparency
If there is one thing that can ruin any business relationship is holding back information that is critical to your lender. With real estate investing, things may not always go to plan.
However, what is important here is how and when you communicate when there are challenges. Always share information that affects your lenders as soon as possible and during that discussion, communicate possible ways to get back on track and avoid a future reoccurrence.

Credibility
In order for your business to grow and continue to have your lenders coming back for more opportunities, it will be critical to leverage off of the success of prior projects. Once they see what you can do and have performed as planned, you will find that the people around you will be literally throwing more money your way. In addition, they will be asking if they can bring their family and friends along as well. Talk about free marketing, it doesn’t get any better than that!

I can’t  tell you how many times I have seen this play out with my Students. Properly documenting your past performance in your Credibility Report will go a long way in securing new lenders. As a great way to demonstrate your performance is to invite your lenders and potential new lenders to your projects both before you get started with the project and after it is completed.

During this time you can share with them both the initial expectations and how the final results compared. Just think how powerful this can be. During this exchange, if the specific performance you were planning was not completely achieved, you should elaborate on the root cause. Evaluating lessons learnt can be a great way to mitigating future errors on the next project.


Have an Exit Strategy
As part of your overall project or business plan, you may need to consider your exit strategy from the private lender in advance of moving forward with them.

There are generally a few options to consider when exiting private money that include:
• Selling the property upon completion of a renovation, the lender will be paid from the proceeds (this is common with a Rehab and Flip project)
• Refinance the property with a cash out conventional mortgage (this is very common on a Hold to Rent property)
• Repaying the loan from the sale of other assets or investment sources

In conclusion, building a solid base of reliable private lenders will help set the stage for you to respond very quickly to the opportunities presented, This can clearly be the path for you to scale the business as large as you want! Once the people in your network actually see that you have the bandwidth to move forward they will bring you even more opportunities.

[author] [author_image timthumb=’on’]https://realty411guide.com/wp-content/uploads/2015/07/KYq78gAB_400x4001.jpeg[/author_image] [author_info]Carl Schiovone is a Performance Coach with over 33 years of experience and is President of Carl Schiovone & Associates Real Estate Coaching Inc. In addition Carl is the President of East Coast Real Estate Investors Association. For information, visit http://EastCoastREIA.net or http://CarlSchiovone.com[/author_info] [/author]

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