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Tim Houghten

Funding Investors To Create More In-Demand Housing Inventory

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By Tim Houghten

We seem to be in one of the most interesting and exciting times for real estate investors in recent history. There appears to be both motivated sellers and motivated buyers creating an incredible intersection of opportunity. For many, the ability and scale at which they can take advantage of this phase of the market is all about access to smart leverage and funding for their deals.

We recently connected with Jared Reyes, Vice President of Sales at Center Street Lending to gain insight on their success, what funding is currently available, and how investors can position themselves to make the most of the landscape.

Center Street Lending

Center Street Lending (CSL) is a private lender specializing in Value-add Residential investment properties. The company is coming up on 13 years in business, during which they’ve originated over $3B in residential investment property loans.

Stephen Couig founded Center Street Lending after obtaining his MBA at Dartmouth, and stints with Morgan Stanley and Troon Golf, as well as operating his own residential development company.

He not only saw a big opportunity to fill the void in the business-purpose lending space, but he also aspired to help solve the lack of housing inventory.

As Vice President Jared Reyes says there was, and remains, a shortage of good housing. He adds that either enough hasn’t been built, or what is on the market needs improvement and upgrading.

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Investment Property Loans

Both directly, and through their network of mortgage brokers, Center Street Lending provides several types of loans for investors.

Programs include:

  • Fix and flip loans
  • Rental property loans
  • Bridge loans
  • Ground up construction loans
  • Long-term rental property loans

Bridge loans provide investors with fast capital when they need to quickly close on new acquisitions. These loans are available on SFRs, up to 4-unit properties, townhomes, and condos, including for foreign nationals.

Rental property loans are available for refinance or purchase, for short- and long-term rental operators.

Center Street’s Strength: Fix & Flip Loans

Center Street Lending’s portfolio Fix & Flip loan program offers up to 85% LTV on the purchase price, or 100% of rehab costs.

Flexible loan terms range from 6 to 18 months. Funding is available in at least 18 states across the US.

Loan amounts start at $100k, with closings in as little as 10 -14 business days.

Center Street’s Strength: Ground Up Construction

One of the programs CSL is most known for is funding ground up construction projects.

Whether it’s helping newer investors get started in real estate or those already doing several projects a month, Center Street Lending sees themselves as a catalyst for starting and growing real-estate investment businesses.

Their construction loans fund non-owner occupied 2-4 unit builds, townhomes, PUDs, and condos. Flexible terms range from 9 to 18 months, with loan amounts up to $10M.

Financing goes up to 80% Loan-To-Cost (LTC). The team at Center Street pride themselves on fast, no-hassle draws on funds.

Tips For Real Estate Investors

While the market may be strong and moving swiftly, Center Street wants to work with solid borrowers with good projects. In today’s market, those flipping houses and building new inventory are facing more challenges than ever before. Center Street’s loan / project journey, which consists of loan origination, servicing, and fund control gives investors more transparency to navigate through supply chain delays, permit delays, and labor shortages.

To stay ahead, to continue to be successful, and to maintain access to the best funding to scale, CSL recommends:

  • Be detailed in costs management
  • Build in contingencies for volatility
  • Be smart about the project at hand
  • Show the work / show the experience

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What’s Different About Center Street Lending? Smarter Loans for Residential Investors

Center Street Lending stands out from traditional lending with some more creative loan programs specifically designed for investors, especially those interested in value-add construction projects.

CSL focuses on relationships with their borrowers as they continue to grow their businesses. The team is built with experienced and knowledgeable members who can communicate with borrowers about their complex needs.

Something that is different than most is that they do everything in house; that means the ability to underwrite and fund loans in house. Another key bonus is CSL’s ability to retain the servicing on their loans so that investors continue to have the same point of contact — one who cares about the long-term relationship.

For those interested in running their deal scenarios by Center Street Lending, please contact them to find out more.

Connect with Center Street Lending (CSL) today at (949) 449-2594

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How To Use Private Money To Secure & Grow Your Real Estate Investing

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By Tim Houghten

We are certainly in exciting times for real estate investing. A lot may feel like it is changing from our 12-year bull run. But if you’ve been through a cycle or two in the past, then this may feel a lot more familiar and predictable.

Success in the months and years ahead is going to largely depend on investors’ financial position and access to capital.

Critical questions all investors should be asking themselves right now include: If their debt has been optimized to survive, what’s next? And, will they be able to secure new funding to keep thriving and growing as more opportunities arise?

Meet Joe

We caught up with Joseph V. Scorese to gain insight on the lending landscape, including what we can expect from lenders and what types of funding is still available for investors.

Joe is Regional Development Manager, Northeast, for Lending One. A national private lender focused on providing loans for real estate investors, LendingOne has funded over $1B in loans.

He has personally been investing in this space since 1992. So, he certainly knows a thing or two about the market, how it works and how to make the most of it.

One of the things that Joseph is most passionate about is educating others on the availability of private money and how it can be used to grow their real estate investing.

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What Exactly Are Private Real Estate Lenders?

Joseph specifically wants investors to understand that there are alternatives to the credit sources that they used to be limited to.

In his opinion, traditional banks and mortgage lenders really let investors down in the wake of the Great Recession. He doesn’t see them stepping up to be competitive or provide the backing that real estate investors need now or will need in the next phase.

At the other end of the mortgage market spectrum have been hard-money lenders. They have certainly had their place in the market, although their high-interest rates and limited scope of underwriting hasn’t made them the optimal solution for many.

Today, LendingOne is a private real-estate lender. A distinctly different industry to the others. LendingOne is backed by Blackstone and its deep pockets of private capital.

They are an asset-based lender. Though in contrast to hard money, they also look at DSCR (Debt Service Coverage Ratio), plus the strength of the borrower and their experience. This allows them to make more aggressive loans — with better rates and terms than hard money lenders — while providing loans that traditional mortgage lenders wouldn’t consider due to their rigid underwriting criteria.

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The Current & Evolving Landscape

We picked Joe’s brain for his insights on the current market and what’s ahead.

While no one knows exactly how things will play out, with enduring inflation — the highest in 40 years — he acknowledges that we could probably use some cooling in the housing market. Not that we need a crash, but more sustainable growth would be wise.

We have already seen a significant reset in the past 90 days. Joe says that in addition to the extra inventory we’ve seen coming along over the past couple of months, there are a lot of foreclosures in the works. It could be another 12 or 18 months before they hit the market. Together these factors suggest that there is going to be a lot more negotiability for acquisitions coming and hopefully more discounts to be found.

So far the only obvious changes in the lending space have been in interest rates. Most of today’s investors weren’t around when rates were at 20% or even 14%. Joe says that while they might not get that high, they are indeed rising. He predicts they will likely hit the 8% to 9% range.

This should definitely be creating a sense of urgency among investors to do two things:

  1. Optimize current debt structures to make it through this phase of the market.
  2. Lock in great long-term fixed rates on new acquisitions while rates are low.

Additionally, investors need to be really getting in tune with their numbers, evaluating their assumptions and bids, and planning for new dynamics in the market.

Loan Programs To Fuel Your REI Business

Joseph V. Scorese says that LendingOne has $3B already committed to lend next year. He expects that to be consistent over the next several years.

LendingOne offers a variety of real estate financing options, including the following.

Fix & Flip Loans

Up to 90% of purchase and repair costs, and closing in as little as one week. BRRR-friendly, and interest-only payment options.

Rental Property Loans

Loans for individual rental properties, with 30-year fixed-rate options, no personal tax returns needed, and corporate borrowers allowed.

New Construction Loans

Ground-up construction loans with interest-only payments for up to 24 months.

Multifamily Property Loans

Multifamily bridge loans for value-add apartment building projects with loan amounts up to $15M, and no DSCR requirement at closing.

Portfolio Rental Loans & Blanket Mortgages

These loans are ideal for those with five or more rental units, with 30-year fixed-rate loans, and loan amounts up to $50M.

Smart Money Moves To Make Now

With the insights we gained from Joseph in our interview, it seems there are some obvious moves most investors should be making.

  • Recalibrate your buying criteria to demand better deals
  • Refinance now avoid rate shock on loans maturing in the next couple of years
  • Lock in long term fixed rate loan terms on new acquisitions now
  • Be sure you are staying on top of market changes on a daily basis

Find out more about LendingOne and their financing options at LendingOne.com.

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411Expo.com or our Eventbrite landing page, CLICK HERE.

Brandon Cobb Leads Investors To High Performing Recession Resistant Assets

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By Tim Houghten

Founder of The House Buyin’ Guys and HBG Capital, Brandon Cobb is leading investors to new forms of high performing and recession resistant assets this year.

We recently caught up with him to find out what he is investing in now, why, his take on the markets, and how to make great investment choices among uncertainty.

Expanding & Diversifying

We last caught up with Brandon in the midst of the pandemic in 2020. His company was thriving through COVID, with double digit growth, great spreads on deals and lots of volume in the single family space. It was their best year up until that point.

Image from Pixabay

Their building, rehabbing, flipping and wholesaling ventures in the Middle TN market were exploding, especially as many investors had chosen to sit on the sidelines afraid of the market. Single family inventory was plentiful, deeper discounts were widely available, competition was low, and on the flip side deals ended up selling for incredible profits as house prices boomed.

Of course, as others watched this success and wanted a piece of it, everyone wanted to jump back into the market at the same time and mimic it. Inventory disappeared and green investors have bid up home prices to wild highs in many parts of the country.

Brandon and his Middle Tennessee business are still doing very well there. Yet, he has also evolved his strategies and opened up new opportunities for investors.

Although deeply tragic on a personal level, the pandemic has been very good to many financially as well. Brandon has found many investors with plentiful capital looking to deploy it in the right assets, and especially in the real estate space.

The truth is that no one knows what the medium term holds for the economy, country and real estate. There are many wildcard factors that could be played. For now, it seems like the outlook remains incredibly strong through the end of the year. In the long run we all know that real estate has proven to be invaluable.

While it looks like the worst may be over, many analysts still see the potential for a recession in the near future as the impacts of recent policies add up and become evident.

After a long and insane run, analysts, including the Chief Investment Strategist of Bank Of America are predicting the global economy and public stock market are headed for at least a ‘flash recession’ in the second half of 2021. In fact, with the exception of a few categories like real estate, healthcare, and utilities which have covered up losses elsewhere, behind the scenes many commodities have fallen by over 20%. Even Peter Theil’s big tech company has reportedly been making big moves into tangible assets. Jeff Bezos has hit the news headlines for a few times for selling off his Amazon stock and bolstering his personal real estate portfolio instead.

All this together prompted Brandon to start giving investors access to more high quality and bigger deals in new places.

Image from Pixabay

He’s been flying around the country, and even the world to source and vet the best opportunities. Including a 384 unit, $42M apartment building with 97% occupancy that they helped close on in Daytona Beach, FL.

There Are Great Performing, Solid Deals Out There

Despite some misinformation and over exaggeration in the media, and the real competition and compressed returns in the single family market there are high performing assets to buy into. There are acquisition opportunities which have not only proven to thrive through COVID (and hence should through any other crises), but are ideally situated to survive and even see improved performance in a potential recession.

Brandon sees opportunities lying in the multifamily and commercial real estate space.

You have to look a little further for them, dig a little deeper, have better connections and a stronger network and do more investigation, but they are out there.

What Brandon Is Investing In Now

With the launch of HBG Capital, Brandon has created a new platform enabling other investors to participate in the deals he is engaging in, and to learn how he is doing it.

While he makes no guarantees of performance, and past performance isn’t always an indicator of future performance, he has produced stable double digit returns for investors throughout the years and at least up until now.

Today he is helping those with capital to invest, those who want to smooth out their returns and avoid the extreme volatility of the public stock market, and desire hard asset backed investments. As well as busy high income earners who simply know that they need to diversify their asset allocation into real estate, but don’t have the time to do it all themselves.

In the multifamily space HBG Capital is mainly focused on 100 unit plus acquisitions to benefit from all of the economies of scale that they offer.

On the commercial real estate front he says they are again looking at recession resistant properties like self-storage and assisted living complexes.

It’s All About The Due Diligence: Integrity & Equity

Success in real estate investing, and especially in times like these all comes down to the due diligence. Doing your homework and screening opportunities.

Image from Pixabay

In fact he says his firm only pursues 2% to 3% of deals they are presented with, after they’ve gone through their rigorous vetting process.

He says the two most important factors in this are:

1. The integrity of the person you are dealing with, and their capabilities
2. The amount of equity in the deal and current existing performance

Most deals fail to pass these factors.

Brandon has also just published a new book on the subject, which you can download for free on their website www.HBGcapital.net

‘Due Diligence: 100 Questions Passive Investors Should be Asking Before Investing’ is the book that outlines everything you should ask and know before making an investment, and how he and his firm are qualifying opportunities.

More Ways To Outperform

Image from Pixabay

Other ways Brandon and his teams have continued to outperform the market no matter what comes along include the following:

  • Keeping the construction in-house to combat asset management, inflation, and other external threats
  • Keeping the map open to invest where the best deals are
  • Adjusting your buying criteria with the market changes and outlook
  • Regularly review your past deals to see what’s working best and where you are leaving money on the table
  • Partner with world class operators with proven track records

Conclusion

Even despite pandemic lockdowns and restrictions real estate investors like Brandon Cobb have proven to survive and thrive. As the market continues to grow, those leading the way are continuously expanding and diversifying into new assets.

To make the best investments in this sector now, be sure you are doing your due diligence, and are aligning with great partners.

Equip yourself for this with Brandon’s new book for free, and check out HBG Capital’s process at HBGCapital.net.

Learn live and in real-time with Realty411. Be sure to register for our next virtual and in-person events. For all the details, please visit Realty411.com or our Eventbrite landing page, CLICK HERE.