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PL The Official Magazine of AAPL PRIVATE LENDER January/February 2017 The Official Magazine of AAPL January/February 2017



FEATURE Ethics is at AAPL’s Core

Lender Limelight:

Leading Civic Financial to a Place Among the Elite PAGE 22

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Corner Office

New year brings opportunity to listen, learn and implement. by Linda Hyde



Many options available to those seeking financing for investment properties by Nema Daghbandan


Business Strategy


What’s Current

Trending industry topics and news from around the world of private lending. a compilation



Impending reforms to Dodd-Frank could present a double-edged sword. by Jeffrey N. Levin




Business Outlook

Self-directed IRA holders finding more freedom in how to invest in loans. by Clay Malcolm


Lender Limelight

Taking Civic Financial Services to a place among the private lending elite. with Jack Helfrich


Special Feature: Ethics

Best to have a checklist of set procedures when evaluating potential projects.

How the JOBS Act opens deal flow for nonaccredited investors.

Attaining and adhering to high standards is at AAPL’s very core.

by Jason Fritton

by Susan Thomas Springer




by Robert “Bobby” Montagne


Manage and Lead

Tech Tools

Revamp of Regulation A has increased its viability for more companies.

Winning organizations make accountability a way of business life.

Marketing strategies that work and how to track their effectiveness.

by Chrissey Breault

by Elizabeth Morales




by Kevin Kim


This is a great way to start having your money work for you. by Allen Shayanfekr

Investor Perspective

Investing in private mortgage notes lets you become the ‘banker.’ by Abhi Golhar


How to make the most of your conference attendance in 2017. by Ruby Keys




R. MICHAEL WRENN CEO, Affinity Enterprise Group

EDDIE WILSON President, Affinity Enterprise Group

LINDA HYDE Executive Director, AAPL

LINDA WIENANDT Editor-in-Chief

HEATHER ELWING-DIXON Editorial Assistant

CHRISSEY BREAULT Director of Marketing and Member Services, AAPL

TIM DRAPE Senior Account Manager, AAPL


CONTRIBUTORS Nema Daghbandan, Esq., Jason Fritton, Abhi Golhar, Ruby Keys, Kevin Kim, Esq., Jeffrey N. Levin, Clay Malcolm, Robert “Bobby” Montagne, Elizabeth Morales, Allen Shayanfekr and Susan Thomas Springer.

COVER PHOTOGRAPHY Kyle Lau Private Lender is published bi-monthly by the American Association of Private Lenders (AAPL). AAPL is not responsible for opinions or information presented as fact by authors or advertisers.

SUBSCRIPTIONS Visit www.facebook.com/aaplonline or email PrivateLender@aaplonline.com.

BACK ISSUES Visit www.issuu.com/aapl, email PrivateLender@aaplonline.com, or call 913-888-1250. For Article Reprints or Permission to use Private Lender content including text, photos, illustrations, logos, and video: E-mail PrivateLender@aaplonline.com or call 913-888-1250. Use of Private Lender content without the express permission of the American Association of Private Lenders is prohibited. www.aaplonline.com Copyright © 2017 American Association of Private Lenders. All rights reserved.



A New Year Brings New Opportunity To Listen, Learn and Implement I love the start of the new year. At its heart, it is a fantasy of newness and clean slates—of the chance to do things differently and with more attention to purpose. In reality, it’s also one of the most challenging times of year for many of us, as we return from holidays and fly straight into the plate-glass window of an overfull schedule. We don’t often have time to consider all the underlying stuff that gives our work shape, character and meaning, and that time won’t ever appear on its own. But we can choose it. Even in the crazy spells—and maybe especially then, when we’re making so many important decisions. I personally am looking at trends within association management, real estate finance and the housing market. While setting New Year’s resolutions may not be everyone’s cup of tea, it can be a helpful way to make yourself accountable for all those goals you truly want to accomplish. Today, we have tremendous opportunity to listen, learn, and implement. As Clay Malcolm points out in his article, An Expanding Landscape, “Private Lenders are tasked with the challenge of determining their own regulations….” He was speaking specifically to working with borrowers and setting loan terms but I like the sentiment. Every one of us is tasked with determining our own way. Do you need to scale your business? Do you need to re-evaluate your event goals? Maybe it’s time to take a closer look at portfolio yields and take a path – or risk you haven’t before. The current political climate doesn’t necessarily allow us to have a clear understanding of what our compliance-based future may hold, but YOU ultimately hold the power to determine your own future. We at the American Association of Private Lenders and Private Lender magazine look at 2017 as we do every new year – a chance to rejuvenate, improve on successes, and maybe even reinvent a little of who we would like to be. Many of our partners have been introduced to our growing Private Lender team over the past several months, and soon you will start to see an even bigger change in how Private Lender looks! Regardless of the path you choose, we wish you a prosperous year of happiness and health. ■ (for printing)

(for spot color, silkscreen, or embroidery)

(for any black and white application)


Executive Director, American Association of Private Lenders


Private Money Lending Software Powerful, Flexible, and Easy to Use Used by most AAPL members Dodd-Frank and RESPA compliant Service multi-lender loans or pools with ease Automate budget and draw process for rehab loans Handle ARM, Construction, and Commercial loans Built in Trust Accounting Enhanced reporting and forecasting Online investor access 24/7 Increase productivity and accuracy

800 . 833 . 3343 | the mortgageoffice.com 6 PRIVATE LENDER



fund at the end of January and expects to manage assets in excess of $600 million.

Greenville, South Carolina-based Lima One Capital has expanded to California, with plans for a Fresno-area office

Web: www.putnamfunding.com

to open in the first quarter of 2017, according to chief

Phone: 561-221-0070

executive officer and founder John Warren.

Twitter: @putnamfunds

The company specializes in providing financing for flippers, landlords and investor-owners of unoccupied properties and does business in 43 states. Warren saw opportunity in Fresno’s stable housing market and strong rental market. Among its loan products are FixNFlip for the real estate investor looking to purchase and rehab an investment property and Rental30 for those purchasing or refinancing single properties and portfolios. Web: www.limaonecapital.com Phone: 800-390-4212


KEN SCHLACHTER JOINS RAINSTAR CAPITAL GROUP Rainstar Capital Group, a multistrategy private equity firm based in Grand Rapids, Michigan, recently welcomed Ken Schlachter as a Managing Director of New Business Development. “We are excited to have Ken join our team to represent us in the Detroit market,” stated CEO Kurt Nederveld. “Ken has a strong track record across multiple industries over his career. His strong corporate finance and capital markets experience will greatly benefit our clients.” Rainstar Capital Group makes investments in consumer

Putnam Funding, a boutique bank specializing in debt and

distressed debt portfolios, small business merchant cash

equity funding for commercial real estate, recently introduced

advances, distressed mortgages, high growth companies

several new lending programs to serve its growing customer base.

and residential and commercial real estate. As a capital

In addition to its bridge and middle tier loan programs,

management and advisory firm RCG focuses on the growth

Putnam has rolled out new programs that offer qualified

of its portfolio acquisitions along with serving its portfolio

borrowers up to 100% financing using both debt and equity

companies and clients.

lending platforms. “Our initiative is to continue our path to disrupt the

“Rainstar Capital Group is poised for an explosive 2017,” noted Ken Schlachter. “I look forward to serving our

commercial real estate industry with state of the art lending

clients by providing invoice, purchase order, receivables

programs and exemplary customer service,” said Steven

and equipment financing solutions.”

Goldberg Putnam’s manager. “We want our clients to know that

Nederveld noted that Schlachter would be working

we view each loan as a partnership that is not just for the current

across multiple product lines but would focus heavily on

transaction but for all their lending needs going forward. Where

serving the firm’s small to middle market business clients

banks limit their underwriting to a strict matrix, Putnam looks

with their working capital needs.

at each deal individually based on its own merits. We are able to find value and security where most other lenders can’t.” Celebrating a record year of growth both in lending and raising funds, the company is launching its fourth income

Web: www.rainstarcapitalgroup.com Email - Ken Schlachter: Ken@rainstarcapitalgroup.com Email - Kurt Nederveld: Kurt@rainstarcapitalgroup.com JANUARY/FEBRUARY 2017 7

Sell your loans to PeerStreet quickly and efficiently PeerStreet provides unprecedented liquidity to the private lending industry. We are a platform for purchasing first-lien residential and commercial real estate backed loans.

PeerStreet can be your capital and technology partner Here are just some of the benefits of working with PeerStreet: • Free up capital so you can originate more loans • Reduce your overall cost of capital • Take the hassle out of working with multiple counterparties • Benefit from access to PeerStreet’s diversified investor base • Maintain borrower relationships • Gain a partner, not a competitor

This notice is issued with and forms an integral part of information supplied in the form of a printed document (“Information”) and should be particularly noted in connection with that Information. This document has been prepared by Peer Street, Inc. (“PeerStreet”) for informational purposes only and without regard to the particular needs of any specific recipient. All Information is indicative only and may be amended, superseded or replaced by subsequent summaries and should not be considered as any advice whatsoever, including without limitation, investment, legal, business, tax or other advice by PeerStreet. Any such advice should be sought from an appropriately qualified and/or authorized professional. PeerStreet does not guarantee the accuracy or completeness of the Information which is stated to have been obtained from or is based upon trade and statistical services or other third party sources. All opinions and estimates are given as of the date hereof and are subject to change without notice. The Information is not intended to predict actual results and no assurances are given with respect thereto. The Information is not an invitation, offer or inducement to acquire or dispose of, or deal in, any interest in security, or to engage in any investment activity. Strategies or investments of the type described herein involve risk and the value of such strategies or investments may be volatile. Such risks include, without limitation, risk of adverse or unanticipated market developments, risk of counterparty or issuer default, risk of adverse events involving any

PeerStreet’s Lender Platform

Please contact us to learn more about PeerStreet: Lender Onboarding Team lenders@peerstreet.com

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underlying reference obligation or entity and risk of illiquidity. This brief statement does not disclose all the risks and other significant aspects in connection with transactions of the type described herein.




REALTYSHARES RAISES $20 MILLION MORE IN FINANCING San Francisco-based RealtyShares has raised another $20 million for its real estate investment funding platform, less than a year after it closed a $10 million round of financing. The company has raised more than $130 million for over 1,600 properties since its launch in 2013. Part of the capital it raised from new investor Union Square Ventures and previous investors Menlo Ventures and General Catalyst Partners will be used to market a new diversified equity fund targeting institutional investors as well as sales and marketing for its existing business lines. Available only to accredited and vetted real estate investors, RealtyShares’ website offers a mix of fix-and-flip loans, preferred equity and mezzanine products, joint venture equity and commercial loans alongside its capital partners. “RealtyShares will likely become a ‘one-stop shop’ for capital for real estate transactions – whether debt, equity, or mezzanine financing,” CEO Nav Athwal said in a statement. “Our preferred equity products have already begun to exploit a real void in the marketplace left by the dislocations of the Great Recession, and we expect that such products will soon lead to

lending technology will enable corporate banks to connect customers looking for loans with individual and institutional investors alike, all digitally. The increased automation of the lending process may attract younger borrowers who may not have a personal relationship with a lender, and by brokering the relationship between the private lender and the client, banks will be able to maintain relationships with individuals they otherwise might have had to turn away. “By embedding crowdlending into the overall credit lifecycle, a bank can maintain and expand its client base,” explained Jean-Cedric Jollant, a senior product officer at Misys, to Reuters. He added that the technology may also assist banks in “recapturing business from alternative finance marketplaces.” Given that Morgan Stanley recently estimated that P2P lending companies might originate up to $490 billion in loans globally by 2020, it should come as no surprise that banks want to keep a piece of that pie. Some lenders have already started forging into the P2P space by partnering with private lenders themselves or launching their own crowdlending operations. Misys is hoping to streamline the entire process for all parties involved, since the software would make it easier for

an expansion of our commercial lending business as well.”

conventional lenders, private lenders and borrowers to find

SOURCE: Tech Crunch

vendor said that it is currently “in discussions” with

the best solutions for their specific needs. The technology interested banks in the United States, Europe and India.

FINANCIAL TECH VENDOR LAUNCHES PEER-TO-PEER SOFTWARE FOR BANKS Although private lenders have long boasted that they

UPCOMING EVENTS Jan. 30-31, 2017 Alternative Lending Summit

are better than the banks, some might be heading back

Miami Beach, Florida

into “conventional” lending institutions in order to reach

This summit will bring together leading asset managers,

more borrowers if financial technology vendor Misys’

allocators, platforms and key service providers that shape and

new software works out as banks and the vendor hope.

influence the Alternative Lending landscape. The two-day

Misys recently announced that its peer-to-peer (P2P)

summit will feature one-on-one meetings and educational JANUARY/FEBRUARY 2017 9




TRENDING INDUSTRY TOPICS topics from the front-runners in the alternative lending space.

LendIt’s 100,000+ square foot exhibition hall, lunch and two coffee breaks daily.

Web: www.contextsummits.com/altlending Phone: 908-379-3900

Web: www.lendit.com/usa/2017 Phone: 646-930-6366

Feb. 18, 2017 Think Realty Group Event San Diego, California Think Realty and San Diego Investment Club have teamed up for a day of networking, learning and dealmaking. In addition to real estate investment speakers and educators, the event includes a tradeshow packed with vendors offering tools and resources designed for the savvy real estate investor. Web: www.thinkrealty.com/events/san-diego Phone: 816-398-4053

April 4-5, 2017 IMN’s 4th Annual Real Estate Private Equity Forum Miami, Florida IMN is pleased to announce the 4th Annual Real Estate Private Equity Forum on Land, Homebuilding & Condo Development. Join IMN to discuss all of the critical issues in the real estate private equity sector.  eb: https://www.imn.org/real-estate/conference/ W Land-Homebuilding-East-17/ Phone: 212-901-0506

March 2, 2017 Pitbull’s 42nd National Hard Money Conference Scottsdale, Arizona Pitbull’s conference is the oldest and largest organization

April 23-25, 2017 Activate 2017 Newport Beach, California

of its kind in the country: educating brokers, lenders, and

At Innovate, you learned the latest cutting-edge ideas. Now

investors as to the emerging opportunities that exist in hard

it’s time to take those ideas and apply them. Like a chemist

money lending. Pitbull’s success can be attributed to a track

who takes a dormant chemical and activates it, so too will

record of consistently producing quality events for industry

we take Innovate and activate it to help you continue to

professionals to network and grow their businesses.

grow your private lending business.

 eb: https://pitbullconference.com/march-2017W scottsdale-2/

Web: http://geracicon.com/activate/ Phone: 949-298-8050

Phone: 858-736-7788

March 6-7, 2017 LendIt USA New York City, New York Join established and emerging online lending companies and investors at the Javits Convention Center in New York for two action-packed days of learning, networking and deal-making at the world’s biggest show in lending and fintech. Tickets to LendIt USA 2017 include all conference sessions with keynotes, panels and company demos as well as access to

June 24, 2017 Think Realty National Conference & Expo Baltimore, Maryland Join others in the real estate investing industry for education, networking and dealmaking.  eb: www.thinkrealty.com/events/think-realty-expoW baltimore-dc Phone: 816-398-4053



An Expanding Landscape Self-directed IRA holders are finding more freedom in how to invest in loans. by Clay Malcolm


he private lending landscape is coming into its own as a popular alternative to

loans from banks and other traditional lenders

who follow strict regulations for borrowers and 12 PRIVATE LENDER

loan qualifications. Private lenders are tasked with the challenge of determining their own regulations for borrowers and loan terms. At the onset of 2017, many online re-

al-estate based lenders are anticipating a potential correction in the real estate

market. Thanks to new regulations instated after the real estate crash in 2008, lenders


(depending on their individual situation).

vestor’s sister is looking to remodel her home

sector in the retirement industry. A new

account holder can originate a note with his

Self-directed IRAs are the fastest growing focus on private lending with retirement

plans has created the desire for more ways

for IRAs to invest in loans. Consequently, the desire for information about IRA investing strategies is high.

Just as it is advantageous for IRA providers

to educate their clients about the benefits and regulations of retirement investing, investor education and due diligence is key while

online marketplace lenders forge business

models that are more sustainable and compliant with emerging regulations.

The present landscape for private lending is

loans for a variety of purposes.

The More Information, the Better Both lenders and borrowers can benefit

from online lending platforms that offer inves-

tor information about the assets they provide. This way investors can understand how their money is going to be lent out, and borrowers

priate strategy for real estate investing if the values do take a downward turn.

A Different Mindset While many lenders may focus on large-

scale market trends, IRA investors can

operate in a somewhat different mindset

Options Abound Another option for IRA lenders is to

become involved with a local lending group, or create an alliance with other lenders

to joint-fund a project or initiative. If, for

instance, a solar energy enterprise is looking for investors, IRA holders can team up with other investors to support the startup.

Within the swiftly growing online lending

can agree to have their money deployed to

market is flooded with borrowers who want

consumers may want to consider the appro-

ing timeframe and interest rate.

has a dedicated channel. The same can be

confined to three or four banks. The lending

a leading asset in the private lending market,

lender controls the terms of the note, includ-

platform arena, IRA holders can participate

said with private lending – borrowers are not

proportions. However, with real estate being

or her IRA and provide the cash. The IRA

a little like the advent of cable TV: It’s no lon-

ger just three channels – every viewer interest

aren’t predicting a downturn of devastating

and needs a loan to complete the project, the

can choose a loan with terms and underwriting criteria that work for them. Concerning IRA loans, it may be advantageous for IRA

lenders to choose an account provider that

offers educational materials and continuing

education classes to fill any knowledge gaps.

IRA holders have many different strategies

available to their accounts. They can take

a personal route and lend IRA money to a

borrower who is close to them and who either doesn’t want to borrow from banks or isn’t

qualified to do so. For example, if an IRA in-

in fractional or whole loans. IRA holders

automatic loans through the platform, or

can choose loans that require approval and input from them.

Both private lending and IRA investing are

rapidly growing markets that will predictably become further wedded in 2017. Feel free to

contact New Direction IRA today to learn more about self-directed IRA private lending. ■ ABOUT THE AUTHOR Clay Malcolm is Chief Development Officer at New Direction IRA, Inc. He oversees most avenues of marketing, teaches continuing professional education and informal classes and webinars, and facilitates the training of business development and client representative teams at New Direction IRA Inc., a self-directed IRA provider that assists more than 12,000 clients nationally. Malcolm, who has more than 20 years’ management experience in various roles, draws upon his teaching background to develop the educational aspects of New Direction IRA and impart knowledge about self-directed IRAs to its clients and prospective clients. Malcolm received his Bachelor of Science degree in Communications from Northwestern University. www.newdirectionira.com/education


REI Fund

ALPM pursues above-market returns for its investors/ clients by primarily investing in the historically strong and steady Texas real estate market.

A List Partners Management, LLC is a powerhouse team of real estate knowledge and experience providing high-yield alternatives through our managed funds for investors who want more for their money than the low interest rates offered by banks. Additionally, ALPM offers high yield opportunities for Non-US Citizens who are seeking investment options in the USA.

Investors receive semi-annual distributions based upon the net profitability of the fund, meaning that some periods may have small distributions and some periods may have larger distributions. The target of ALPM is to manage real estate transactions that yield greater than 12% annually. Investors may choose to receive a check for their semi-annual distributions or they may choose to reinvest their distributWion to build wealth by compounding their earned distribution. Compare our return rates to the rates banks offer on a five-year Certificates of Deposit, and see why ALPM offers a clear choice for the thoughtful investor.

Regional Center Fund

Each EB-5 project will be its own security filed with the SEC within A List Partners Regional Center. Whereas most Regional Centers offer only a tiny return for EB-5 investors, A List offers a 3% annualized interest rate to EB-5 investors, AND in some projects investors share in a small equity percentage of the project. For non-EB-5 investors investing through the Portfolio Interest Tax Exemption Program, the annualized returns are 8% of greater, AND in some projects investors will receive a bonus in addition to the annualized interest rate on the investment.

A List Partners Technology

Converting Cannabis Industry Legacy Money into Viable Investments

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A List Partners Mentorship Program Turnkey Option to Set Up Your First Capital Fund While being Mentored by Experienced and Successful Fund Managers


Finding Funding There are many options available for those seeking financing for investment properties. by Nema Daghbandan, Esq.


ccording to a study conducted by the

online real estate site Trulia.com, be-

coming a homeowner is still as important as

ever among consumers. In 2016, 75 percent of those surveyed said they dream of becoming

a homeowner one day, although 22 percent of

respondents expect it to become increasingly harder to acquire a mortgage.

If you are one of the lucky Americans who

already owns a home, yet is considering buy-

ing an investment property, pay attention to

these important ideas for financing your real

estate investment transaction.

How to Find Financing If you are new to the real estate invest-

ment world and have a clean credit report and low debt ratios, a traditional bank is



your best bet for financing. Many of the

Alternative Lending

gages to investors with good credit. While

keeps on its books, rather than selling on the

expensive, you can still expect great rates

unions or smaller banks offer these types of

According to Bankrate.com, the average

The loans are typically a little higher priced

large banks can offer low rates on mort-

Portfolio loans are mortgages that a bank

investment money is typically a little more

secondary investment market. Many credit

that can increase your buying power.

loans to investors with multiple properties.

interest rate on a conventional 30-year home

than their big bank counterparts but have

loan (as of this writing at the end of 2016)

easier qualifying terms.

around 2.50 percent. These rates are some of

tively fewer regulations associated with them

If there was ever a better time to finance real

lenders by reaching out to local investment

is 3.65 percent, with 15-year rates hovering

Portfolio loans are useful, having compara-

the lowest in the history of mortgage lending.

and higher credit limits. You can find portfolio

estate, we haven’t seen it.

communities or asking your real estate agent.


Real estate agents have an extensive network of lenders with which they work, and many

have nurtured those relationships specifically for the benefit of their clients.

Seller Carrybacks A “seller carryback” is a loan, or portion of

a loan, that the seller provides and holds. For real estate investors, seller financing is one

of the best options available. A property that is seller-financed means that the seller has

agreed to personally finance the mortgage at

a “market” interest rate with a specified down

payment. These loans typically have a shorter

••• determine your cash flow before considering

In 2016, 75 percent of those surveyed said they dream of becoming a homeowner one day, although 22 percent of respondents expect it to become increasingly harder to acquire a mortgage.

it as a rental property.

PRIVATE LENDING SOLUTIONS Successful and savvy real estate investors

are always seeking to build up their portfolio of properties. A financing strategy many of

there are also private money lenders that can

• Ability to choose from a wide variety of investments

lending can come from family or friends, but provide quick financing at comparative rates. House fix-and-flippers typically use this

type of funding to snap up below-market

priced rehab properties quickly. The rate may and sell the property, you can cut the annual percentage rate in half.

finance the entire property or the difference

Private Money Pools

available to the consumer. These loans are an

investors to provide real estate borrowers

ing with a minimum amount of documenta-

finance their properties. There has also been

escrow company can assist with drawing up

of crowdfunding for real estate. According

between the real estate value and the loan

Private lenders use funds pooled from

excellent opportunity to get immediate financ-

with quick access to the capital needed to

tion and regulatory headaches. A Realtor or

an explosion in this market with the addition

the mortgage docs.

to current regulations, accredited investors

Low Capital? Pursue an FHA 203(k) Loan

home value) are eligible to participate in such

FHA loans are a great strategy for fledgling

with more than $1 million (excluding their crowdfunding endeavors.

down payment of only 3.5 percent, an investor

Putting Your Retirement Funds to Work

costs allowed to be calculated into the loan

can legally use those funds to finance an in-

investors with little start-up capital. With a

can finance the purchase balance, with repair

If you own a Solo 401(k) or SEP IRA, you

balance. The only downside to 203(k) loans is

vestment opportunity. For years, people have

for one year before being able to rent it or

tail business or invest in one, but you can also

that the buyer will have to live in the property

been using their retirement funds to start a re-

place it on the market.

use it to finance your real estate investment.

when enlisting these types of high-LTV loans.

Why Use Solo 401(K) for Property Investment?

There are important details to consider

With a smaller down payment, your loan balance will be higher, which means it is vital to

• You can invest freely with the capital • Financing of real estate projects with tax-free, non-recourse loans

look to re-sell the property in the near future. The seller has the possibility to either

• Tax-deferral benefits associated with the capital

these investors utilize is private capital. Private

be high, but if you plan to quickly turn around term but are a great option for investors who

investment property

• Access to tax-free capital from the sale of

Using a Solo 401(k) plan to invest in real

estate comes with a few restrictions. First, you must put the capital gains or net income back

into your 401(k) plan. Second, all costs and ex-

penses involved with the investment property

should originate from the retirement account. While it does require a fair bit of due

diligence, investing into real estate is a great opportunity to take advantage of record-low mortgage rates and use them to make money. There are few better advantages in life than earning profits with “OPM” – Other People’s Money.

With the popularity of real estate crowd-

funding sites and an extensive selection of

private money lenders to choose from, access to capital should not be an issue, as long as

you are a responsible investor who has done his or her homework in advance. ■ ABOUT THE AUTHOR Nema Daghbandan’s practice encompasses all facets of real estate transactions representing lenders and brokers, including loan documents for commercial, residential, construction, multi-family, servicing agreements, spread agreements, assignments (of all types), leases, lien releases, procurement agreements, intercreditor agreements and subordination agreements throughout the country. He also leads the firm’s nonjudicial foreclosure practice and advises clients on all default related matters. He has closed hundreds of millions of dollars in loans throughout the country.



Dodd-Frank: The End Is Near? Impending reforms to the Act could represent a double-edged sword for private lenders to the housing and construction industries. by Jeffrey N. Levin


banks. Whether these provisions will be

do deals. On the other hand, the possible

need to scrap the Dodd-Frank Act (the “Act”).

either way, changes could represent a dou-

tions where small lenders and community

transition team signaled that reform will

housing and construction industries.

n the campaign trail, candidate Donald Trump frequently discussed the

Following the election, the President-elect’s most likely come incrementally. The area

repealed or replaced remains to be seen. But ble-edged sword for private lenders to the On the one hand, private lenders may ben-

most likely to be tackled first encompasses

efit from easier lending requirements from

lending by small lenders and community

of capital—opening up more liquidity to

the portions of the Act that have hampered


community banks and other bank sources

loosening of restrictions may create condi-

banks start competing more directly for the non-standard deals that are currently the

domain of private lenders. To get a handle

on what the future may hold, it’s valuable to look more closely at the Act to understand

what its impact and legacy on bank lending

has been up to now.

Capitol Hill actually understand the arcane

big banks, even he has voiced support for

Is Dodd-Frank on the Chopping Block?

the appetite of Congressional Republicans to

lines of Hensarling’s proposal, rather than

The President-elect’s argument to get rid

of the controversial banking regulations was a populist message: that Dodd-Frank made the large Wall Street banks an even bigger

threat to the nation’s economy and working

families, the opposite of what it was intended to do as the government’s response to the

2008 financial crisis. According to a state-

labyrinth of provisions the Act contains, so

take a hammer to Dodd-Frank is fairly limited. Furthermore, on the other side of the

aisle voluble legislators including Senators

Chuck Schumer and Elizabeth Warren have pledged a bare-knuckle, no-holds-barred

fight if President-elect Trump tries to make good on that campaign promise.

ment posted on the Trump official transition

Guess Who’s Calling Most Loudly for Repeal?

munity financial institutions have disap-

to completely repeal Dodd-Frank is mostly

remain on the hook for bailing out financial

Given the uphill political battle, it’s likely

Services Policy Implementation team will be

instead to deal with portions of the law that

and replace it with new policies to encourage

system, and particularly for small commu-

website, “Big banks got bigger while com-

The reality is that the loudest drumbeat

peared at a rate of one per day, and taxpayers

coming from the large banks themselves.

firms deemed ‘too big to fail.’ The Financial

that the new administration may choose

working to dismantle the Dodd-Frank Act

have restricted lending across the broader

economic growth and job creation.”

nity banks, which played little role, if any, in

The facts line up with the first part of the

President-elect’s argument. Big banks have only gotten bigger since the law’s imple-

the 2008 crisis.

The Trump administration will most likely

rely on a proposal from Rep. Jeb Hensarling,

mentation, with the Big Four—JPMorgan

R-Texas, who leads the House Financial

Fargo—now controlling about 45 percent of

to the President-elect. His bill—called the

struggle to compete as their compliance costs

Dodd-Frank altogether, but rather for elim-

their growth rate for small business loans

provision that lets the government dismantle

cantly lower than for the larger banks.

the Volcker Rule, which imposes restrictions

Chase, Citigroup, Bank of America and Wells

Services Committee and serves as an adviser

total bank assets. Meanwhile, smaller lenders

Choice Act—doesn’t call for abolishing

have gone through the roof, and, as a result,

inating several of its core parts, including a

and individual mortgages has been signifi-

failed banks. He also wants to do away with

reforming portions of Dodd-Frank along the scrapping it completely. Nominee Steven

Mnunchin is a Goldman Sachs alum who has voiced skepticism about Dodd-Frank.

Mnunchin spent more than two decades at Goldman, and later became a movie pro-

ducer and hedge fund manager. In a recent CNBC interview, the Treasury Secretary

nominee said that Dodd-Frank was “way too complicated” and indicated that his agenda was to strip back portions of the law that prevent banks from lending.

Even one of the original authors of the bill,

former Sen. Barney Frank, admits the Act

has aspects that need to be reformed. Frank

told a reporter from the Washington journal The Hill that he believes the law set too low

a threshold—$50 billion in assets—for banks to face increased regulatory burdens.

“That was a mistake,” Frank told The Hill. “We

should have made it much higher—$125 billion or more—and we should have indexed it.”

Other Democrats have signaled a willing-

ness to work in a bipartisan way on modest reforms to alleviate the burden on smaller

lenders, including Senators Sherrod Brown of Ohio and Jon Tester of Montana, accord-

ing to a recent Morning Consult report. Even Fed Chairwoman Janet Yellen has signaled

concern that the smaller lenders struggle to compete, due to the provisions of the Act.

on banks’ trading and investments, and to

Dodd-Frank and Community Banks

majority of its provisions are now engrained

Protection Bureau. The lowest-hanging fruit

sued by Dodd-Frank skeptics, most community

impetus to do so probably takes a back seat

that have restricted lending, particularly for

assets are actually in fairly good shape today.

However, repealing Dodd-Frank in its en-

tirety would be an uphill battle since the vast

weaken the reach of the Consumer Financial

in the banking system. Further, the political

would be to tackle the portions of the Act

to other items on the Trump team’s to-do

those small lenders and community banks.

and renegotiating trade agreements. Few on

nee for Treasury Secretary comes from the

list, like replacing the Affordable Care Act

Although President-elect Trump’s nomi-

Despite the many worrisome headlines is-

banks and small lenders with under $1 billion An easing of their regulatory burden would

be a boon for them that would likely result in somewhat more opportunistic lending.



Number of Banks in Each Asset Class, 2003-2014

3500 # of Banks

3000 2500 2000 1500 1000 500 0

Less than $100m

$100m to $300m

$300m to $500m

$500m to $1b

Greater than $1b

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Total Assets (2009$)

Dodd-Frank critics usually point to the

everything sold into the secondary market.

to accept borrowers that don’t meet the strict

ation today as proof that the new regulations

rowers met an “ability to repay” test—which

financial or reputational risk associated with

analysis, including from the Brookings In-

of the loan, tremendously raising the risk of

reduced number of community banks in oper-

are strangling them. However, more objective

The Act requires lenders to show that bor-

can be challenged in court for the entire life

conditions. Most lenders do not want the

loans outside the QM designation and simply don’t make loans other than Qualified Mort-

litigation for the lenders.

gages. Other community banks have simply

of consolidation, driven by macro factors like

nating parts of Dodd-Frank will help those

the requirements and compliance cost made it

tation of new technologies. Due mostly to

stand exactly how restrictive the Dodd-Frank

stitution, suggests the reduction in the sheer

numbers of community banks is more a result regional population shifts and implemen-

industry consolidation, the number of com-

munity lenders with less than $100 million in

assets has shrunk by nearly a third since 2003, while the number of institutions with greater than $300 million in assets has grown.

These community lenders already account

for nearly half of all small business loans,

particularly for the SBA program. However, they have been clearly held back with

mortgage loans, where they represent only about 15 percent of all residential lending.

Dodd-Frank dramatically reduced the willingness and ability of community banks to

make mortgage loans due to the broad risk retention requirements that it imposes on 20 PRIVATE LENDER

To understand how reforming or elimi-

community lenders, it’s valuable to under-

rules have been for them. The Act provides

stopped providing mortgages altogether, as

unreasonable without considerable volume.

only narrow exceptions to the risk retention

More Competition for Private Lenders?

tion called the Qualified Mortgage (“QM”)

Dodd-Frank focuses on the notion that it

characteristics that are deemed to meet the

community banks and other lenders in the

on their balance sheet, lenders face risk of

have stronger balance sheets now than prior

the QM designation provides a “safe harbor”

OCC capital requirement regulations. As

requirements. It provides for a designa-

While much of the controversy about

definition for loans with pre-established

has harmed these smaller lenders, in fact

ability-to-repay test. Even with just QM loans

asset classes of $300 million to $1 billion

litigation or sanctions because it is unclear if

to 2008 due to all of the onerous FDIC and

against legal challenges, or if it’s only a “re-

a result, successful efforts to get rid of the

still be challenged in court.

tional and community banks may well open

buttable presumption,” meaning they could Worse, the QM designation is a cookie-cut-

ter approach that limits the lenders’ flexibility

Dodd-Frank restrictions on smaller tradia spigot of new lending.

When considering whether competition

••• from banks could put a squeeze on private

Share of mortgage origination volume, by type

Mortgage credit availability index









the Mortgage Bankers Association. (Consider





lion in residential-mortgage loans just during









lender origination, it’s valuable to consider

the size difference. Current estimates of the

private lending industry range from $65 billion in annual mortgages to as high as $100

billion. While that’s an impressive range, it’s dwarfed by the conventional lending indus-

try that totals about $1.6 trillion, according to that Wells Fargo & Co. alone issued $43 bilthe first quarter of 2016.)

Over the past few years private lenders

have enjoyed a more robust growth rate than banks: in 2015, private lenders originated 68

percent more volume than in 2014, according to Mortgage Bankers Association’s Commer-

cial/Multifamily Annual Volume Origination Summation. That annual growth rate is

nearly double the 35 percent increase that

2006 ‘08




March 2012 = 100

2007 ‘09




Commercial bank Independent mortgage lender Credit union

commercial banks and savings institutions saw over the same time period.

However, with deregulation, banks’ growth

held up by political backlash—don’t forget

them perform essentially as the banks’

Dodd-Frank regulations may well increase orig-

interpret its repeal as a free pass for “too big

even the subprime parts of the construction

and independent mortgage lenders, causing a

2008 crash—the industry will continue to

has been mostly flat for the last several years.

top of their game.

restrictions will be eased for the traditional

tions of the Act that will help smaller lenders

lenders and community banks. If the Act and

sheet leverage and lend more. Rather than just

like the Basel III standards, are eliminated or

deregulation may be that the easing of credit

vigilant about increased competition from

private lenders that rely on them for liquidity.

rate will pick up speed. The loosening of the

that many on both the right and left will

ination and leverage for both commercial banks

to fail” lenders that played a big role in the

rise in the mortgage credit availability index that

reward those private lenders who are at the

It remains to be seen how fully credit

The most likely scenario is a repeal of por-

banking industry, including for the small

and community banks increase their balance

its regulations, as well as other regulations

more competition for deals, the flip side of

relaxed, private lenders will need to remain

restrictions on banks becomes a boon for the

banks on mortgages and other loans.

Rather than expand into direct loans that

To compete with banks, private lenders

don’t meet the QM designation, it’s quite

tion, ability to find deals and overall market

lenders will prefer to make individual or

will have to rely on their speed of originaexpertise. Even if Dodd-Frank reform gets

possible that community banks and other warehouse loans to private lenders, letting

intermediaries for non-QM mortgages and

sector. In that scenario, look for lower cost of

capital and greater liquidity to prime the private lending industry for even more robust growth in the years ahead. ■ ABOUT THE AUTHOR Jeffrey N. Levin is the founder and president of Specialty Lending Group and Pinewood Financial, which together provide a full suite of boutique private real estate lending services in the Greater Washington, D.C., area. Prior to launching SLG, between 1993 and 2007, Levin was a cofounder and CEO of iWantaLowRate.com and a cofounder and president of Monument Mortgage. Levin is a recognized authority on real estate investing and, as such, is a frequent author, lecturer and panelist. He earned a BA degree from The American University in Washington, D.C., and lives on Capitol Hill with his wife, Dunniela, a Canadian trade lawyer, and his two sons, Jack and Charlie.



Backed by a cohesive, committed team, Jack Helfrich looks for Civic Financial Services to join the private lending elite after just a few, short years of impressive growth.





ou can sense the exuberant

determination and excitement in Jack

Helfrich when he talks about Civic Financial Services and what’s ahead for the young

company. The Director of Sales is absolutely bullish on Civic, confident of reaching his

goal of funding $100 million in a month in the very near, bright future.

PRIVATE LENDER: Let’s start by having you

tell us about Civic Financial – origin, mission, values, goals, etc.

JACK HELFRICH: Civic Financial Services was founded in November 2014 to provide real estate investors an alternative financing source to conventional loans. Our vision for Civic is to become the largest private money lender

in the country by the end of 2017. In order to

reach that achievement we need to continue

to provide three things: the best service to our clients, competitive pricing and fast funding. PL: Who are the key team members at Civic, and tell us a bit about what they do.

JH: Civic is fortunate to have incredible

affiliations with some of the largest investment

groups within the real estate industry. Civic was

originated by HMC Assets, which acquires NPL’s throughout the United States, and Wedgewood Inc., one of the largest buyers of distressed

residential real estate in the country. Through

these affiliations, we have seasoned professionals working in all aspects of the residential real estate industry which we use to provide top

service to our clients here at Civic. For example, Wedgwood’s claim to fame is that they have

bought and sold a property on every street in

California (you read that correctly). They have

purchased over 35,000 properties in California

since their founding 30 years ago and have col24 PRIVATE LENDER

lected data on all of their properties, the amount of rehab that was required, the number of days the property sat on the market, their competi-

PL: What is it about Civic – structure, people, company culture – that makes it “hum”?

tors’ purchase price, the wait time on the market

JH: Civic is a unique place to work, while

ence, we offer insight to our clients’ investments

around for over 20 years, we are new and

for their competitors’ flips, etc. With that experithat other lenders can’t provide.

PL: What sets Civic apart from its competitors?

our parent company Wedgewood has been definitely have more of a startup “vibe” to our work environment. It is a collection of people

who have grown together as the company has grown, bringing us closer together and more

JH: Civic Financial Services is not just a stand-

focused on our common goals. While we have

ture. It falls under the umbrella of companies that

industry, we are still relatively small and

with Wedgewood and HMC Assets in particular,

sense the unity and collective determination

markets in which we lend. That means better val-

month end comes around.

funding and being able to advise our borrowers

PL: What do you see as the biggest challenges

alone company, but rather a piece of a larger pic-

been making waves as of recent in the lending

is Wedgewood Inc. These unique relationships,

nowhere near where we want to be. You can

allow Civic to be well informed in the real estate

of everybody in the office, especially when

uations for our borrowers, quicker turn times in through every step of the process.

facing institutions like Civic Financial?

JH: The biggest challenge of 2017 will be the

JH: I was born and raised in Marin County,

place. As new private money lenders jump into

to Los Angeles in 2007 to start college at Loyola

tions, rates and fees will be driven down. We

my real estate finance career at a conventional

addition of competing lenders to the market-

California, just north of San Francisco and moved

the industry to fund these investment transac-

Marymount University. After graduation, I began

believe Civic is in a good position to handle

lending group in Santa Monica. I learned the

petitive in the future. We have an entire capital

ers purchasing mansions along the hills of Los

function is to obtain cheaper money for Civic

financial statements of high-profile people in Los

these fluctuations and remain extremely com-

markets division at Wedgewood whose primary through a variety of channels including ware-

house lines, institutional capital and note sales. PL: What lies ahead for the industry, in your view?

processing side of A-paper financing for borrowAngeles. As a junior processor, I was exposed to Angeles and found that no matter how much

money someone has, the ability to qualify for a conventional loan was practically impossible.

Separately, I was always interested in real estate investment, so when the opportunity arose to

JH: When it comes to lenders, I think that the pri-

help start Civic Finan-

can obtain the lowest cost of capital. If you are a

I jumped all over it. I

vate money space will be dominated by whoever hard money lender and your funds are derived from a variety of investors (lawyers, doctors,

family, etc.) and your guaranteed return to those investors is anywhere north of 11 percent, I think that the days are numbered for those lenders.

Additionally, the Fed has established that they

will to continue to increase interest rates through

2017 which narrows the gap between convention-

JH: Again, the industry is shifting from a small

group of private lenders to a larger platform for Wall Street to deploy capital. To survive in the

near future, access to cheaper money has to be a priority for any private lending organization. PL: Now let’s turn to you. Tell us briefly

about your early years, schooling, career progression to this point.

onboarding new sales members for our offices in Los Angeles, Irvine, Boca Raton and Las Vegas.

Headquartered in Redondo Beach, California, my colleague Whit McCarthy and I are developing a

training program for junior account executives to try to harness some of the young graduates from schools like USC, UCLA, LMU and Pepperdine.

PL: What is it that you love about this business?

years until I assumed the role as Director of Sales

with my colleague Whit McCarthy in November 2016.


challenges ahead in private lending?

never ends. I am now tasked with hiring and

ecutive for two and a half

attractive when you compare the qualification

PL: How can one be best prepared for the

JH: My workday consists of responding to inquiries from our team of account executives, which

worked as an account ex-

PL: Where do you trace

and funding process for both products.

routine for you?

cial Services in 2014,

al financing and private lending. An increase of interest rates makes our products much more

PL: What is your workday like? Is there a “typical”

your interest in real

JH: My interest in real estate stemmed from my dad, who was a

commercial developer when I was growing up. He would show

me blueprints of the

new grocery stores that he was working on

and told me about his experiences visiting the sites.




JH: For me, whether it was on the sales side or

now in management, the best part of my day is

my time interacting with the people I work with.


A lot of what I do on a daily basis consists of

problem solving, so when an account executive,

processor or an underwriter come into my office with questions on the structure of a deal, I love

working with them to come up with a solution. PL: Are you hopeful, wary or dubious about the economic outlook in 2017 and why?

JH: While nothing is for certain, in any

industry, I personally believe the economic outlook for the real estate industry is

looking promising. While many are waiting to see what happens with the new political administration, there are many promising

signs for the real estate industry, especially in the United States.

Foreign investors are still looking to

purchase real estate, and with recent taxes

and penalties in cities such as Vancouver, the

U.S. real estate market is becoming more and more welcoming to foreign nationals. And

lending firms such as Civic are great resources for foreign nationals who want to take

advantage of financing on their investments. PL: Who do you see as the leaders in the industry?

JH: There are a number of companies in the industry that we view as competitors—and I say that in an endearing way. Lone Oak is

one company that we compete with when it

comes to our wholesale product and the battle for broker business. Additionally, Mark Filler and his team at Jordan Capital do a quality business throughout the United States.

PL: Who has had the greatest influence on your 26 PRIVATE LENDER

Jack Helfrich Director of Sales Civic Financial Services www.civicfs.com If I weren’t doing this… I would be studying astrophysics in my pursuit of being the first person on Mars. When was a kid… I dreamed of growing up to play professional baseball. In 10 years from now, I see myself… At Civic in an expanded role. I believe that there is a bright future here and a tremendous opportunity for the company and myself as an employee in the future. The one piece of technology I couldn’t live without… I recently bought an Amazon Echo, which has voice-activated commands like “play music,” “read me the news” and “order an Uber.” It’s awesome. I keep current by… Reading the news as much as possible. There are a variety of websites I use, but Business Insider is traditionally my “go-to.” To keep a healthy work/life balance… I enjoy surfing, running and playing volleyball with friends. I live in Hermosa Beach, California, so the beach is a big part of my life (on the weekends). Work never seems to end, so I try to take advantage of down time by staying active.

My favorite way to relax and refresh is… Going to the movies and having a good dinner has always been one of my favorite things to do. Three things I tell myself when the chips are down… 1. W  hat doesn’t kill you makes you stronger. 2. Trust your instincts. 3. D  on’t take life too seriously; you’ll never get out alive. The best advice I ever received… When I was 12 I was golfing with my grandfather in Naples, Florida. I was playing poorly, so naturally I was pouting and whining up and down the course. On the ninth hole he looked at me and said, “If you aren’t going to be any good, at least be fun to play with.”

••• life (professionally or personally) and why? JH: Professionally, I would say my dad has been the greatest influence on my life. When I first

had the idea of entering the real estate industry, my dad was the one who recommended

starting off in finance to better understand how

transactions are structured. He used to say, if you understand how real estate is financed, you can

then branch into any other facet of the business. The rest is history. My mom definitely influ-

enced me the most from a personal perspective. Her positivity and creativity are characteristics I try to emulate every day of my life.

PL: How important are mentors? Who have been some of yours and how have they helped you?

JH: Mentors have been, and continue to be

incredibly important for me and my growth in business. When it comes to mentors I

don’t have to look any further than within

the walls of our Wedgewood office. Gentleman such as Gary McCarthy, Greg Geiser

and Dave Wehrly have all found tremendous success in their line of work, but their work

JH: Professionally, my biggest accomplish-

JH: I would recommend identifying what

for Civic’s first funded loan. That milestone

working from the ground up. As a junior

ment to date was signing the loan documents marked the completion of a long and vigorous process of developing every single aspect of

Civic Financial Services, including our guide-

processor, I learned the organization of loan

files, which helped me when I transitioned to a salesman. Being a salesman helps me now

lines, loan docs, disclosures, logo, pricing ma-

as a sales manager. Don’t take any position

we realized that we were a legitimate company

rience you have.

trix, marketing materials, etc. In that moment, with tremendous potential.

PL: What is on your professional bucket list? What do you have yet to accomplish?

JH: There is one item on my bucket list: to fund

$100,000,000 in a single month. It was only two years ago that we were at a dive bar in El Se-

gundo, celebrating the first month Civic broke $5 million. We joked what it would be like to fund a billion dollars in a year or even $100

million in a month. Today, Civic funds over $50 million per month and we intend to break $1

billion (and the $100 million per month mark) in 2017, which would place Civic at the top of

the list of private money lenders in the country.

ethic and leadership are what I most admire.

PL: What are some important lessons you

PL: What are your guiding principles?

the industry and how have they helped,

JH: I am a firm believer in treating people

industry that you are interested in, then

have learned as you have progressed through shaped and influenced you?

for granted and try to learn from every expe-

PL: What changes do you see in store for this industry?

JH: When you take a look at the recent

reports done on the real estate industry and the fix-and-flip industry in particular, you see that the percentage of buyers utilizing

financing is increasing. This is an excellent

sign for lenders because investors are starting to become more comfortable with the idea

of debt again. An excellent statistic to show

this comes from RealtyTrac’s second-quarter

(2016) report for U.S. home flipping – it states

that 68.3 percent of flips were purchased with cash. This may sound like a very low amount for what is financed, but this is the least amount since Q2 of 2008.

There is also the issue of the market

becoming saturated with investors as more

and more “mom and pop” investors enter the industry. There were about 39,775 flippers in the market, according to the same report—

the way that you would want to be treated.

JH: I have learned to use people as informa-

person when communicating with borrowers

experienced veterans to the industry from

enter the market it will be harder to purchase

information as possible. By learning from

increase of demand. This is just something to

unique sales pitch to cater to all borrowers, no

en’t trying to make flipping into a career and

I think that mentality helped me as a sales

and brokers by putting myself in their shoes. Also, in the private money industry, we see a varying degree of fraud on a monthly basis.

Another principle that I have developed with borrowers is “trust, but verify.”

PL: What has been your biggest accomplishment to date?

tional resources. We have hired skilled and

the most since Q2 2007. As more investors

whom I have learned and absorbed as much

properties at steep discounts, due to the

their experiences, I was able to form my own

keep an eye on. As long as new investors ar-

matter the experience level.

only want to perform one or two a year, the

PL: What suggestions do you have for those just starting out on a similar career path?

market should experience the same steady growth as it has over the last few quarters without too much oversaturation. ■


Jon Hornik, Partner

MEET THE NATION’S GO TO ATTORNEY FOR PRIVATE LENDERS. With over 20 years experience in the private lending industry, Jon Hornik has earned the respect of both borrowers and lenders alike. Mr. Hornik currently represents and advises many nationwide private lenders. His expertise includes: Closing private money deals  Licensing requirements  Usury  Predatory lending Underwriting  Structuring  Private placements 732.409.1144 | www.lhrgb.com 28 PRIVATE LENDER


Ensuring Your Portfolio is Solid When assessing potential projects, it’s a good idea to run through a checklist of set procedures. by Robert “Bobby” Montagne


o lender wants to be left holding the note on a property that won’t sell or

has to be foreclosed upon. The goal of an

learn the building industry also can provide value-add opportunities for the borrower. When assessing potential projects to

decision about funding. What may seem like a fair amount of additional work up-front pays back many times over by helping you select

ethical and successful private lender is to

include in your portfolio, the idea of following

the best, most profitable deals.

builders, resulting in gains for both parties

on each investment holds significant merit. A

property and do so, to some degree, for each

evaluate the many important considerations

portant. Remember, it’s not only the horse that

build mutually profitable relationships with and, in turn, additional deals. Due diligence

before funding the deal is in both parties’ best interests. A private lender taking the time to

set procedures before deciding “yea” or “nay” detailed checklist helps you drill down and of the deal so you can make an educated

Many lenders are comfortable qualifying the

deal. But qualifying the borrower is just as imwins the race, but the jockey as well!



Qualify the Property A plethora of data for nearly every prop-

erty is readily available. The key to this abundance of data, however, is proper interpretation and extrapolation to gauge the viability and profitability of a potential deal.

Perform exhaustive property research The tried and true method of identifying

prospective properties is through a multiple listing service (MLS). An MLS listing offers hundreds of data points for nearly every

residential property, including sale history,

days on market (DOM), physical description,

data helps you gauge the appropriateness of

urban neighborhoods, are very specific about

on market. DOM data is especially valuable

allowed, how close to the property lines the

the proposed renovation and expected time

when determining the loan term and vitality of the submarket. You can further enhance the analysis by overlaying the CMA with

additional knowledge of the neighborhood, quality of other renovations and any other

You should know whether any taxes are

or title is unmarketable. Some sellers of

list-servs for current issues or problems.

ship and title issues, which are best discovered

Analyze results with an enhanced CMA

somewhat common, for a borrower and lend-

(CMA), which examines the sales statis-

tics for comparable properties in the same

ahead of time. It is less than ideal, though

er to spend a fair amount of time and money

property and see the neighborhood first-

hand. You might find that the MLS pictures are overly flattering or incomplete, or that

adjacent properties are dilapidated. Observing the property and its surroundings in

detail can give you a first-hand check of all of the MLS and CMA data and give you a true feel for the neighborhood.

without delay and additional expense.

be expensive, but it gives you greater assur-

ing that serious title issues cannot be resolved

neighborhood, the average days on market

planning even be done on the lot he wants


It is imperative to make site visits to the

Get Independent Appraisals

Check zoning regulations

and the quality and level of finishes. This

have rules about everything from paint col-

on a project, only to find out just before clos-

neighborhood. A CMA also enables you to analyze the velocity of trading in the

about homeowner’s associations—they often

Engage eyeballs

distressed properties have complicated owner-

a detailed comparative market analysis

before he buys the property. And don’t forget

Check existing liens or encumbrances: Tax and other public records are another important element of property research.

hood by checking local crime statistics and

You can then use the collected data to create

borrower understands these rules and ratios

ors to selection of materials.

owed on the property, encumbrances exist

Analyze results with an enhanced CMA:

addition can be, and so forth. Make sure your

adjustments that you feel are warranted.

lot size and nearby schools. You can obtain

even more information about the neighbor-

how much building per lot square foot is

Can the addition that your borrower is

to buy? Local zoning laws, especially in more

A full-blown third-party appraisal might

ance that the resulting price estimate ac-

counts for all significant factors. You can save money by settling for a simpler broker price opinion (BPO), but these are less intensive and detailed.

••• Qualify the Borrower The other half of the lending decision rests

on the profile of the buyer. In private money

lending, lenders often care more about the value of the property than the creditworthiness of the

borrower. That said, you may not want to lend to a person with, for example, no experience man-

aging a rehab and a checkered past. Trust is an

important consideration in any relationship, and

the lender-borrower relationship is no exception.

Responsiveness Does the potential borrower respond quickly

to your questions and your requests for infor-

mation? You shouldn’t have to chase material

information from the borrower. It’s your money, and even though the loan is collateralized,

you want to feel that the borrower understands

er has flipped and find out if there have been problems with the condition of the property.

Secret Sauce It’s very important to get to know your

borrowers face to face, establish a relation-

ship and form a solid human connection.

Some lenders never meet their borrowers,

which means they don’t get to evaluate first-

hand whether the borrower is someone they can trust. Look for traits that help achieve

success: organization, intelligence, responsibility, skill, empathy, maturity and honesty. In summary, many lenders know and follow

the steps just noted, but the real way to ensure

you are financing the right deal is to get to know your borrowers and establish trusted relation-

ships with them. This will help you to key in on

any red flags that could lead to potential defaults. In addition, a trusting relationship means you

can assist with problems sooner rather than later. In the long run, this will help encourage repeat borrowers, a win-win for all concerned. ■ ABOUT THE AUTHOR Robert “Bobby” Montagne is a real estate entrepreneur with three decades of experience in commercial and residential property development, finance and sales. Having successfully overseen $15 billion in career transactions, he is among an elite class of real estate innovators that have consistently delivered high-quality returns to partners and investors. A native of Fairfax, Virginia, Montagne earned a bachelor of science degree in economics with honors from George Mason University and a master of business administration from Virginia Tech.

your intense interest in the success of the deal.

Preparation Does the borrower have a realistic plan

and budget for improvements? You should be confident that the borrower’s scope of work represents the tasks that are necessary and

sufficient to achieve the target resale price.

History Notwithstanding the nature of a private

money loan, it’s wise to check the credit of bor-

rowers for past bankruptcies, foreclosures and

liens. Not necessarily a deal breaker, but a com-


pelling property in the hands of a questionable borrower may not make for a solid deal.

References Does the flipper/builder have a track record?

What do former lenders and associates have to say? The borrower may provide you with a list of references, but it behooves you to contact

others who are not on the list, if possible, and

see what they have to say. You can also contact

the owners or tenants of properties the borrowJANUARY/FEBRUARY 2017 31


Tearing Down Barriers How the JOBS Act opens deal flow for nonaccredited investors.

it will continue

• Net worth of $1 million or more, excluding the investor’s primary residence

Unaccredited investors—those who don’t

meet the above criteria—were excluded from making equity investments into privately

by Jason Fritton

traded companies.

According to the SEC, about 10 percent

of the population, or about 12.4 million

households, qualify as accredited investors, although others contend the number is far

lower. This means that the vast majority of ordinary citizens were effectively excluded from investing in equity crowdfunding.

But crowdfunding has since evolved from

when it was first introduced in the United

States over a decade ago. With the introduction of Title III, more investors can enter the market for raising capital. And with only a

small portion of accredited investors actively investing in equity shares of private compa-

nies, the JOBS Act is viewed as good for both investors and entrepreneurs.


From Wall Street to Main Street n historic fashion, investing opportuni-

nonaccredited investors—known as Title III (Reg-

Individuals of modest means now have more

ulation CF)—became effective on May 16, 2016.

freedom to participate in investment options that

crowdfunding rules from the Securities and

credited investors, Title III gives small businesses

limitations on nonaccredited investors prior to

Besides opening up a whole new world to

raising capital and takes a seat among other ini-

often $100 to $500, investors can now put their

bootstrapping, friends and family, angel investors

ise to be the next Google, Apple or Facebook.

ties for ordinary Americans took on new

meaning in the spring of 2016 when equity Exchange Commission took effect.

nonaccredited investors, Title III of the JOBS Act (Regulation CF) expanded options for entre-

preneurs to seek out everyday investors to raise capital and grow their companies via online

By opening up equity crowdfunding to nonac-

and early stage startups an alternative method of

this new legislation. With as little as $10, but more

tial capital-raise scenarios that typically include

money into a startup that they believe has prom-

and small business loans.

Until these changes, the sale of securities in

crowdfunding platforms.

private companies were typically only accessible

designed to help small businesses raise capital

in equity crowdfunding, an individual had to

The Jumpstart Our Business Startups Act was

by easing certain securities regulations, and

although the legislation was signed in 2012, it

required the SEC to write new rules. The equity crowdfunding portion of the act that applies to 32 PRIVATE LENDER

weren’t available to them before due to previous

to accredited investors. This meant that to invest have one of the following:

• Annual income of $200,000 a year for the past two years (or a household annual in-

come of $300,000) with the expectation that

But this still isn’t an “anything goes” market-

place. The SEC placed limits on nonaccredited

investors in order to build safety and soundness into this new equity crowdfunding option:

• If a nonaccredited investor has an annual

income or net worth of less than $100,000, then the investor can invest the greater of

$2,000 or 5 percent of the lesser of his or her

annual income or net worth.

• If the investor has more than $100,000, then

the investor can invest 10 percent of the lesser of his or her annual income or net worth.

These limits are designed to provide import-

ant protections to ordinary investors while still opening up an avenue for small businesses to raise capital via online crowdfunding.

Nonaccredited investors are protected in other

decided to give it a try. It will take some time to see if its popularity wanes or grows.

The crowdfunding platforms offering the se-

lates into 46 successful offerings on WeFunder that have met minimum fundraising goals.

StartEngine and NextSeed are the No. 2 and

curities also have a number of requirements they

No. 3 platforms for Reg CF offerings to date,

risk of fraud on their sites, providing educational

statistics. Together, they’ve funded 16 compa-

must meet, such as taking measures to reduce the materials to shareholders and meeting require-

ments for handling investor funds, among others. There’s plenty to like about the new rules. The

based on funds raised, according WeFunder’s nies. SeedInvest, FlashFunders and Republic also are offering CF offerings.

Indiegogo, a well-known rewards-based

ways as well. The act requires that the sale of

use of an online platform can translate into a way

crowdfunder, is the most recent entrant. It created

third-party intermediary registered with the

ing it relatively easy for everyday investors to buy

investment bank and equity crowdfunder for

securities occur through a funding portal—a SEC and FINRA. The intermediary acts as a first line of defense against fraud by conducting due

diligence on issuers and curating the campaigns accepted onto its platform.

Investing in startups and small business

is still a risky proposition, one in which the

to raise money quickly and efficiently while makshares. Businesses raising money this way aren’t prohibited from simultaneously raising money other ways. So a startup could use the crowd to raise $1 million while simultaneously funding through other forms of debt or equity.

The investors who invest in a particular

a joint venture with MicroVentures, an online

accredited investors, to initiate an equity crowd-

funding portal. The venture launched with four Reg CF offerings Nov. 15, 2016, and as of Jan. 13,

2017, had already provided more than $1 million via equity crowdfunding.

investor could lose the entire investment or

company via equity crowdfunding are likely

An imperfect option

for many years. On the flip side, high risk can

shareholders these investors are vested in see-

III, there are also a few drawbacks.

one in which there may not be an exit option also mean high reward.

What the Title III means for entrepreneurs The philosophy behind the crowdfunding

portion of the JOBS Act is that access to capital

creates jobs and economic growth, and now busi-

nesses have a new way to access to capital that they didn’t have available previously.

With this new opportunity, a company can

raise a maximum aggregate amount of $1

million through crowdfunding offerings in a

to become company cheerleaders because as

ing the company succeed. Equity crowdfunder

While there are plenty of advantages to Title Legal fees and other fees, such as account-

SeedInvest views it this way: “More investors

ing or potential audit fees, may be an issue

gives a company the ability to turn its users into

quirements may be viewed as cumbersome for

means more supporters. A Reg CF campaign

brand evangelists with a vested interest in the future of that company.”

Reporting requirements give startups and

investors an open, transparent and struc-

tured dialogue to report and get feedback, SeedInvest notes.

for small startups. In addition, reporting re-

small companies that have to report annually

to the SEC and have to post information about their equity raise on their websites.

Companies can only raise a maximum of

$1 million over a 12-month period, and some

businesses will decide that amount is too small to be worth the costs and time involved to engage in equity crowdfunding.

12-month period. The aggregate amount of

Crowdfunding platforms give Title III a try

funding offerings during a 12-month period,

funding under Title III (Regulation CF) rules.

months before final Title III rules were imple-

platform had funded $19.3 million in Reg CF of-

the funding limit from $1 million to $5 million.

securities sold to an investor through all crowdmeanwhile, may not exceed $100,000.

It should also be noted that there are a

number of hoops to jump through, so whether companies will raise financing using Title III in a significant way still remains to be seen,

although early dozens of early adopters have

WeFunder has led the way on equity crowd-

TechCrunch notes that a “Fix Crowdfunding

Act” was introduced in March 2016, a couple of

As of Jan. 13, 2017, investors on the WeFunder

mented. Among its fixes is a proposal to raise

ferings that have reached their minimum funding

Although the legislation passed the House in July,

target. WeFunder says its fundings account for

about 66 percent of the entire universe of Reg CF investment filings. Said another way, that trans-

it has never been taken up by the Senate. With a

new administration taking over, the future of this legislation to adjust the act is uncertain.



OneVest co-founder and executive chair-

man Alejandro Cremades published an open letter last May, right before Title III became effective, criticizing the structure and requirements under Title III.

“Nowadays startups on average raise, at a seed

stage, in the neighborhood of $2 million-plus. The fact that startups will have a limit of $1

••• fund Insider, which said founder Eve Picker is

targeting “transformational” real estate projects

by connecting developers and investors. As of Jan. 13, 2017, no investment options for nonaccredited investors were listed on the website, which also

offers deals to accredited investors, but there was a “coming soon” sign for such an offering.

The way that Title III is currently written

million per year will either force them to be un-

does not make real estate crowdfunding a very

in parallel to raise the remaining capital from

with some mechanisms in place to protect the

dercapitalized or conduct another type of offering accredited investors, which means more costs

from a legal perspective,” Cremades said in his letter, published on Crowdfund Insider.

“Moreover, it is a mistake that startups need

to take on upfront costs of up to $50,000 to

conduct financial audits before fundraising

and before even knowing if they would raise

any financing at all. It is a significant upfront

risk. Plus, let’s say the startups does raise capital via Title III, they will be forced to report to

the SEC on a periodic basis, which is certainly not going to be just sending them an email

with a brief update on the business. Lawyers will need to be involved and that will cost

money, on an ongoing basis,” Cremades wrote. Funding raising limits and costs are certain

to be impediments for some entrepreneurs, but with just a handful of months with the rules in

place, we’ve seen fairly robust activity on multiple crowdfunding platforms.

New options for real estate crowdfunders? To date, there hasn’t been a big rush

related to real estate in this new space, but we expect some interest to develop. A real estate developer or real estate investor could make a significant purchase with $1 million raised through equity crowdfunding.

FINRA approved Small Change as a Reg CF

funding portal last fall, according to Crowd34 PRIVATE LENDER

feasible option for nonaccredited investors. Even investor, real estate loans can be complex and

hard to evaluate —it’s not as simple as putting

your money in and getting it back out. While we here at Patch of Land applaud the expansion of the JOBS Act, in the interest of the investor, we

will be staying with Title II and maintain that our investors must be accredited. ■ ABOUT THE AUTHOR Jason Fritton, co-founder and executive chairman of Patch of Land, sets the company’s vision and leads efforts to accomplish the team’s mission of building wealth and growing communities. Fritton launched Patch of Land when the SEC implemented Title II of the JOBS Act in 2013 based on his vision to evolve real estate financing to be tech-enabled, data-decisioned and easily accessible to a marketplace of borrowers and investors. He has decades of experience managing and growing startup companies. Prior to Patch of Land, Fritton founded and developed a telecommunications design and procurement firm active in the public sector. Previously he served as director of digital marketing for a national retailer. Additionally he founded and developed several technology-based startups, including Startingline Networks, Tech@Cost and Virtual Realties. He studied biology at Cornell College.




Maintaining Accountability Instilling ethics and ensuring adherence to high standards of practice is at AAPL’s core. by Susan Thomas Springer


xactly what are great ethics? Since the American Association

of Private Lenders began in 2009, the association has been com-

mitted to a professional code of principles and standards. The Code

of Ethics was written to inspire members and to help them make fair and responsible decisions. AAPL members agree to the Code, which

includes abiding by the laws, not discriminating, truthful advertising and being honest.

The Ethics Advisory Committee helps put those goals into action

on a day-to-day basis. There are currently five volunteer members. Here they each share how the EAC functions.




The Ethics Advisory Committee is an unbiased, mediating

body consisting of five current members of AAPL who are

appointed to two-year terms. The Ethics Advisory Committee

is responsible for administering and enforcing the AAPL Code of Ethics. Should a complaint be filed, either electronically or by mail, alleging a violation of the Code, the complaint

adjudication process will begin. Individuals accused of violat-

ing the Code are given the opportunity to respond to claims

against them. Respondents can seek further review of, and also appeal, adverse decisions. The Committee considers evidence Ethics Committee members at play (front to back): Susan Naftulin, Nema Daghbandan, Kellen Jones, Mike Hanna and Jeffrey Tesch.


AAPL is uniquely positioned. There are no other large scale

national associations focused on this particular niche of lending.

provided by both the complainants and respondents to reach its decision. There are two outcomes to this process. The first

outcome is to find there is insufficient evidence to support the

claim that a Code violation has occurred. Both the respondent and complainant are notified that this is the Committee’s final decision, and the case is closed. The second outcome is that the individual is found in violation of the Code, the details

of which will be specified by the Committee, which then will

To a great degree, this area is mostly unregulated, as business

determine a sanction.

Lending Act, Real Estate Settlement Procedures Act and most

is provided by both sides of the complaint. The adjudication

ed environment, it is imperative that lenders in the space act

process. The right to due process is so important to the Committee

the eye of federal and state regulators. In the last few years we

respondent the ability to know who the complaint is coming from

purpose loans are exempt from regulations under the Truth in

The Committee works most effectively when sufficient evidence

state lending regulations. In order to maintain a less regulat-

process has been designed to ensure fairness and allow for due

ethically—not only because it’s good business, but to stay out of

that anonymous complaints will not be accepted. This gives the

have seen a dramatic expansion of federal lending regulations

in the event that the complainant is biased or submitting frivolous

promulgated through Dodd-Frank. For now, the regulations mostly leave private lenders alone, but one large bad

apple (excuse the bad pun), could bring a storm of regulations to a mostly unregulated world.

NEMA DAGHBANDAN Geraci Law Firm, Partner Irvine, California


or malicious accusations. It also makes it easier for the Committee to determine the credibility of the evidence being presented when the source of that evidence is known.

JEFFREY TESCH RCN Capital, Managing Director South Windsor, Connecticut

Ethics Committee members, from left: Nema Daghbandan, Kellen Jones, Susan Naftulin, Mike Hanna and Jeffrey Tesch.


participates in, and apprise the Association’s leadership of trends, observations and notable highlights.

The Ethics Advisory Committee operates as a board made of

industry and Association-appointed volunteers. The board does its best to formally meet by telephone as often as possible to

discuss the affairs of the Association and the industries it serves,


with particular emphasis on ethics and governance. In addition

Cache Private Capital,

claim, the Committee is working to improve its operations by

Sandy, Utah

to perfunctory tasks and occasional responses to a complaint or

Chief Operations Officer

codifying industry subjects and streamlining processes. The Com-

mittee strives to create content, prepare for the various panels it




Two years ago the Ethics Advisory Committee was

tasked to establish a Code of Ethics that would be

followed by all members of AAPL, along with a process for filing a complaint with the committee for any code

violation. The committee worked together over the next

several months to define both the Code of Ethics and the complaint process, and get them published on the AAPL


customers, but should be expanded to include the ethics requirements and responsibilities of a private lender to its investors and other sources of capital.

SUSAN B. NAFTULIN Rehab Financial Group, President & Chief Operating Officer Rosemont, Pennsylvania

website. To further disseminate this information to the members, the Ethics Advisory Committee presents the


ence breakout sessions. Questions

Susan Thomas Springer is an Oregon-based freelance writer with a background in banking. Contact her at susan@susantspringer.com.

Code of Ethics during the AAPL Conferrelated to the Code of Ethics were also incorporated in the Certified Private Lender exam.

MIKE HANNA Investmark Mortgage, Owner & Principal Addison, Texas

WHAT ARE THE ETHICS ADVISORY COMMITTEE’S MAIN CHALLENGES? In 2017, we hope to continue to contribute to the growth

of AAPL and work within the membership to continually

stress the importance of acting well within the law and with ethics and transparency in order to maintain the privi-

leged position private lenders currently enjoy as being

relatively unregulated. In

addition, the current AAPL

Code of Ethics primarily

focuses on a lender’s respon-

sibility to other lenders and its


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Welcome Relief Regulation A revamp has increased its viability for more capital-seeking companies. by Kevin Kim


egulation A was established by the

Securities Act of 1933, but its restrictive

$5 million offering limit, coupled with exorbi-

tant compliance prices, made this exemption

financially impracticable for a significant por-

tion of capital-seeking corporations. However, new alterations have increased the viability of Regulation A by increasing the offering limit and implementing additional changes that

make it more appealing for certain companies. The updated exemption, also known as

Regulation A Plus (Reg A+), features a bifur-

cated securities framework about equity, debt and convertible debt securities. Tier 1 offer-

ings have an annual limit of $20 million, while Tier 2 offerings have a $50 million cap.

These two classifications share several

regulatory characteristics. The offerings are restricted to only American and Canadian

companies or start-ups with approved business plans. Investment businesses required

registering under the Investment Company

Act of 1940 or reporting to the SEC, business

development organizations, with blank check companies being excluded from using Regulation A Plus.

No ‘Bad Actors’ Allowed Additionally, any organization whose

executive staff previously engaged in certain fraudulent activity are considered “bad

actors” and are prohibited from using Regu-

lation A. Potential issuers must also remain 42 PRIVATE LENDER



compliant and up-to-date with all applicable

unlimited number of private offerings and

maximums. All investors, regardless of ac-

Companies seeking either tier offering are

following the official filing of the offering

1 offerings. With the exception of securities

anti-fraud and security provisions.

also required to declare an offering statement on Form 1-A before selling any securities. Offering

general public solicitation either before or statement, as long as any resources used after filing have attached preliminary offering cir-

statements consist of an offering circular, which

culars or similar notices providing potential

and additional information that only needs to

circulars. Securities garnered via Regulation

is shared with investors, and specific exhibits

be filed with the SEC. Furthermore, Form 1-A

mandates, among other items, an overview of

the business and its utilization of proceeds, associated risks, financial standing, personnel bios and disclosure of executive salaries.

Regulation A allows for general solicita-

tions and marketing practices, permitting an 44 PRIVATE LENDER

investors a means to obtain updated offering A are not considered restricted securities and

creditation status, may take advantage of Tier to be listed on a national securities exchange,

Tier 2 is only available to accredited investors

or buyers whose investments do not exceed 10

percent of their annual income or net worth— whichever is greater.

Tier 2 offering statements must incorpo-

thus freely tradable.

rate audited financial statements but are

Tier 1 and Tier 2 Differences Explained

whereas Tier 1 offering statements allow un-

Tier 1 and Tier 2 offerings differ in some key

aspects in addition to their associated offering

not required to be qualified under state law,

audited financial documents but must either be qualified or exempt from qualification

under relevant state legislation. Furthermore,

••• Tier 2 companies must provide audited an-

than their SEC qualified minimum amounts,

nual, semiannual and current event updates

demonstrating exceptional market interest.

qualified offerings, the only filing requirement

JOBS Act was implemented, the amended

to the SEC. For those Tier 1 issuers with SEC

Since June 2015, when Title IV of the

is exit reports submitted within 30 days of an

exemption has provided the opportunity for

While the Reg A market is in its relative

ticipate in qualified offerings from U.S.- and

offering’s expiration date.

infancy, it continues to grow exponentially. Just within the last few months, the SEC

Qualified 12 new companies for offerings. That brings the total to 74 businesses that

qualified in 2016, for a total scheduled $1.6 billion in capital raise, with the number

of approvals projected to increase over the next several months. It is estimated that 11

companies have already raised more money

non-accredited investors worldwide to par-

Canada-based companies. While the rules are designed to allow more mid-size or late start-

ups to raise capital across a wide-range of the

companies recently approved for A+ offerings, many are mature and a more suitable option

for this type of capital raise. With safeguards

in place and a strong group of newly approved Reg A+ offerings, building consumer confi-

dence and interest in this type of investment is

showing to be a roaring success. ■ ABOUT THE AUTHOR Kevin Kim is an experienced corporate and securities law attorney and Senior Associate with the Geraci Law Firm, a law firm dedicated to providing reliable and innovative legal solutions. Kim focuses his practice on real estate matters, specializing in private placements and other alternative investments for private lenders, real estate developers and other real estate entrepreneurs. His work includes ensuring clients are compliant with the applicable securities laws, structuring strategic partnerships and creating innovative solutions. Kim’s securities and corporate practice also includes preparing complex private and public securities offerings for alternative investment platforms for clients throughout the United States and abroad.

Contact Tom Schmidt at 785-889-1300 or thomas.schmidt@mainstartrust.com to discuss your IRA custody needs.




HARD MONEY Meet Leonard Rosen, the CEO of Pitbull Conference as well as several other leading experts in the private lending industry this coming March in Scottsdale.


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The Future of Leadership Winning organizations don’t just make accountability a priority, they make it a way of life. by Chrissey Breault


hroughout the last decade there was a considerable investment made in

Flexibility and Agility A research study from the Institute of

executive training. A poll conducted by

Leadership and Management suggests the

70 percent of Americans considers leader-

leaders will be flexibility. For future success,

researchers from Harvard University showed

leadership practices are adapted to the transforming context and carried out successfully.

single most important feature of future

Going Global

managers will need to become more agile,

simple idea but a fact. In an increasingly

generated by changing workplaces.

ganization of almost any size. Businesses will

many leadership development programs

to cultural and technological changes that will

side their home markets or are part of a team

What will be the future of leadership?

job will be to ensure key management and

ship crisis a significant factor in the national economic decline. This is a very confusing

situation – on the one hand, we see a rising demand for leadership skills; on the other,

seem to fail to deliver their promised results.

responsive and adaptable to different needs Those managers will also need to be open

impact the core of enterprise operations. Their

Business globalization is no longer a

globalized world, it is still an issue for an or-

become aware that leaders who operate outthat stretches beyond borders require a host

of specific skills – from coping with ambiguJANUARY/FEBRUARY 2017 47


ity to having effective interactions or making decisions in unfamiliar environments. All those become increasingly challenging in new surroundings.

Increased Demand for Core Competencies A report published by the Institute of

Leadership and Management unveils another important future leadership trend to be an increase of interest in core skills such as

motivating direct reports, communicating

effectively, setting goals and delegating tasks. The changing settings are likely to impact

the performance of those core tasks – manag-

ers will be operating with less time on their

hands and in a much more complex working environment. In short, basic management tasks will become increasingly difficult to

perform and managers might require additional training to help them adapt.

Sustainability The U.S. Human Capital Effectiveness Re-

port from PricewaterhouseCoopers suggests that next to agility and talent, one of the

most important values in future leadership

al has been trying to tell you?

see collective leadership styles flourish all

of demonstrating social responsibility by

Collective Leadership

require a radical transition in thinking.

concern for the greater good.

collective leadership. It’s likely in a few years

mental issues – focusing on sustainability,

a brand-new form of leadership that will

term consequences of their decisions relating

new working environments, where adaptive

ing place in the leadership sector – the arrival

safety. Social responsibility will become em-

al but by a group of people.

Companies will need to learn how to mitigate

will be increasingly responsible for deliver-

ing this leadership style to drive innovation,

the workforce and business climate. Maybe

by an entire social network. Once Millenni-

will be sustainability, understood in terms

balancing achievable business results with a Sustainability is much more than environ-

managers will be looking toward the longto the environment but also to health and

bedded in business processes and managers

Another strong trend for the future is

we won’t see any heroic leaders anymore but

Generational Difference Management

perfectly match the requirements posed by

a major generational transformation that is tak-

challenges cannot be tackled by an individuMany organizations are already embrac-

ing insights about how their decisions impact

which is understood as a process initiated

this is something your marketing profession-

als take hold of leadership positions, you’ll


over the place – but this new approach will

Finally, trend-watchers are acknowledging

of Millennials on the global leadership scene. the generational differences, which are guar-

anteed once Millennials get hold of executive jobs. Companies will also have to develop a

host of new strategies to make the most from the unique qualities of this generation.

Millennials are generally considered team

players and high achievers. They’re indepen-

their commitments and expect managers to follow up on actions promised with them-

dent but tend to follow rules. They’re confident

selves, colleagues and customers.

innovation is their natural world. All this can

Making Accountability Work

but they also trust authority. Technological

be expected to impact their leadership styles.

The Future of Leadership All-in-all, leadership is destined to change

radically. With many leaders feeling unpre-

pared for the economy around them, leadership development programs should flourish

and strive to provide training aimed at developing skills for addressing problems arising from globalization and current leadership gaps.

Expect to see more management policies

When attempting to restore or enhance

accountability, most leaders mistakenly start by defining the tasks people need to be held

accountable for. Instead, the first step should always be defining (with specificity) the

expectations for individuals, teams and the

company. This requires defining the target or

objective so clearly it minimizes the interpre-

tation of the outcome or result.

Start by defining the desired outcome or

result as clearly as possible. • What does your organization’s destination need to be?

• Where are you going and what will it look like when you get there (defined in ways

that matter and mean something to everyone – well beyond just the financials)?

• Get your team focused on achieving the right outcomes and using their brains to ponder, explore and determine the necessary actions or tasks.

Next, decide who will do what, by when,

promoting sustainability and witness a transition from the repressive, control-and-command management style to its democratic

assortment. When it comes to leadership of the future, we’ll finally see its human face

working as a growing factor in business success by many (global) brands.

In a more democratic workplace, how do you

build policies that help build real accountability? In a global economy, it is increasingly more

important to understand the wants and needs of those we serve; that is, the internal and external stakeholders. Having awareness of this means leaders must be able to shape the culture of

their organizations to address changing needs. Accountability is a word that gets tossed

around a lot in many organizations. Unfortunately, the reasons typically evolve around the lack of

accountability rather than how an organization is winning by holding each other accountable.

At the organizational level, accountability

is all about creating a culture where the right things get done, on time, consistently. In

cultures with real accountability, people say

they’re going to get something done and they do. Employees expect each other to uphold



••• which frequently results in a negative outcome.

with what resources. As a leader, you should

No Secrets!

to winning as a company or a team?” Make

– either on purpose or by default – does not

er than different interpretations of it.

significant initiative or task. Even when a team

clarify and constantly communicate it, so peo-

culture of accountability. The difference is,

question yourself, “How does this get us closer sure someone has clear ownership of every

Keeping your definition of winning a secret

support a culture of accountability. Instead,

is involved, you still need one person to be in-

ple never lose sight of it. Make it visual, make it

line of sight, peer pressure and follow-up.

toward the destination. This ignites the com-

dividually accountable to create the necessary When identifying the target, clarify the cur-

rent state as well as the end state, as this creates a critical baseline that enables measurement of progress or achievement of milestones. Then

transparent and regularly post progress made

petitive spirit and desire to win in most people. And it is one of the fastest ways to prompt brains to think about something.

Finally, measure results using both qualita-

assign the necessary resources to get it done.

tive and quantitative data. This helps to lessen

Closing the Accountability Disconnects

It also helps minimize employees going rogue,

uncertainty while keeping focused and engaged.

Providing ongoing feedback reflects reality rathEvery successful organization wants a

winning organizations don’t just make accountability a priority, they make it a way of life. ■ ABOUT THE AUTHOR Chrissey Breault is a Pittsburgh native and hospitality major, Chrissey started a part-time photography and design business in 2009, while working full-time in local government communications. She is currently Director of Marketing and Education Services with the American Association of Private Lenders.

One of the biggest disconnects in ac-

countability management involves assigning

resources and responsibilities when you don’t have clarity around the outcome. Without

carefully assessing the gap between where you are now and where you want to go, it’s impos-

sible to accurately allocate the right amount of time, money and resources to get things done.

Capital Provider for Private Lenders

When the outcome isn’t clear, organizations often discount what it will take to get there.

When things don’t go as planned, they tend to give up, stop following up and start behaving in a manner adverse to accountability.

Accountability also requires ongoing feedback.

Employees need to hear what they’re doing well,

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not so well and how they can improve. This rarely

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Make the Most of Your Marketing in 2017 Whatever strategy you choose, do it with purpose, track it and make your decisions based on your data. by Elizabeth Morales


ith so many new marketing trends

taking place these days, how do you

Maybe you are doing great by attending

tradeshows, but your social media is neglect-

• Price: What does the market say about it? • Promotion: How, when and where can

go about choosing the ones for your business?

ed. Maybe your email marketing is doing

does that mean? It means you need to be

and few between—or totally nonexistent.

A Web ‘Identity’

good old “4 Ps:”

plete strangers and their five yellow stars, it is

Pick what makes sense. But what exactly

tracking every penny spent in marketing

and figuring out where your biggest ROI has been. Continue to invest in that which has

great, but your customer experiences are far Perhaps it’s time to go back and revisit the

given you the greatest returns, and see where

• Product/Service: How does your prod-

plan of action for them.

• Place: How can buyers find you?

your weak points are to further develop a


you reach your audience?

uct/service solve a client’s problem?

Since we live in an era where we trust com-

imperative that you have a web presence and,

within it, a way for people to see who you are.

Sure, it is great to have an engaging website,

but how about a place where people can read

testimonials from some of your customers?

cautionary step on your part.)

you have (with their permission), or you can sign up with a customers’ review company

2. Be sure you know where every email address in your database came from.

such as TrustPilot.com or Bazaarvoice.com.

These companies contact customers on your behalf and authenticate the reviews. The

catch is, if someone leaves a bad review of

your company/service, there is no way to bring

3. Make sure you have permission to send emails to these addresses. The best way to accomplish the third item

is to obtain emails by having people text a


company, and getting a response with a

number you get from your email servicing

If email marketing is the piece you have

request to put in their email address. This

this is one that is fairly inexpensive—rang-

of getting emails, but instead it is all done

depending on number of email addresses

proof there is: the person actually requested

been neglecting in your marketing plan,

way you never get involved in a “paper way”

ing from free to less than $200 per month,

electronically and you have the greatest

you have and number of emails you send on

to be part of your email list.

a monthly basis.

Among the most well-known companies

What if you haven’t yet started with vid-

your email, who clicked on what link, who

to create an inexpensive, professional video

leted your email before opening it and, finally, who reported you as spam.

One spam report for every 1,000 emails

sent does not raise a red flag. Anything above

company such as KillerExplainerVideo.com about your company/service. Why are they

so affordable? Because they use templates— hundreds of them, so you have plenty from which to choose.

If you wanted to pay for your own video

that will and may cause these companies to

and not choose from a template bank, it

very cautious of their own reputation with

for a 60- to 90-second video. Some of the

drop you as a customer, as they are always

the federal government. If any of these companies is seen to be sending spam email, it can get shut down.

There are three ways to avoid having your

company dropped from an email service

company for too many spam reports (that means someone clicks on “Spam” at the bottom of your email):

1. Do not buy email lists. (This is a good,

send out. Your response rate will increase because people are more inclined to respond to a personalized video than to a simple email.

But why video all together? Here are some

statistics that may surprise you. According to HubSpot:

• “Real estate listings that include a video receive 403 percent more inquiries than those without.”

• “50 percent of executives look for more

information after seeing a product/ser-

Video eos? Then do it now! Don’t know how? Get a

never received your email and why, who de-

hearing back from them. You can use Bomb-

vice in a video.”

and InfusionSoft.com. These companies will

do a great job giving you data on who opened

clients or contact prospects if you are not

Bomb.com and make a video of yourself to

it down. Once a review is up, it is up forever.

are Mailchimp.com, ConstantContact.com

On the same topic, a different kind of

video you can use is one to respond to your

You can do that yourself, by posting the ones

could cost you anywhere from $500 to $5,000 companies to keep in mind are ExplendidVideos.com or VideoZeeInc.com.

Remember, these last two are if you want

• “59 percent of executives would rather watch a video than read text.”

• “More video content is uploaded in 30 days than all three major U.S. T.V. net-

works combined have created in 30 years.” Any questions still on the need and benefit

for videos on your site? The data is clear.

Social Media If social media is your neglected piece,

become active on LinkedIn and Facebook, to begin with.

You will get a lot out of your interactions

to give the idea and have the video company

on LinkedIn. The idea is to keep yourself

writers produce a script, have the creative

product/service, they will think of you be-

review and suggest new things, have their

active so when people have a need for your

team sketch the video, get a person to do

cause you are present in their minds through

you. Sure, it will be more money but it will

relevant and informative. People are very

voice work, and finally get it approved by be totally unique to your company.

your postings. Make sure your postings are choosy with what they read these days.



Do the same on Facebook on your person-

al page to promote yourself and also open

a Facebook Business page to promote your

business. You can try doing some Facebook advertising and see how it goes. The trend

has been that it works great on B2C and not so much for B2B.

You will not be doing much Instagram or

Snapchat unless your audience is Generation

••• that information. Don’t make a big pitch

about your service, but instead show people the value in knowing you and sitting down


higher engagement.

Elizabeth Morales is the Business Development Director for Applied Business Software, makers of The Mortgage Office, a leader in private lending loan servicing software. She 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; handles media, public relations and brand management for ABS; and is a strategic planner and forward thinker. Morales has a Bachelor of Arts degree in Spanish Literature and a Masters degree in Business Administration. You can contact her at elizabeth@absnetwork.com.

the more attendees you will have and the

Blogs Apply this rule to blogging as well. If you

can only do one thing in 2017, blog. It keeps

thinking about it.

keeps you at the forefront of your business.

Website What is better than a cool-looking

website? An interactive website. Yes! A big trend coming up in 2017 will be interactive

websites. This contributes to the experience your visitor has on your site, (the visitor ex-

perience being one of the key factors search engines look at when determining your

organic rank position). It sends the message that you appreciate their visiting your page and really care about their opinion. Make

their comments untraceable so people feel comfortable leaving you their feedback.

Live Interaction Along the interactive experience, if you are

at a tradeshow or anywhere where you would like to get live audience participation, you

can use PollEverywhere.com. Your answers

will be displayed immediately on the screen. This beats the good old “raise your hand if …” question.

Webinars Webinars are still a way to get your mes-

sage to a lot of people at the same time. Make sure your webinars provide rich content for the folks attending. Figure out what your

prospects want to know from you and share 54 PRIVATE LENDER

make your decisions based on your data. ■

for your webinars. The better the content,

Z (13- to 24-year-olds). However, if not now, they will be 5 to 10 years from now, so start

this 2017, do it with purpose, track it and

your content fresh, it is great for SEO, and it One of your main goals should be to estab-

lish yourself as an industry leader. Blog away. Whatever you chose to do for marketing



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The Crowdfunding Advantage If you want your money to work for you, this is a great way to get started. by Allen Shayanfekr


nvesting your money is a challenge. You’re tying up your funds for quite some time,

letting someone else have access to them,

while you twiddle your thumbs and wait for the magic moment when you’ll have that

construction project. For renovation and

ground-up projects, you’ll see real progress being made to increase the value of each project selected by you, the investor.

money back again. Whether you’re investing

Low Investment Minimums

hoped, ultimately have plenty of money for

getting started, you’ll rest easier knowing

move forward with some other major event in

of these companies for as little as $1000.

money to help improve your profits and, it is retirement, to fund a child’s education, or to

your life, you need to know that your money is going to work for you. Ideally, you want to get it started fast so that you can see substantial gains in your portfolio as soon as possible.

Real Estate Crowdfunding as a Passive Investment Option Often with projected double-digit net

return on each investment, you have the

If you’re feeling a little uncertain about

you can get in on the ground floor with many That means that you can take a chance with a minimal amount of money to get started,

then increase your investments as you learn how effective real estate crowdfunding can be. Of course, the more you have to invest,

the more you stand to make. That initial step into a new investment strategy, however, can

be a difficult one. Knowing that you can start small and work your way up helps you take

chance to see investment results that you’ll

the first step more easily.

especially true if you diversify your portfo-

Low Risk Alternative Investments

ments mature at staggered times throughout

choose from a variety of projects or focus on

you, real estate crowdfunding is a great way

needs. As an investor, you can decide how

love with real estate crowdfunding. This is lio and arrange things so that your invest-

the year. If you want your money to work for to get that started.

When you work with a company like

Sharestates.com, you have the option to

Real estate crowdfunding allows you to

one, depending on your current investment

much risk you’re comfortable taking at each financial level. Some investors prefer to stay

with locations with which they are very famil-

choose the exact investment you’d like.

iar, while others look for the economics in the

drive down the road where the properties are

investors can be certain the company has tak-

These are real, tangible assets. If you were to located, you would be able to see a building and/or possibly a renovation or ground-up

deal. Either way, at Sharestates, for instance,

en a deep dive into the underwriting, making sure the risk is as minimal as possible.



Monthly Returns for Real Estate Crowdfunding Investors For monthly cash flowing projects, inves-

reward. There are opportunities that offer a

charges a small fee to the sponsor as well as

ments with a balloon/profit share at the end

ty offering. This is how Sharestates comes up

hybrid of debt and equity--monthly pay-

tors will see their distributions arrive into

of term, along with the return of principal.

tion of the investment. For equity projects,

the risk for each project. Depending on over

at the end of term--making the investment

sor’s track record, a grade is determined that

their accounts once a month for the dura-

Sharestates uses a grading system to assess

to the investor for servicing the loan or equiwith its projected double-digit net returns.

interest and principal are generally paid back

30 variables including the LTV and spon-

Transparency of Real Estate Crowdfunding Platforms

riskier with the potential for a much higher

equates to an interest rate. Then, Sharestates

a company like Sharestates, you can avoid


Through real estate crowdfunding with

••• many of the headaches and non-transparen-

crowdfunding, you can start small or go

project worth investing in. ■

your own. They make it easy to start building

Sharestates, there’s no effort involved for


cies that come with investing in real estate on your real estate investment portfolio. Even better, the associated risks have already been figured

out. You can go through the available profiles and look at something that you can understand: properties,

economics, and exactly what the developers have planned for the project. Real estate

crowdfunding offers a tangible investment opportunity that you can understand.

When you take the plunge with real estate

big--it’s all up to you! With a company like you except that which occurs behind a

computer screen. You don’t have

to deal with contractors, determine what’s needed for the

property, or discuss zoning regulations. You just have

to make the investment and

watch the returns build up. Ready to give real estate

crowdfunding a try? Whether

you choose Sharestates or another

crowdfunding portal, the experts are ready to answer your questions or help you identify a

Allen Shayanfekr, Esq., is the CEO and Founder of Sharestates, which offers investors direct access to real estate investments through an online marketplace and enables property owners and developers (aka sponsors) to gain access to capital quickly and at a competitive rate. Shayanfekr’s legal expertise (currently admitted to practice law in New York and Connecticut) in securities law is paramount to Sharestates’ ability to promote and produce public and private offerings in a highly regulated space. He interacts regularly with the Securities and Exchange Commission, in addition to spearheading daily operations at Sharestates. Shayanfekr received his J.D. Magna Cum Laude from Touro Law Center, where he graduated in the top 6 percent of his class, and his B.A. in Political Science from New York University.



Role-Playing – For Real You can become the ‘banker’ through investing in private mortgage notes. by Abhi Golhar


ouldn’t it be nice to play the role of

a bank with your investment funds?

You’d get to receive above-market returns

while avoiding the incredible volatility of the stock markets.

You may be surprised to learn that becoming

a lender is rather simple. There’s no shortage of people who need financing, and the powerful

collateral of real estate makes lending to home-

owners safe, effective and nearly pain-free with proper agreements in place.

You’re about to learn a fascinating al-

ternative investment option called private mortgage note investing.

What are Private Mortgage Notes? Private mortgages, also called mortgage

notes, are carried by non-traditional lenders for a higher rate of return than what banks receive. They can be offered by individuals

like yourself, or companies not in the busi-

ness of income-based lending practices.

While you can write up a mortgage note

yourself, including the interest rate and other payment terms, it’s usually better to have a

How much can I expect to make?

gage on your behalf. The cost is nominal, and

nothing is set in stone. However, it is fairly

extremely complicated lending and securi-

13 percent range even when the mortgage rate

professional loan originator create the mort-

As with all investment opportunities,

the convenience of not having to deal with

typical to receive returns in the 10 percent to

ties laws is well worth it.

offered to the borrower is in the 8 percent to


10 percent range.

How is this possible? The mortgage note

itself is often passed from investor to investor at a discount. The first investor has many reasons to discount a note for a lump sum payment.

Perhaps he’s a real estate investor who needs

money for a down payment on a new investment

investors looking for safe, high-yield returns.

time. The difference is that instead of being paid

more favorable terms that he’d like to purchase

What are the downside risks?

ual, often at a higher rate of interest. Increased

note he’s about to sell you. Some note brokers

similar to corporate bonds, in that you receive

property. Or, there is another note with even

right away, if only he could raise cash from the specialize in trading these discounted notes to

Private mortgage notes are functionally very

a fixed payment over a pre-specified length of

by a company, you are being paid by an individ-

risk that comes with individual borrowers is

offset by the strong collateral that the mortgage obligation is attached to—namely, the house.



In the worst-case situation, the mortgage

note falls into nonperforming status, as the borrower ceases payment as scheduled. In

this case you have several options: you can restructure the payments due to hardship, foreclose on the home, or simply sell the

nonperforming note to another investor who specializes in buying nonperformers. In any case, you’re protected as long as you invest

in notes that have a high amount of equity in the underlying asset.

Determining equity in the asset Partnering with a local real estate agent

who has an eye for real estate investments is critical to your success in valuing an asset.

Why? Agents can pull comparables for the subject property in a matter of minutes to

••• give you a full scope of active, pending and

• Not to cross major intersections, railroad tracks, or bodies of water

of the asset. A factor to remember is the

Getting educated with the local real estate

sold properties within a few square blocks

velocity of product in the marketplace (“days on market”). A low number helps to solidify potential exit strategies for your borrowers and increase your confidence in the deal.

In order to find the right comparables to

determine the value of the asset, I suggest using the following search metrics:

• Less than 0.25 miles and a maximum of 0.50 miles from subject property • Sold homes within 30, 60, and 90 days from subject property • Similar bedroom, bathroom and square footage configuration

WORKING FOR INVESTORS. Safeguarding YOUR Financial Interests.

market and its inner workings is very important in order to realize high returns with private mortgage investing. If you are not well versed in real estate or valuation of assets, practice! And remember, it’s never too late to start! ■ ABOUT THE AUTHOR Abhi Golhar is the host of “Real Estate Deal Talk” and Managing Partner of Summit & Crowne. Abhi uses a “valueadded” approach to invest in real estate renovation, new construction and development opportunities in the Southeast United States. He actively educates and works with investors to deploy market-driven strategies that yield success. He holds a B.S. in Electrical Engineering from the University of Michigan. You can find him on Twitter, Snapchat, and Instagram - @AbhiGolhar.

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The Conference Advantage Pick your business conference opportunities carefully, then make a plan to get the most out of your attendance. by Ruby Keys


ast year was a very busy one for us all, and now it is time to dive into 2017—

discovering new ideas and improved strat-

leagues, it also offers a process for networking with other professionals, getting up to speed

on current business trends and planning how

the most out of every conference that you do attend or sponsor.

With the election over and new adminis-

to build a bigger book of business.

tration coming into the White House, chang-

these opportunities is through professional

work and attending the meetings that matter

quickly. There will be new markets and new

seem like a chance to take a step away from

ence opportunities to choose from, and only

egies and identifying prospective business

opportunities. One way to take advantage of business conferences. While these events may the office and spend time with friends and col64 PRIVATE LENDER

Finding the right balance between office

to your business is key. With so many conferso many you can attend, it is essential to get

es in the business climate will be happening opportunities, along with the challenges of

competing with existing—as well as emerging—competition.

What will you do to make your business

stand out? Professional conferences are a

way to get a step up on your competition and

discover new ideas and strategies for growing your business.

Here are some of the ways you can get the most

out of attending business conferences in 2017.

Identify the Value of Each Conference There will be many panels and lectures to

choose from this year. Identifying and com-

mitting to the ones that will provide the most benefit is key to growing your business. Be-

fore allocating hundreds of dollars and booking flights, carefully examine the schedule of the conference to ensure it aligns with your

business goals. Review the list of presenters and their background for the information

they are providing. Look at the length of time allocated for each topic of interest, and if the presenter will be made available for Q & A.

Often, a business conference can provide

the best opportunity to find new clients

or future business partners. Find out the

keynote speakers and who will be attending. Most events will be promoted on social me-

dia or the sponsor’s website, providing a good representation of the type of people who

plan on attending. Recognize the networking

value of each conference, and determine how networking with other attendees—whether

competition or peers—can benefit your longterm business strategy.

you don’t do proper planning beforehand,

professionals, be sure to bring plenty of

loss. Set a goal and do your best to make

material you wish to distribute. Be ready to

you may end up writing it off as an overall it happen. How many new clients do you expect to walk away with?

Before the conference, familiarize yourself

with the panels and speakers who have con-

business cards and any other brochures/

provide service or product demonstrations

on the spot, as you may have an opportunity

to turn prospective clients into actual clients at the conference.

firmed participation. Review the agenda. Note the key addresses that you want to attend and

Attending the Conference

apply to your business. Draw up a list of im-

make a walkthrough of the facilities so

make sure you take notes on how this could

portant points you want to focus on, and the types of questions you would like to see an-

swered at the conference. If you are attending an online conference, keep a list of questions

to ask at the appropriate time. Research other

professionals who will be attending and make a note of those you would like to meet and interact with at the event or in the future. Technology is playing a bigger role in

today’s business conference scene. Many conference providers are using web applications like Whova, Skype and GoToMeeting to pro-

vide up-to-date information and reach a larger audience via live streaming. For instance, with the Whova app, attendees can get pre-

event information, confirm presentations, get updates on program changes or announcements and offer a personalized approach

for participants to interact directly with the

speakers and other attendees. It’s important to familiarize yourself with the technology

that will be made available, and use it to your advantage during the conference.

On the day of the conference, plan to

that you may familiarize yourself with the

surroundings and amenities being offered. Some sponsors of larger conferences will provide a map of the conference location

on their event app. If there is a registration

requirement, make sure you register early to avoid the rush. While everyone else is stuck

in line, you can spend some quality time with colleagues or network with prospects.

If there are multiple sessions at the confer-

ence you are attending, make a plan to focus

on the panels that have the most influence on your business. Communicate with peers who

are attending the same sessions to get varying views on the information being presented.

Make notes of the information provided and

follow up on your concerns or questions with the speakers or conference sponsors.

While in attendance, prioritize the ses-

sions you will be attending and determine

how you can use them to further your busi-

ness. This outline will allow you to maximize the amount of information you will be able to learn and retain. Actively participate in

Prepare Yourself for the Conference By the time a conference approaches, you

should have a good idea of the types of topics that will be discussed. Coming up with a

well-formulated plan will better prepare you to benefit from the information provided. If

Get Organized Getting prepared for the conference with

the right equipment is imperative. If it’s

important, you’ll have your laptop or tablet, so ensure you pack your charger cables

or extra batteries. If you are planning on

pitching clients or networking with business

the conference through question-and-answer sessions by using the event app or Twitter

hashtag to communicate with peers. Through involvement in the larger conversation, you can get additional exposure to prospective

clients and have a platform to provide your personal views and insights.



After the Conference A conference is only as worthwhile as the

information and contacts you come away

with. Outline the information you received and emphasize what you found most

beneficial. Be sure to follow up on the most important points with the conference orga-

nizers and see how they can assist. Check back with the event app or conference

sponsor to see if you can obtain a transcript of the conference or additional information about the subject matter; typically, most

presenters will want you to have a copy of their PowerPoint presentation.

Face-to-face meetings are an excellent

way to personalize your relationship with

clients. However, just because you exchanged business cards does not mean a prospect

or potential business partner will call you.

Make a list of the contacts you made in the order of importance that they hold to your

company. Make an intentional effort to reach out to each person, shortly after you return

to the office. Prepare a good initial email or

letter as a professional introduction to your company and the products or services you provide. Remember, personal touches are

key. Make sure to include why you had the

pleasure of meeting them and how the two of you can benefit one another.

Practice What You Have Learned Whether a company is large or small,

marketing will always play a role in its

success. A marketing campaign can take

many forms. There is word of mouth, social media marketing (SMM), search engine

marketing (SEM), internet marketing, or

business-to-business networking. Profes-

sional business conferences can also play a

significant role in providing the information, training and legal guidance for presenting 66 PRIVATE LENDER

••• your message better to clients and prospects.


ences and make a plan to implement it into

Ruby Keys is the marketing and communications coordinator at Geraci Law Firm. She graduated from Vanguard University with a degree in communications with an emphasis in marketing and public relations. Keys joined Geraci Law Firm to promote all aspects of the law firm and run Geraci media division. Keys focuses on the marketing and communication details for the firm to include working closely with the media departments of professional organizations such as American Association of Private Lenders. She plans all Geraci media’s corporate conferences, facilitates the dissemination of the company newsletter and handles all other aspects of marketing and public relations within the firm and media company. Visit www.geracilawfirm.com or email her at Ruby.Keys@geracilawfirm.com.

Use what you’ve learned at your confer-

your marketing campaigns. Take the incredibly valuable insights you’ve discovered and

determine how to best incorporate them into your business model. Record and share what you’ve learned with co-workers and management. Have a discussion on how you can use the information to your advantage.

Whether you plan on attending one or a

dozen conferences this new year, the most valuable advice you can get about confer-

ences is: Do more than simply attend, and make sure you have a plan in place. ■

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