All Forum Posts by: Alex Sinunu

Do they have other rental properties as collateral that you could use? The way the market is right now with higher cost of capital is local banks and credit unions are much more likely to be monitoring loans that fall out of compliance and calling them due. I'm hearing about it more and more these days. Less likely that a larger bank would take notice even if they have a provision prohibiting junior liens, as many of them do. You could consider getting a deed of trust signed and not recording it. I don't love that concept but it's better than a completely unsecured note. 

If i were to interview a Private money broker i would ask the following. 

Can you actually close? 

what makes you different besides rates and points? 

what was the easiest closing ever done, what was the hardest? why? 

ask for references.

at the end of the day, a good relationship with a lender that can close when you need to close and can give you a no bs pricing is key. that is what I expect from my borrowers, be upfront and honest so we can have a smooth transaction. 

a direct lender might be cost-effective sometimes, but nothing beats a broker that knows how to structure the deal instead of just submitting paperwork. 

 I would look to track record and solid digital Prescence, good website, solid record of online reviews, etc.

One thing to note is that it is going to be tough "breaking in" with the top mortgage brokers, because by definition of being top brokers, they probably have a good track record, experience and relationships with a lot of lenders - so its typically high risk low reward adding a new lender or one without a long track record to the list.  To really break in with top brokers, you may honestly have to take on some of the "worst" deals and not make much money on the first few to get established

I was placing private capital for clients for nearly a decade before moving over to a private debt fund model, as we grew too big for individual whole notes. A few things you need to consider with respects to brokers: 

 - How do they fund the deals? There are three different approaches to consider - whole trust deed investing, fractionalized trust deeds, and loan participations or hypothecations. My preference is whole trust deeds since you are named on the legal documents and have security with real property. 

- What is their underwriting process and lending guidelines? Do they have conservative LTVs and lending practices or are they doing 80% LTV + 100% rehab, immediately funding deals with little to no equity to protect your loan (and completely speculative on the ARV, I might add).

 - What is their default rate and principal loss to date? Ask them about their most recent defaults and how they played out. They are not all created equally. We have a sub 3% default rate but the most telling metric is that we have essentially zero principal losses and have been able to fully recover all legal fees, default interest, late fees, interest and full principal on any defaults that went into foreclosure. Most didn't even hit the auction block and we supported our trust deed investor every step of the way in that process so they didn't feel alone and not know what to do. Most of the time, we would manage the workout with the borrower to avoid auction. 

- Who services the loan. I prefer this not be done in-house and preferably through a 3rd party contract servicer since they can do the ACH pull and deposit directly into my account. Leaving servicing up to the lender could potentially put your installment payments at risk and in many states servicers need to be licensed anyways so double-check that part as well. 

This is just the tip of the iceberg. I've actually prepared a blog post for BP that will come out soon about how to vet trust deed brokers. A few months ago, I did the same for private debt fund managers. Which brings up the question, have you considered this route as an alternative? 

Hi Bigger Pockets Community,

We currently manage 1000 odd doors across two cities in the co-living space in an opco/propco structure. Over 3.5 years we have built both brand, data and the customer experience required to help us scale the propco business across our targeted geographies. ROI on cost is circa 7-8% post ADU addition generating NAV of between 20-30%

and we are operating at close to 100% occupancy with a pipeline of circa $200m in line of site. 

To date we have self funded most of our developments and are fairly new to the private/institutional capital space.  We are looking for the best way to get introduced to family offices and or institutions who may have an interest in what we are doing.

How best should we go about doing so save for cold reach outs on Linkedin etc?

Thanks for your help and advice in advance!

Regards,