For today’s episode, Kevin Dureiko, James Eng, Eric Johnson, and Freddy Johnson take us on a journey through mastering the lending environment. Kevin elaborates on how their marketing changed as Covid started unfolding. James gives us tips on what to consider when doing an underwriting for lenders and approaching them.
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As we sit with Eric, he tells us the creative ways to maximize growth through lending and the most crucial challenges of the process. And lastly, Freddy explains to us what a yield curve is and how exactly changes in interest rates affect cap rates. Don’t miss out on these best episodes and takeaways about the lending environment! Tune in now!
Key Points From This Episode:
- Where do things sit in the lending industry in the middle of COVID?
- How did the pandemic help Kevin realize who they were competing against, which changed their marketing strategy?
- James shares what interest rates he thinks investors can expect in five years.
- Insights into what you should consider when underwriting and approaching lenders.
- The creative ways people have had for lending that explodes their growth.
- The hardest part of the lending process and working with commercial investors
- Freddy talks about how interest rates affect cap rates.
- What is a yield curve?
“Our job is to give people homes. In the syndication space, my job is to lend money for syndicators like you to provide good homes for people at a rate that they can afford.” – Kevin Dureiko
“When you have a private lender, you really figure out whether or not they’re private, whether or not their funds are backed by bonds or big banks, and that really opened up my eyes, especially now as to who can really fund the deals, and it kinda changed my marketing a little bit.” – Kevin Dureiko
“What always happens on the lending side is once one person, or one lender has a great product, everybody copies it.” – James Eng
“For any syndicator listening, don’t lag behind on investor docs or anything else because it just makes the deal much more stressful than it needs to be because now everyone’s anxious about the timelines and the contract and losing EMD and all this.” – Eric Johnson
“When you have a low interest environment, obviously it’s gonna make debt cheaper and thus, it’s gonna make properties more competitive, basically, so that’s gonna affect your cap rates naturally.” – Freddy Johnson
Links Mentioned in Today’s Episode:
About Kevin Dureiko
Kevin Dureiko is the founder and fund manager of Birch and Dobson LLC, a private real estate debt fund located in Connecticut. Birch and Dobson was founded in 2007. Kevin’s objectives as the Fund Manager are to source property secured investments that produce returns as expected by his capital investors. The fund and Kevin raise capital from accredited investors to place or purchase senior mortgages on investment real estate. The main focus of the fund is lending to real estate investors with mortgages in the first position on value-add syndicated multi-family properties, non-syndicated multi-family, and 1-4 family. In addition to fund manager, Kevin is also retained by a $20B hedge fund as a monthly consultant to the private lending industry.
About James Eng
James Eng serves as a Senior Director for Old Capital. James is actively involved in financing commercial real estate with a focus on multifamily in Texas. He has financed over $500 million in multifamily properties. Before joining Old Capital, James underwrote over $750 million in loans over 8 years for the acquisition or refinance of commercial properties at GE Real Estate.
Prior to his work at GE Real Estate, he completed GE’s Financial Management Program (FMP) at GE Capital with rotations in Connecticut, Colorado, and Texas across multiple businesses. He received his undergraduate finance degree from the McCombs School of Business at The University of Texas at Austin. He is currently invested as a limited partner in 21 multifamily properties totaling over 6,000 units.
About Eric Johnson
Eric Johnson began his journey with Shoreside Realty Finance two years ago. He joined them to help redefine the way real estate investors experience financing. Eric helps craft custom debt strategies for clients to maximize ROI on any type of real estate project. Eric shares the Shoreside mission to help investors achieve efficient and effective growth by delivering reliable financing solutions that are tailored to their investment strategy. Outside of Shoreside Realty Finance, Eric has had experience in fix and flips in Los Angeles and is also an active investor in the Chicago market. Eric’s passion for real estate also saw him perform as a successful real estate agent between 2017 and 2019 for Keller Williams Realty.
About Freddy Johnson
Freddy has had an interesting path through the real estate sector. Out of college, he worked for a very successful investor in Chicago who always went against the grain. It was an eye-opener for him to work for someone who had so much success in assets like MHPs, multifamily, and tax liens. He would assist in multifamily construction projects, model out potential investments, and even go to tax auctions. From there he went back to school at George Washington where he interned with Brookfield properties. He interned for a guy named Paul Schulman who was something of a role model and he went on to become COO of U.S. Operations for the company.
After grad school (May 2009) and intra recession, Freddy moved back to Chicago as there wasn’t much hiring going on in the real estate world. He met a very well-known person in the trading world (Matt Hulsizer) and he and his wife (equally impressive) started an equity options trading firm (they had a prop shop and hedge fund) called PEAK6. The firm needed an analyst to cover banks, and property and mortgage REITs…Interest rate-driven stocks. These were historically not sexy stocks to cover at the time but it became somewhat interesting as the “Fed” would cause a taper tantrum and we started to see volatility pick up in some of them during his tenure there with the “fed dots.”
Freddy also began to cover special situations (M&A, LBOs, spin-offs) and that would entail covering a lot of consumer and retail as a decent amount LBOs were happening in the early 2010s. After 5 years and being a little burnt out on the desk, he (maybe against his better judgment) decided to do a 180 and start his own company in fitness. He always had plans to return to real estate (either as an analyst or on the investment side) but he did not anticipate going to the debt side. He was introduced to StackSource by an old high school acquaintance who told me about the company and the deals he was working on. It honestly sounded colorful and fun and he admired the startup world. The guys who started it spent time working at Facebook and Google so Jon figured they were intelligent…and they are. They gave him a case study which he completed in the hospital a couple of hours before the birth of his second daughter, and a week later he was hired.
Since then, he has been able to work on financing redevs, ground-ups, refis, and acquisitions in all areas of the U.S. from Alaska to Florida. He is currently closing an SFR portfolio in Wyoming, a mixed-use portfolio in Alaska, several multifamilies across the country, and a couple of MHPs in MI and OH. He loves being in tune with the macro side of things and how it affects his clients. He also likes working with clients that want to keep learning and let me help them find the best returns for their investments. He works with them on their priorities, and he’s always candid with them as he really doesn’t have time to provide false hopes. He also knows most of his clients don’t have time as a large percentage of them work in the tech sector for companies like Google, Netflix, Facebook, and are investing in the CRE space.
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