In this episode of Lender Lounge with Kevin Kim, Mike Hoffman, CEO and President of Longhorn Investments, joins Kevin to share his journey into private lending and the growth of Longhorn Investments. Starting from a background in law with no real estate experience, Mike stumbled into the world of hard money lending during the 2008 financial crisis. He shares the origins of Longhorn Investments, its expansion beyond Texas, and the unique challenges of building a successful private lending business. Mike also discusses how the company adapted to market changes, including the decision to start a fund and the impact of institutional competition on their strategy. The conversation dives into the nuances of operating in multiple states, the challenges of raising capital, and the importance of maintaining a solid relationship with investors. Tune in to hear Mike’s insights on navigating the evolving private lending landscape, maintaining discipline, and his perspective on future opportunities.

Bullet Points:

[00:00:37] Introduction of Mike Hoffman and Longhorn Investments.

[00:01:00] Mike’s unconventional entry into the lending industry.

[00:02:11] Early challenges and learning about hard money lending.

[00:03:12] Transition to a fund model and challenges of raising capital.

[00:07:00] Expansion strategy to other states and diversifying investments.

[00:10:02] Evolution of the Texas market and branching into the Midwest.

[00:14:00] Adjusting business strategy to handle increased competition.

[00:21:03] Importance of maintaining investor relationships and discipline.

[00:28:20] Discussion on institutional partnerships and capital raising.

[00:33:57] Mike’s perspective on selling notes and loan servicing.

[00:38:58] The potential and challenges of securitization in private lending.

[00:43:33] Maintaining a single fund strategy versus multiple funds.

[00:47:00] Hiring and team development for scaling a lending business.

[00:52:22] Focus on growth, new products, and strategic planning for the future.

Links:

Learn more about Longhorn Investments at https://www.longhorninvestments.com/

Learn more about Geraci Law Firm at https://www.geracilawfirm.com

Subscribe to the Lender Lounge newsletter for episode notifications and exclusive content at https://www.geracilawfirm.com/lender-lounge-podcast

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In this episode of Lender Lounge, Kevin Kim welcomes back Ben Fertig. Ben is the founder and President of Constructive Capital, the leading national capital provider for DSCR Rental Loans and Residential Transitional Loans (RTL or Fix and Flip Loans). Prior to Constructive, Ben led Credit and Asset Management at Finance of America Commercial; and, before that, he served as Chief Operator Officer of Jordan Capital Finance, where he managed originations, credit policy, and capital markets. Ben was instrumental in the sale of the Jordan Capital Finance platform to Blackstone and Finance of America in 2017. Ben began his Mortgage Banking career over 25 years ago and has served in a Senior Leadership role in the Residential Investor Loan Market since 2012.

Ben delves into the rapid growth of Constructive, highlighting the company's journey from its inception in 2017 to becoming a nine-figure monthly producer. The discussion covers key milestones, strategies for risk management, the importance of capital diversification, and how Constructive navigated the challenges posed by the COVID-19 pandemic and subsequent market volatility. Ben also shares insights on leadership, the impact of economic cycles on the lending industry, and the increasing importance of managing fraud and maintaining solid client relationships in today's market.

Bullet Points:

[00:00:50] Introduction of Ben Fertig and Constructive Capital.

[00:03:59] Key milestones in Constructive's growth from 2017 to 2021.

[00:05:54] Strategies for risk management and capital diversification.

[00:08:27] Impact of COVID-19 on Constructive's operations and market conditions.

[00:11:02] Constructive's decision to partner with a life insurance company for stable capital.

[00:14:57] Managing a lean team and maintaining high production levels.

[00:20:11] The importance of client relationships and operational efficiency.

[00:28:30] Challenges in the current lending market, including fraud and market volatility.

[00:37:41] Technological tools and processes used by Constructive to maintain efficiency.

[00:45:55] The impact of rising interest rates and economic uncertainty on loan performance.

[00:53:09] Discussion on fraud issues and the need for industry-wide solutions.

[01:00:24] The potential for regulatory challenges in the private lending space.

Links:

Learn more about Constructive Capital at https://www.constructiveloans.com

Learn more about Geraci Law Firm at https://www.geracilawfirm.com

Subscribe to the Lender Lounge newsletter for episode notifications and exclusive content at https://www.geracilawfirm.com/lender-lounge-podcast

Subscribe to the Geraci Law Firm newsletter at https://www.geracilawfirm.com/sign-up

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The Lender Lounge is pleased to host a special guest speaker series. Leading up to our next season, we have John Beacham of Toorak Capital Partners as our guest for an open conversation about his career and success.

John Beacham, CEO of Toorak Capital Partners, joins Kevin Kim for a special episode of Lender Lounge, produced in collaboration with the American Association of Private Lenders. John shares his extensive journey in the finance industry, detailing his transition from investment banking to leading one of the most recognized firms in the private lending sector. The discussion covers the evolution of real estate finance, the impact of market crises, and the strategic maneuvers that have shaped Toorak's success.

John is an experienced entrepreneur who has completed more than $50 billion in transactions over his 25-year career and has structured CMBS or financings that were honored with multiple “Deal of the Year” awards. Prior to Toorak, Mr. Beacham was the founder and President of B2R Finance, the leading mortgage origination company focused on the single-family rental (SFR) and residential bridge loan markets. B2R Finance (now Finance of America Commercial) is a Blackstone portfolio company. Before founding B2R SFR platform, Mr. Beacham originated large balance commercial real estate loans in the CMBS group at Deutsche Bank and worked in the financial institution’s investment banking groups at Deutsche Bank and Credit Suisse First Boston.

Key Points:

[00:01:09] John's background and early career in investment banking

[00:03:25] Founding of Toorak Capital Partners and its growth trajectory

[00:04:26] Challenges and strategies in the residential bridge loan market

[00:06:15] Evolution of private lending and the importance of institutionalization

[00:10:45] Impact of the financial crisis on real estate finance

[00:14:22] The creation of new loan products and securitization

[00:20:35] Addressing industry accusations and market competition

[00:23:54] Toorak's approach to partnering with lenders and homogenizing the industry

[00:28:36] Future outlook for Toorak and the private lending market

[00:34:12] Importance of adapting to market changes and fostering innovation

[00:40:15] Detailed discussion on the impact of market volatility and strategies to mitigate risks

[00:46:28] Insights into the operational efficiencies and technological advancements at Toorak

[00:51:44] John's perspective on leadership and team building in a dynamic industry

[00:57:10] Discussion on the regulatory landscape and its impact on private lending

[01:02:33] Real-life examples of successful projects and deals by Toorak Capital Partners

[01:08:57] The role of community and client relationships in Toorak's business model

[01:15:21] Final thoughts on the future of private lending and John's vision for Toorak

Links

Learn more about Toorak Capital Partners at https://www.toorakcapital.com

Learn more about Geraci Law Firm at https://www.geracilawfirm.com

Subscribe to the Lender Lounge newsletter for episode notifications and exclusive content at https://www.geracilawfirm.com/lender-lounge-podcast

Subscribe to the Geraci Law Firm newsletter at https://www.geracilawfirm.com/sign-up

Follow Lender Lounge with Kevin Kim on LinkedIn and YouTube