3/13/11: Commercial Lending Challenges and Opportunities – Be the Brainer

When we went to the National Hard Money Conference in Las Vegas, we met a guy who had over 30 years in commercial hard money lending.   Based on that alone we wanted to talk with him.

But because we’re busy prepping for our Secrets of Successful Syndication seminar, we were especially anxious to get perspectives from a 30 year vet.  After all, we think it’s a great time for real estate entrepreneurs to step in and help heal a decimated economy by getting capital flowing into properties and projects.  But what does an industry insider think?

Before leaving Las Vegas, we set up our mobile studio.  We wanted to make sure that what happened in Vegas didn’t stay there.  Behind the microphones for this episode of The Real Estate Guys™ Radio Show:

  • Your hard money host, Robert Helms
  • Your semi-hard money co-host, Russell Gray
  • Special guest, founder and CEO of Blackburne & Sons and C-Loans, George Blackburne

Just like in the grocery, hardware and car part businesses, the financial industry has suppliers, wholesalers, retailers and consumers.  But the product being distributed is money.

Most people are familiar with banks, credit unions, mortgage companies and the types of retail transactions they engage in.  Some people (like small business owners) are somewhat familiar with local business banks and other institutional sources of commercial capital.  But most people have only a vague understanding of private capital and the term “hard money” – especially when it comes to small commercial businesses and properties.  So we open the show with a quick overview of the term “hard money” and a quick discussion of how it fits into the financial food chain.

But we don’t take long to get our guest talking about his 30+ years in the business and what he sees going forward.

George Blackburne has been helping guide private money into local projects and properties three decades.  Along the way, he’s seen a lot of changes.  Being an entrepreneur, he saw a need in the commercial funding business which emerging technology could solve.  So fourteen years ago, he founded C-Loans, an on-line directory that matches borrower and brokers with sources of funding.  We thought is was such a cool idea, we’re adding it to our Resource Center.

In addition to being a money guy and an entrepreneur, George is also a lawyer licensed in two states.  In other words, he’s a pretty sharp guy.  So we were very gratified when he told us he thought 2011 would be “the year of the hard money lender”.   It just made us all the more certain that now is the time for all good real estate entrepreneurs to come to the aid of their country and consider getting into the private capital business.

While many are frustrated waiting for corporations to create jobs and banks to start lending to small business, entrepreneurs can create a job for themselves and others while getting into the game of investing private capital.

There are tons of distressed assets available for pennies on the dollar, and deserving projects just waiting to be funded.  And while banks are only interested in the “low hanging fruit”, (the “no brainers” as George calls them), there are lots of “outrageous profits” waiting for those are willing to “be the brainer”!

We think this era will be remembered not only as the “year of the hard money lender”, but as one of the greatest opportunities to build wealth with real estate that we may see in several decades.  Check out this episode and see what you think!

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The Real Estate Guys™ Radio Show podcast provides education, information, training and resources to help investors make money with their real estate investments.

The National Hard Money Conference in Las Vegas – March 3rd 2011

When The Real Estate Guys™ heard that the National Hard Money Conference was coming to Las Vegas, we decided it would be a perfect opportunity to visit one of our favorites places.  Say what you want about the Las Vegas economy and real estate market, but it’s still one of the most dynamic and fun places to visit.  And because the economy is soft, there are great deals on rooms, meals, transportation and entertainment.  Too bad we didn’t have time to indulge in anything more than the conference.  But we’re dedicated to staying focused on bringing you a wide variety of interesting topics and guests!

Back when conventional funding (that is, money from banks) was flowing like water, most people equated “hard money” with “hard up”.  But that’s really a misnomer.  It’s really more like “unconventional” or “out of the box”.  Professional investors have long relied on hard money to finance properties that needed work, when the deal needed to close fast, or when the property or borrower needed a more personal underwriting.  We often say that hard money is one of the best kept secrets in real estate.  And when there’s enough in a deal, the premium you pay for the flexibility of hard money (that’s kind of an oxymoron, isn’t it?), is well worth it.

As a reminder, “hard money” is just another way to say money that comes from private individuals rather than banks, and is sometimes aggregated into investment pools.  It used to be (and is largely true today) that those pools, or “syndications”, were often managed by a local mortgage broker and the funds aggregated came from local investors.  It’s a great vehicle to allow people to put their savings to work in support of their own community.

Of course, any time there’s big money to be made, it attracts Wall Street, foreign investors and other big players.  So in today’s market, you’ll also find many hedge funds participating in the hard money market.  And in a post meltdown economy and all kinds of distressed assets available for pennies on the dollar, like white corpuscles, private money is flowing to the wound and cleaning things up.

With that backdrop, this one day convention (which was conducted by industry icon Leonard Rosen), brings together lenders, vendors, brokers, and even some borrowers, to explore the state of the industry and consider what the opportunities are in today’s market.  There was a big emphasis on teaching traditional mortgage brokers, whose business model has been under attack by both the market and the regulators, how to transition from broker to syndicator.  This obviously piqued our interest, since we are of the opinion that this is one of the greatest times in recent memory to get into the syndication business.  We felt like geniuses when some of the biggest brains in the hard money business concurred!  Of course, we feel like geniuses most of the time, whether anyone agrees with us or not.  It’s part of the delusional experience of being radio talk show hosts. 😉

For us, the National Hard Money Conference was a chance to peek behind the curtain of this intriguing sub-set of the lending industry and talk with some of it’s major players.  And yes, we captured some great interviews and scheduled several more, so keep an ear out for some very interesting episodes of The Real Estate Guys™ Radio Show in the coming weeks.  In fact, to be sure you don’t miss any, be sure to subscribe to the podcast.  It’s free!

Mr. Rosen and his staff at Pit Bull Seminars put on a first class event.  Held in the Mirage hotel on the Las Vegas Strip, there was lots of energy and enthusiasm right from the get go.  But more than hype, the event included several guest speakers including a very sharp attorney named Jon Hornik.  The presentations were laced with perspectives, humor, technical training and valuable insider information.  Toward the end of the day, all of the speakers participated in an open forum panel and attendees were able to step up to the mic and ask specific questions.

One of the most interesting segments was when attendees were able to pitch a deal they were seeking funding for.  The answers and resulting dialog provided insight into what kind of deals are getting funded today, though the main purpose was for the audience to see what funders think about when considering a deal.  Whether you’re a borrower, broker or budding fund manager, it’s mission critical to understand how to quickly analyze a deal.  Watching pros do it was very enlightening.

There were several opportunities to network with other attendees. We made lots of great contacts, which is always a highlight of attending any event.  It’s great when the promoter pays careful attention to creating these valuable opportunities to build relationships.  As great as the internet and social media are, we doubt they will ever be as effective for getting people together as getting people physically in a room for a full day or more, to focus on a dedicated topic and share their ideas, information and contacts with each other.  We don’t know how anyone can consider themselves a professional in any industry, if they don’t make attending such events a frequent and consistent part of each year.  It’s one of the main motivations behind our annual Investor Summit at Sea

We hope our schedule will allow us to check in on future conferences.  Leonard Rosen has been teaching hard money lending for 36 years and this was his 23rd annual conference.  He says each one is different because the market changes, creating new challenges and opportunities.  He made a passionate appeal to all attendees to be sure to continually re-evaluate their business models or risk being swept out of business by the relentless waves of change.   A big part of staying ahead of the curve is to spend time with the thought leaders if your industry.  So The Real Estate Guys™ offer kudos to Leonard Rosen for being such a leader and bringing others like him together for us to learn from!  We look forward to visiting the National Hard Money Conference again.

Hard Money National Conference – March 3rd, 2011

Join The Real Estate Guys™ in Las Vegas on March 3rd 2011 as we check out the Hard Money National Conference at the Mirage Hotel & Casino!

For 36 years running Leonard Rosen has been training real estate entrepreneurs how to get into the hard money business.  With all the turmoil in conventional money, this is one of the best times to be in the business of providing alternative funding.

Whether you’re a mortgage pro or a cubicle dweller looking to start your own business, there are lots of opportunities in hard money.

“Hard money” doesn’t mean the borrower is “hard up”!  It’s just a term used to describe private money versus institutional money.  Income investors are always looking for better yields, and when conventional money is hard to find or takes too long to get, private money often gets the job done.

We  agree with Joel Grey in Cabaret, who sang “Money makes the world go ’round”!  So we’re headed to Las Vegas to see what’s happening in the world of hard money.  While we’re there we’ll capture some interviews and some Backstage conversations.  Stay tuned!

Meanwhile, if you’re a serious investor, it behooves you to get “in the know” about how hard money works and how to make it work for you, both as an investor and an entrepreneur.  Besides, you were looking for an excuse to go to Las Vegas anyway, right?

To learn more about the event, go to pitbullconference.com.  Then come say hi to The Real Estate Guys™ !