Choose Your Real Estate Deals: Inside Project-Level Private Lending with Michael Columbia

Michael Columbia (00:00)
Story of my life. in my twenties, I lived in Asia. I was my business partner’s brother was very well connected in the banking sector. So I got hugely connected because of him, again, who you know, right? in the banking sector where I can walk into, Credit Suisse and get $30 million credit facility in a day, which most couldn’t. so absolutely.

Being in the right spot with the right people changes everything. you could have the best program, the best deal, the best real estate pri it doesn’t matter. You can have the best of anything. But if you’re not able to tell the right person, it’s nothing.

Scott Bursey (02:04)
Welcome back to the Real Estate Pros podcast powered by Investor Fuel. I’m your host, Scott Bursey Glad you’re with us. And today we’re pleased to be joined by Michael Columbia, CEO of Midpoint Capital Partners and managing partner of Midpoint Capital Fund One, a premier private real estate lending fund for accredited investors. Michael brings an amazing background spanning

domestic and international commercial lending, having built major banking relationships across both the United States and Asia. In this episode, Michael pulls back the curtain on how Midpoint Capital Fund One empowers investors to choose individual projects where their capital is allocated with full visibility through exit. Listeners, you can expect a high level masterclass on discipline underwriting.

investor choice and navigating the evolving private lending landscape. Michael, welcome to the show.

Michael Columbia (03:02)
Thank you very much.

Scott Bursey (03:03)
It is awesome having you here and to help our listeners get up to speed. Please give us the ninety second highlight reel, if you will, of how your career ignited and where you’re pouring your fuel now.

Michael Columbia (03:15)
night when I was in my twenties, so about twenty-two years ago, in commercial real estate at that time it was a residential, a lot of residential was being built. and then it kind of expanded over the course of twenty-two years. today we have midpoint capital fund. we specialize in bridge loans for development projects, fix and flips and D S C Rs.

we do have some multifamily things, but we are starting to take our turn away from that right now. So hotels, hospitality and things like that is kind of what we’re really liking right now.

Scott Bursey (03:40)
Well, thank you for highlighting your journey. That’s really, really fascinating. And what caught my attention about you, Michael, was the way you’ve been able to connect institutional grade underwriting standards with direct investor choice, creating complete transparency from deal allocation to exit. And really expanding on that, curious to know.

What would you say is the greatest strength of offering project level choice to private real estate fund investors?

Michael Columbia (04:11)
Yeah, so most funds, they’re private pools. So the investor puts their money in and they kinda don’t know what’s going on. And over the course of time they have to call investor relations, find out, et cetera, et cetera. we have built a platform when investors from the beginning, very much when they just want to see the PPM and investigate it to signing it, to sending money to being part of the fund, their money sits in the fund. We don’t get to just decide where it goes.

we’ll take our funds, we’ll show it to the investors, and they get to elect and allocate where their funds go. when they do that, they do sign a discl investment disclosure for that particular deal, and then their funds are deployed to that deal only. After that point, the investors still have their login. They can see live every month, every two months, every three months, whenever, nighttime, daytime, they can go and see how their money is doing within the fund. so they’re never gonna have to

really try to figure out, how do I get a hold of investor relations and things like this. they get to see it live. So they get to see the good, hopefully the not, the bad, the ugly, but if it was there, they would see it live, on their screen. and all the way to, getting their monthly statements or quarterly statements, to it being payback. Everything is live right there. So they’re gonna see the performance of their funds. So

I think that’s quite great is the visibility for an investor to actually see what’s going on within the fund. so there’s no there’s no hidden tricks, there’s no investor relations sales guy getting on the phone trying to make it sound better. they’re gonna see it live, the ugly, I guess, if you would, which we hope never happens. But if that was the case, it’s gonna be there. It’s not gonna be hidden. So I think that’s a good new way for investors to kind of

have a way more comfortable feeling about their investment and what’s going on with it.

Scott Bursey (05:45)
And fascinated to learn how does that flexibility directly impact investor retention during broader market shifts?

Michael Columbia (05:53)
It’s huge. when the market shifts and there’s twofolds going on, right? We have our knowing what’s going on and what’s shifting and what kind of deals we’re presenting. if the investor is experienced, they themselves have their own opinion on what’s shifting, right? So I send them five deals, again, they can be like, I don’t like those four. I’m gonna go with this one, So it’s a twofold process with the market shifting, right? it’s what we think and it’s what they think.

Which again, in theory, when they’re investing in that, they should feel really good about that choice, that they chose to invest. it’s not just us selling them or trying to convince them, when the file is submitted into the file, it someone’s not calling them up saying, Hey, invest in this file, invest in this file. It it’s not like that. it’s there, it’s live, it notifies them, they look at it, they like it, they don’t. it’s quite simple. So

it makes it a little bit more kind of pulls the salesmanship out of it, I think, and I want them to feel good about what they’re doing. which in turn is gonna make the retention much better. it’s more than just the dollar figure which we’re gonna perform on. It’s that good feeling of, hey, I made a great choice, this is gr going great, everything is, the way I like it.

Scott Bursey (06:54)
Appreciate you sharing that insight, Michael, and wanting to understand what is the biggest internal challenge or operational bottleneck private lending funds face when scaling their underwriting process?

Michael Columbia (07:07)
So I think the everybody has their own kind of bottlenecks in different positions. I think ours could be that the benefit and the and the negative kind of combined into one, right? We get to have the investors elect to invest into that particular deal. Well, if that kind of takes a little bit longer than normal, kind of delays our underwriting there, at that point in time. so at least that’s our biggest thing we’ll face is investors actually

electing to invest in a file. our clients are told that up front, they kind of are aware with what’s going on, but nonetheless, that’s kind of a bottleneck. But the outside of that, at least for us, our underwriting is very streamlined. the program, we’re talking about the investors and being able to see it’s actually a twofold program where clients, when they’re submitting a file from day one.

All the way through the process of underwriting, all the way to funding, all the way through servicing, They’re also have their own side of things where they can see everything live. they’re not gonna be hidden, hit with some randomness where, hey, why is this taking so long? What’s going on? It’s a beautiful program that we have. and everybody can see everything. So a borrower going through the process of underwriting, seeing everything live. Hey, I need a document. It’s telling them I need a document. Why haven’t I moved to funding?

That’s because I need this or I need that or whatever the case may be, so we we’ve tried to make that transparency great on both sides.

Scott Bursey (08:20)
And interested to hear, what specific underwriting safeguards do you maintain to ensure risk is never compromised for speed?

Michael Columbia (08:29)
So there we have a quite a large detailed underwriting manual, I guess you can say. our underwriters and our program was built around this. So nothing can kind of slip through the cracks the file is underwritten against the fund, right? So if the file is allocating too much capital from the fund it’s allocating too much capital for one location.

in one metropolitan area or little things like that which most people wouldn’t think of because the deal might be a good deal, right? But if it’s hitting some markers on our fund, it’s going to notify the underwriter. so we have a lot of safety nets around everything to protect the fund, to protect the client, right up front, right? there could be a good deal, right? It could be an amazing deal. And let’s just say my fund was getting too full.

And it came in this metropolitan area and already have two deals and it’s already kind of capped out our fifty million dollar mark for that particular metropolitan area, it’s immediately gonna decline the file. And it’s gonna say why. it’s gonna be like, hey, we have too much money in that market already. we don’t have any more for that market, so little things which most people don’t realize behind the scenes, it’s all there and being protected in every way, shape, or form, which I think is great.

Scott Bursey (09:30)
That makes complete sense. And eager to discover where do you see the most compelling market opportunity in real estate backed private lending over the coming year?

Michael Columbia (10:29)
So I think visibility is gonna be key Private money right now is booming. There’s a lot out there, everybody’s switching over to private money. which is great. Well, when that happens, that’s where cracks start happening. Visibility to borrowers, visibility to clients, investors, you name it. Investors trying to figure out what’s going on with their money and clients trying to figure out how to get the deal approved, right? calling a bunch of different

private lenders talking to a loan officer, loan officer says no but doesn’t explain why. Loan officer says this and doesn’t explain why. Loan officer says yes and five minutes later changes his mind because he went to the underwriter and the underwriter. So all of these little things, I think clear visibility. Again, that’s where our program comes into play where you’re not going to get that. You’re everything is right there. It’s gonna tell you no and it’s gonna tell you why. It’s gonna tell you yes and it’s gonna tell you why. It’s gonna tell you yes with conditions and tell you why. everything is and most people

in the world, they just want to know the whys, right? our program does that for them. So it gives every stage or anybody involved anywhere through the process the whys. it doesn’t say do this and you’re gonna be approved guarantee, right? That’s not how it works. But it’s definitely very clear of, hey, this is what is needed, this is where you’re at, yada. So I think visibility is gonna be the most key to keep everything intact, right?

‘Cause when that doesn’t happen then borrowers start getting mad and start looking elsewhere, investors start getting mad looking elsewhere and that’s where it starts to kind of crumble.

Scott Bursey (11:50)
And keen to explore our specific asset classes or geographic regions showing the strongest risk adjusted yields right now.

Michael Columbia (12:00)
So we really like hospitality and hotels right now. those sort of things. We still do like multifamilies, but we’re we are kind of a little bit tentative on them. And then depending on where they’re located, we don’t like rural very much. some markets have been saturated, markets in Texas have been saturated quite a bit, Arizona, little things like that where it was booming. So it’s starting to get quite saturated. But there’s still a lot of markets out there,

North Carolina, South Carolina, places like this where the markets are still great. so just because an asset class may not be the greatest in one market doesn’t mean it’s not going to be good in another market. so it’s, shifting through, the market cues and what’s going on in each location. we are a national lender. We don’t just stick to one state or one location. So our underwriters are big on, understanding that market before even issuing an approval.

we do like our sunbelts deals just because we’re familiar with them, right? it doesn’t mean that they’re any better than, other markets. It’s just familiarity. I think every asset class has a strength in a different market. just because it’s not so great in one market doesn’t mean it’s good in another. RV parks and things like that on the West Coast are booming right now. so it just kind of depends on where it’s at.

Scott Bursey (13:06)
Great context right there. And looking to unpacked, what macroeconomic threat or market headwind keep private commercial lenders alert in today’s environment in your view?

Michael Columbia (13:19)
Yeah, well, I think it really just depends on what people are shifting to, again, we’ve all been sitting on multifamilies and it’s been a big, big thing for a while. and the question was why that was happening, right? We know that the market and COVID and everything kind of changed how things were doing and the market, shifted itself based on all that, right? So, everything’s gonna depend on how the market’s doing, right? Hospitality and hotels and things.

Why? if the market’s booming right now, why? We currently have a deal right now in Punta Cana, Dominican Republic, for Condo Hotels that we are in the middle of finishing right now, where hotels out there are 79.4% year round sold out. Most markets it’s sixty to seventy. Why is that? so and how long it’s been doing that? Is it just a market fluke? Is it just this year? Is it,

what’s really going on. So in any class, I think that’s just kind of the key of what to pay attention to when things are happening and, everything above, right? We got a whole lot of things that move our real estate markets. So it’s hard to like, key on one specific thing, but the entire market moves how real estate works and what is good and what is what is not so good,

Scott Bursey (14:21)
Interested to know how is midpoint capital fund one structuring its positions to remain resilient against rate fluctuations?

Michael Columbia (15:12)
Sure. so our rates, our bridge rates kind of range from eight to fourteen percent depending on risk factors. and so we have risk factors built in there, right? So we have sponsors history and all these little things that is gonna determine the rate that is gonna help us fluctuate with what’s going on. they did just recently raise rates, so this things like that are gonna affect rates.

I think our rate kind of spread that we have really kind of sets us up where i we don’t need to change it, a year from now or two years from now. I think we’re gonna be kind of right in the realm of where it’s gonna be then. So I think we’re kind of set up for good. the only thing that really kind of keys in is maybe a little bit of our factors where it’s like history, right? sponsor history. Sponsor history is a big thing nowadays. I think a lot of investors are forgetting this, when they’re looking for loans and rates.

that track history is really gonna determine a lot of times if you’re approved or if you’re not and what your eight’s gonna be. it’s kind of your credit, so to speak, when you’re developing something or going into the commercial world.

Scott Bursey (16:06)
Michael, how do your cross border commercial banking experiences in the US and Asia give you a unique edge in structuring fund relationships?

Michael Columbia (16:15)
I lived in China for two years in Shanghai and had a lot of experience in the Asia markets. changed the way I view banking, to be honest with you. United States banking is very different than international banking. So there’s a lot more things that can be done internationally, that most people don’t realize that, don’t happen here in the US. could be because of regulations, whatever the case may be. but it did allow me to

Can I get a $10 million loan, right? It becomes like the hardest thing alive. then you go and get it, and all of a sudden it’s like, well, that’s easy. Now can I get a $20 million loan, right? So the international world kind of fast tracked me when I was really young in my twenties that opened the door of what is possible and what is not possible, right? something’s holding me back and why? most people forget to ask the why. What is holding the situation back?

Scott Bursey (16:55)
if you could expand and give us a little bit of insight from the global perspective and commercial banking, how does that translate best to individual accredited investors and the relationships today in your view?

Michael Columbia (17:08)
I think, a credit and credit investors right now worldwide are looking at private money. there’s more in people right now investing, and that means they’re pulling away from their commercial banks and, their typical investments. it’s not necessarily just because the return is better, because a lot of investment banks and things like this can get the same kind of returns we can get for their customers.

and I think they’re just looking for that more personal touch, right? these big big large banks and commercial banks and things, they’re losing that personal touch. So my investors, they can talk to me as an example, They don’t they don’t have to talk to my investor relations person. They can talk to Michael Columbia,

they’re investing in my fund. I they if they want to get a hold of me, they all they have my cell phone number. there’s a little bit more personalness to the whole thing, which I also think they like more, credit investors, in theory, they have some money. they like a little bit of respect. And the word respect really is just talk to me, like a human being, I don’t need the fluff.

that guy over there is gonna give me.

Scott Bursey (18:06)
Michael, if you could describe and walk us down the path of what does your professional network look like right now?

Michael Columbia (18:12)
So we currently have relationships with a lot of investment banks, RIAs and things like that. my business partner is partners with some famous people. have quite a large network of accredited investors and huge network of developers and investors who are just investing in real estate. my whole career being that’s what I’ve done, that’s pretty much everybody I know. So

if you if you know me, you probably are in real estate of some wo some way, shape or form. Right. So anybody and everybody, from investors that are just doing fix flips to brokers to, accredit investors to large institutional investors, those are

Those are people that are acquaintances and friends. it’s not just, people I call up to get money from or people I call up to get a deal from. I would say a very small percentage of my network is actually what’s funneling into my companies. just because I’m not going out there selling my network of people, I guess. if they’re interested, sure, I’ll give them the information. But, they’re just friends. I like to pick their brains, surround yourself with people who know stuff and that’s how you learn more. So

I like to feed my brain with as much information as I can. And a lot of times, over a football game, you don’t realize it, but you’re you guys are talking something that just keys something in your mind, right? So it’s always great to do that.

Scott Bursey (19:20)
an accredited investor seeking to deploy capital into real estate debt today, what is the most important rule they must follow to protect their principal?

Michael Columbia (19:31)
what their appetites for. right. So LTVs are gonna be, crucial particular projects in particular markets. So when you’re looking at a specific type of a deal, right? as an example, our investment disclosures. if we’re gonna present the deal to an investor, it’s gonna talk about the market and the deal in the market, which was our questions earlier, right? So that’s gonna be key. It could be a 50% LTV and

a projected ROI of amazingness and all of these great things. But if it’s a project that’s in a market that’s just, not a market for that type of project, that’s a red flag. so I think it’s really looking at all the risks. every single project, every single deal, every single investment’s gonna have risks, right? There’s absolutely not one out there that has zero. If you find it, please send it to me. I would love to do it. but the question is look at all those risks.

don’t overlook them. Don’t just look at the good stuff. review the risk, understand the risk, ask the why on every single risk. And, if it’s within your appetite, great. but if you’re not looking at the risks, then you’re not looking at the deal, right? It’s just like an underwriter, right? We can look at all the great stuff on a deal and it looks beautiful, but what are the risks? Every deal has risks,

they’re there. they’re live and you can see the risks and then you can see our mitigations around the risks. it’ll show you what we see the risks and what our choices are going to be based on ABC DOG. but we make sure that they’re there. deploying the investor’s capital to a deal. But we also want the investors to see them.

I think people forget to look at the bad stuff in a deal.

Scott Bursey (20:56)
That’s some powerful perspective right there. And Michael, you have given us a lot of great words of wisdom. Some great perspective today. But is there any additional words that you like to leave with our listeners?

Michael Columbia (21:08)
Sure. If you guys are interested in investing in a fund like ours, feel free to go to midpointcapital fund one dot com. There you can see everything, understand it, see how it works. I think it’s a great thing, even just for your knowledge. and if you’re a if you’re in a real estate investor looking for financing, midpoint capital partners dot com, go there. same deal. You can go through our connect and you can see if we can help you don’t have to be blindsided.

both ends of the spectrum, we have things here to help you out and get you kind of on the right track.

Scott Bursey (21:38)
For those of our listeners that want to keep this conversation moving, stay in your lane, or perhaps collaborate with you on future deals. What is the best way for them to plug into your pipeline and reach you directly?

Michael Columbia (21:50)
Sure. You can send me an email for starters. My email is always open. Michael Columbia at midpointcapital partners dot com. find me on LinkedIn. My LinkedIn is public. Everybody can find me. again, I get a lot of messages through there from real estate people. again, or just go to their website, send in a contact form, say, Hey, I want to talk to Michael. they’ll send it right over to me. So you can

call her office, you can talk to a receptionist, if I’m available, I’ll pick up the phone. So any way you can think of, I I’m available. Definitely.

Scott Bursey (22:16)
Michael, thank you so much for joining us today on the Real Estate Pros podcast.

Michael Columbia (22:20)
Thank you so much.

Scott Bursey (22:21)
This has been an absolute master class. And to our listeners, we appreciate you. If you receive value from today’s episode, please subscribe. We’ll be fueling your tanks with a lineup of elite guests, just like Michael Columbia, who are accelerating and setting the pace for the rest of the industry. Until next time, keep your standards high and your vision clear. We’ll see you on the next episode, everyone.