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Show Summary
In this episode of the Real Estate Pros podcast, host Michelle Kesil interviews Gregg Kennedy, a hard money lender specializing in fix and flips, DSCR loans, and ground-up construction. They discuss the intricacies of private lending, the importance of managing client expectations, and the criteria for successful lending. Gregg shares insights on common pitfalls in real estate investing, the significance of networking, and how to build strong relationships in the industry. The conversation emphasizes the need for thorough research and planning in real estate ventures.
Resources and Links from this show:
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- Investor Fuel Real Estate Mastermind
- Investor Machine Real Estate Lead Generation
- Mike on Facebook
- Mike on Instagram
- Mike on LinkedIn
- Gregg Kennedy on LinkedIn
- Gregg Kennedy’s Website
- Gregg Kennedy on Facebook
- Gregg Kennedy’s Email: [email protected]
- Gregg Kennedy’s Phone Number: (732) 543-7735
Listen to the Audio Version of this Episode
Investor Fuel Show Transcript:
[email protected] (00:00)
Sure, so we deal with all different types of investors across the nation, different experience levels, things like that. We work with newbies where a lot of our len… you know competitors don’t. Listen, we look to mitigate risk, so sometimes a newbie’s gotta put down a little bit more of a down payment. We do take credit into consideration, so.We have a high FICO box. your FICO score is 740 or more, we can get you up to 90 % of purchase price, 100 % of rehab, which is a very good deal for someone with no investment real estate experience behind them.
Michelle Kesil (02:11)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil and today I’m joined by someone that I’m looking forward to chatting with, Gregg Kennedy, who is a hard money lender focusing on fix and flips, DSCR, ground up construction. So excited to have you on the show today, Gregg.[email protected] (02:35)
Thank you, Michelle.Michelle Kesil (02:36)
Yeah, of course. I think our listeners are going to take something away from how you’re approaching helping your clients get deals. So let’s dive in. First off, for those not yet familiar with you and your world, can you share what your main focus is?[email protected] (02:58)
Sure. ⁓ I’m with Civic Financial. We’re based out of Manhattan, New York. We are a nationwide investment real estate lender for fix and flip, DSCR loans, and ground up construction.Michelle Kesil (03:15)
Awesome. And you are operating across all 50 states.[email protected] (03:20)
I think 48 now. We’re not in the Dakotas, but we’re everywhere else.Michelle Kesil (03:24)
Okay,awesome. And how long have you been in this business?
[email protected] (03:33)
So I started on Wall Street. been, you know, worked ⁓ equity salesman ⁓ on Wall Street for, you know, from the 90s all the way to about 2012. ⁓ Transitioned over to wealth management and then was doing a lot of lending there for my clients and ⁓ got into the private lending space in about 2018. So I was lending a lot at the, you know,Michelle Kesil (04:00)
Awesome.[email protected] (04:02)
big money centers, JP Morgan Chase, Prudential, ⁓ and then transition into the private side.Michelle Kesil (04:04)
We’llYeah. And what have been some of the main keys that have allowed your business to be able to grow and to run smoothly.
[email protected] (04:22)
Sure, mean one thing I learned is big money centers, the banks, even the smaller banks, they don’t want your business. Especially the JPMorgan, the Chases, the Bank of America, they could care less about it. They’d rather, you know, these small business, these small loans, they don’t have an appetite for it.There’s definitely a need for private lending. We saw a lot after 2008 when banks stopped picking up the phone unless you owed them money. So that’s really where this space came on. And back then there was a lot of, a few lenders and a lot of borrowers needing it. And now it’s kind of transitioned. Now we’re seeing a lot more, you know, lenders in the space. So. ⁓
you’ve seen, know, borrowers have seen pricing rates compress, which is obviously better for the borrowers.
Michelle Kesil (06:02)
Yeah, absolutely. Can you share, I know you mentioned you do fix and flips, DSCR and ground up. Yeah, can you expand a bit on what some of those processes look like when you are with your clients that are investing in these different types of ⁓ real estate opportunities?[email protected] (06:26)
Sure, so we deal with all different types of investors across the nation, different experience levels, things like that. We work with newbies where a lot of our len… you know competitors don’t. Listen, we look to mitigate risk, so sometimes a newbie’s gotta put down a little bit more of a down payment. We do take credit into consideration, so.We have a high FICO box. your FICO score is 740 or more, we can get you up to 90 % of purchase price, 100 % of rehab, which is a very good deal for someone with no investment real estate experience behind them.
Like I said, you know, I deal with guys that have flipped 50, you know, anywhere from three to 50 properties a year.
So we have all sorts of different borrowers, different borrower needs. ⁓ Once you get on our platform, it’s pretty smooth. We’ve already underwritten you, the sponsor. Now it’s borrowers bringing in new deals and we’re just underwriting.
the new deal coming in. So it’s a very smooth process. We try and fund these loans between seven and 10 days. We need clean title and we need an appraisal. And now we’re rolling out internal valuation. So ⁓ we’re funding deals. Our turnaround time is getting a lot faster. We’re rolling that out next week actually. So ⁓ borrowers will send us pictures and…
know we have that appraisal done in eight to ten hours the you know that’s you know internal evaluation done on our you know New York City office so increasing the turnaround time and the speed a little bit different on the DSCR loans these all these ⁓ DSCR loans get packaged up and sold to Wall Street so we do need a full inspection of the property
Michelle Kesil (08:20)
Yeah.[email protected] (08:32)
So, you know, we try and manage clients’ expectations. Listen, it’s got to be a group effort. You’ve got to, you know, start title from day one. We’ve got to get the bar. We have to get the appraiser access in and out of that property. So we need, you you have to work with us, whether it’s, you know, a purchaser or a refi coordinating with the appraiser, getting them in, getting them out. And then it’s my team’s job to get that report back in the appraiser ASAP.Like I we’re doing a lot of ground up construction, which is a different animal than fix and flip, a little bit more complex. We have a large appetite for that. We’re getting a lot of those loans in and across the nation and we’re starting to do a lot more infill projects. Sponsors putting up 10 to 12 units. So we’re seeing a demand for that and we are filling that void, supplying the capital for it, the debt for it.
Michelle Kesil (09:36)
Yeah, absolutely. Do you often encounter investors that are hesitating to work with the lender and what are kind of some of those hesitations that they might have and that you help them resolve?[email protected] (09:40)
you often go to bathroom. That’s true.Sure, I mean we work with a lot of people that are well capitalized and you’re paying cash for these properties. We preach to them about how we can help you scale your business, positive leverage. We don’t give 100 % financing or anything like that, but we can help you from doing one or two properties a quarter to maybe four or five.
taking on more properties with using leverage from our debt funds. So we’ve made a lot of clients a lot of money. ⁓ We do what we have to do. The client’s got to perform on his side. He’s got to execute. He’s got to the marks. mean, they’re coming into us. Hey, I can turn this property around in two months, three months, six months, nine months, whatever the case may be. And we look at the scope of work. We work with them.
you know, I turn away loans, you know, some borrowers have false expectations and listen, as a lender, our main concern is getting our funds out in the street and getting it back. If it’s a bad deal, I’m trying to tell my clients up front, know, listen.
We do ⁓ probably do a thousand loans a month, so we know good, bad, and mediocre. When we’re charting a loan down, it’s because it doesn’t make sense. We’ve done our homework. ⁓ We have state of the art technology. We can go into different markets and see what’s trading. So we…
provide expertise there on the valuation and listen, I don’t like turning away loans, but if it’s a bad deal, sometimes a borrower’s best deal is a deal that they don’t do. Because we’ve seen people get into trouble before and help them manage their expectations. no, valuations are trending this way. Lenders don’t look at where things are trending. They’re looking at yesterday, where these comps closed. ⁓
It’s a big difference. Everyone’s forecasting, the valuations or prices are going to go up 5%, 10 % this year, or 3%, whatever the case may be.
We have to sit there and talk to client through it. Like, we go off of comps, right? What’s sold? Anyone can know, well, this property’s on the market for a million dollars. That means nothing. If that property sold for a million dollars a week ago, a month ago, three months ago, that’s a different story. So it’s a lot of educating and listen, we want to help our clients. We want repeat business. So it’s, you know, it’s give and take and it’s we learn. I learn from my borrowers. My borrowers learn from me and
I learn from my people in my office, appraisers, so we see a lot and we learn a lot.
Michelle Kesil (13:15)
Yeah, that makes a lot of sense. What are some of like the red flags that you would categorize as a bad deal?[email protected] (13:24)
⁓ Like I said, borrowers want to do deals just to do a deal. ⁓ They get so excited, they’re just kind of not looking at the big picture. ⁓ Seeing borrowers go across state lines. Someone live in Ohio, think they’re gonna do a fix and flip down in Miami, they don’t even live there.So these are red flags like, hey, we don’t feel comfortable. Most lenders aren’t gonna feel comfortable. You’ve never been in this market, you don’t know it. Real estate is different, it’s location, location, location. So what works in Ohio doesn’t necessarily work in Miami or Georgia or Tennessee. we see a lot of that. A lot of California borrowers wanna, the market is so expensive in California.
They want to get in a lower priced markets like Ohio, Cleveland, parts of Michigan, things like that. And we have to, once again, manage your expectations. You don’t know this market. You need boots on the ground and ⁓ their regulators work different. The zoning officers work different. So a lot of that we encounter.
Michelle Kesil (14:41)
Yeah, definitely it’s important to know those things.[email protected] (14:45)
Yes.Michelle Kesil (14:48)
What are you most focused on solving or scaling to next in your business?[email protected] (14:56)
I mean here at Civic we’re always trying to improve. ⁓ We want to help our clients. We appreciate client feedback and a lot of it’s speed, right? Everyone wants everything done yesterday. with our technology we’re constantly upgrading, ⁓ improving that, making it more efficient.the appraisal process in-house valuation, that is speeding things up immensely. We’ve already beta tested it, so when that hits the market, our turnaround time is going to really explode. And that’s the name of the game, right? The stock market used to take a week for stocks to trade to clear, then it went down in three days, now it’s two days. That’s the way the industry is going.
Michelle Kesil (15:42)
Yeah, absolutely.[email protected] (15:44)
faster turnaround time.Michelle Kesil (16:31)
When you’re working with your investors, are there certain criteria that you have for the ones that you’re working with or the ones that you turn away?[email protected] (16:44)
Sure, mean listen, we want to see the experience. I want to see what you’ve done in the past. Are you in the trades? Are you a plumber, a handyman, an electrician, licensed GC? Are you a mortgage professional, realtor? I want to see your credit. How are you treating your other lenders, your mortgages? Are you having lates? Are you behind on payments? We don’t want to be the next guy in line waiting for you to pay off, so we look at that. mean, we have to…My advice to people getting into this industry is as much as I know you want to fix up houses, you also have to fix up credit. That’s very important if you’re going to be in this business. We’re an institutional hard money, so we have guidelines, we have people to answer to, institutions. If a loan goes bad and this person has 600 FICO score and he’s, when that loan came in, he was already behind on three mortgages.
Our investors are gonna be like, why would you lend to that person? And they could push that loan back on us and now that’s our problem. So listen, we want repeat business. We want the client to make money. Obviously we’re lending our money. We want this money coming back. ⁓ We’re providing our deal, our terms. You know it upfront. Get the job done. That’s the name of the game, right? You procrastinate, it’s gonna hurt you.
⁓ The faster you pay us back, the more you make and the less we take. And that’s what I try and preach to my borrowers. Speed is everything. Obviously, do it, do it right, stick to your plan.
That’s where I see my most successful investors, that business plan. Have a plan, obviously. A bad plan is better than no plan, so don’t try and wing it. Go out there and you can find a lot of information on our websites, YouTube, your channel. ⁓ See what other investors are doing. You’re not reinventing the wheel here. See what works. Ask your account executive, hey, what have you seen in the past? How have your successful borrowers done it?
We’ll gladly provide the information for you and your YouTube channel and your website provide a lot of information and your podcast.
Do your homework is what I’m trying to say.
Michelle Kesil (19:09)
Yeah, definitely there’s a lot of resources out there for people to learn.[email protected] (19:16)
Yep. Agreed.Michelle Kesil (19:20)
What are some of the common, like you mentioned, there’s a lot of things that you’ve learned from over the years, like what are there any common patterns that people fall into that if they maybe knew something in advance, it would be mitigated?[email protected] (19:42)
Like I said, have a plan. Putting things off and you have to prioritize. I have guys ripping out kitchens and bathrooms and I’ll make $30,000, $40,000 a quarter or a month, however long it takes them. You gotta manage your personal finances, right? A of these fix and flippers, they don’t have a full-time job.So we know like, hey, bills come in, right? You have a home mortgage or rent, car payments, kit payments, food. So you got to manage that. You got to manage your budget and then you have to manage ⁓ your project, right? You want to know exactly, you know, try and pin down as precisely as possible. Hey, what’s this going to cost us? What is this out sale going to look like? How are you coming up with this ARV, you know?
Realtors will tell you anything, They want that commission upfront and then they’re gone. The borrower, he’s got to bear all the risks. So he’s got to do his homework. You can’t just believe in blind trust. Okay, Mr. Realtor, how are you coming up with these numbers? What are you seeing? If I put $50,000 into this project, how am I going to get to that $400,000 out sale? Don’t take their word for it. See it. Show me the comps. Look at it.
A lot of this stuff can be seen online. You can see the pictures. Is it a dated kitchen? Is it a new kitchen? Has this property been worked on? There’s a lot of things these borrow you as a borrower. I listen, I fix and flip homes too. I’ve got rentals. You gotta wear a lot of hats. And this is your money. this is your livelihood. You gotta take pride in it and know every facet of it.
Michelle Kesil (21:27)
Absolutely. When it comes to growing your business, whether that’s through networking or other modalities that you are using, what are some of the things that have made the difference for you?[email protected] (21:42)
For me personally, sure, networking, asking for referrals. I preach to my salespeople, it’s get on that phone. ⁓ The more people you speak to, the more people you get in front of, the higher probability you have of getting loans in. To sit back and think this phone is gonna ring is naive and it’ll be tough to make your, you know.make your car payments, your house payments, if you sit and wait, you gotta be proactive, get out there. Get out to these meetups, ⁓ social media posts, ⁓ real estate groups. We do a lot of nationwide conferences. Miami, Las Vegas, Californias. I just hosted a meetup last week in my home market in New Jersey, Monmouth County over in Cold Snake. You know, probably had.
This is a small 25 investors local and we sat around, some drinks, some food, talk shop. Hey, what’s working for you? What are you seeing? And that’s it. You you gotta get, you know, you have to let people know what you do. So I work, you know, I drive around a lot. I see someone working on a house, pull over, I’ll bring coffee in. You know, I’m not a realtor. People want to talk to me. I have money. ⁓
And a lot of times it’s not instant gratification. It’s like, all right, your next deal, let’s talk. I see you knocked on his house. Oh, this looks great. It’s going on the market. I’m here for you. Me personally, I worked out. I want people at a 20 mile radius to know what I do. And then obviously I got a machine behind me at Civic. We have data science. have a marketing team.
We know pretty much every borrower, not personally, but we know every borrower in the United States. I’m exaggerating a little bit there, but it’s our job to know. They feed us the information, it’s me and my team getting out, getting in front of clients, educating them. I’d love to say I could just sit back on social media, push out deals, but it’s not. You gotta roll up your sleeves, get dirty, speak to people, and ask for referrals.
Michelle Kesil (23:58)
Yeah, absolutely. The way that you build relationships is everything in this space.[email protected] (24:04)
It is. You do a good job and you over serve your clients, you will get referrals. And listen, a lot of these people hang out together, so like they’re contractors and so hey, they meet people at the Home Depot, at the Lowe’s, wherever they’re getting their lumber or their equipment and they talk. You wanna have people, it’s a lot easier when someone calls me and says,Michelle Kesil (24:26)
Yeah, absolutely.[email protected] (24:35)
Joe Smith just recommended you, right? There’s a lot less resistance or People say hey reach out to this guy. I know he’s doing it Hey Joe Smith told me to reach out to you like the resistance from the borrower it goes down because I came in recommended so it’s you know, you got to work it at every angle and You know at sales you got to treat it like a sport full contact getting there Sorry civic new leadMichelle Kesil (24:39)
Mm-hmm.[email protected] (25:02)
The phone’s ringing, so that’s a good thing. Yeah. That wasn’t planned or anything. I mean, that’s the name of the game, like getting in front of clients. I’m sorry, I can’t even turn this off until one of my salespeople pick up. Can you hold on one second? Oh, good. Sorry. I can’t stand when a phone rings.Michelle Kesil (25:03)
Right on topic.Yeah, okay, no worries at all.
Yeah, awesome.
[email protected] (25:31)
It’s after hours,so it’s later. So I’ll give my salespeople a break. They’re not picking up at 6.30 Eastern time.
Michelle Kesil (25:39)
Right? Awesome. So before we wrap up here, if someone wants to reach out, connect, collaborate with you, where can people find you?[email protected] (25:49)
Sure. Once again, my name is Gregg Kennedy. I’m at Civic Financial. You can look me up on LinkedIn.I mean email addresses you can see it on the screen there, but gregg.kennedy @ civicfs.com My direct line is 732-543-7735 Like I said, you can see go to our website all my contact information is there LinkedIn Facebook. I’m on everything you can imagine
Michelle Kesil (26:18)
Perfect.[email protected] (26:19)
Michelle,Thank you for having me on here.
Michelle Kesil (26:21)
Of course, I appreciate your time and your story. Thank you for being here. Yes. And for those listeners tuning into the show, if you got value, make sure you’re subscribed. We have more conversations with operators just like Gregg, who are building real businesses, and we’ll see you on our next episode.[email protected] (26:27)
Thank you, Michelle. Bye bye. -
