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How Builders Get Funded Before Plans & Permits | Private Lending Strategy

By January 22, 2026Real Estate Pros Show

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Show Summary

In this episode of the Real Estate Pros Podcast, host Micah Johnson interviews Matthew Del Medico from Hondo Finance, a private lending firm focused on financing builders of spec homes and fixer-flippers. Matthew shares his journey in the real estate financing space, the unique offerings of Hondo Finance, and the challenges they face in finding qualified investors. The conversation emphasizes the importance of relationships, knowledge, and transparency in the real estate industry, as well as the opportunities in new construction amidst a housing shortage.

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    Investor Fuel Show Transcript:

    Matthew D (00:00)
    Absolutely. If you look at inflation over the last few years, it’s increased labor cost, material costs as well. And I know a lot of flippers, they know their markets. But obviously, with that inflation, if the materials are not what they were a year ago or even six months ago, that completely changes the dynamic of the project, changes their profit margins. So yes, for someone like us to be able to give them less expensive financing, especially at a time when their costs are higher, we’re definitely creating value for investors.

    Micah Johnson (02:00)
    Hey everyone, welcome to the Real Estate Pros Podcast. I’m your host, Micah Johnson. And today I am joined by Matthew, who’s been making serious moves in the private lending space, specifically for builders of spec homes and fixer flippers and long-term holders. Matthew, welcome in, man. Glad to have you.

    Matthew D (02:18)
    Thank you, Micah. Thank you for having me. Excited to be here.

    Micah Johnson (02:20)
    ⁓

    I’m excited for you to be here. Based on our pre-recording talk, I think our listeners are really gonna take some great information away from how y’all approach it is what you do and making sure that people are successful in the end. So let’s dive in. For people who don’t know you yet, tell us a little about who you are, what your main focus is right now and what markets you operate in.

    Matthew D (02:41)
    Sure. So again, my name is Matthew Del Medico. I’m with a firm called Hondo Finance. We’re based out of Norwalk, Connecticut. We’re a relatively new firm we launched last year. We set up our credit facility last year as well. We’re specifically lending for spec builders and fix and flippers. We have some pretty competitive terms as far as these types of products. So for any opportunities that investors have, whether it’s short-term or long-term, we can be a go-to solution to get them that financing.

    Micah Johnson (03:11)
    Man, that’s excellent. let’s take a step back. What led y’all to opening Hondo? Tell me the story of how that came to be and how you’re a part of it.

    Matthew D (03:20)
    Sure. So I’ve been in the real estate financing space since 2006. I spent my first five years, again,

    securitizing mortgage-backed bonds. We all know the story that happened there with the subprime credit crisis. I was basically a spoke in the wheel of that entire operation. After that market collapsed, I got into financing both asset-based and small business loans, but we found that there was a gap

    for real estate investors who are looking for fast funding to capitalize on these types of fix and flip and ground up projects. So after 11 years on networking, working with my colleagues, just building my own presence and expertise, a handful of us came together last year to launch Hondo Finance specifically to help these types of real estate investors.

    Micah Johnson (04:07)
    Oh man, that’s awesome. And it lines up with real estate in general. This is a real, this is a relationship business. Each part of it is very much determined by who your network is, who you know, that’s how we put things together. And the products and people I see go the furthest are the ones that are connected that way. So man, that’s awesome to hear. So look, take us through what your, sets y’all apart? What is it that y’all are out there doing in this space? You mentioned that gap. Y’all saw this gap.

    Take us through that. What is it that you saw and how are y’all feeling it?

    Matthew D (04:40)
    One example I can give you specifically for spec building or for ground-up construction. What I’ve been learning is a lot of builders that I speak to sometimes have difficulty getting financing because they normally have their plans and permits approved post-closing. So a lot of construction lenders want to see builders have plans and permits in hand before they give them the financing.

    So what we’ve been able to do is through our credit facility,

    we’re actually able to fund these builders pre-permanent plan approval so they can get their acquisition, get that lot, get that house, and then demolish it, right? That’ll immediately create some value for them. Then once they get their plans and permits approved, we can then refinance them into the construction loan and just continue for them to do the build.

    Micah Johnson (06:18)
    Man, that’s excellent. Because as investors, capital is the hardest part is what you start to learn. It doesn’t become so much the deal anymore, what you’re looking for. As you get better and better at finding those, where am I going to get the money to get that project done?

    Matthew D (06:32)
    Exactly. Exactly. And we’ll give

    them all the money at once so this way they can get started and get right to

    Micah Johnson (06:38)
    And that’s man, sets a, because timing is everything in real estate, right? Like, especially if you’re doing ground up construction, fix and flipping, like right now, fix and flipping is a, it’s a tougher industry because you got to predict longer holds. can’t, you can’t guarantee the amount of money you have to get the deal at, right? You got to buy deeper right now. You got to manage expenses way better just simply due to that section. So speeds everything.

    Matthew D (07:03)
    Absolutely. If you look at inflation over the last few years, it’s increased labor cost, material costs as well. And I know a lot of flippers, they know their markets. But obviously, with that inflation, if the materials are not what they were a year ago or even six months ago, that completely changes the dynamic of the project, changes their profit margins. So yes, for someone like us to be able to give them less expensive financing, especially at a time when their costs are higher, we’re definitely creating value for investors.

    Micah Johnson (07:32)
    Take me deeper on that. So how are y’all going about getting them those better rates, being flexible there? What is it that Hondo is doing specifically to help investors?

    Matthew D (07:42)
    Yeah, it’s really with our capital providers. So most lenders will have one big credit facility that’s managed by a bank or any type of large financial institution. So we’re working more with hedge funds and fund of funds that will give us this credit facility, but let us be more flexible of what we can offer. So based on that, like an average fix and flip or even a ground up construction loan will be anywhere from let’s say 10 to 12%.

    We’re actually coming in sub 10 % on rehabs, anywhere from nine to nine and a half. Believe it or not, I’m actually underwriting two construction loans in North Jersey at 8.75 for a builder who’s been in the business for quite a long time. He’s doing like 40 million a year, but these are rates that are unheard of in this space. But this again goes back to our capital providers that are able to give us that flexibility so we can literally save these people thousands of dollars with their bills, with their investments.

    Micah Johnson (08:38)
    Now, was that originally the plan going in as y’all were brainstorming Hondo about, okay, we got, see this gap, we’ve identified it. How are we going to feel it? Was this that mindset all along?

    Matthew D (08:49)
    Yeah, that’s an excellent question. So it’s a very competitive landscape, right? There are a lot of lenders out there. There’s a lot of brokers. There’s a lot of brokers that say they’re lenders. You don’t know what to get. And a lot of these guys charge all the same. So with us coming in lower or coming in cheaper, we felt this was our niche to grab market share and at the same time create value.

    Micah Johnson (09:10)
    And between y’all, there’s quite a bit of experience, right? Like between you and your partners, I think you mentioned over 50 years total experience in the finance space, which real estate teaches everyone experiences, everything. It’s everything like what you know is what saves you money. And it’s, usually when you don’t know it, it’s what costs you money. That’s why you learn that lesson. Right. Right. That was, I was talking with a guest previously, especially if you’re

    Matthew D (09:13)
    Yes.

    Yes.

    Exactly. Yeah, and you don’t want to learn the hard way. That’s right. Exactly.

    Micah Johnson (09:37)
    So someone’s that they’re getting into real estate. They’re trying to change their life forever, use it for generational wealth. And you do a hard first deal or even second deal. You may not do it anymore. It may turn you off. And what could have been the vehicle that changes your family forever, you decide it’s not for you anymore, simply just because it was a knowledge issue, it an education issue.

    Matthew D (09:56)
    Exactly.

    Exactly, ⁓ Knowledge is power, as they say. You gain knowledge with experience, but if you can have a firm or even a resource that maybe can guide you on the right path so you don’t make those same mistakes, all the more power to people working together to facilitate that for each other.

    Micah Johnson (10:55)
    Absolutely, man. I think it’s Arnold Schwarzenegger’s quote. Maybe it’s not a quote, it was a question they asked him. How did you become a self-made man? And he says, I didn’t, I’m not. I got here on the backs of Titans. And I think that’s something that’s interesting, especially about the entrepreneurial space in general, but in real estate. You get started and you quickly can feel like you’re on an island.

    Matthew D (11:07)
    There you go.

    Micah Johnson (11:19)
    You can quickly feel alone. Like you don’t know. Cause all of a sudden you’re seeing, my God, how much I don’t know. And you don’t even know what you don’t know. And you’re already feel like you’re drinking from that fire hose. So filling that gap for folks where, Hey, slow down, take a deep breath. This is what we can do. This is the information you need. I feel like that’s the game changer.

    Matthew D (11:39)
    Absolutely, and people feel more comfortable that way. They appreciate that. And again, a guiding hand to help people succeed is what we’re here to do.

    Micah Johnson (11:47)
    And it’s, that’s what we’re all trying to do anyways. Right. And that, especially in the lending space, if you’re making sure that who you’re lending to is successful, that only makes you successful. Right. We talked about that a little bit before it’s more of an abundance mindset mentality than a, know, just trying to make money one, even though that’s what we all want to do. However, if we’re all doing it well and we’re helping each other do it well, high ties raise all ships.

    Matthew D (11:58)
    That’s right.

    I was about to say that. Yeah, rising tide raises all the old adage. You’re absolutely right. It was literally in my mind. Excellent. Great minds think alike. Think alike, Micah. All right.

    Micah Johnson (12:17)
    Yeah.

    Great minds think alike, Matthew. ⁓ see?

    Okay, so let’s shift gears here for a second. Tell us, what are you focusing on this year? What do you think the big opportunity is for y’all?

    Matthew D (12:33)
    I feel the big opportunity is new construction. We clearly have a housing shortage. We clearly have ⁓ people that are struggling to afford housing. We need more homes to bring prices down, to increase that supply. So we feel focusing on new construction nationally is going to be where we feel the best opportunities for our firm is.

    Micah Johnson (12:54)
    steps you all taking to capitalize there? How can, so if an investor is listening to this thinking, okay, new construction there, what kind of mindset do they need to have in coming to work with you?

    Matthew D (13:04)
    Sure, so we want them to have some experience having some of these projects under their belt. We want them to have an understanding of their scope of work, what it takes to get this built from start to finish, basically all the general ⁓ qualifications that a builder would normally have. I can always speak to someone to make sure they’re on that page and we can always guide them if they’re not ready yet to get them where they need to be so when they are ready, we can jump on it and fund their opportunity, if that makes sense.

    Micah Johnson (13:32)
    man, that’s excellent.

    Cause sometimes you’re not ready yet and hearing it, it’s not our favorite thing to hear, but hearing it is the truth and walking them again. You’re talking about that, holding that hand through success, making sure, okay, if you want to do this, here’s how you get to do this. This is the next step to take and the next step to take. Cause that’s again, typically the hardest part. If you don’t know what step to take, where do you go?

    Matthew D (13:36)
    Exactly.

    Exactly.

    That’s right. That’s right. And a lot of people hit the wall that way, you know, I mean, they, want to do it, but then they’re not sure or they’re unsure because of their lack of experience or lack of guidance and they miss the opportunity. And then some people may give up entirely and never revisit it. Or some people may go on another opportunity, up losing money and giving up that way. So if we can prevent that from happening right from the start, we can mold somebody to be successful long-term for themselves.

    Micah Johnson (14:21)
    Exactly. Because once, if you can help someone steer away from a mistake that could be catastrophic, that itself is life changing. It’s, you don’t have to learn from your own mistakes. And I feel like a lot of times just humans in general, we don’t like feeling dumb. We don’t want to ask, like when we don’t know something, it makes us feel weird. And then think, we think asking a question, they’re going to think I’m dumb. And it’s like, that is the most expensive question you have ever asked yourself. And I even teach, I have a 10 year old and a 12 year old.

    Matthew D (14:29)
    Absolutely.

    Exactly.

    Micah Johnson (14:51)
    I’m constantly on them, ask for help. There’s nothing wrong with it. And I won’t help them until they ask. I’m not just gonna step in for you. Like I want you to ask. There’s nothing wrong with asking. Dad asked for help almost every day. Okay, like there’s nothing wrong with it.

    Matthew D (14:58)
    That’s right.

    That’s

    That’s right. We all should be here to helping each other, learning from each other. So, yeah, ask away. You know, we should always be helping. Absolutely.

    Micah Johnson (15:57)
    So in that same environment, we’re talking about opportunities. What are some challenges that y’all are facing? What are you trying to work through right now?

    Matthew D (16:05)
    Yeah, and mainly again, finding qualified investors. I know a lot of investors are new. lot of investors don’t have that experience, don’t have that wherewithal. So if we can find qualified investors who understand their markets, who understand the opportunities, who understand the cost of completing these types of projects, those are the people that we want to focus on to help the most. ⁓ I guess it’s not really a challenge. I guess it’s a challenge from our perspective of finding those people.

    Micah Johnson (16:33)
    Yeah, just locating them. And it makes sense, especially in that space, because y’all are, your opportunity is new construction. So finding the folks that have the proper qualifications to get there. No, that completely makes sense. Do you tell me about this? What really taught that? Did y’all come with that information or have y’all had like a bad experience that taught that? What is it that, you know, what have y’all had to get through?

    Matthew D (16:35)
    Exactly.

    definitely. it’s not so much, I guess you can say bad experiences. You’re just unqualified borrowers. And normally, you don’t know until you get to the end, right before funding. And a lot of times, the deals collapse that way because there was pieces missing or they just weren’t transparent with that information. So again, trying to alleviate that, to find those qualified people is the route or the path we’re on for the year.

    Micah Johnson (17:21)
    To help folks out get ahead of the curve, what’s that information that you can share they do need to have prepared? What is it that makes a file go smoothly and gets you all the way through to closing?

    Matthew D (17:29)
    Yeah.

    Sure. So for construction, normally we want to see ⁓ investors or builders with at least three ground-up construction projects under their belt over the last 24 months. We want them to have ⁓ either a team of general contractors or some contractors, even be a general contractor themselves. We want them to be liquid, to actually have financing, or I should say have funds available for closing. ⁓ And we just want them to be in good markets.

    where they recognize the value of a property and we can recognize the value of a property once it’s constructed and we can match up what they’re estimating the value to be for what we see ⁓ as far as comps and things like that. So basically a qualified deal.

    Micah Johnson (18:13)
    man. Yeah,

    well, and that’s excellent info too, because knowing what you need to do before you go do it too is very helpful, right? Like it relieves a lot of stress. Just if this is what it is, it is what it is, right? Like it’s just what you got to do. So I think that’s, that’s super helpful. So let’s shift back to that network a little bit for listeners who are earlier in their journey or trying to level up. What’s made the biggest difference for you when it comes to building relationships and growing your network in this business?

    Matthew D (18:22)
    Yes.

    Yes.

    Yeah, just being transparent with people. You I always want to give people all the information upfront so they understand what this is, what they’re getting into. I want them, I always ask open-ended questions to obviously get them more comfortable. I always tell them, ask me as many questions as you can. Just the more information that we provide to each other that we share, normally the better experience all around for the client and for us as well.

    Micah Johnson (19:09)
    From my side of the table, what are some good questions that an investor should ask you? Right? Like they may get on the call, don’t know what all to ask. What are some questions that you would like to hear coming from someone you can be working with?

    Matthew D (19:23)
    Yeah, first question is, what’s the leverage, right? How much money will they get loan to value? So, I can answer that. I mean, we’re relatively higher than a lot of lenders out there. We’ll normally go up to 92 % loan to value on a fix and flip. We’ll go up to 85 % on a ground-up construction. So, loan to value is definitely a good question. How much funds did they need to bring to the closing table based upon how much we’re going to give them on their purchase?

    That’s another question. You know, how long… This is a question I ask, how long do they normally take before they complete and flip a project? So, obviously, with these fix and flip loans, they can be anywhere from 12 to 24 months. However, if you find somebody who’s experienced doing this and knocking them out in four to five months, ⁓ we want to try to find people like that as well. That’s not really a question they should ask me, but just something for them to think about. I guess, yeah.

    Micah Johnson (20:19)
    Yeah, something think about,

    but what makes it a better fit? Interesting, man. Okay, so y’all are taking all the time. You’re taking time to make sure you’re doing it right. You have the experience in place. I really appreciate that. You’re walking people through what they need to do, how to be a good fit. So if someone’s listening and they want to connect with you and learn more and see if it’s something they could work with, what’s the best way to find you?

    Matthew D (20:22)
    Yeah.

    Yeah, the easiest way would be to call me directly. My number is area code 203-383-0372. That’s direct to me 24-7, phone or text. Secondly, I would recommend going to our website, hondofinance.com. On our website, you can inquire, you can fill out an inquiry, you can call us directly from there. We’re always available to speak. So those two avenues are the best way to get in touch with us.

    Micah Johnson (21:14)
    Excellent. For those of you listening, we’ll make sure that the information is in the show notes so that you can easily find Matthew. Matthew, man, I appreciate you being here. Thanks for your time, your story, your perspective. I love connecting with passionate people in the space, folks that are excited about doing what they’re doing. So for those of you tuning in, if you got value out of today’s episode, please like this episode, share it, subscribe to our podcast. We’ve got more episodes coming up with operators.

    Matthew D (21:23)
    Thank you. Absolutely.

    Micah Johnson (21:40)
    just like Matthew, are out there building real businesses and helping folks actually pull off that dream they’re trying to. So thanks for being with us. We’ll see you on the next episode.

    Matthew D (21:50)
    Thank you, Micah. Enjoy. Thank you, guys.

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