Mastering Market Navigation: Strategies for Lenders and Syndicators

Brett McCollum (00:00.831)
All right guys, welcome back to the show. I’m your host, Brett McCollum, and I’m here today with David Hansel. And today we’re gonna be talking about how he navigates markets as a lender and a syndicator. Pretty cool stuff. Before we do guys, at Investor Field, we help real estate investors, service providers, and real estate entrepreneurs to 2 to 5X their businesses to allow them to build the businesses they’ve always wanted and live the lives they’ve always dreamed of. Without further ado, David, how are you, man?

David Hansel (00:27.906)
Great, thank you. Good morning and appreciate you having me on.

Brett McCollum (00:32.095)
Man, I’m excited to hang out with you, man. I know of one of your businesses I’ve heard of for a long time, like your reputation precedes you and getting to know you a little bit before the show. I’m excited to do this with you, but before we kind of get into all of it, because I know we’re gonna hit on a lot of different things, can you maybe back up a little bit, rewind, give us some history, like who’s David, and catch us up to speed.

David Hansel (00:44.481)
Yeah.

David Hansel (00:54.008)
Yeah, sure. So I’m born and raised in New Jersey. I had a short stint out of state where I worked up in Massachusetts for four years, but came back to my hometown and had gotten to real estate in 2001. I was a interesting fact throughout high school and college. was a springboard and platform diver, which is an obscure sport.

Brett McCollum (01:01.183)
Thank

Brett McCollum (01:19.398)
cool.

David Hansel (01:20.536)
But I like to share that because it’s a sport of perfection and about constant improvement. And, you know, it kind of relates to business and how I’ve adapted over the years. I’ve married and have two kids, both teenage girls. My oldest is gonna be getting her driver’s license in about two weeks, which will be nerve wracking for me and the wife.

Brett McCollum (01:46.111)
Yo, fix something.

David Hansel (01:49.73)
but I enjoy spending time with them, barbecuing and playing golf. Those are things that I enjoy. I’m not in shape anymore to do the diving, but maybe I could impress the kids once in a while, but that’s a little bit about me. And like I said, happy to be here and hopefully share some good value with your crew here.

Brett McCollum (02:15.487)
Yeah, man. That’s really cool. 2001, that’s a minute ago for You’re a veteran, right? You’ve seen it. You’ve been through some stuff, so that’s cool.

David Hansel (02:27.508)
I always say it’s like that insurance company you’ve seen it all, I don’t know. But every day there’s some new issue that comes up that you haven’t seen that always challenges you and that’s nice to have.

Brett McCollum (02:34.174)
Now…

Brett McCollum (02:45.171)
I was gonna say that’s a great mentality to think like, know, like, know what? I’ve seen a lot, but there’s more to learn. Like, I think that’s incredible. Let’s back up a little bit because it is really interesting, the diving side of it, right? How long were you doing that for? Like, was that a, you started at a young age? you, like, when did that start?

David Hansel (03:06.07)
I started in middle school. There wasn’t a team, I had, there was a community pool that had like, had an indoor pool and had a diving, diving well to it. I would, I would, was just enjoying myself and teaching myself tricks. And then got into high school. We actually had a high school team, the high school I go went to no longer carries the team.

They took out diving boards because of insurance problems in a lot of places. you know, went through there and then I dove at the University of Delaware, you know, when I was in college. But it was my love for the longest time, you know? Really, really enjoyed it.

Brett McCollum (03:52.499)
Yeah, I it’s such a, I always watch it. Olympics, like the Summer Olympics, right? Like when you’re watching the diving stuff and it’s so, you hit it, like, you’re watching these Olympians, like the best in the world, you know? Even the, we know the Chinese team is the best, like there’s just, there’s a wide gap between them and everybody else, it seems like. But even them, you watch, they’re they’re tweaking it. They’re always refining it.

and they’re the best in the world. It’s an incredible, incredible skill set. I think, let me ask you this, because you kind of touched on that too. Do you think that that constant refinement shaped a lot about like how you operate today?

David Hansel (04:37.454)
100 % and and I love you know, it’s interesting and I’m sure you’ve heard it before but especially in hiring people it’s not a requirement, but I certainly love people that competed it’s in sports, especially at a high level because although diving is less of a team sport than most but you’re part of a team you’re you you know about hard work, you know about wins, you know about failures and how to persevere.

And I feel like it’s an incredible trait that helps build you into a professional. so every day in both the businesses that I own and run, I’m always looking at ways to improve and do things better and have kind of built that culture within the companies as well.

Brett McCollum (05:31.647)
Yeah. Yeah. I was a collegiate baseball player. Uh, there’s always in sports that team sports or individual, there’s always the game within the game, the game within yourself. Right. So I, that’s how I look at it. It’s like, what am I doing? If it’s a team sport, like baseball, I was a pitcher though. So like every, every pitch relied on every part of that relied on my initiation with it. Right. But even inside it, it’s like, what is it the game within myself that contributes to the out?

David Hansel (05:35.826)
that’s awesome.

David Hansel (05:54.242)
Right. Yeah.

Brett McCollum (06:01.727)
And I think that’s a, if you’re part of an organization or if you’re a solopreneur, there’s always the game within yourself that we can do. And we should be refining ourselves and growing and yeah.

David Hansel (06:14.326)
It’s a state of mind. There’s a famous quote. I’m not sure who came up with it, but the way you do anything is the way you do everything. And so it’s kind of like when you’re competing in sports, whether you’re working at a restaurant and washing dishes, whether you’re at a real estate private equity firm, looking at acquisitions or operations, you’re always trying to figure out how to do things a little more efficiently.

a little bit quicker, a little bit better. So, you know, I think that all plays in together.

Brett McCollum (06:48.553)
Yeah. Sorry. We’re good. We’re getting off on a little tanger here now. I promise. I promise I’ll bring it back in the rails here. I have to ask you this. So I would record, have somebody recording every, every time I was on like pitching, right? Be it in a practice environment or in a game setting, because I always wanted to go back and watch myself and just tweak everything I could just to refine the process. Were you, did you find yourself as like bad at all? Like where are you like the OCD personality of like refinement or was it?

David Hansel (07:17.998)
Yes, but back then there weren’t cameras. No, I’m just kidding. No, we did videotape and was very, always just like I said, because it’s a sport of refinement. You’d see yourself, your shoulders leaning a little too far forward or not swinging through your hurdle fast enough or whatever. it allows you to, and that’s probably why I like golf, although I’m not that great at it. It kind of feels.

Brett McCollum (07:45.587)
Yeah, it’s the same thing though. Yeah. All right. Last thing and we’ll move on. You mentioned your daughters and you know, all the same thing out of shape, not really do you know, and every once in while we get to show our kids, know, like daddy can do it still once, you know, last night, kid, you know, the true story. My son, he’s 11 and

David Hansel (07:47.694)
Same thing, you know?

David Hansel (08:04.055)
Yeah.

Yep.

Brett McCollum (08:13.951)
couple of the neighbor kids were that are 12 and 13 like we’re gonna play against you and they’re talking all their stuff you know you know I’m like okay yeah we’re playing basketball outside just in the you know in the the cul-de-sac there and I was like okay it felt real good I’m not gonna lie don’t like put it put it to these little 12 year olds I’m not gonna it’s it’s like we can do but then the feeling your daddy you’re actually good at this like

David Hansel (08:33.016)
Yeah.

Brett McCollum (08:39.327)
Do you ever feel like that, when, like, you’re that moment, like, yeah, I can impress my kids once and all. I still like to do it, you know, like, aw, that’s really fun.

David Hansel (08:46.282)
Yeah, yeah, no, it’s, it’s always exciting when your kids, especially when they’re teenagers, appreciate something that you do, whether it’s athletic talent or cooking or, you know, doing, doing whatever it is that you impress your kids, because as they get older, they have less interest in you, you know, you, you, you cherish the moments when they they do. Yes.

Brett McCollum (08:59.421)
Yeah.

Brett McCollum (09:07.121)
It’s, I’m starting to see that. I’m starting to see it more.

Relish it. Yeah. Well, cool, man. Let’s do this because we want to talk high level on some real estate things. You’ve been around since 2001 you got in. And I’ve known you from alpha funding, right? Can you kind of go a little bit high level on what alpha is? then I do want to talk about Lucerne as well. Tell me a little bit about that.

David Hansel (09:34.862)
Sure. Yeah. So as I mentioned, Lucert, Alpha had launched back in 2007 with my business partner. It was initially a way to invest our own money as a private lender, realize there was opportunity to put out more dollars, which we didn’t have. So we looked at ways to raise capital. And the money that we lent out was for real estate investors that are

Brett McCollum (09:42.484)
Thank

David Hansel (10:03.512)
doing fix and flip, ground up construction, projects like that. And over the years we rolled out DSCR, which is your 30 year term products for real estate investors that own rental property. But in the early days, there wasn’t institutional money in the space. And so all of it was private. We had raised over 50 million of retail investor capital that we were able to deploy out into

the market. We grew that organically by being out at events all the time, speaking, attending, you know, working obviously different avenues of advertising. But that company thrives today. We are actively lending throughout most of the country. We’re in 44 states. And like I said, we kind of view ourselves as a capital partner to other real estate investors.

You know, they need solid vendors for all aspects of what they’re doing, whether it be their roofer, electrician, plumber, their lender, you know, we fit into that cog, into that big wheel with them to help grow and thrive, make their businesses thrive. So that’s kind of a little soundbite of Alpha and what we do.

Brett McCollum (11:25.023)
Yeah, well, let’s deep back that a little bit. That’s okay. So 2007, you jump in. We all know it’s coming around the corner from 2007. Did you guys run into any issues on the lending side of it? with every investor I’ve met that went through it, was like, oh, we lost our shorts in 2008. Did you run into any of that back then?

David Hansel (11:42.413)
Yes.

David Hansel (11:46.382)
So thankfully not, we didn’t really grow that fast in the beginning and it was very, so we were just putting out a handful of loans here and there and very purposefully. And we didn’t have a lot of capital till we started raising. And then as we were starting to raise more, the market started to come around over the subsequent years. And so we eventually…

Brett McCollum (11:50.665)
Okay.

David Hansel (12:13.464)
grew obviously over the years we’ve had problem loans but a lot less than most people would ever think. know, these loans are meant for short-term duration to change, know, improve the asset and get out. And we’ve obviously had, you know, since that we’ve had a good run up in the market. Things are certainly a little uneasy at the present time with where things are going.

for various reasons, but we’ve all benefited from a long growth pattern in the market. we’ve had our challenges over the years, but have continued to grow and be successful.

Brett McCollum (12:56.489)
Yeah, what are some of the, you know, because in my own sphere of influence and stuff like that, what are some of the protections you guys are maybe putting into place like in a, in the uncertainty times, right? Because, mean, fortunately you’ve had enough time in business to, you know, have that probably in place, you know, what are you guys doing for that?

David Hansel (13:16.878)
I mean, there’s a lot of things that we do for that. First and foremost is really understanding the budget and the ARL TV, which is the after repair loan to value. So we want to understand if the work gets done today, what is the value of it compared to other other properties selling in the market? And so those those two things, getting that right is important because if you get it wrong and you’re short.

and then the market starts moving south, you’re in that much more of a problem. But it’s also helping to manage the construction and the draws for our investors in a quick and efficient manner, staying in touch with them if they aren’t drawing down just to see, hey, you know, what’s going on, any delays or hiccups, can we help you at all? Is there anything we can do to help move things along? Sometimes, know, investors hit roadblocks and it’s good to source

ideas from other aspects and a lender believe it or not is a source for you and we pride ourselves on trying to help out and do those kind of things with our borrowers. So it’s about managing the draws when the assets, what? And then even when they’re done with the project, getting it on the market, sometimes we’ve helped provide resources for our investors.

Brett McCollum (14:29.843)
That’s huge, by the way. That’s huge. I agree.

David Hansel (14:44.022)
and trying to get them to be able to sell the asset in the market and not miss out on time because time is money. So there’s a lot of different pieces of the puzzle. We look at the individual, we make sure that they’re capable of executing a project. Most of them have experience, but we do work with first-time borrowers.

We just dialed down the leverage a little bit. So there’s a lot that goes into it and each borrower and deal is unique, but the constant is the value of the asset and comfort with the borrower.

Brett McCollum (15:26.185)
Yeah, something we’ve been doing trying to on the pivot end of it just to kind of keep things safe because we’re seeing days on market just skyrocket on a lot of our property here in Florida where I’m at.

David Hansel (15:35.17)
Yeah.

Florida is a scary place right now, in certain, like Cape Coral and what.

Brett McCollum (15:40.059)
It’s not weird that two years ago, you couldn’t get a sign in the ground fast enough and the prices were doubling. It felt like every second of the day that the prices are doubling. It was actually a benefit for a project to delay a little bit. It’s like, but now it’s like things are just slow. They’re still selling, but they’re slow.

David Hansel (15:50.19)
Thanks

David Hansel (15:59.555)
Right.

David Hansel (16:05.708)
Yeah. Yeah. Each market’s unique. And that’s something we look at too. Like, like you said, there are certain markets in Florida that are getting eviscerated and, and inventory levels are sky high days on market or sky high. so, you know, we’ll, we’ll talk to the investors about it. And obviously we’re going to be more conservative on valuations and we may.

may look for extra dollars in and try to convince the borrower in certain situations. Like I always say that we spend more time talking borrowers out of bad deals than we do funding good deals. And it’s important for us because if an investor, not that we can protect them or we know everything, but we have a lot of experience and we can protect them from going into a deal where a market is really starting to unravel. You know,

Brett McCollum (16:43.369)
Yes.

David Hansel (17:00.96)
not only does that help us because we help them avoid a bad situation, we want them selfishly to come back and keep investing because that means they’ll take on new loans with us. If they get hurt really bad in a couple of deals, they may be out of business and that’s not good for us and certainly not good for them.

Brett McCollum (17:24.287)
Right. Yeah, something we’ve been doing too. I don’t know how curious you take is taking an ARV right now and just saying, you know what, and then 15 % off of the ARV as our new ARV. And just to say, you know what, like it might be 200, but now it’s 185.

David Hansel (17:38.338)
Yeah.

David Hansel (17:43.586)
Right. And when the markets are softened, even price, you know, price reductions just don’t help. People are chipping away. They’re like, I don’t want to drop, like maybe I’ll drop a little bit below the comps and then the next guy wants to, and the next guy wants to, it becomes an avalanche. Yeah.

Brett McCollum (18:02.025)
That used to be a good strategy too, didn’t it? Yeah. I personally had a deal that went that way where we were our ARB. We felt good. We had a lot of comps at five and a quarter. And I was like, man, we have a ton of room to play here. Let’s beat the market. Let’s listen at 4.79.9. Bam. Because of the market softening. And I said, you know what? It sat for eight months. And I dropped it, dropped it, dropped it until we sold it for pretty, it was bad.

David Hansel (18:19.362)
Yes.

David Hansel (18:26.99)
Yeah.

David Hansel (18:31.17)
It’s almost like you want to, goes, it’s some feels counterintuitive, but in a downward market, you want to make a big price adjustment quickly and get off the market, you know, but it’s a scary proposition. know, everyone’s been winning on deals for so long that there are these markets and listen, there are other areas that are still thriving, you know, where inventory levels, like there wasn’t the plethora of property to build and develop on like Cape Coral.

Brett McCollum (18:53.545)
Right.

David Hansel (19:01.262)
Florida is ground zero for a lot of what’s happening. You hear about it all the time and there’s just so much new inventory that the market couldn’t bear it. And you look for markets where days on market are lower, where inventory, there’s a lot of older inventory where it’s more rehab than building new. So you gotta be cognizant of that. And like I said, lean on your lender, lean on

Brett McCollum (19:02.814)
Rough.

David Hansel (19:30.776)
your other sources in the business to get their opinion and feel through some of these potentially challenging situations.

Brett McCollum (19:38.515)
Yeah, guys rewind that for like if you’re listening rewind and listen to that again like what he said call people that call your lender call people that are in it like ask for help because you don’t want to try to just figure it out that’s that’s there’s there’s a lot of wisdom in that and pointing my fingers back at me when I say that one David like that’s

David Hansel (19:49.613)
Yeah.

David Hansel (19:54.552)
Right.

Well, the crowdsource information, you get information from a couple places and you make your best decision based on it.

Brett McCollum (20:04.255)
Don’t just try to figure it out. Yeah, that is like I said fingers back to me on that when lessons have been learned, right? But yeah, I want okay. So obviously I love that like we could talk about continuing talking about that all day I want to talk about more on the see that’s the hard short-term capital side But now you’ve got this other thing venture going with Lucerne And that’s really exciting too, you know You know it is, you know

It’s just different, know, like explain a little bit and I’m really curious.

David Hansel (20:34.926)
Yeah, launch Lucerne about eight years ago. I’ll go back to how that got started, but we’re a real estate private equity firm. We’ve done a fun. We mostly are now doing syndications because of the asset class we’re investing in and the size of the deals that we’re doing and also not being under pressure to put capital out in the market. we are

owner operators of real estate where there’s some value add component, be it in management or upside in rents or capex improvements. And we’ve, we’ve owned stuff in the Carolinas, Maryland, and up in New Jersey. Primarily what we are focused on now is small bay industrial or flex warehouse space. We had

you know, been investing that for quite some time. A lot of interest is now pivoting into that direction, especially as multifamily has seen some big challenges over the last couple of years when the interest rates moved up and insurance costs skyrocketed. But we’ve owned and operated both multi and industrial. And we typically are owning these assets from two to five years in length.

And it’s a way for us to gain exposure and for our investors to gain exposure to the benefits of owning real estate, you know, with appreciation, depreciation and cashflow. And we are thriving now in the industrial space and, and, you know, think that the market has a lot of legs in it. And we’re going to continue to grow that and provide opportunities for us and for our retail investors.

Brett McCollum (22:26.943)
I like that a lot. So I’ve been talking with more and more people that have been saying that to you on the industrial space. What is your take on that? Why does that have the legs that it’s carrying right now?

David Hansel (22:37.582)
Sure. So I’d like to say we got in it before it became hot and we saw what was happening. But, you know, there’s a lot of reasons why I can talk about some of the challenges in Multi and then kind of talk about how that relates to what we’re doing now and why you’re finding a lot of folks showing interest in the space. So Multi was always a place that was looked as a safe haven for cash flow.

Brett McCollum (22:42.589)
Yeah.

Brett McCollum (22:51.967)
You sure? Yeah.

David Hansel (23:06.574)
You know, you have the ability to mark to market very quickly as rent, you know, tenants are in for a year at a time. You have the ability to improve the asset by putting capex and elevate the finish and the amenities of a complex and drive rents. Well, a bunch of things have happened in that space starting back in, it was in 21 when the interest rates started to move up.

very drastically, I may have my dates off, but a lot of these value add projects ran into some issues because of variable rate debt. The cost of money drove up very high, but a lot of other things started to become problematic, right? You had higher labor costs, quality of labor became very challenging. It’s a challenge throughout the industry from the management side.

you know, leasing, property management, maintenance, finding good people to stay, even if you’re paying up, became somewhat challenging. And then additionally, you had costs that got out of control from utility costs and no secret, the insurance costs, which have skyrocketed and have made major hits to the bottom line on these assets. So…

There’s a lot of issues that are there. There’s been a strong demand or need for housing, but there just was too much at one time to get absorbed. And so all this new product that’s coming on the market is competing against older product and they’re having trouble leasing up. So they’ve been driving pricing down, offering more concessions. So pivoting over to the industrial.

we kind of saw an opportunity to get involved where the small bay, is kind of an analogy of retail strip centers that are neighborhood retail strip centers for opposed to the big box retailer is kind of similar to what small bay is to industrial.

David Hansel (25:23.958)
In the neighborhood retail, you have your Chinese restaurant, the nail salon, a haircutting place, you know, those types of neighborhood retailers that you’re going to need and always have. Well, in industrial, the small bay really follows rooftops and their service providers and businesses that work and deal with, you know, retail type folks. you have, you know, your

HVAC and plumbing, electric, you have some car related stuff, small, small distribution, small manufacturing type, you know, where tenants can be 1500 to 5000 square feet. Sometimes they’re bigger, maybe up to 20,000, which gets into like mid bay. but then the interesting pieces of why to invest in it was there’s a lack of supply.

The zoning for a lot of towns and areas don’t allow for new development on industrial. And if they do, they were already built for these monstrous distribution centers, which there may be too much of an inventory. These cannot be repurposed for these smaller, like neighborhood type warehouse tenants that we

Brett McCollum (26:36.5)
Yeah.

David Hansel (26:53.486)
use as tenants. The other interesting thing is that if they aren’t, but we bring a lot of these tenants into triple net leases where all the variable rate expenses are costs and a burden to the tenant, not to the landlord. So taxes, insurance, utilities, all these things get billed back to the tenant, which allows you for more predictive

and stable cash flow. The other thing is that these leases, similar to multi, not a year, but typically will go from a year up to five years. So it gives you a chance to mark to market, to move the rents up when leases come due. So there’s a lot of commonality of why multifamily investors have pivoted into this small bay industrial.

Brett McCollum (27:25.982)
Mm-hmm.

David Hansel (27:53.294)
And so that’s kind of a high level overview. I’ll let you ask some questions and we can dig in a little deeper.

Brett McCollum (27:59.987)
Yeah, I guess the biggest question is, for me, is in an economic uncertain era where industry and, know, are, taking a lot of punches right now, right? The labor market’s been funny for a minute or it’s catching up to the, you know, to us today. Like that’s our rate of interest rates and all that stuff. they, know, the yield curve and all that stuff. and it’s like, my, I don’t know enough about this. This is just a me question.

How is it more insulated to go into industrial at this point? Because people still need a place to live no matter what uncertainty is. But businesses come and go every day.

David Hansel (28:45.646)
Sure. So again, there’s a lack of supply for, you know, for this type of facility in many markets. And so these small businesses, there may be some that get hurt with what’s going on now and the tariffs and the economy. There’s a lot of ways to look at it and we we could dive in on the topic. But I do think that

Brett McCollum (28:56.671)
Thank

David Hansel (29:14.614)
especially with small bay, have larger companies that may in the short term need to downsize and are going to want to fit into some of these spaces. So when, when, when the economy shrinks or there’s problems in the economy, some of the midsize will look for smaller spaces to downsize. And these other businesses, like I said, some of these service related businesses, have auto uses in some of our facilities and you know, look at

people are going to look to hold cars longer and do more repairs because of some of the costs that are going to be associated with it. All of these pieces come into play. so some of our tenants will actually thrive and do well. Others may not, if they’re import and distribution, but those may get picked up by others that may be downsizing.

The vacancy rates remain extremely low in the markets that we are in. We fill up these vacancies very quickly and hope that that will continue. Yeah.

Brett McCollum (30:19.657)
because of that lack of supplier, right? That makes a lot of sense. Yeah. Interesting. Yeah. I was just very curious because I’m like that on its head, like I didn’t, I wasn’t thinking about suppliers. Just like, man, it’s really economically, that makes a lot of sense though. But man, I knew you and I could just keep going back and forth on this draw. You know, there’s so much 30 minutes is not enough. You know what mean? I wish there were, but if people want to connect to you, learn more, you know, that sort of thing, you know, be it alpha or loser, what’s the best way to connect with you?

David Hansel (30:49.89)
Yeah. So I’ll give you a couple of easy ways to reach out. Probably the easiest way, if you’re on LinkedIn, it’s David Hansel, H-A-N-S-E-L from Alpha Funding in Lucerne Capital. You can message me there and happy to set up a call and talk to you, answer any questions you have. You could also visit one of our two websites. The Alpha website is alphafunding.com, A-L-P-H-A, funding.com.

And we have, you know, there are a couple of ways to message in. We have a bot on the site that’ll come right in directly to us. The same thing with Lucerne. It’s lucernecapital.com, L-U-C-E-R-N, capital.com. And happy to answer questions or help out where I can.

Brett McCollum (31:42.207)
Perfect. Yeah, guys, we’re gonna make sure that’s in the show notes for you and everything there. So I certainly encourage you to check that out. But before we go, David, I just wanna say one more time, man, I appreciate you hanging out with me, spending the time and going deep on some of these topics. I wish we had more time. But man, this would be great. Yeah, man, this is great. So, all right, well guys, thanks for hanging out with us. I appreciate you taking the time and we’ll see you guys on the next episode. Take care, everybody.

David Hansel (31:58.466)
Yeah, sorry, I’ll come back if you want.

David Hansel (32:08.558)
Thanks.