Welcome to the Managing CRE Risk podcast with Jeremy Goodrich. On the show today we are talking about debt and all the risks associated with it. Our guest is Edward Brown, a capital-raising expert and podcast host. We learn about financing, how private lending works, and the best ways to choose a lender.
Learn more about Edward and his story at shineinsurance.com/managing-commercial-real-estate-risk!
“Even though our documents do have a one-year hold, there’s no penalty for early withdrawal as long as you just give us 30 days’ notice.”
03:44
Edward is working at Pacific Private Lending as a capital raiser. Investors are investing in his funds that are building up the capital and Edward’s company lending it out by mostly doing residential bridge lending. He assists with 4 different debt funds.
The upside of his funds as opposed to traditional CRE investments is that the risk is very low. The investor’s principal is secured as the investor is the first person in the debt stack.
“A few years ago, when interest rates were still fairly low, there was so much money abounding, people keep undercutting each other. This doesn’t happen anymore.”
14:38
Edward shares his top 3 things to look out for when choosing a lender
- Check out their portfolio and how long they’ve been in business.
- Get some referrals.
- Make sure to ask about the structure of the fund draw and if the funds will be available at closing.
Edward reflects on the current market. Because the interest rates have gone up the refi market has dried up considerably. This has made even better opportunities to Edward’s company.
“It’s better to give bad news in your tax returns with an explanation than it is to have to come back afterward and say, Well, I didn’t know you’re gonna catch that.”
28:09
Edward talks about why investors choose their lending instead of agency debt.
- They are faster.
- They don’t require that much qualification.
- They don’t perform that many background checks.
Edward explains what investors can do to make a perfect file.
- Make sure that all the forms, most importantly the 1003, are filled out as accurately as possible.
- When you send your tax returns, if there’s anything out of the ordinary, send a letter of explanation.
- Know your tax return and your financials well.
About our guest, Edward Brown
For over 20 years Edward Brown was CEO of a $40 million alternative lending company based in Marin County. Today he assists Pacific Private Money with capital raising and investor presentations. Edward is also the host of two radio shows —The Best of Investing with Mark Hanf and Sports Econ 101, a national sports and business show. Edward earned his B.S. in Accounting and M.S in Taxation from Golden Gate University, and has held licenses and certifications including Real Estate Salesperson, Insurance License, Series 7 Securities License, Tax Preparation License, and Certified Fund Specialist.
Mentioned in the show:
- https://www.pacificprivatemoney.com/
- His LinkedIn
- Shineinsurance.com
- www.shineinsurance.com/managing-commercial-real-estate-risk
- Jeremy’s LinkedIn
Need an instant insurance ballpark for your next Multifamily deal?! Answer 9 simple questions and we’ll give you a sense of what insurance should be. Visit us here for everything you need to know: https://www.shineinsurance.com/ballpark/
Special thanks to Edward Brown for taking the time to share so many great insights with us
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