Alec Wang of Breenance finances real estate projects like flips and new construction for builders too big for consumer loans but too small for banks. He moved from flipping properties himself to lending because debt offers lower risk and stable returns. Even with high interest rates, residential housing demand stays strong due to metro shortages.
Welcome to Billionaire Brain Trust, our newest YouTube series that will take you behind the scenes into candid conversations with billionaires and those who work with them, hosted by Steve Woodruff, who brings a unique perspective as a family office advisor. Billionaire Brain Trust will feature exclusive interviews with billionaires and the key players in their organizations, offering viewers a rare glimpse into their stories, decision-making frameworks, and what they are excited about right now. Whether you're an aspiring entrepreneur, a seasoned investor, or simply curious about the world of the ultra-wealthy, Billionaire Brain Trust will to help you think bigger and achieve more.
So day 2 of our Super Summit with the Family Office Club. I'm with Alec Wang.
Yes.
Uh, Breenance.
Yes.
Private lending. Uh, tell us a little bit about your, your company and your background.
Yes. Um, so I'm the president of Breenance, which is a real estate private lending company. What we do, uh, in a summarized form is we deploy capital into loans secured by real estate, and our borrowers use our loans to materialize their projects. And these projects are oftentimes rehab projects, rehab-to-sell flipping, ground-up construction of master-planned communities, or stabilizing a vacant rental property before they use a long-term bank financing to keep and hold them.
Yeah, excellent. So obviously really important right now with high interest rates, right? A lot of real estate people looking for financing. So yes, it's great that you're able to help fill that, fill that gap.
Yes, we do fill a gap that is really underserved between consumer loans in real estate and the large commercial loans because our borrowers are established full-time builders, flippers. So on one hand, they're too big for consumer loans. They're not using their, their job to qualify for a house to flip. On the other hand, they are not as big as your Lennar, Toll Brothers type of builders.
Yeah.
So and by definition of what they do, which is to find properties with room to improve the value, they need to find the properties that has— that are in bad conditions or just vacant land to create value. And those conditions from a traditional bank's point of view are not desirable. But from us, from our private lender point of view, it is something with great potential. So as long as we're able to evaluate these deals properly, we can help them materialize their projects while creating vehicles for us to collect a stable interest return and for our investors as well.
Yeah, that makes sense.
Yeah.
How'd you ultimately get into private lending as opposed to investing in more traditional stock or—
Right. Yes, that's a great question. My personal journey, really, I started trying to do real estate as soon as I left college. Okay. So as a person in his early 20s without a track record or work credit history, I couldn't use bank loans to buy my very first investment properties. So I was actually a user of private loans to start my own real estate career, buying small properties below $100,000. Try to fix them up and put a tenant there, create some value there. So I, I was an operator of these loans by using private, private lenders. And later, when I had some resources, experience, I shifted to the financing side very intentionally because what I realized was if you're a deal operator and the owner, you are the first one to take a gain, but also the first one to take a loss. If the market doesn't support what you're doing or execution, some is within your reach, some without your control. So on the financing side, whether you outperform or underperform, you still need to pay for the loan. So it's a business strategy to shift the financing, therefore a lower risk side for me to manage a slightly bigger portfolio while maintaining a lower risk That's a— I think that's a business decision. There are obviously people doing great work on the equity side and there are people doing great work on the debt side.
Yeah, yeah, that makes a lot of sense.
Yeah, just need to pick the right—
we like it for the same reason, just lower in the capital stack, right? Especially right now with high interest rates, you can see really high returns.
Yes.
But in general, yeah, very—
that's a great point.
More secure.
Yeah, that's a great point because it always has the benefit of being lower in the capital stack, a safer position. But today, in today's market, it's in addition to being in a safe position, is also in a high interest environment.
Yeah.
So you're collecting much higher than like 3 or 5 years ago of return.
Absolutely.
Yeah. So that's what we— it's a good market for us, but we were doing this for— it's like 15 years ago. We, we were doing this when interest was lower. Still doing that now. I think it attracts a certain type of investor, investors who are conservative. They have a number of funds they want to invest into, but they don't look for aggressive gains. But on the other hand, larger funds might want to, or family offices might want to designate like 15, 20% on these low-risk asset classes while pursuing higher gains with other diversification.
Yeah, yeah, absolutely. Anything in particular right now that you're looking forward towards in 2024? I guess what might be your outlook?
Our niche within the private lending space is residential purpose property. Some of them might be commercial projects, but they're master-planned communities of dozens or hundreds of single-family house— houses that I will say fortunately are still very much in demand. Because even though there were price turbulences from interest rate increase, in many metropolitan areas, housing is still in shortage. So when the borrowers, in our case, the developers who borrow from us, make conservative, good plans, they can still profit. Their projects are still in demand, and we can create a vehicle for— to help them and help us help our investors. But we just look to towards continuing doing that in today's market. Again, it's overall high interest, which we think will just be here for a little while. Yeah.
So, so a shorter-term opportunity that you're capitalizing on.
Yeah. Yeah. Excellent.
Great. Well, thank you so much, Alex. Thank you for the time.
I appreciate it. Thank you.
