Hard Money Lender No Credit Check for 24-Hour Closing

Hey everybody, Toby Potter here with Global Eternity Finance. We are here at Dallas at the, uh, LeverageCon real estate expo. We're here with my good buddy Zach Fuhrman with Capital Fund One.

Yes sir, right?

Zach, tell me a little bit about CapFundOne, what you guys do, where you're located, and, and how that all plays out in your world.

Yeah, absolutely. So Capital Fund One, we've been around since 2009. Uh, we are a private money lender who focuses on strictly asset-based lending. So we don't do any credit checks, no third-party appraisals. We can close in as little as 24 hours if title's ready.

Wow.

So we are a strict, we like the house, We evaluate it in-house. We said we give you a loan-to-value and we close when title's ready.

Now, where are you guys now? Where do you concentrate your deals?

So we loan in 5 states. We're out in Phoenix. That's where we started. And we went to Colorado in 2020, 2021. We opened up an office in Dallas. We're here locally in Las Colinas. And then we have an office in Nashville and Atlanta as well.

So when you say no credit, no appraisal, I'm assuming you get title.

Yep.

Who does evaluations and how do you, how do you ensure that that deal with today's volatility of the market?

Sure.

How do you protect your asset in valuations and all that?

For sure. So we, our underwriters are a lot of them are some of our former appraisers. They all they do all day is sit and evaluate properties in the core metro areas in those states. And so we're very concentrated. And if 2 and 2 equals 4, we do it. If it doesn't, we don't.

We move on.

We're just fast yes, fast no. And what we're looking for in properties, especially right now in the volatility, is does it match the neighborhood? Right. I have a good floor plan. Inventory's rising. So what's gonna make this house different, right, than the other 15 houses on the street that are for sale? Yeah.

Yeah. We're getting more and more inventory, less and less buyers right now.

Exactly. So, you know, we do look at past products. We will loan to first-time flippers, but they're probably not gonna get our max leverage. But as long, again, they just have to be buying at a discount. And support the future value or the ARV of the property. And, you know, that's what we look for.

And so tell me about your leverages. So, so if I'm an experienced investor, I've done 20, 30 deals in the last 3 years, let's say, what's, what's my leverage look like and all that?

So we'll never exceed 75% of the future value.

Okay.

85% of the current value, 85% of the total cost of the property purchase and rehab. And then we will not exceed 90% of the purchase price.

So the borrower always going to have some skin in the game, no matter what.

Exactly.

And then what about liquidity? Do you look like— do you look for like 6, 9 months liquidity of reserves?

No, our collateral is the asset.

Is the asset.

Yeah. You could have a 400 credit score. We're not going to know.

So that seems very, very risky, Zach.

So we do— we close right around 200 to 300 loans on a monthly basis. 56, 57% of our repeat is repeat business.

Yeah.

So we, we work hard, we establish good relationships, and our goal is to have you finish the project. We don't— we're a volume shop, so we don't care about making— closing a deal with you. We want you to come back over and over again. And so like the risk is kind of offset because again, they have that skin in the game. You can absolutely go get more leverage somewhere else.

But you're looking for that, that institutional investor who's now becomes a life partner with you. So you're making life easy for him.

Exactly.

By expediting the closing. Yeah, he's got 10, 15, 20% skin in the game, but he doesn't care because he's flipping that thing out in 6 months.

Yeah, our average loan pays off in 5 to 8 months right now. It's gone up a little bit just because of the, you know, sitting on the market, but are still getting that payoff between, you know, 5 and 8 months.

Which brings me to, so when you're looking at an MSA, how important is days on the market when you're looking at a neighborhood?

It is very important, especially depending on the neighborhood as well too. Yeah. You know, depending on the price point. So, you know, our average loan, we, we service all of our own debt as well too. So we get a lot of real-time data as far as what's happening, what's moving, what's not moving, where do people get into trouble. And so when we're looking at these houses is, like I said, investors have to, they can't cut corners anymore.

Yeah. No, no, they can't.

You gotta do, you can't just do the Home Depot flip. Hope it all works out. So again, no lipstick on a pig. No lipstick on the pig. So do quality work. Make sure the floor plan flows. Those, you know, especially here in Texas, you got the house that was built in 1955 and then, you know, 1970 added on a bedroom. 1985, we added on the back portion of the house. You know, 2008, we had some money, right? 2007, we had some money. Yeah. We put brown everywhere, you know, and then you have to— it's got to flow because again, The buyers right now, they don't want a high interest rate with the high-priced home.

Yeah.

Still have to do work and still have to go in there. You can have two and you can't have all three. You can have two, but you can't have all three.

Yeah. They're gonna pay premium pricing. Rates are gonna be what rates are for a, for a primary resident. But then if I gotta go in there and dump another $10,000, $15,000, $20,000, they're outta money. Yeah. To fix it. This, it's just ridiculous. So that house is, I'm gonna pass. It's gonna sit.

And that's so, and, and a lot of that too is You know, people are like, oh, the inventory's rising. It is. But a lot of it's crap.

It is.

You go and if you actually, you know, sit in bed at night with your wife looking at Zillow and you're shopping for a house, you're not gonna like 90% of what's listed. Right, right, right. And so that's where we see if you do a good job, it, it doesn't fly off the shelf, but it's picked up in a week or two, you know, perfect.

Perfect.

Right around list price, assuming you price it aggressively.

Right. And so when you're, and you said out, out of your 200 loans a month, you said 50, 55% are repeat. Clients.

Correct.

So you are picking up new clients every, every month and trying to roll them into long-term, uh, established people. Other than the quick close, the no credit, the no appraisal, you know, what else really, um, sets you guys apart that I'm going to jump ship to where I've been for, for 15, 20 years and now start doing business with you guys? Do I get an— do I get a personal assigned account executive, or how, how does that work?

Yeah, no, we, we have boots on the ground in the 5 states, and it We stay in our lane.

We have a branch in every state.

Exactly.

Oh, wow.

With dedicated loan officers that, you know, just like any sales job, they, they're going to protect their clients. They're going to work for their, their borrowers. And that's who you're talking to, you know.

So is that their territory there? So if you're going to open up a branch, so when you open up a branch here in Texas, you say, okay, your territory is Texas, correct? And you— and anything comes out of Florida, comes out of Colorado, comes out of Arizona, it goes to that branch.

That, or unless you have a relationship with one of the guys at the other place. Yes.

What if as an investor, I travel, I go like, like the fish do, I follow the food. And so I'm moving to the hotspots as a, as a flipper.

Correct.

But would I be then transferring account executives?

No, you can keep, if you like, if you like who you're working with, you can keep 'em. Like we can, our stuff's, especially with technology, it's not a big deal. If you want someone that's local, you can absolutely have someone that's local. That is an option. Or if you, you, you bond with one of our loan officers and you just want to keep going. All of our guys can do stuff wherever, but obviously the people in Texas get 90% of the Texas business where they live, you know?

So, and I tell you, be— so being a branch here in Texas, it's extremely competitive. There's, there's more hard money lenders, private equity lenders in Texas than there are in the rest of the whole nation.

For sure.

Uh, so what you have is a very unique concept and a very aggressive underwrite closed fund, which kind of puts you at the top of the echelon of that.

And one of our biggest value adds too is just the size that we, there's, there's not anyone that's bigger than us. We, we manage right around $950 million.

Wow.

And that's our, that's our fund.

Yeah.

And we have full discretion over those funds. And so a lot of times too, your guy that's giving you a great interest rate, we have no problem with you shopping us around. We, yeah, we're here for the long haul. We're right. If, if this doesn't work, we're gonna be the first one to say, hey, why don't you call your buddy or you get it. You're, or your rich uncle that gives you 7% financing, 100% of cost. Well, when his wife wants to buy a new house, you're bus— you're out business. So we're, we're here to help pick up or life situation, right?

Uh, you know, we've, we've seen over the last 10 years where there's been those private individuals who pull money out of an IRA or 401k or retirement fund, wanted to be a direct lender, and they were doing it, and they may have made some money, lost some money, but then life happens. Yeah, a life situation like, I'm out, I can't do it no more. And then that guy that was kind of partnered up with him was like, I don't have anywhere now to go to get money. Exactly. So those things aren't long-term. No, they're, they're sweet Right. While they're running.

And we're not bitter when you go do that. If I could go get that money, I'm going to go get it. It's common sense.

It's cheaper money. It's easier money. It's less restricted. So tell me about your organization. Tell me about your back end, the CEOs, the COOs. Tell me about all that.

Yeah, absolutely. So started in 2009. His name was Mike Anderson. He was a land developer. You know, he started loan, you know, buying trustee sales at the crash in 2008.

Mike Anderson from Texas?

Arizona. So we started in Arizona.

Okay.

And we didn't open up because I knew him. He lived here. He's Arizona. He did a lot of stuff in Arizona, New Mexico, and different places. But yeah, he was from out there. But anyway, so he started the company rather than doing the flips. He's like, why don't I just give these guys the money in the trustee sale? And so in Arizona, unlike Texas, you have 24 hours to provide financing at the auction.

So you win the auction and I got 24 hours to bring the money.

You got to put your non-refundable money down, but you got 24 hours to bring it.

I can bring $5,000, $10,000, $15,000, $20,000 to the auction, but not $200,000. Exactly. Right. Right.

So, you know, unlike Texas, how we'll offset that is if you buy something at auction, we'll refinance you the next day.

So if you're able, you know, if you wanted to do a delayed purchase structure.

Yeah, exactly. But anyway, so they started the company. You know, we, we didn't really start growing until about 2019, but he was a great influence. We have Mike Lofton. He owns a large framing company out of the Southwest, Loftco. Buddy Satterfield, he was one of the executives at Shea Homes for a number of years. And then Dean Bloxham. And then we have some managing partners, Noah Brocious and Tyler Larson and Kevin Heimark. They're the ones that are showing up on a day-to-day basis and helping things out. I'm the chief revenue officer. I, you know, manage the origination, the marketing, the, you know, servicing and collections departments and try to keep the money coming in.

So nice. So when you guys decide to move into an area, so let's say Texas is a big state.

Yeah.

You have one branch handling Texas. And is it just the Dallas-Fort Worth metro or do they handle San Antonio, Austin, Houston, all that?

No, so we have the one physical location here and then everyone manages outside of that one. We don't have a satellite office in those other MSAs, but we'll loan there for sure though.

But you will loan in there.

Oh yeah.

Yeah. And so when you decide to move into another, let's say you want to go to Georgia.

Yep.

So you're going to start sourcing a branch there, a branch.

Yeah. So we opened up and we just did this a year ago in Atlanta. So. Usually our process is, because again, we're asset-based. Step number one, we go and find an underwriter who's familiar with there. They've been working the areas, they know how to evaluate the properties, they know the ins and the outs of it. We bring them on, teach them our processes, our procedures. They get familiar with what we do. And then we start from the other offices funneling some deals there. Because again, we, we get a lot of— we're a volume shop. We got a lot of leads coming in. And then from there we start hiring local staff. You know, salespeople that are— the first thing is to find an underwriter that knows the area, because exactly like you said, that's, that is, that's everything.

That's everything. If they, if they miscalculate evaluation, um, then you're stuck with an asset that you can't move.

Exactly.

Yeah. So the first thing is you guys find an underwriter that has some valuation background, appraisal background, all that, and you kind of just retitle them basically.

Exactly.

From it, from an appraiser or a evaluation guy to an underwriter.

They're your branch manager, I guess, to say that, or just, yeah, just boots on the ground here, you know. And then we just, we grow organically from there.

And then you'll start finding sales reps then to handle the day-in, day-out leads.

Exactly.

And then is everything funneled back to Phoenix for underwrite?

No, because we got the local guys there now, you know. Obviously the, the head underwriters and the managers of the department, you know, most of them are, they're regional, so they'll go there and get like the final approval. But the local people are the ones that are establishing the values and then just say, hey, this is what we're looking at. Does this sound good? And they say, yeah, sounds good. You know, ask the questions and stuff. But again, our underwriters, they're— we look at anywhere from 700 to 1,000 loan requests a month. Right. You know, and then we're funding 200 to 300 of them. So like they within a couple of months, like they've looked at hundreds and hundreds of deals, you know, and how we're looking at it. So they have a— they can quick spit them out pretty quick.

Yeah. And it sounds about right if you're looking at, say, 700 to 800 And funding to 1 to 2, that ratio is about right because we say no more than we say yes.

Oh yeah. We're looking for about a 30, 35% conversion.

Yeah. And that seems about right. That's amazing. So if anybody wants to come find you, your product, your program, where do they go, Zach?

Yeah. Capitalfundone.com. We have a booth here as well, obviously, and our office is in Las Colinas. So we're local here. Yeah.

That's where the rich live. That's where all the movie stars are.

Oh, hey, we commute.

Yeah. All right, Zach, is there anything else you want to tell the audience as we're kind of talking about what you guys do, who you are?

No, we appreciate it. Like I said, just give us a chance. Fast yes, fast no. We're here for the long haul and we want you to be successful. So if we tell you— there's no offense if we don't like your deal, just double-check it. We have no incentive in you failing.

So I want to go back real quick. So let's say I send you a deal and your underwriter says, no, we don't agree with it, but I can bring supporting documentation. you know, through comps, through all this that I'm seeing, is there wiggle room or is it pretty much absolute?

No, for sure. Well, no, it'll be one of those things where if we're missing something, we're not perfect. And so if we're, you know, Texas, especially non-disclosure state, like if there's something that like you, if you have something that we're missing that we just can't find easily.

It's not online.

It's not posted anywhere. You know, we, we welcome information. So now we, will we agree with you all the time? No. Right. Again, at the same time. We put our money where our mouth is. Like if, if we're saying no, maybe pay attention a little bit because we don't make any money if we tell you no. Like, what do we have to do by you failing?

Well, when I started in 2010, um, I don't know if you know, uh, Phil and Chenoa Grove, but they have a big real estate investment network deal they do twice a month. And I remember when we were presenting in front of, you know, 200-300 people and, and Chenoa would say, if a hard money lender tells you no, then walk away. Because their job is to fund deals, right? We all have money sitting in the vault. It makes us no money in the vault.

Exactly. We have to deploy money.

Yeah, it costs us money to store it there. We have to deploy it. But if we're saying no, there's a reason, right? We don't want to lose our money and we don't want you to fail, right?

Exactly. And again, we— if the way it's set up, like, you don't pay, like, we're gonna, we're gonna own the house. If I don't want to own it, why do you want to own it, right?

Right. Yeah. And that's when we first started we did, you know, uh, kind of like what you guys are doing. And it was like every deal that I approved was all about, if you default, I'm gonna make, you know, $20,000, $30,000, $40,000, $50,000 on it versus $10,000. Yeah, for sure. So I'm going to triple, quadruple my money if you default. So yeah, let's do the default, I win, and if you don't, well, we both win.

Exactly.

Yeah, so great concept, love it. Zach, enjoyed, appreciate it.

Thank you very much, appreciate the time.

Appreciate it.

Thanks a lot.