Thank you to our sponsors for this episode, Liquid Logics and Mortgage Automator.
Liquid Logics
This episode is sponsored by Liquid Logics, a NextGen FinTech company offering the only true full cloud based SaaS Loan Management System. The system includes CRM/lead pipelines, LOS full workflow, processing, automated credit & underwriting, servicing, reporting, closing DOCS, and 3 types of fund pool management structures. Although loan origination software is their bread and butter, at their core, Liquid Logics is a business solutions company dedicated to facilitating growth, minimizing your workload, and making your business the best it can be. Visit liquidlogics.com to learn more.
Mortgage Automator
Private lenders, this one’s for you. If you’re not currently automating your internal operations, you’re likely spending a lot of time on tedious manual processes. If increasing efficiency and generating more business is your company’s goal, automation is the answer. Recently featured in Forbes and Entrepreneur Magazine, Mortgage Automator is a complete loan origination and servicing platform designed specifically to optimize your processes and automate your tasks, including all of your communication with the various parties involved in your transactions. It can help you generate and send out documents to the term sheets in seconds for digital signing. It’s also able to handle your payments, collections, accounting, and so much more. Focus your team on growth and let Mortgage Automator handle the rest. Go to mortgageautomator.com to book your personal demo and find out how Mortgage Automator can help your business grow.
You’re listening to Lender Lounge with Kevin Kim, a podcast dedicated to the private lending industry. I’m Kevin Kim. And my goal is sit down with key figures in the private lending industry to talk about their business and their personal lives. We’ll get their takes on market conditions, the industry at large, and their personal stories. Overall, I really want to learn more about how they started and grew their businesses. So whether you’re a lender, a borrower, be a vendor, an investor, or anyone just interested in learning more about private lending, this podcast is definitely for you. Thanks for tuning in and enjoy this week’s episode of Lender Lounge with Kevin Kim.
Kevin Kim:
All right, guys, welcome to another episode of Lender Lounge with yours truly, Kevin Kim. We are in my office at Geraci headquarters, and today one of our really good friends is visiting with us. Rocky Butani, please introduce yourself.
Rocky Butani:
Thanks for having me. I’m Rocky Baton, from privatelenderlink.com, and it’s a website that lists private lenders throughout the country. And it’s a valuable resource for people to find lenders.
Kevin Kim:
And I want to ask you because Private Lender Link is probably… I mean you have some competition, but in private lending, your website is kind of the go-to place for listing your company, what you do, and you’ve grown it. I mean, now you’re everywhere. You’re at all the shows and we see you. You’re a household name now, but let’s kind of take a step back like a few years back because you’ve been in the space for as long I have, so when did all this start off for you?
Rocky Butani:
It actually started in 2010.
Kevin Kim:
Oh, back then.
Rocky Butani:
Yes. I launched the first version of the website in 2010.
Kevin Kim:
What were you doing before that then?
Rocky Butani:
So before that, I had a business doing commercial property marketing.
Kevin Kim:
You were always kind of in a real estate marketing kind of…
Rocky Butani:
Yes.
Kevin Kim:
Okay.
Rocky Butani:
Yeah. And then before that, it was a virtual tour business for residential and I wanted to get out of residential. It was kind of a unique concept where if a commercial property owner wanted to sell a property, instead of hiring a broker, they would hire me, and I would just do the marketing. I’d do a video shoot, make a website for the property, put it on LoopNet or CoStar, whatever.
Kevin Kim:
I remember back in the day before they had the whole… That was standard practice.
Rocky Butani:
Exactly. Now everyone does it. But I had this idea to offer the service, and the idea is I would charge 1% instead of what the brokers would charge 2%, 3%, 4%, 5%, 6%. And it was a failed business model. It took me a while to figure that out.
Kevin Kim:
No one was adopting, is that what the problem was?
Rocky Butani:
Well, all the property owners loved it, but then the recession hit. And my model was that I’d get a little bit of money upfront, but then I’d get a commission if it sold. And nothing was selling. Everything was overpriced. And when I really got the business going, it was a national service, so I got flown out to Minnesota. I came to Southern California a lot. But then the recession hit, and none of these properties were selling. And then I just realized it was a failed business model because in the end, even though I kept at it and some deals happened, the fundamentals weren’t there. I realized these property owners couldn’t sell their own property. They really needed a broker. And I originally thought that in commercial real estate it’d be different than residential where you’d have more savvy investors or savvy property owners, and it wasn’t the case. They’re always emotional about getting offers. They wouldn’t answer the phone. Someone wanted to look at the property, they were like, ah, I’m on vacation.
Kevin Kim:
With commercial, you have a lot of passive owners. And so property managers take care of everything, I mean, especially with the smaller strip centers and stuff like that. So you’ve always been in the marketing side of things. So you did that and then 2008 hit, 2009, and then 2010 hits, you just like fall upon private lending, how did that happen?
Rocky Butani:
I read about it in a magazine. There were these commercial real estate magazines I used to get, and I read an article about, hey, no banks are lending, private lenders are the only ones that are lending. And at the same time, I was trying to figure out what the next business was because I realized this commercial marketing service wasn’t going to be a good long-term business.
Kevin Kim:
But I mean, the model is somewhat similar if you think about it. Right.
Rocky Butani:
It is.
Kevin Kim:
So, I mean, when did you make your first kind of foray into this space then?
Rocky Butani:
Well, so I was looking for something unique that’s real estate-related. I like the finance side because I don’t want to deal with the property side, which I was kind of traumatized from that. So I like the finance side. I wanted to build some sort of marketing or lead gen business that was just easier to operate, and that could last for a long time and go through recessions and still do okay. So I just wanted a long term business that I could say, okay, I’ve already done four or five other businesses, and most of them failed, so I just wanted a good, solid business that was kind of a niche market or a niche service that wouldn’t have that much competition. So I read this article about private lending. I had never heard of a hard money loan or a bridge loan. And then I started doing some research and I realized there was nowhere to find these lenders. And the only resource I found was Pitbull Conference had their own hard money directory, but the problem is it only had a name, an address, and a website address, and a phone number. Yeah. And you didn’t have any information.
Kevin Kim:
And back then, Scotsman Guide wasn’t really a thing either.
Rocky Butani:
Yeah, it was smaller. So, Pitbull, their hard money directory was great. It was a huge database. But my plan was to create something where you could really learn about the lender and I would vet the lender and make sure they’re reputable. So anyways, I had this idea and I thought, okay, let me call up some lenders and see if they’d pay a fee if I sent them a lead. It was a referral fee or per lead fee. So I just started calling up a few lenders that I found and at the same time, I was getting emails from Lone Oak Fund, which was one of the bigger funds in California.
Rocky Butani:
And they were sending out emails to all commercial real estate professional. So I called them up and I said, if I sent you a lead, would you pay a referral fee? And they said, yeah, sure, how much do you want? And I said, well, how much do mortgage brokers get? And they said, one point. And I said, how about half? And so I came up with that idea where they wouldn’t pay anything upfront, it would just be performance-based. And then I tested it out. I built a very small makeshift website just to play around with it and did some advertising and I got leads and nothing closed, but I thought, okay, this is kind of working, I’ll get a few more lenders. I ended up getting about 10 lenders that agreed to do it.
Kevin Kim:
That’s quick.
Rocky Butani:
Yeah.
Kevin Kim:
This was 2010, 2011, what year was this?
Rocky Butani:
It was 2009 when I started testing it out. And then early 2010, I actually started building the website. So I built it myself.
Kevin Kim:
So private lending was really in its infancy back then. I mean, we were all coming out of the recession. Everyone was still fighting off, I mean, the recession. Everyone was so knee-deep in it. I mean, it was pretty bad. That’s cool though. You saw an opportunity and you’re… I mean, you kind of indicated this, like I always talk about how fractured this space still is. Like back then it was, I mean, you can’t even call it fractured. It barely existed from an organizational standpoint. There were companies that did it, but you really didn’t know. Right. Is that an opportunity sign for you, those kinds of structures, those kinds of arrangements you see in the marketplace?
Rocky Butani:
Yeah, it was more that everyone needed private lending because they couldn’t get… It was in high demand. Yes. It was high demand, but there wasn’t that much supply them. There wasn’t that many lenders back then. So they were hard to find. The lenders didn’t market themselves very much. So I saw an opportunity because I thought, okay, there’s a lot of these private lenders out there, but there doesn’t have to be too many, I just need to be able to promote the ones that are willing to put themselves out there.
Kevin Kim:
Well, it’s funny because online now, I mean, there’s a lot of different types of websites that are trying to like, for lack of a better word, almost aggregate the data and information, but like you said, there’s still just kind of like, here’s the company name, here’s the email address, and the state they lend in, and they don’t tell you what they do. There are other places, like I know there’s magazines that have different directories, but it’s hard to navigate. I mean, I can’t speak for anyone else, but if I’m trying to figure out okay, who lends… I mean, from my standpoint, like who lends in some obscure state like Maine. Right. I can narrow it. I go on your website. And you’ve created this on kind of like… I mean, we have trade shows.
Kevin Kim:
We have kind of community organizations in the industry. But you’ve created an online place for people to really interact and people to find a lender. Let me ask you this. So you were creating a lead gen platform and also kind of a listing website for lenders out there, how did you attract on the other side of the coin, like getting the borrowers to come to you? That’s very, very challenging thing. Everyone wants to know how to do that. And you’ve been doing it now for 11, no more than that now, like 12 years now. And it’s been evolving. Right. And your client list is huge now. You represent a good chunk of the industry. A lot of our friends, a lot of mutual clients. When you were coming up with this idea, was it the commercial real estate business before that helped you drive traffic that way or just your marketing?
Rocky Butani:
No, it was totally separate. It was all organic SEO, all organic Google search. That’s it. And it took about three years before the site started to rank. So when I launched it in October 2010, it took two almost three years before I started ranking. And before, I’d just get leads randomly from Texas or mostly of California.
Kevin Kim:
So most of your efforts were done through either… Was it just marketing, like online marketing back in 2009 or 2010?
Rocky Butani:
Yeah. When I started, I didn’t have a budget. I didn’t want to go into debt, putting everything on a credit card. I didn’t want to try to find investors. I had the other business I was still operating to pay the bills, but I knew it was just going to phase out eventually. And it just took that long for it to show up in Google searches and have enough credibility and enough content. I had to keep adding lenders. I had to keep adding content to the site. And then it finally hit a point where if you typed in private lender, California, or Los Angeles or Bay area, I’d show up number one or two.
Kevin Kim:
And back then SEO consultancies didn’t really exist. So like you had figured that out on your own, right?
Rocky Butani:
Yeah. So I learned SEO on my own. I just took these lynda.com courses, which is now LinkedIn Learning. I learned everything from there. I learned web design. I learned SEO. And when I built the site, I planned it really well in terms of the structure and the keywords, and the URL. So I really learned the basics of SEO. And back then it was good because there wasn’t that much competition. The only competition I had were the lenders themselves. And even then, there weren’t that many lenders that had websites that were built well.
Kevin Kim:
Right. I mean, there’s still a lot of bad websites out there. And back then they were terrible. I remember I joined this firm and I was looking at this… I had only been used to working with banks until then, and I joined this firm and I was like, these are the people we’re dealing with, this is barely a website. I’m getting an AOL email address. It’s like, what’s go going on. I mean, we’ve evolved since then. I mean, the industry has become very much more professional and polished over the years, and has evolved a lot of us. But back then, it was, I mean, literally, it was the wild, wild west back then, I would say 2010 to 2015. And tell me about that, how did you guys grow? I don’t want to say you guys. A lot of people don’t know this, but you’re still a solo shop. You’ve been running, lean and mean, just you and then some outsourced servicers, this entire time, the past 12 years.
Rocky Butani:
Yeah. That’s good and bad. I’ve tried to keep it simple. I tried to automate stuff.
Kevin Kim:
We all thought you had this giant in-office team, and then it turns out it was just you and a couple of outsourced servicers. Right.
Rocky Butani:
Yeah, exactly.
Kevin Kim:
Is there a reason for that?
Rocky Butani:
Well, I’ve just always been… I don’t know how to explain it. It’s good and bad. I try to keep it simple where I don’t want to manage people. I’ve just never done it before. I know eventually, I’ll have to. I’ve just tried to put it off and delay it as much as possible.
Kevin Kim:
And you like getting out there and doing the song and dance like all of us. We always do, every other month. Right.
Rocky Butani:
And I love it. I love going to all the conferences. I know a lot of these lenders, I love having new conversations with them. It’s really valuable, but there’s still a lot of admin stuff that I do myself, which I shouldn’t be doing myself. So I’ve tried outsourcing some of that, but it’s almost like I have to have someone full-time to do that. And they could be remote. They could be somewhere in the US. I don’t really want to outsource it international, but yeah, I’ve tried and I haven’t tried hard enough. So eventually, I’ll get to that point. But the challenge is, it’s hard to grow if I’m just doing it by myself.
Kevin Kim:
I would be to differ in one respect though. I mean the website has grown from a user standpoint. It’s to the point where before, like I’m going to discover new lenders on your website, and then I’ll search them again and they’ll be on other websites, but they’re always going to be on one. And I feel like you guys have gotten a really in-depth reach. Now, in doing that, what has helped you broaden your user base when it comes to people signing up with you, right? Your client base, if you will. Has it been all the trade shows that you attend because you go to all the ones that we do? Plus, I’m sure you go to the ones that we don’t go to. Right. So like you’re at a trade show, what, once a month?
Rocky Butani:
At least one a month.
Kevin Kim:
Usually, twice a month sometimes when we’re really busy.
Rocky Butani:
Yeah.
Kevin Kim:
Pre-COVID, you were probably, what, like twice a month?
Rocky Butani:
Exactly. At least one a month. And then some months like in the fall it’s always busy, that’s two each. But the thing is even if I didn’t attend all the industry conferences, I still have a ton of lenders that have signed up or asked to sign up and it’s a challenge because I can’t list everyone. There’s only a certain number of leads that come in and a certain amount of traffic.
Kevin Kim:
Oh, so you’re having to say nothing sometimes.
Rocky Butani:
Yeah. I don’t want to overload the list. And then the lenders that are listed get fewer leads, and fewer looks, and page views. So it’s tough because I want to do the business with everyone, but I can’t.
Kevin Kim:
So you being very cognizant of making sure that you’re servicing your clients as well, they’re getting good value out of this.
Rocky Butani:
Yes. In some states, because that the listing is broken up by state, the lenders have to pick and choose which states and which loan types they want to be listed in, and certain areas are overloaded or getting close to [crosstalk 00:17:37].
Kevin Kim:
California is saturated.
Rocky Butani:
Yeah, but I increased the pricing in California, so that’s a bit under control. But now it’s Florida and Texas. Especially Florida. So many lenders wanted to lend in Florida now. So I really have to control how many show up. But yeah, like I said, even if I didn’t do the conferences, I’ve already had all these lenders just reach out and say, hey, I found your website, I want to be on there.
Kevin Kim:
A lot of referrals.
Rocky Butani:
Not even referrals. Usually, what they do is the lenders will go do a Google search…
Kevin Kim:
To find their competition.
Rocky Butani:
Yeah, trying to find their competition. They see the website and they say, hey, I want to be on here.
Kevin Kim:
And it’s the best way to make it work because, hey, if my competition’s doing it, so should I? It goes back to SEO and online marketing, and you jumped on that game very early on as a necessity. But in our space, now everyone’s doing it. Like, SEO is now a household word. And I want to get your take on that, like what can a lot of these smaller guys, as they’re starting up, if you have any advice for them. Like how can they embrace digital marketing and really do it on a budget? Because you built this company on a budget and you’ve succeeded. And you’ve also kept leading them this entire time. You know some of my clients are just starting up, they come from another shop, they’re a former investment banker or whatever and they’re getting started, a lot of times there’s stuff that we don’t really have any advice about SEO and digital marketing, like any feedback for them.
Rocky Butani:
What I tell people is it’s not easy and it’s not something you just do one time, it’s just an ongoing effort that you have to constantly work for.
Kevin Kim:
Should they go and learn it like you did, or should they hire someone?
Rocky Butani:
Just hire someone. Lenders are in the business to lend. My role is more marketing, so it made sense for me to learn it, and kind of do it. And it’s very valuable, but there’s lots of marketing agencies out there that can help with that. But even if you find an agency, the tough part is you have to keep adding content and different pages to your website and…
Kevin Kim:
And educate them too, a lot of them, they don’t understand.
Rocky Butani:
Yes.
Kevin Kim:
Right. I mean, have you ever been tempted to do that, to offer that?
Rocky Butani:
I’ve been asked a bunch of times. There was a time in 2014 where I helped two or three different lenders build their websites and the SEO was so good that even now they outran Private Lender Link sometimes. So they are in the Bay Area. I had close relationships with them and they said, hey, can you help with the website? And I said, look, I’m not a web designer, I don’t like doing this thing one time and you pay me a fee. So we worked out a deal where they’d pay a fee whenever they closed deals or something like that, and it just didn’t work out.
Kevin Kim:
It taught you a lesson though, like this is too much for me, right?
Rocky Butani:
Yeah. In some cases, it worked for a little bit, but in the end, the fundamental was just, look, I felt bad charging these lenders a fee when… It got to a certain point where they’d get inquiries through the website without my doing. It had nothing to do with me. It was from their own marketing and their own network. And then I just told them, look, this doesn’t make sense, we don’t need to keep doing this.
Kevin Kim:
And let me ask you this. Over the years now, 12 years now, you’ve added and removed features, has it always been based off like clients asking or, hey, what about this opportunity? How have you added and removed features over the years?
Rocky Butani:
It never ends even now. So let me take a step back. In 2017, I hired a marketing agency out of Canada to rebuild the website because I didn’t want to do it anymore. It outgrew my expertise and I wasn’t really that good at it when it got more sophisticated. So I hired this company called Reaction. They’re out of Alberta and they’re a marketing agency, but they’re really good with websites. So they rebuilt the website from the ground up. And so I collected a lot of the features that I just knew everyone would need. And I do get feedback, and a lot of the feedback or the lot of requests I get is for data integration, which I haven’t done a good job of, but that’s all in the works right now. So this year, that’ll all be set.
Kevin Kim:
When you say data integration, like data the lenders are feeding you about what they’re doing.
Rocky Butani:
No, the other way around where a lead comes in and the input the data into Private Lender Link, and all the lenders just want to dump into their CRM or their LOS.
Kevin Kim:
Oh, you want the website to feed the leads directly without you getting involved.
Rocky Butani:
Yeah. So things like that. There’s not too many requests that the lenders have. We focus a lot more on the user experience, but over the last three years, even when the new website launched or when the first…
Kevin Kim:
I remember that. I was like, this is so nice.
Rocky Butani:
Yeah. But it’s been evolved and it’s constantly being upgraded. I always have a budget set to just spend on web development, or they call it web innovation. But even now, we’re doing a major overhaul of the design, making it more modern. There’s a new loan form experience that we’re building. So yeah, maybe by the time people listening to this, it’ll be implemented. Look out for that guys.
Automated:
I hope you’re enjoying this episode so far. Before we move on, I really want to tell you about a great sponsor that’s joined us for the show. Private lenders, this one’s for you. If you’re not currently automating your internal operations, you’re likely spending a lot of time on tedious manual processes. If increasing efficiency and generating more business is your company’s goal, automation is the answer. Recently featured in Forbes and Entrepreneur Magazine, Mortgage Automator is a complete loan origination and servicing platform designed specifically to optimize your processes and automate your tasks, including all of your communication with the various parties involved in your transactions. It can help you generate and send out documents to the term sheets in seconds for digital signing. It’s also able to handle your payments, collections, accounting, and so much more. Focus your team on growth and let Mortgage Automator handle the rest. Go to mortgageautomator.com to book your personal demo and find out how Mortgage Automator can help your business grow.
Kevin Kim:
Yeah. and there’s a lot of stuff going on in the industry, but I want to take your take on just your feel in the industry because it’s… We’ve interviewed a lot of lenders and their CEOs, but we’ve never really interviewed… I’m in partnership with a law firm, I guess that’s the only kind of vendor perspective on it, but you’ve got a very unique perspective. Not only have you been in the industry since its infancy until now, it’s grown massively and you’ve seen a lot of folks just grow immensely, sell off, not make it, the evolution of the space as a whole, and I want to get your take on it. Like how were things back in the early days, and what are your thoughts on the space today, and how do you compare and contrast it?
Rocky Butani:
Yeah. It’s amazing how it’s changed so much. There weren’t that many national lenders at the time. It was more local lenders.
Kevin Kim:
One state, two states at best.
Rocky Butani:
Or even one metro area, not even one of the state.
Kevin Kim:
I remember it was like we lend in LA.
Rocky Butani:
Yeah.
Kevin Kim:
It’s just crazy now.
Rocky Butani:
Yeah. And they wouldn’t even touch San Diego. They would just say LA, maybe Orange County. Just that LA Metro. They wouldn’t do Inland Empire. I mean, it varied, but it was mostly local, and there wasn’t as much capital then. Especially in 2010 coming out of the recession, it was just everyone was local, finding capital was just not that easy. It was all individual.
Kevin Kim:
It was all [crosstalk 00:25:22] investors, it wasn’t driven by any kind of Wall Street money. It was just not at all private investors, retail investors.
Rocky Butani:
Yeah. And there weren’t that many lenders out there. It was just a whole different world. And then I think around 2015 is when institutional capital first started dabbling in the space.
Kevin Kim:
We heard the idea of sell your loans and it was like, what?
Rocky Butani:
Yeah. And there’s lenders I know that have had that model to sell loans. So they’ll fund it and then they’ll sell it immediately after, but they’d sell it to their network of [crosstalk 00:25:57].
Kevin Kim:
Investors. Exactly. And then the idea of an actual business model that’s backed by either a financial institution or hedge fund. It took five years for them to reacclimate to our space if you will because they wouldn’t touch anything that looked like a mortgage, but they did in 2015. So that’s like from 2015 to 2021. I mean, it’s been a crazy ride. I mean we’ve just seen double over and double over again. And our firm’s a good indication. Your company’s a good indication. We’ve both grown significantly over the years. And what do you think, I mean, good and bad because I have my personal feelings about Wall Street, how about yourself? Like what are your views on how things have changed over the years?
Rocky Butani:
No disrespect to the institutional guys, but it’s gotten less interesting if you will.
Kevin Kim:
It’s become very commoditized.
Rocky Butani:
Yes, commoditized is a good way to put it. It’s very standardized. It’s almost like the consumer lending now where it’s you know what all the loan products are. Most of the lenders that have that model have very similar programs and terms. So when I meet a new lender, I onboard them onto the website now. Most of the time I know what their [crosstalk 00:27:17].
Kevin Kim:
The [crosstalk 00:27:17] is predictable.
Rocky Butani:
Exactly. It’s the institutional box.
Kevin Kim:
You remember when guys used to do second and thirds? I mean, come on, it’s crazy. Now, we’re dealing with 100% firsts, which is okay, which is fine. But I feel like everyone fits within the same credit box. Like a lot of guys don’t even touch commercial anymore. They used to do all of it.
Rocky Butani:
Sure. And it’s probably because it was easier. It’s easier to just…
Kevin Kim:
Wall Street’s made it super easy. And I agree with you, the idea of wall street creating… Because I’m a securities attorney and I do funds, that’s the one thing I hold dearly against is like there are some funds out there that are still doing amazing volume without Wall Street’s help. I mean, we had a couple of guys on the show, I mean, good example is like the guys out in Arizona, a capital fund, [inaudible 00:28:10] Noah, good friend of mine, like they’ve been doing this purely with investors. And they are pure balance sheet. And they don’t sell loans. And it’s like, those people are still showing me that model has not died yet. But I was on a panel last year and a good friend, Ryan, over at [inaudible 00:28:28], he personally thinks that the market’s going that purely in that direction. I mean, what do you think?
Rocky Butani:
You mean, purely to institutional.
Kevin Kim:
We’re going to be essentially like the correspondent world you see in conventional. Everyone’s going to be a correspondent. There’s going to be your major shot, your Fanny, Freddy, Jeanie, whatever, and everyone essentially is going to be a correspondent or some type of loan originator. What do you think?
Rocky Butani:
I disagree with that. I think even today, there’s all these lenders that have been doing this for years, maybe even more than 10 years, that…
Kevin Kim:
Oh yeah, you get guys in the show 20, 30 years now.
Rocky Butani:
Yeah. And they have their model. They’re very wary about the institutional capital and the reliability because they just have their system and it works. And they’re just against that whole institutionalizing.
Kevin Kim:
Let me ask you this because you interface with more sponsors, lenders than I do even, and I want to ask, are there still people holding onto that hope, like they’re not letting go of it, and they’re sticking to their guns.
Rocky Butani:
Yeah, absolutely. And they fundamentally disagree with that model.
Kevin Kim:
Their thesis from an investment standpoint.
Rocky Butani:
Yes.
Kevin Kim:
That’s great.
Rocky Butani:
And they also can’t do the creative loans that they can do where they could just fund it themselves, or either portfolio it, or have it funded with accredited investors. You can’t do some of those creative loans with institutional capital.
Kevin Kim:
You can’t do creative loans, but also, our industry was built on speed, and speed means, a lot of times, no credit, no appraisal, we’re asset-based lenders at our core. And a couple of my clients have been telling me since Wall Street and the aggregators are requiring all those things now, we’re able to win because we don’t require that. And we lend in the MSAs that we know. And we’re only going to do that and they’ve been killing it. A lot of my balance sheet lenders are doing record months, record months. Some of them like $90 million a month. That’s crazy.
Rocky Butani:
And the funny thing is I don’t even understand how there’s that much business out there to be had.
Kevin Kim:
That’s the crazy part.
Rocky Butani:
With so many lenders entering the space there’s, there’s only so many fix and flip investors, and maybe even that’s not something that lenders have focused on.
Kevin Kim:
I’ve heard of this, as the people saying there’s a transition to construction now.
Rocky Butani:
Yes. Well, they have to transition because there’s got [crosstalk 00:30:48]. Yeah. There’s no fix and flip business, or it’s hard to find deals. And the people who have been flipping houses for however many years, they already know all the lenders, they already have their relationship. Maybe they’ve dealt with the same lender.
Kevin Kim:
And they’re going direct to the institutions now, a lot of them. I’ve talked to so many of these national builders and they don’t even need to go to our clients. They’re just going directly to institution.
Rocky Butani:
Yeah. Once they get to a certain point, they can bypass the originator in some cases, I guess. But that’s a huge amount of volume, but even let’s just say it’s an investor that does maybe 10 flips a month, even that’s quite a bit, but maybe they have their relationship, they don’t need to mess with it, they don’t need to go look for another lender. There’s only so many real estate investors out there. So the lenders have to just figure out what other products are there. The rental loans are really popular.
Kevin Kim:
Let’s talk about that real quick. What is your take on DSCR because it just shocked me? I was like, this is stuff that the banks used to do. I used to do it as a banker and a lot of our conventional colleagues have been doing it for years. And it’s just like all of a sudden it appeared in our side. I think about, what, three years ago, four years ago ish.
Rocky Butani:
Yeah. I first saw it in I think it was 2016, and I think maybe CoreVest and maybe one other company were the only ones that were doing it.
Kevin Kim:
I think only CoreVest were one of the first to jump in.
Rocky Butani:
And I’m surprised it took so long for the institutional capital to catch on because it’s such a good product.
Kevin Kim:
For them, it’s wonderful, it’s a fantastic product for them. It’s eventually a conventional mortgage without all the red tape.
Rocky Butani:
Yeah. And it’s a 30-year product. Yeah. I’m surprised because it’s higher yields than conventional mortgages, so whoever buys those consumer home loans that are a 30-year product this is even better because it’s higher yields.
Kevin Kim:
There’s much more appetite for it now. I think that’s the interesting component about it is like a lot of… I mean our industry as a whole is an indication of Wall Street not really knowing what they’re doing, and then now they’re saying, wait, what’s that? That’s pretty cool. I want that too. And then all of a sudden their friends want it and their friends want it. And all of a sudden now everyone’s doing it. And that seems to have been the trend at least from my standpoint, it’s not any kind of crazy quant or crazy analyst. It’s literally like, that’s pretty cool. Let’s do that.
Rocky Butani:
That said, with construction I have concerns, but I think…
Kevin Kim:
I want to hear about that.
Rocky Butani:
So lenders will definitely learn construction because they have to. That’s kind of the thing that’s in demand right now. But I’ve never originated a loan, so I’ve never been that involved in a loan, let alone a construction project. But from what I know, it’s way more complicated. So even if a lender learns it, I just have concerns about the viability of it being done on a national scale.
Kevin Kim:
And I think right now a lot of folks are taking it on because they can just sell it. Right. And they don’t have to worry about managing the asset.
Rocky Butani:
And it makes sense. If I was in their shoes, I’d probably do the same thing. And you’re right, there are capital providers out there.
Kevin Kim:
A couple of years ago, you couldn’t sell a construction lot if you wanted to. And now they’re all buying them. And I think they understand how to underwrite them and how to manage them. But even three years ago, it wasn’t as prevalent.
Rocky Butani:
And then some of the large national lenders that just have so much capital that they’ve raised, whether they’re a fund, but they’re, they’re starting these wholesale programs where a loan originator can just rely on that company even though it’s not their product and they’re not funding it off their balance sheet. It’s, hey, I have it available, they have the relationship with the borrower so why not just have someone else deal with it. That’s their expertise.
Kevin Kim:
Yeah, I noticed that too. And what’s interesting is you’re seeing not just… I mean, for the past almost six, seven years now, we’ve had all the aggregators and we have new entries and people like that, but then there’s also, like you said, companies that have been traditionally balance sheet programs now partnering with some major institutions or pensions and really getting massive horsepower. And we’ve had some guests on this show that have been lucky enough to get that, but they’ve kept their balance sheets, which is good. They’ve really grown. And that’s another thing I want to ask you about like something like the growth because you worked with one of the largest debt funds and lenders on the commercial side early in the game, Lone Oak, right, they’re still massive on the kind of resi fix and flip. I mean, you work with now, what I consider national shops. Let’s talk about kind of how they’ve grown and what you’ve seen as a kind of common thread because one of the common themes of this show is we talk about like; we’re trying to figure out what the common thread to growth is. And we have an outside perspective. We’re seeing a lot of these folks do it. So I want to hear your take on that.
Rocky Butani:
You mean more what the institutional-backed lenders…
Kevin Kim:
Actually, more of the folks because they’re not the institutional-backed folks. Because like I’m not talking about the aggregators, I’m not talking about the loan buyer, I’m talking about companies that have had a retail operation, have added that wholesale component, are borrower-facing and they have their own operation and they’re growing national. Guys like Lone Oak, right, on the resi side. And I want to get your take on it. What have you seen in common amongst these guys and how they’ve grown, from your perspective, as clients?
Rocky Butani:
Yeah. One common thing I’ve seen with a lot of the companies that have done really well is they just invest heavily in their marketing and not only online or AdWords or whatever, I’m talking like they sponsor every single event. Not necessarily the ones that we go to within our industry, but more the ones that the real estate investors go to. And those are also not that easy to find, and a lot of it it’s local.
Kevin Kim:
They’re involved in the [Reynaers and MasterLines 00:36:56], something like that.
Rocky Butani:
Yes. Exactly. Or they’re in the home investors network. That’s a big one. Or bigger pockets there. They’re more involved where they…
Kevin Kim:
BiggerPockets, they’re going to have their own show. You read that, in October.
Rocky Butani:
I think they had one in 2019.
Kevin Kim:
Yeah, but the COVID, right, that was the first show. We’re going. We’re going to see New Orleans.
Rocky Butani:
Yeah. I heard about it.
Kevin Kim:
Yeah. I’m excited.
Rocky Butani:
Yeah. I should look into that. I had it on my radar because I set up an events page on Private Lending Link to list all the events. And even if there’s one I’m not attending, I’ll still put it on there because it’s for my own purposes.
Kevin Kim:
[crosstalk 00:37:33] listener out there, you’re looking for new opportunities on the real estate investor front, BiggerPockets is doing a show in October.
Rocky Butani:
Yeah. So there’s not as…
Kevin Kim:
They’re going to all the shows. They’re doing a lot of marketing.
Rocky Butani:
Yes. And they understand it’s a relationship business, so they really embrace the broker relationships as well as the borrower…
Kevin Kim:
The broker channel.
Rocky Butani:
Yeah, the broker channel as well as the direct investors.
Kevin Kim:
Do you think that most of the folks that are considered successful that have the bigger shops have those kinds of broker channel management teams as account executives?
Rocky Butani:
Yes. Yeah. A lot of the big ones, like I know LendingHome has it and most of the other ones do as well.
Kevin Kim:
I just interviewed Dalton, and at Lima one, he was saying they built just a broker channel management team, and that seems to be a pretty common thread.
Rocky Butani:
Yes. RCN Capital is one I’m really impressed with where they’ve… I don’t really attend the consumer mortgage events, but yeah, they go to all of those and they’ve done such a good job of building up that broker network.
Kevin Kim:
And Jeff’s involved. Like he was telling me to join all these local realtor associations. So he’s involved in all that and that’s kudos to him for getting his really… It’s a different angle.
Rocky Butani:
It is, yeah. Because I see some shops where they don’t even want to get out there and meet people. They just want to do online advertising and [crosstalk 00:38:53] with the rates. The rates are going to be similar. It’s just more do you like that lender that you’re going to do business with? Do you have a real relationship with them? Have you shook their hand? But that said, there’s a lot of real estate investors that don’t ever go to events or they don’t do networking. So it’s tough. Like you have to have a lot of boots on the ground, so you have to have local offices in the big markets that you serve and just get more loan officers and people to build those relationships.
Kevin Kim:
Nice. Yeah. I agree. I think those are all the common threads. Well, let me ask you this though, do you find that all these like, “I mean, I want to say successful shops” because I can identify some that are not actually national and I consider them very successful.
Rocky Butani:
Agreed.
Kevin Kim:
They’re not all national.
Rocky Butani:
No, not at all.
Kevin Kim:
They focus on certain MSAs.
Rocky Butani:
Yeah. And some of them have just done really well. They’ve either been around a long time or they’ve just done a really good job of just networking within their one market. And they’ve never even had to do that much advertising or marketing, that’s been a lot of word of mouth.
Kevin Kim:
I found some folks are actually… They manage hundreds in billions of dollars, and they’re doing almost a billion-plus origination volume, but they’re literally in like three cities, which is crazy.
Rocky Butani:
And some of them never really get out there. Some of them, you never see any marketing from them. Right. A lot of shops I’ve seen over the years; it’s been really impressive to see what they’ve done. But that said, now there’s a lot of competition, and what I see is that some of these companies that they’ve done really well over the years, but now they’re losing customers or they recognize the competition, and they recognize the need to do more marketing and maybe have a marketing department or hire a marketing person. And it just has become essential for some of these companies because it’s just so much competition. They can’t not do it.
Kevin Kim:
I’ve always said we just did a kind of a little video segment for our marketing stuff explaining why our clients need to be marketing. It’s like Anthony said it years ago, you could be the best in the world, but if no one knows that you’re the best in the world, it doesn’t matter. Train the forest. Right. And so like going back to marketing, a lot of our clients are smaller, they’re trying to scale, they’re trying to build and build and build. With digital marketing nowadays, what’s the one thing they can invest in? It’s like they can outsource the SEO, they can do all that, what’s the one thing they can actually invest in. Should it be people? What do you think? I mean, should it be people to manage those relationships? Of course, they’ve got to [inaudible 00:41:36], that’s one thing, but what’s the one thing they should invest in from a marketing standpoint or common thread that you’ve seen?
Rocky Butani:
I’d say you got to do it all. You have to…
Kevin Kim:
There’s not one little thing they can…
Rocky Butani:
No, I can’t think of one thing. I mean, the easiest thing is social media, even though some lenders just don’t… Like even for me, I struggled in the beginning with… I don’t want to have to post every day just to put something out there but that’s the easiest and cheapest way to market.
Kevin Kim:
And that’s the funny part is people don’t appreciate the fact that Facebook, Instagram, LinkedIn, now TikTok, I mean, [Ruben’s 00:42:15] like I’m on TikTok. I’m like, that’s good for you, man. But all these platforms, if you think about it, are free marketing platforms. You don’t have to pay anyone. You may have to pay for ad space, but I mean, if you’re not paying for it, you can use it yourself, manipulate it.
Rocky Butani:
I understand why a number of lenders are it’s a bit difficult to get started or be consistent, but there’s companies out there that can help with that. There’s all kinds of marketing consultants that could just tell you what the social strategy should be and get it done for you. So yeah, there’s an expense if you have to pay someone, but social, you just advertise wherever you can.
Kevin Kim:
Any strengths still left in print. I mean, some people tell me that print still works for them. I mean, I throw away every single mail. I don’t [inaudible 00:42:59] mail.
Rocky Butani:
Well, the only print I keep is all the industry magazines, that’s different [crosstalk 00:43:04].
Kevin Kim:
Those are trade industry magazines, but like mailers, do you think anyone that actually does mailers?
Rocky Butani:
I’ve heard of some lenders using mailers where they collect data for local markets and try to figure out who’s a real estate investor or when their loan’s maturing, and then they send out a postcard. I’ve heard of some lenders that do cold calling and have been very successful at it, which is you have to have the bodies to do that.
Kevin Kim:
We have some clients still that have a very traditional approach when it comes to their marketing, cold call center approach, and it works.
Rocky Butani:
Yeah. And different shops have their different strengths, but you have to explore all of them.
Kevin Kim:
What works for you, right, from a company culture standpoint.
Rocky Butani:
Yeah. And there are some companies that buy leads and that’s enough to kind of meet their volume goals. So it kind of depends on size as well. There are some shops where they can’t handle too much marketing and too much inbound or too many leads, so some of them have to control where they advertise and how much they do.
Kevin Kim:
So speaking of leads, I actually wanted to ask you this, I mean, we’re still kind of in a pandemic, it’s last year, 2020, I mean, how did that impact you guys? I mean, where your clients just knocking on the door, help us out, we need more leads, or was it okay?
Rocky Butani:
No. A lot of them were, hey, we need to cancel and stop paying. It was an interesting time because I had to figure out which lenders were still lending and the ones that were… I knew which ones were. It was more the lenders that used the accredited investors to fund their loans.
Kevin Kim:
Balance sheet [crosstalk 00:44:52].
Rocky Butani:
Yeah. Balance sheet or even funds. And I had to figure out who was still lending, so the revenue that Private Lender Link gets, a lot of it is subscription where the lender’s paid to advertise on the site. A lot of those canceled.
Kevin Kim:
Really.
Rocky Butani:
Yeah. Dwindled down. I mean, it was like 75% of it was halted, or they just said, hey, we have to cancel.
Kevin Kim:
And that’s the first thing that goes, marketing dollars.
Rocky Butani:
Yes. Yeah. Exactly. And it makes sense because even if they got leads, they couldn’t [crosstalk 00:45:25]. Yeah. So that was the only effect it had, and that lasted for several months and then it came back. Yeah.
Kevin Kim:
So when did things [crosstalk 00:45:34] for you?
Rocky Butani:
Starting in September I think it really started coming back up to normal and then took until the end of the year. And even January and February, there was a lot of new signups where all these lenders now had enormous amounts of capital available to lend.
Kevin Kim:
Yeah, that was interesting. Not only did a lot of the capital providers come back, they came back with a vengeance. I mean the current condition of capital markets from Wall Street, I’ve never seen margins this big for our clients. I’ve never seen this multitude of products available for our clients. It’s really, really crazy. It’s probably more robust than it’s ever been before.
Rocky Butani:
Yeah. And who knows how long it’ll last, but they have to take advantage of it while they can.
Kevin Kim:
Yeah. And so let me ask you this, I mean you interface, but you also talk with these folks on a regular basis and like, what were their feelings last year? What kind of vibe did you get?
Rocky Butani:
There was a lot of them that they didn’t know if they were going to stay in private lending or if it was kind of the end into the road.
Kevin Kim:
Is this another 2008?
Rocky Butani:
Yeah. But there was some lenders that I reached out to that have been around for a long time. Like, there’s this one lender I remember in Maryland that… I had been to their office years before and it was a barn in one of their development projects, and I reached out to them. And this guy’s a bit older, he’s only lent in the DMV area for 30 years or whatever. And I said, hey, are you still lending, what’s changed? Then he went off on this huge rant and started telling me about, oh, all these Wall Street companies, I knew they were going to just bomb out and not be around and not last that long, and I’ve seen everything. And I’d get some of that where the…
Kevin Kim:
Well, there’s a lot of resentment from like the balance sheet lenders, the fund managers as Wall Street are taking opportunity away from them.
Rocky Butani:
Yeah. They were all excited because they thought, oh, less competition, finally. Get some relief and get some more deals in. But even some of the fund managers I talked to, they were on pause. They had the capital, they didn’t want to put… Yeah, they wanted put out when… If values are going to drop and they didn’t know… The valuations are always the toughest thing when the market [crosstalk 00:47:51].
Kevin Kim:
The ground [crosstalk 00:47:51] underneath you, especially in, in, in some of the secondary and tertiary markets. I was talking to [inaudible 00:47:57] about this during our show and he’s like, we were fine, they were fine, we were doing okay. And we were [inaudible 00:48:04] as values, but because they are so relationship-driven, they were able to have reliable borrowers, but they were not beholden to Wall Street. And so the interesting takeaway for me was… Because I’m kind of agnostic, right, with my clients, I mean, while I would love to build your fund for you, at the end of the day, I want you to grow. So whether that means through Wall Street, whether that means through your investors, my goal is to help you grow. But at the same time, I want you to grow for 20, 30, 40 years. I want you to do this and retire. I don’t want you to [crosstalk 00:48:34].
Rocky Butani:
Not be one cycle and out. Right.
Kevin Kim:
Yeah. And this is kind of a blip on the radar. Think about it. Like we’re due for something. And that goes to kind of the future. Like what do you think? I mean, I always ask people this on the show, like bullish, bearish on the market right now, on private lending, not Wall Street. Private lending in general, are you bullish or bearish, what do you think?
Rocky Butani:
I’m bullish, but I really think at some point, whenever there’s a change in the housing market, it’s going to affect how many deals can be done.
Kevin Kim:
Something is going to happen.
Rocky Butani:
Yeah. And there may be some smaller shops that they’ll always be able to get deals just because they have those relationships, but I just think volume’s going to reduce. But one thing that came out of 2020 is all these lenders realized that they just had to diversify their capital. And I’m sure a bunch of them have started a fund.
Kevin Kim:
We did record numbers in 2020 on my team and we’re still doing really well. And there’s two reasons for that. Right. Number one is you need to make sure you have reliable capital that will not pull out in the middle of a crisis. And high net worth investors are typically at a relationship game. And if they really are high net worth investors, they’re likely to be more understanding. Hey, I understand, do what you need to do. And if you take care of them, they’re probably not going to break down the doors in a crisis. They’re probably going to realize, okay, I’m going to do better here than I’m going to do anywhere else. But on the flip side, there’s also something to be said about the volume of consolidation that we’re seeing. And it’s not what we thought it would be.
Kevin Kim:
I thought that we’d see a lot of these bigger shops from Wall Street and their kind of their proxies or the hedge funds start buying up these companies. That’s happening, but they’re picking a minority stake or they’re setting up an SPV. We’re seeing a lot of consolidation at the retail level too. But at the same time, the point I’m trying to make is the most common thread that you see amongst people who are being bought up or being invested in by these groups, they’ve got a balance sheet, they’ve got a fund, they’ve got something that shows they can manage assets. And that’s the message I’m trying to get across these days is like you, you can sell, sell all day long, I encourage you to sell, those spreads are awesome, but you should also think about having your own balance sheet and having your own fund or something because that’s going to make you way more attractive to a seller come two, three years from now.
Rocky Butani:
Yeah. And seen there haven’t been that many acquisitions, but there’s been more investments lately where…
Kevin Kim:
Investments. Yeah. It’s like, I’m going to buy 20% of the company.
Rocky Butani:
Yeah, of the originating company or the operating [crosstalk 00:51:10].
Kevin Kim:
Operating company. I mean, it happened with Lima, they recently were bought by MFA. They started with a small percentage in Lima. So that’s the evolution of it. But Lima also had multiple balance sheet funds. They demonstrated the ability to balance sheet the loans and manage the assets.
Rocky Butani:
Yeah. And that takes a bunch of time to build. And then you have to show that diverse capital structure, and then you have to have technology because all the investors want to see that you have [crosstalk 00:51:37].
Kevin Kim:
I actually wanted to get your take on that too because you’re kind of a tech guy too. Right. And so you got a background on online stuff. And I know you have a personal interest in it and that’s also the opportunities presented. I mean, it’s kind of funny to me, it’s like there’s a lot of third-party software providers, but then everyone I have had on the show, they’ve all told me, I built my own.
Rocky Butani:
Yeah, I know.
Kevin Kim:
It’s so weird, isn’t it?
Rocky Butani:
And maybe that’s why they wanted to control it and they wanted it to be a part of the value of their business.
Kevin Kim:
It’s true because you go by a multiplier if you own proprietary software.
Rocky Butani:
Yes. Yeah. And I’ve had this a bunch of times with lenders of, hey, do you want to take the time and energy and money to build your own system, or do you want to just lend and operate your business and let someone else take care of the technology. And I think it depends on each lender’s goal. Some of them, they think that they could just build their own and it’s one time and they’re done., but they have to have a technology consultant that they’re constantly paying.
Kevin Kim:
[crosstalk 00:52:40].
Rocky Butani:
To upgrade it, and new features.
Kevin Kim:
Millions of dollars. I mean just like payroll and operations.
Rocky Butani:
And I’ve seen even smaller shops that try to build their own based on whatever, Salesforce or any other…
Kevin Kim:
We tried that one time, we tried using Salesforce, it did not work for us.
Rocky Butani:
Yeah. So I use Zoho and I’ve learned how to build stuff within Zoho. That’s my favorite, but for a lending company, unless you’re a certain size where you’re just really big and like I said, you want to make that part of the value of your business and you want to control it a bit more, then maybe it makes sense. But then again, I’ve seen some bigger shops that built their own technology, and they just got fed up with it and said, hey, we’re going to go with a third party company that does this for a living and we don’t need to make it part of the value of our business.
Kevin Kim:
It’s never been as robust as it has been before either. I mean all the companies that have been kind of like household names have expanded their capabilities, but we get new market entrance from all over the place and [inaudible 00:53:44].
Rocky Butani:
Yes.
Kevin Kim:
Are you also marketing to those folks and working with those folks as well?
Rocky Butani:
You mean the new entrants.
Kevin Kim:
Service providers like vendors. I know we’re on your website, but besides that, anyone else who provides a service to the space they can also find.
Rocky Butani:
Yes. So my goal when I built Private Lender Link was really… I mean, it was mainly just to focus on finding lenders, but I just got too tempted with other things that, hey, while I have all these people on my site, maybe I should build a service provider directory.
Kevin Kim:
I need this, let’s go look for that.
Rocky Butani:
Yeah. Or an investment directory where there’s a list of funds or trustees and companies that you can invest with. So there is a service provider directory. So I do market some of those companies. And the technology, especially, is one section I’ve optimized where it’s gotten to the point where that’s ranking pretty high and it just takes a lot of time. Like now, I have to work on the legal section and then I have to add content. And it’s hard to get people to write the content.
Kevin Kim:
We’ll help you there.
Rocky Butani:
Sure. So yes. To answer your question, yeah.
Kevin Kim:
Let me ask you this though. So Private Lender Link has grown so much now and looking into the future, the industry’s continuing to grow, continuing to become very standardized, I mean, what’s in the future for Private Lender Link, what are you guys working on?
Rocky Butani:
So the immediate future is there’s a major rebuild of the website happening right now. And then the new thing that’s going to happen in the next few months is there’s going to be a new service offering. So I’ve learned this over the years of people reaching out and trying to navigate and try to find the lender that they need, and so the new offering is going to be… You have three options when you come to Private Lender Link, or when you need to find a lender. Option, number one is self-service. So whatever lenders are on the site, there’s tons of information about their guidelines and about their company. So you contact each company.
Kevin Kim:
Figure it out.
Rocky Butani:
Yeah. You do the research; you contact whoever you want. They’re paying for advertising, there’s no cost to you. The second option, a referral or recommendation, and the model when I started out was a referral fee, but it was a mess because it was an honor system, I didn’t have… I had some tracking, but I didn’t have a proper system to track it, but that’s being built right now. So option number two would be, hey, if you want a referral or recommendation for a lender, we’re happy to do it, but to be very transparent, the lender’s going to pay a referral fee. As long as it’s not in Nevada or as long as it complies with the…
Kevin Kim:
Comply with the states, of course.
Rocky Butani:
Yeah. But the idea is to be very transparent. And, hey, if you’re a broker, the lender’s going to pay us a quarter-point. If you were a direct borrower, it may be up to a half a point. But then the third option that’s going to be a new service is full-service brokerage where Private Lender Link would be the originator. And this is something I never had planned. For the last 10 years, I’ve always avoided it.
Kevin Kim:
[crosstalk 00:56:41] Rocky Butani jumping into the lending game.
Rocky Butani:
Yeah. I would never say that I’d be a lender. I would never put myself out there as a lender, but I’d be a broker that… It’s not going to be for everyone. It’s going to be, hey, if you don’t want to deal with lenders directly, if you want a professional to help you through the process, then…
Kevin Kim:
So you want more on the borrower side.
Rocky Butani:
Oh yeah, only on the borr… But the brokers, I do business with so many brokers where I connect them with lenders and so there would always be that referral.
Kevin Kim:
And they’re going to need your help especially in states like California.
Rocky Butani:
Yes. Exactly. So that’s a new thing, but I don’t think it’s going to be the biggest part of the business.
Kevin Kim:
When can we expect all this re… What do you call it? Is it revamp or is it…
Rocky Butani:
Relaunch.
Kevin Kim:
Relaunch, when can we expect the Private Lender Link 2.0 to come out?
Rocky Butani:
In the fall. So probably in September, the new website design is going to be launched. There’s going to be a new loan form experience where people can enter their data about their deal, and save it, and then share it with whoever they want. It’s still not going to be a model where you submit your loan and then we sell it to multiple lenders. That’s never been the model. It’s either advertising or referral, but that’s a really big thing that’s long overdue. It should have been done a few years ago.
Kevin Kim:
It’s a good idea. I still get a lot of I would say people who just like… They don’t have a sense of where to go yet. And that’s still very much in need, and you’ve got a massive gap. Like brand new market entry, whether it be on the biller side or on the lender side, or the originator side, a massive gap knowledge nowadays because of that commoditization.
Rocky Butani:
Yes. So that’s the immediate plan, and then long term, the plan is once I perfect the current website and the new model, once that’s perfected over the next year, maybe even year and a half, the plan has always been to be not only Private Lender Link. So the idea is that…
Kevin Kim:
You want to expand into other industries.
Rocky Butani:
Yes.
Kevin Kim:
Nice.
Rocky Butani:
So the next one would be multifamily. I originally thought commercial real estate, everything commercial real estate, but multifamily is kind of its own animal that I just think it’s easier. Commercial real estate is so broad.
Kevin Kim:
Yeah. And the food groups are just too broad there. Multifamily, you got people who just do that.
Rocky Butani:
Yes. And it’s manageable so it kind of makes sense. So the idea would be that once Private Lender Link is perfected the way I’ve been planning, it is to duplicate that, and that would be Multifamily Link. And then a few years down the road, there’d be a CRE Lender Link. So everything which has become Lender Link, and then along with that, there’d be an app that just kind of automates the process of connecting people with lenders.
Kevin Kim:
You’re going to need more team members, man.
Rocky Butani:
Yeah, I know. So that’s down the road.
Kevin Kim:
I like it though.
Rocky Butani:
Yeah. The whole multifamily expansion probably won’t happen until 2023 I think. I still got a long way to go and lots to do.
Kevin Kim:
Well, congrats. I like the vision. There’s a lot that needs to be done. And what’s nice is our sector’s a really good jumping off-point into those spaces with our clients and relationships, they dabble in those spaces. Some of them do it only, and so it’s a good way to break in. So I guess we’ll see you at the Western States trade shows and the [inaudible 00:59:59] shows, and those things too.
Rocky Butani:
And I’ve already been going to those over the years and it’s been tough for me to get into those spaces because I just don’t have that audience. Most of the audience that I get is residential, but there are a lot of commercial real estate brokers that come to Private Lender Link when they need a bridge loan. And I know a lot of the bridge lenders for commercial real estate throughout the country. So right now, it’s kind of mixed, but eventually, the idea is that once there’s another website or another two websites that Private Lender Link would just be focused on the residential. And then on the other sites, you’d still be able to find the bridge lenders, the private lenders that focus on commercial real estate on those assets.
Kevin Kim:
And that’s smart because right now the markets heading in that direction from a private lender’s standpoint. For the past, I’d say three, four years now, it’s been a pretty clear bifurcation between lenders who are doing resi and lenders who are not.
Rocky Butani:
Yes, sure.
Kevin Kim:
Even within that now, you’re starting to see guys, we only do rental or we only do construction. Like it’s starting to become much more siloed if you will. And so guys who do commercial, they don’t touch resi anymore.
Rocky Butani:
Exactly.
Kevin Kim:
They used to do all of it. [crosstalk 01:01:08].
Rocky Butani:
I’ve seen only a few cases where there’s a commercial real estate bridge lender that does some resi because they get requests for it.
Kevin Kim:
They know how to do it, but it’s not their primary driver.
Rocky Butani:
Yeah. And they do it because there’s opportunity. And there’s a lot of competition in the commercial [inaudible 01:01:26] bridge side as well so they have to see what other options they have.
Kevin Kim:
Fantastic. That’s great. I’m really looking forward to it. I think that’s natural evolution of what the need is and that means we’ll definitely see it all at those different events. We’ll try to help as much as we can with our clients. Let’s talk about this before we close the episode. All right. So we are now officially in conference season. Right. It is fall. It’s going to be August soon. So what’s the next show you’re going to be at.
Rocky Butani:
The next show, as soon as this episode is done, I’m heading to San Diego for the California Mortgage Association event.
Kevin Kim:
Because you’re a California lender, you need to join CMA, it’s important you join.
Rocky Butani:
It’s a smaller event, but it’s great. And you’ll find a lot of these lenders that have been lending for a long time, and a lot of them are not institutional or they don’t sell to the aggregators, but there’s a mess.
Kevin Kim:
They’ve been through cycles and they’ve… Yeah. I mean, a lot of our clients at CMA have a lot of legacy knowledge about the industry and that helps them. I was interviewing Pete over at Fidelity, he was telling me like Chuck knew exactly what to do right when COVID hit. And so that comes with years of knowledge. And so once again, if you’re a California lender or if you lend in California, you should definitely join CMA because you’ll gain so much just wisdom and knowledge by networking with these folks. But after CMA.
Rocky Butani:
After CMA it’s Captivate.
Kevin Kim:
Yes, you will be. All right. [crosstalk 01:02:53].
Rocky Butani:
When I went in 2019, it was pretty impressive. It was amazing, and there were so many people there that I had never seen at other events or you guys brought out a lot of family offices that never would’ve attended any other event.
Kevin Kim:
Yeah. Shout out to Ruby and our marketing team, they’ve been really smart about networking in that space too.
Rocky Butani:
Yeah. And I like the idea of just making it focused on capital, even though you just get a lot of loan origination business there as well, but the theme is to connect to capital providers with lenders.
Kevin Kim:
We’ve got some new faces coming out this year upstream Wall Street folks. We’ve got some really great families coming out this year. So I’m really excited about this year.
Rocky Butani:
So, anyone who’s a fund manager, it’s a great place to… Or not even only a fund manager, if you’re just looking for family offices or if you’re looking… Whatever your capital needs are.
Kevin Kim:
And that’s what’s important for this year is that the families are out there and the high net worth investors and the RIAs are out there, they have appetite for this stuff. They’re not getting what they used to on Wall Street from a fixed income standpoint. This is a really good place to be for them. So they’re looking, they’re asking me about this. This has never happened before. They actually come to me now, hey, you seem to represent a lot of funds. So definitely, if you are thinking about networking with high net worth investors, it’s the place to be. After captivate, which is going to be great by the way.
Rocky Butani:
Then it’s Originator Connect.
Kevin Kim:
Oh, you go to there, nice.
Rocky Butani:
Yeah. It’s easy because it’s across the street. Even though this is not private lending, it’s consumer mortgage, I meet a lot…
Kevin Kim:
A lot of our clients go to that show.
Rocky Butani:
Yeah. And it makes sense because it’s across from Cosmo and it’s the same weekend. It’s the weekend right after Captivate ends. But I go to that one because there’s a lot of consumer mortgage brokers that I meet that every once in a while they’ll have a private mortgage deal.
Kevin Kim:
Oh, there’s a lot. Especially now that our clients are doing heavy volume in rental, I mean, investor loans are massive for them.
Rocky Butani:
So I think you’re going to see a lot more private lending firms at that event.
Kevin Kim:
We have a partnership with them. So a lot of our clients are telling us like, hey, we’re staying the weekend for that.
Rocky Butani:
Yeah. And after that, I think there’s a CMBA secondary market event here in Orange County after that, but I’m not going to that because I just don’t deal in that space. And I want to learn about it so it’s coming, but not the right time. I have too many other events to go to.
Kevin Kim:
And then we’ll see you at the October Vegas show for CMA.
Rocky Butani:
Yes.
Kevin Kim:
And then, of course, APL.
Rocky Butani:
Yeah. APL as well. And then I think the last one might be IMN in Scottsdale.
Kevin Kim:
Oh, you [crosstalk 01:05:20].
Rocky Butani:
I missed east, which I regret.
Kevin Kim:
I really do regret that. I couldn’t get out. It’s just family
Rocky Butani:
And also, it’s a big trip.
Kevin Kim:
Across the country.
Rocky Butani:
Yeah. I already went to Miami and in March, I just, I wasn’t really in the…
Kevin Kim:
Yeah. You lose a whole day. Yeah. If I’m traveling to the East Coast, I’m going to spend a week there. That’s my usual.
Rocky Butani:
That’s what I did the last time I went there. I went there for the Pitbull Conference and I just stayed there for another five days just to hang out and just to meet clients in Miami because, I mean, that’s the only one time…
Kevin Kim:
What else are you going to get out there?
Rocky Butani:
Yeah, exactly. I’m not going to go there until next year, so might as well make the most of it. And that’s what I do whenever I go to a conference is I like to meet lenders in person. I like to go to their offices, get to know them because that’s kind of one of the core parts of Private Lender Link is I try to vet the lenders as much as possible and have a relationship with them. So when I refer clients to a lender…
Kevin Kim:
They’re are a real lender, they’re a real office. They’re not some shady guy operating out of his garage kind of operation.
Rocky Butani:
And people will notice whenever they ask for recommendations, I’ll always mention that, hey, I’ve met them in person. I [crosstalk 01:06:29] their office, and it means a lot. So I try to do that whenever possible.
Kevin Kim:
I do the same thing. I just started doing it recently. I know you’ve been doing it for years. It’s one of the best things I ever did. Like you get to see the environment they work in. It really influences your understanding of them is people.
Rocky Butani:
And you get to learn by having these conversations that you wouldn’t have with them at a conference. When you sit down with them at their office or you go to lunch, you get to learn a lot more that you wouldn’t in just a casual, hey, I saw you at this event, let’s chit chat for a few months.
Kevin Kim:
Right. Longer form and really deeper. Yeah, for sure. Yeah. All right, man. Well, I think that’s all we have for today for this episode of Lender lounge with Kevin Kim. We’re going to see you at… I think we’re driving down today as well. Our team is going to be driving down to CMA, so we’ll see you there. And then we’ll see you there and the rest of you guys over at our show in August, 18th to 20th, at the Cosmopolitan Hotel for Captivate. Hopefully, the episode comes out before then.
Rocky Butani:
If not, there’s always next year.
Kevin Kim:
Then there’s always next year. We always have to innovate as well. And keep a lookout for us at the various shows throughout the year because we have new swag for the show and we’re always looking for guests. So please let us know if you want to be on the show. And once again, this is Kevin Kim for Lender lounge and we’re signing off. Thank you very much.
Thanks for listening to Lender Lounge with Kevin Kim. I hope you’ve enjoyed this episode as much as I did. If you did enjoy, please leave us a five-star review on your podcast platform and be sure to follow our show to be notified of new episodes. If you’re on YouTube, don’t forget to smash that like button and hit subscribe for more content from all of us here at Geraci. Lender Lounge with Kevin Kim is available on all podcast platforms. Referrals really help us spread the word, so please send this over to someone you think might enjoy. See you next time. This is Kevin Kim signing off.
