Real Estate Finance Corporation (REFCORP), based in Scottsdale, Ariz., provides short-term construction loans and value-added revitalization loans on residential real estate across Arizona and is an active investor in opportunistic real estate projects. REFCORP is currently funding new construction loans on quality residential projects in high-demand areas and is funding value-added neighborhood revitalization projects in the Phoenix and Scottsdale areas. In addition, REFCORP has just completed its first assisted living residential rehab project with another in the works. Meet President and CEO Adam Child and the REFCORP team at the Captivate West conference in Las Vegas August 26-28. REFCORP is the Title sponsor for the conference and Adam Child will be the featured speaker.

The city of Phoenix is experiencing a renaissance. Since the financial collapse of 2008, when Phoenix was one of the most impacted U.S. cities, the downtown area has rebounded in a spectacular way. Community leaders and developers have revitalized aging warehouses, invited new business, restaurant and retail tenants; created a cultural center; and constructed a light rail system connecting Phoenix Sky Harbor International Airport with nearby communities.

Driving the renaissance is an influx of opportunity: the establishment of Arizona State University and the Phoenix Biomedical Campus, the successful establishment of technology companies wooed from Silicon Valley and elsewhere (an increase of 318% since 2012), and increased employment (up 9% between 2006-15).

All of which has led to the thought that Phoenix is a highly desirable market to invest in.

Real Estate Finance Corporation (REFCORP), a Scottsdale-based private money lender and real estate investor, finds all this activity working to its advantage. “The demand in the marketplace is high, the inventory is low and the ability to borrow is getting easier,” says Adam Child, President and CEO of REFCORP. “There is more capital available to buy a home, and the job market is very strong. In downtown Phoenix in particular, the area and outer lying neighborhoods have become very popular.”

Formed in 2008, REFCORP launched full force in 2015 with Child, his partner and Fund Manager James Guajardo, and Vice President of Operations Ashley Spisak. The company initially offered loans for short-term construction and revitalization projects throughout high-demand areas in Arizona, and quickly diversified by investing in residential revitalization projects. REFCORP has since grown to six employees (Dawn Monforte, Vice President of Capital Development and Investor Services; Taylor Quenzler, Director of Marketing, Project Management and Design; and Alesondra Mora, Manager of Marketing and Operations) and 73 residential and rehab properties currently in development throughout Phoenix, Scottsdale and rural Arizona.
“We have ground-up construction in north Scottsdale right now, which we’re very excited about,” Child says. “We’re also excited about our rehab projects in downtown Phoenix, where there are a lot of older properties, but it’s a popular part of the community. We have found a niche in rehabbing these properties, and in many cases demolishing them and putting brand new homes in their place, and they’ve been very popular.”

Investors in the rehab projects typically earn a 10% return. “We get three types of responses to that,” Child says. “One is, ‘The rate of return is too good to be true;’ the other is ‘It’s not enough;’ and the third is, ‘That’s great, how do I get involved with you guys?’ It’s not that the rate is too good to be true or not high enough. The rate is really the function of our business model, and the investments and loans we make are very short term. The money that we lend or invest in these projects I like to compare to credit cards. We all use credit cards for convenience. If you don’t pay it off in full, you’re left with a very high interest rate that no one really wants to talk about. The loans we make and the capital we use is really like the credit card of real estate lending. It’s a short-term convenience loan. And because it’s short-term, it justifies a higher rate of return. A lot of times, the return is associated with higher risk when in fact many of our projects have very low risk. We have an average of well over 30% equity in our projects. In many cases 40% equity.

“I’m told that it’s a very high rate of return compared to what investors are getting in California, and I’m told in other parts of the country it’s a low rate. It’s our rate in Arizona and it works very well for us.”

Criteria for a rehab project starts with a cost basis: the cost to acquire the property, the cost to build or rehab the project that meets REFCORP’s quality standards, and the market conditions that dictate the sales price. Also, the location is key – the project must be in a part of town that is desirable to a buyer.

The REFCORP team then works with an architectural and contracting team to put out a customized product for the location. In downtown Phoenix rehab projects, the buyers tend to be young professionals looking for proximity to their employment, and prefer a contemporary look in the architecture and décor. In north Scottsdale, the homes often attract older or retired couples relocating from other parts of the country, so REFCORP funds a more traditional style home.

“We try to get into a project that allows us to deliver the best finished product,” Child says. “The best finished product is also the most desirable to the buyer. If the pricing is so tight that we can’t produce what we want to, we’ll pass on that project.”

Quality is a non-negotiable item. Finished projects shine like model home showcases, complete with neutral décor such as plank flooring, whitewashed kitchens, coordinated hardware and plush furnishings. “We want everyone walking into our homes to be completely wowed, and I think we’re accomplishing that. Our finished product has been very well received and well liked, and some of our homes have received ‘best on tour’ from the real estate community, and that’s where we want our buyers to think of us. We want to be in that space.”

Investors in the rehab projects can look forward to becoming part of the REFCORP team. New investors are invited to take on-site tours of the projects, review operations, and meet the team members in the field and in the office. The effort put into building relationships pays off, says Child. “We put a lot of energy into getting to know our investors and them getting to know us. I think it becomes really powerful at that point. It’s more than writing a check; it’s becoming familiar with exactly what we do. That’s been a very powerful approach and what I think attracts investors to us.”

The company’s track record also attracts investors, some of whom have been with REFCORP for several years. After a build-up period of approximately four to eight months, the projects typically sell within 30 days. Child seeks investors who are able to invest a minimum of $100,000 for the 12-month period. The investor holds the first or second deed of trust until the sale of the project.

James Guajardo, REFCORP’s fund manager, sees the short-term investments as ideal for risk management of the investor’s portfolio. “If the market falls, and you’re stuck in a 10-year loan, you can’t get out,” he says. “If market trends change, then exiting every 12 months is a beautiful model for an investor.”

On the borrowing side, REFCORP requires 20% down and at least a 30% equity position on the finished product. Competitors are getting more aggressive, Child says, and requiring less money down. REFCORP is particular about track records and backgrounds, and as a result, many loans are made to repeat clients who are building and selling a product and coming back to REFCORP for the next one. Some borrowers have been affiliated with Child for 20 years or more, since his start in the business in 1989 as a mortgage broker.

Like most hard money lenders, REFCORP funds its loans quickly, usually within one to two weeks depending on the due diligence required. “We do fund very quickly because it is the nature of our business,” says Child.

For new investors and borrowers, REFCORP holds educational seminars called “Lunch ‘n’ Learn,” where new investors and borrowers can enlighten themselves on the topics of how to borrow hard money and how to invest in deeds of trust. Child says there is confusion about how to approach a firm like REFCORP to apply for a loan. “I think there is a lack of understanding within the real estate community regarding what a private money lender is and how we operate. We do educational events to help people break through that. We walk them through the entire process because we want every one of our borrowers to know how we operate and what they’re getting in to. It just makes a better environment for everybody.”

REFCORP’s role in the revitalization of Phoenix and surrounding areas is for the long term. Eventually, the company may invest in other cities, says Guajardo, but for now, Phoenix holds more than enough opportunity. Group homes are a new target with the current societal focus on mental health and drug addiction and a predicted 30-year shortage for assisted living.
According to the Arizona Regional Multiple Listing Service, the 2018 first quarter median and average home prices have increased 9.5% over last year in Maricopa County, and the average number of days on the market has decreased by 7.2%.

“We’re always looking for investments one to two years in advance,” says Guajardo, “and the right investments to invest in. This year, we bought three different developments that will sell in the next two years.”

Assisting with the company’s forecast will be Stan Harley, a noted financial analyst with a 100-year strategic financial model. He also publishes The Harley Market Letter for advanced technical analysis of the financial markets. “Stan is providing us with a better barometer,” says Guajardo. “With his statistical analysis, we’re building a business model. It’s a very unique component, especially for residential. Not many homebuilders look at a 100-year trend. We can see where the market has been and where it’s going.”

Along with the REFCORP team, Harley will be available to meet potential clients at Captivate West in Las Vegas August 26-28.

Harley and other financial analysts predict a dip in the market in 2022, but REFCORP is preparing two years in advance to ensure the company and its investors are protected. “No one can do a great job unless we have the right outlook in place,” Guajardo says. “We are gauging for the future.”

The REFCORP Team

Adam Child — President and CEO
James Guajardo — Partner, Fund Manager, Project Acquisition and Development
Dawn Monforte — Vice President, Capital Development and Investor Services
Ashley Spisak — Vice President, Operations and Compliance
Taylor Quenzler — Director of Marketing, Project Management and Designs
Alesondra Mora — Manager, Marketing and Operations

It takes a unified team, flexibility and communication to manage 73 properties in development and ongoing loan processing. REFCORP staff attributes their success as a team to the family environment, where everyone leans on each other for assistance, shares responsibilities and comes together to create solutions to new challenges.

“Everybody understands their value and is appreciated, and hopefully that starts with me,” says Child. “As the team leader, I like to think I play a role in the glue that keeps everyone together. I’m not a babysitter. The team has latitude and the ability to make decisions in their own space. We hold a weekly team meeting where each provides updates to their projects and we address issues and find solutions. It’s a healthy work environment, and every day, everyone hits the ground running. Everyone is educated and has a tremendous work ethic.”

James Guajardo — Partner and Fund Manager

James Guajardo believes if you surround yourself with successful people, you’ll be successful because you’ve built the right team. “No one can do a great job unless we have the right outlook in place,” he says.
Guajardo and Child have known each other for 14 years and formed their first fund in 2016. Their complementary relationship has allowed the number of projects to grow from 17 to 73 in 2.5 years. Now Guajardo seeks out the investments, evaluates them and oversees the project to completion. His 20 years as a developer with experience in evaluation, acquisition, rehab and disposition helps him steer REFCORP into the future. Since 2014, he has also served as president of Wealth Investor Network, for which he provides weekly real estate education and development seminars for investors.

“We are very fortunate to have come together,” says Child. “We get along really well and look at things similarly: the quality of the project, whether we should acquire it, and attention to detail.”

Ashley Spisak — Vice President, Operations and Compliance

“It’s been a team effort from Day 1,” says Ashley Spisak, Vice President of Operations and Compliance. “For me, being a young professional and seeing the start-up process was hugely fulfilling. The family dynamic makes it work and that’s why we’ve been able to communicate our way through all issues.”

She started in the industry as a loan processor six years ago and joined REFCORP in 2015 and expanded her role to include licensing, compliance, MLS reporting and sales logs. She is also a licensed mortgage loan originator. She has played an important role in several administrative improvements, including loan processing, underwriting, loan documentation and reports, and the implementation of Calyx Point and The Mortgage Office software.

Spisak is also Child’s oldest daughter of five. The most important tip she’s learned from her father? “We’re the problem solvers. Rather than focus on the problem, there is always a solution and we should always be forward thinking. That’s huge, and it’s also applied to my life.”

Dawn Monforte — Vice President, Capital Development and Investor Services

Dawn Monforte works directly with investors to help educate them on alternative investment strategies and processes, keeps them informed of progress on lending and development projects, provides property tours, and handles other capital needs and services. She has opened sales support centers for major corporations including PayPal and Verizon Wireless. “l met Dawn three years ago,” says Child, “when she was buying one of my homes. It was coincidence that she worked in raising capital for another company and I hired her right away. She has become one of the family.”

Taylor Quenzler — Director of Marketing, Project Management and Design

Taylor Quenzler joined the REFCORP team in 2015 after marketing and learning the foreclosure side of the industry with another firm. Taylor is a Chicago native as well as a proud Sun Devil graduate from Arizona State University. She has played an important role in building up REFCORP’s Lunch ‘n’ Learn program and rallying investors for educational events. Today her role is multifaceted: Planning and creating marketing collateral, managing projects at the manufactured home communities in Cottonwood and Tonopah, Ariz., in addition to decorating the Phoenix and Scottsdale projects that are under construction.

“I wouldn’t describe any day that I’ve had as normal,” says Quenzler. “Every day is its own adventure. I work with contractors on all phases of our projects as well as city staff to turn coordinate power, water, etc. for our projects. I might make inspections and take photos of projects or design them by shopping for décor.” Whether it’s designing promotional materials or choosing colors for the a projects interior and exterior, Quenzler says the most challenging part is creating something new every time. “You don’t want to use the same colors, formats or home choices.”

Quenzler is also part of the family: She is Child’s middle stepdaughter and enjoys working with her family. “We work well together because at the end of the day, we’re family,” she says. “Some of us are blood relatives, but we all have an enormous amount of respect for what each person does. If I need help, there’s always someone there willing to help. If there’s a new task, then there are multiple people willing to take on that task and learn. If there’s an issue, it becomes a group chat and we resolve it as a team.”

Alesondra Mora — Manager, Marketing and Operations

Aslesondra Mora is the newest member of the team and joined REFCORP in March 2018. Mora assists in the marketing efforts creating brochures, banners, and web-based designs. She also manages company electronic communications, project draws, accounting activities and much more. Her 10 years of marketing and graphic design experience, as well as operations management skills, has allowed her to assist in many roles at REFCORP. A Chicago native and graduate of Indiana University Bloomington, she moved to Arizona in 2015 and hasn’t looked back. “My father taught me, ‘Always be looking 10 miles down the road,’” she says. “This mindset affects my approach to each task. What effect will this have now, tomorrow and even next year? I’m proud to be part of a company that is also looking concurrently at its present and future impact.” Mora is also part of the family and is Child’s niece.

While everyone has their own role to play, the business of lending and investing is still a team sport: You need a quarterback to throw the ball and a receiver to catch the ball, but you still need everyone else to play the game. But this, says Child, is the key to the team’s success. “We’re definitely a team of jacks-of-all trades,” he says. “Nobody sits in a box.”