Legacy Group Capital, headquartered in Bellevue, Washington, operates on a deceptively simple mission statement: creating healthy returns for investors through real estate investing and lending opportunities. The Company has seen its fair share of economic downturns, and through adaptation and a commitment to staying abreast of the latest trends in lending, has thrived in seemingly unlikely circumstances.
To better understand how Legacy Group Capital differentiates itself from the competition – and has created a culture of longstanding partnerships within the hard money space – Originate Report sat down (virtually) with CEO Scott Rerucha to discuss what sets his Company apart and the lessons he has learned in his thirty-year career in the mortgage industry.
As CEO of Legacy Group, Scott said that the team he has built consistently fires on all cylinders and has a keen eye for the best real estate transactions. With professionals unswervingly drumming up capital, acquiring real estate through various funds, and hiring builders to see projects through to fruition – all to provide profits and value for investors – Scott said that making sure everyone is ‘on the same page’ is a key to success when all the gears of a deal are moving at once.
“We all sync together, and we have software that melds our deals so we can track them from start to finish,” he said. “We know where everyone’s at, and we have a system behind that. It took a few years to get this into place, and at first, we were tracking elements through Excel spreadsheets, and now we’ve created software to track and make sure a deal flows smoothly from start to finish.”
This commitment to deal completion, he said, was one of the driving factors in coming out of the 2008 financial crisis in a position to thrive in today’s buyer market. At the time, Scott added, the real estate fund in place at Legacy consisted of three loan types: bridge loans, rehab loans (which encompass fix and flip projects,) and construction loans. Although banks were ‘tightening and solidifying their lending practices’ at that time, he said that the diversified approach helped Legacy weather the storm – an attribute that continues into the midst of the coronavirus pandemic.
“We were in the middle of a down market,” he said. “Banks tighten up, and many people turn to private money to finance deals. That gives us leverage, and we have to make sure that our portfolio is wide and we stay on top of what our builders, who are in the middle of deals, are seeing in the market shift. We’re underwriting deals with market expectations, and what we see now is a crazy hot market in the Seattle area. We have to judge the market and see if it’s going to rise or going to fall.”
Scott said it could be easy to adopt a pessimistic attitude towards the market as it rises and falls, but he added that one differentiator of Legacy Group Capital is the group’s ability to take ostensibly negative situations and see the light at the end of the tunnel. Scott said his group’s nimble nature produces results. Even considering the 2008 crash, Legacy has never lost one investor dollar nor foreclosed on a single property in the 15 years of running the fund. He said that his track record is due to the team members Legacy has and their ability to adapt to any situation.
This dexterous nature, however, was certainly not limited to the 2008 financial crisis. When speaking about the coronavirus pandemic – Washington was one of the earliest states to see an outbreak of the virus – Scott said his team’s ability to adapt was on full display.
Communication, Scott said, is of the utmost importance during periods of economic downturn and national stress. In the Seattle area, he added that dozens of builders use Legacy exclusively. These trusted partnerships do not spring up overnight, but the Company’s consistency throughout tumultuous periods has created a positive reputation in the private money space.
“Even though projects took longer to complete because builders were shut down, we took into account these regulatory challenges and didn’t charge extension fees or higher rates because of the extended build times,” he said. “There’s no way to overcome some of the cards you get dealt, but you have to manage through it and stay with your builders, your partners, and work with them to perform to the best of their abilities.”
These partnerships, Scott said, go ‘very deep’ and are built on a level of trust challenging to find elsewhere in the private lending field. For Legacy to win in any given deal or see it to completion while providing capital gains for investors, an infrastructure of confidence is of the utmost importance. And that infrastructure, he added, leads to Legacy’s continued growth.
“We’re looking to expand into a number of different markets,” Scott said. “We’ve always maintained our consumer lending license or 25 percent of our loan portfolio, and our diversified offerings are needed and will thrive in different markets. What we bring to the table is decades of in-the-trenches experience and a commitment to see deals through to the end.”
