Mark is president and CEO of San Francisco Bay Area-based Pacific Private Money Inc., an alternative real estate loan provider to consumers and investors in California. Mark’s real estate career spans 35 years, including 25 years in commercial development and management, and 10 years in private lending. He founded Pacific Private Money in 2008, and has grown the company to over $100 million in annual volume, 350 investor clients and is manager of three mortgage funds. A recognized authority in the private lending space, he is an author and radio personality, and frequent guest speaker at industry events.

Originate Report: How did you get into lending?
Mark Hanf: In 2007, I worked for a developer who originated a few hard money loans as a side business to help cover his overhead. His company didn’t survive the market downturn, and in 2008 I decided to try my hand at originating privately-funded real estate loans.

OR: What excited you about the mortgage industry?
MH: At the time I started Pacific Private Money in 2008, I had 25 years’ experience in the real estate industry, mostly running the back office for a development company. My experience included raising equi- ty, obtaining financing, creating offering packages and buying and selling property. Once I understood the private lending business model, I felt that my experience would give mean advantage in growing a successful lending company.

OR: What made you want to start Pacific Private Money?
MH: Quite frankly, I didn’t know what else to do that would leverage my specific real estate experience. I knew I no longer wanted to work for someone else.   It was 2008, and I didn’t have enough capital to buy property, but it turned out that I knew a lot of real estate professionals who still had money and who liked to invest in notes. My introduction to the business model in 2007 was serendipitous, and I just ran with it.

OR: What advice do you have for loan officers trying to close loans with you?
MH: Know your borrower. We’re all about understanding the story and the exit strategy. We get a lot of calls from brokers who are selling a deal they got from another broker and it’s not uncommon when the story we hear is not the true story of the  borrower.

OR: What is the most important characteristic in a loan originator/broker?
MH: The ability to know when and how to say no. We track our daily and weekly inquiries, and we say no to 9 out of 10 loan requests. To be this discerning, you need to have a lot of deal flow, which is a function of marketing. Too  many brokers try to “package” a loan request, trying to make it something that it’s not. That’s a recipe for disaster. When we turn down a request, we try and be nice about it, and we explain why.

OR: How is your company reacting to changes in the marketplace?
MH: Private lending and alternative finance is starting to become crowded with the emergence of these many so-called Marketplace Lenders. In California, we’ve seen a huge increase in competition for the fix & flip borrower. As a result, we have been focusing on niches including owner-occupied and other consumer purpose loans, as well as ground up construction. Also, we try and leverage our regional expertise. Rather than compete on price, we sell borrowers on our speed and reliability. We’re more nimble and holistic in our lending practices, which gives us an advantage over nationwide lenders.

OR: What CRM systems do you use to email your target market?
MH: CRM has been a frustrating part of this business. We have had two costly failed CRM deployments, and the reason was that we tried to create an end-to-end solution. Like many in our industry, we’re resigned to living with multiple software solutions and the inefficiencies that creates. For our email marketing campaigns, we recently started using Infusionsoft. So far, we like it.

OR: What tools are essential to Pacific Private Money?
MH: There are many important tools at our disposal today. Google Street View, LoopNet, the MLS, and Zillow just to name a few. We recently signed on with a great online valuation service that we’re excited about.

OR: Have you had to learn any lessons the hard way?
MH: Of course. Everyone I know in this business has. Every loan that falls into trouble provides a lesson on improving our underwriting guidelines. So far, though, we’ve been blessed with no principal losses.

OR: What is one fun fact that most people don’t know about you?
MH: My two daughters know that I am still a kid at heart. I make them laugh all the time with silly behavior and jokes.

OR: What is one piece of advice you have learned and carried with you throughout your life?
MH: My father taught me how to listen to people in order to gauge their integrity. He would often ask me “How did he sound?” which meant how did my gut feel about this person’s personality. I’ve learned to become a good listener, and believe I am an effective judge of character as a result.