It seems everywhere you turn, a different group is claiming to ‘revolutionize’ the real estate investment industry. Despite these catchy monikers, few live up to the hype. Enter The Bedrock Mortgage Fund, a real estate investment fund that constructs short-term, high-equity real estate loans. By fastidiously targeting a portfolio of high-equity real estate loans, the Fund can provide consistent results for its investor pool. The leadership of the Fund, which has provided backing for more than 2,500 transactions, includes Founder Mark McKeller, who sat down with Originate Report to discuss the elements of the group’s success.
Throughout his 20+ year career, McKeller has owned companies that have secured an impressive book of business: this includes purchasing more than 800 fix and flip properties across nine markets, including 400 rental units, networking with a group of over 1,200 HomeVestors of America Franchisees, and personally originating more than $5 million in asset-backed bridge loans before Bedrock. When thinking about this experience, McKeller said he has seen monumental shifts in the ways borrowers and lenders interact. He added that at the Fund, the leadership strives to implement emerging trends into day-to-day operations. “Back in 2000, when I started, credibility was a huge issue – no one believed that I could walk into a house and make a cash offer with no contingencies. That was such a foreign concept. The mindset was that there was no other option other than dealing with a real estate agent and going through laborious processes and jumping through hoops,” he commented. “At the Fund, we work with our investors to cut the red tape and streamline the financing process.”
Since he started in the space, McKeller said that public-facing components – such as a litany of fix and flip-focused shows on HGTV, paired with internal attributes – like the growing number of private money lenders – have contributed to increased visibility. Although this can be positive, he mentioned that some of the media surrounding real estate sound like a ‘get rich quick’ scheme. A key way around this mindset, McKeller noted, is to establish credibility by fully vetting potential investors. Because the Fund specializes in short-term, high-equity real estate loans, the group only offers financing to a carefully selected group of investors. “There is a reason we have never had a late payment or default,” he stated. “We prioritize the flow of deals through our platform and pay attention to detail during the initial steps of lending. That due diligence is critical.”
McKeller explained that the Fund originates commercial residential loans on properties that fall around the median in any given market. In addition to offering a glimpse into the market averages, these properties tend to be the least volatile. As a HomeVestors of America Franchisee, McKeller emphasized that this contingent of investors has a track record of providing safe capital. “We gear our product towards investors who have experience and are in this full-time,” he responded. “It is not about being exclusionary, but we wanted to construct an environment with the Fund that was conducive to high ROI.” This emphasis on return, McKeller told us, has been on full display over the past two years. While many lenders struggled through the early days of the COVID-19 pandemic, McKeller expressed that the Fund has been able to retain its lack of late payments and defaults. “It is about flexibility, and it is about managing market correction. We are in a very hot market right now that has been good to us, but as that begins to slow down, we strategize on how best to pivot,” he answered. “We will not repeat what we saw after the 2008 crisis because we are in a strong financial market.”
Looking forward, McKeller announced that a critical goal remains to grow the amount of capital in the Fund. By offering a higher interest rate than products such as savings accounts or blank CDs, the Fund hopes to entice more investors with loans that provide comparable liquidity to less-profitable investment alternatives. “Everybody needs a place to put their cash, and no one wants something that is risky,” he replied. “But who wants to put their money in a savings account and make 1% interest? I always ask our investors to think about their long-term vs. short-term investments. It will not happen overnight, but we strive to offer safe investment alternatives. Our investments are shorter-term but pay as much as some longer-term investments. Our investors can also get their returns paid monthly if they choose to.” This safety, McKeller claimed, is not just an empty promise.
As a verified group by VeriVest, the Fund has been fully vetted by the leading due-diligence group in the real estate industry. The Fund has no unfavorably resolved litigation, no personal or business bankruptcy petitions, and zero regulatory sanctions or criminal convictions. “We have a steadfast commitment to our investors, and I am proud of the products we offer. We have a dynamic team in place, and I look forward to watching the fund grow,” he spoke.