James Gaskin
SVP Corporate Development, Renovo Financial, LLC
How many years have you been in Private Lending and why did you enter this field?
I’ve been in the industry since 2013. My entire career has actually been focused on Real Estate finance, but I entered the private lending niche because I saw the huge opportunity in alternative financing for investors who were otherwise short on good options for smaller residential projects.
It all started at St. Edwards University in Austin, Texas, where I played on the basketball team. I got my undergrad degree in Finance and stayed to get my MBA in entrepreneurship. One of my friends from school was a serial entrepreneur and had recently become a principal at a small regional lending shop. He and I would meet once a quarter to network and discuss business ideas and one day over lunch he let me know that they were looking to grow their small lending business and could use some smart people to help them.
I decided it sounded interesting enough to take a shot. At that time, they were syndicating every loan by fractionalizing the deed among several different investors from a group of high-net worth individuals who wanted to know exactly what property they were invested in. It was terribly inefficient, but we were able to offer the investors something unique – double digit returns with complete transparency and control over where they put their money. Our job was to be an expert on each loan and borrower to make sure they had all the information they needed to make the decision.
We grew the company from a servicing portfolio of about $35MM to over $150MM in 3 or 4 years and I was able to take a central role in evolving the capital side of the business from those early days to a much more sophisticated operation when I left.
Where did you get your start?
I started at a small regional lender based in Texas.
What do you do for your firm? How do your contributions affect your company at large?
My title is Senior Vice President of Corporate Development, but my job is focused on scaling Renovo to become the #1 lender in the US for small-to-medium sized residential real estate investors. When I joined Renovo, we were strictly a Chicago-based lender, and I was hired to develop and execute a strategy to expand the footprint of the firm while maintaining the things that made us so successful in Chicago. I co-authored our growth strategy along with our very talented Management Team and it’s my responsibility to execute that strategy daily.
Since I’ve joined, Renovo has grown from one market with 5 lenders (loan officers) and about $10-15MM per month in new loan originations to 20 lenders in 16 markets and $130MM per month in new loan originations. It’s important to emphasize that our growth is the result of a lot of people all doing their job at a world-class level, but the plan we put into place to expand the company’s footprint has proven successful at driving the results we are looking for which is a stable and sustainable lending business focused on long-term customer partnerships and a high-performing portfolio.
How have you seen your company grow despite or because of current market conditions?
The disruption caused by the emergence of COVID absolutely accelerated our growth.
One of the main reasons I joined Renovo is because I felt they were the best positioned to handle a market shake-up, and that proved true when the pandemic hit. We were very fortunate that we had spent the second half of 2019 working on our growth strategy and in January 2020 we had all the pieces in place to start our national expansion. When COVID hit it disrupted the space significantly, but because we were working with highly experienced and established clients, our portfolio sustained zero delinquencies. We also balance sheet many of our loans so we weren’t as reliant on the capital markets as some of our competitors, so we were able to continue to support our customers through those difficult early days of the pandemic which cemented those relationships and allowed us to pick up great new clients whose former lender was forced to pause operations. Lastly, it allowed us to hire some incredible talent who would likely have never picked up our call had their shop not stumbled. Looking back, it was a pivotal moment, and in many ways we are preparing today for the next disruption that might allow us to take another big leap forward.
What are some of your goals for 2022 and beyond?
In 2021, we focused on proving out our growth model of building local branch offices with “boots on the ground” talent from scratch. Now that we’ve done that, our goals for 2022 are to double down our investment in the markets that are really working and to add to our footprint with strategic hires of talented sales leaders to help us open new markets and repeat what we have seen work so well for our business model.
What does success look like for you?
We are a very competitive group of people and when we go into a new market, we’re there to be the #1 lender in that market, period. I recall a conversation with Kevin Werner, Renovo Founder and CEO, in late 2021 where we started trying to figure out if we were in the top 5 lenders by volume in a certain sub-market. After going back and forth for a few minutes, Kevin looked at me and said, “You know what? Nevermind. If we’re not #1, I don’t care.” That’s the attitude we have and that’s the bar we set for ourselves.
With that said, success is when Renovo is the #1 lender in our space in the United States and I believe we have all the pieces in place to achieve that goal.
What is something most people don’t know about you or your company?
We have traditionally kept a very low profile within the industry so there’s probably a lot of people who don’t even know we exist, especially if we haven’t started lending in their market yet. We like that but as we look to grow, and specifically as we look to hire the top talent in the industry, it’s important that we raise our profile so more talented lenders and operations professionals recognize Renovo as a company that can help them reach new heights in their careers.
Additionally, we service every single loan we write including the permanent (30-year) rental loans. We believe this is a central aspect of being able to deliver a great experience to our customer.
What steps are you or your company taking today to make an impact on the industry?
I don’t think we spend much time thinking about how to make an impact on the industry at large. As a company, we are more focused on how we can make an impact on our customers. Everything we do comes from the central question of: “how can we be the best partner to our customer?” We are always trying to find ways to add more value to our customer because as soon as we stop adding value, we must expect that they will leave. Candidly, they should leave if we no longer bring value outside of price and loan terms. That’s the challenge that the management team and I take on every day and it’s what drives us to keep getting better. I think our customers feel that when they work with us.
One way we try to add value is by delivering a consistently excellent level of service. That’s something that almost every lender in this space will tell you, but few deliver consistently. For us, it’s an obsession. To reinforce this core value, we measure customer satisfaction using a metric known as Net Promoter Score (NPS). If you’re not familiar with NPS, it’s a very simple one-question survey we send to every customer (and other parties to a transaction like title agents, attorneys, etc.) on every loan. The question is: on a scale of 1-10 how likely are you to refer Renovo to a friend or colleague? A 9 or 10 is a promoter and they are likely to go out of their way to tell people how good you are; 7 or 8 is a passive score and they probably won’t say anything good or bad; and 1-6 is a detractor who is likely to go out of their way to tell people how much you stink. Promoters minus detractors equals you Net Promoter Score. The average score in our industry is a 35. For the entire year 2021, We received a 91 NPS. To take it a step further, whenever someone fills out that survey, the results along with any comments they include, are automatically emailed to every single person who works at Renovo regardless of their role. That’s how much we value customer feedback and satisfaction, and that social accountability drives behavior in a powerful way.
Tell us about a person or organization you admire. How have they made an important impact on you, the industry, or the world?
There are many organizations that we look to for inspiration in various aspects of our business. But, one that has been especially impactful for us has been the consumer mortgage lender, Guaranteed Rate. We have modeled some of the things they do well such as the way they support their lending team. One of the things they do especially well is adding value for their loan officers by putting tons of resources into supporting them. The idea is that if you, as the lending platform, provide so much support and make it as easy as possible for an individual to drive massive loan volume (and make a LOT of money) then they will essentially be unrecruitable.
That’s something that I think about a lot because retention is central to the success of our business model. We don’t hire tons of young, hungry, but inexperienced salespeople knowing that many will fail. Sure, that’s a lower cost model, but the high churn isn’t good for maintaining the continuity needed for long customer relationships. So, in order for us to deliver on our promise to be the best partner to the top-tier real estate investors, we have to match them at their level of sophistication and expertise. Thus, we focus on hiring a smaller number of highly experienced lenders and then support the heck out of them. The net effect is that, in my view, we’ve built the best platform for highly skilled lenders to do more individual volume than anyone else in this space. As an example, 4 out of the 18 lenders we had on the team in 2021 did $100MM each in personal production and two more closed over $85MM each for the year. That’s all retail direct-to-customer, no wholesale or correspondent. The only way that level of production is possible while keeping customer satisfaction high is with support. So, borrowing from Guaranteed Rate, we surround each lender with a dedicated team of people who only work that lender’s pipeline to ensure each stage of the process is done efficiently while making sure the customer is informed and has the most realistic expectations every step of the way. That, along with the consistent execution they get from our Chicago-based back office, makes Renovo feel like a dream partner for our target client.
If you had a clean slate to start over and do anything you wanted to do, what would that be?
I played Division II college basketball and have always been an athlete, so naturally I think it would be really cool to do that on a professional level, but basketball is so hard on your body. Looking back on it now, I wish I had learned to play golf at an earlier age. To be a PGA pro would be an incredible lifestyle and you can do it until you’re in your 60s or later. Hard to beat that.
What is the best advice you could give someone thinking about making a leap into Private Lending?
Be true to yourself, listen, be open to new ideas, work hard, and be kind. Those things will help you find success in pretty much any endeavor in life, including the simplest job we all have, which is to be a good human being. After that, it’s just a matter of how hard you’re willing to work to make your dreams come true.
And for those people reading this who resonate with some of the things I’ve talked about here don’t hesitate to reach out to me to learn more about us. We’re happy to share and we’re always looking for talented people who are willing to work hard to build not only a great, profitable business, but a sustainable one that you can be proud of.
