Racing Full-Speed
RCN Capital’s Jeffrey Tesch is Pushing the Limits and Staying in the Fast Lane By Carole VanSickle Ellis If Jeffrey Tesch, CEO at private direct lender RCN Capital, were not involved in the private lending industry, he would probably be zooming at top speed around an asphalt track in Daytona or Talladega. “My wife might not agree, but I think if I put a helmet on and really worked at it, I could be a truly great NASCAR auto racer,” he laughed. Fortunately for the world of private lending, Tesch has elected to stay out of the fast lane — at least where driving is concerned. When it comes to business and lending, however, it is a completely different story. Tesch has spent his entire career pushing the limits and creating solutions in two very different industries. “I started out in business with a single Subway franchise,” he recalled. At 22, Tesch bought the business using a loan co-signed by his father, and for nearly 20 years he focused on growing his business, buying more franchise locations, and raising his family. Of course, this was all conducted at top speed, with little time to slow down between one responsibility and the next. Nights, he would mop the floors of any shop where the closers did not show up, and in the morning he would do the prep work if the early crew did not make it in. “There was no job I did not do,” he recalled. “I never really liked mopping floors at 10 o’clock at night, but it had to be done because I cared about the business. I always remember that.” Not an Easy Business Over the 20 years he was expanding his Subway franchise business and raising a family, Tesch invested in real estate. He preferred to buy rentals, and did so throughout the 1990s until about 2010. “I did not have time for flipping because I was so busy running the sandwich business,” he said. “At that time, Subways were popping up everywhere. If I was going to buy real estate, I was going to rent it out and keep it simple.” He recalled getting started with RCN in 2010 and expecting lending to be relatively easy compared to his experiences in the restaurant business. He soon learned the lessons from Subway would be highly applicable in his new role at a lender trying to forge a niche for itself providing capital to real estate investors who were acquiring distressed homes, fixing them up, and putting them back into the marketplace. At that time, the types of loans Tesch and his partners envisioned making were largely unprecedented. “There was no good solution,” he said, “and the industry, the housing market, and the economy needed one,” he said. “Of course, that was 2010. There was a horrible recession, and the marketplace was extremely fragmented,” Tesch continued. “I knew that we could build a company that would provide a true service to the industry, but it was not easy — not even compared to food service!” RCN Capital began providing time-sensitive bridge financing to real estate investors in 2010, creating much-needed solutions for investors who needed faster-paced, more flexible lending solutions than the traditional banking industry could provide. There was no time to slow down, however; the next solution needed, Tesch saw clearly, was the need for transparency in a burgeoning industry with very few rules. “Back in 2010, there was not really an industry for real estate investment loans,” he said. “It was mainly investors just looking for money with no good way to find it. It was a mess.” Tesch and RCN implemented a series of internal standards to help the lender and borrowers know where things stood with a loan, to uphold standards for customer interactions, and to maintain clarity throughout the transaction. “It was common stuff you would expect in a residential loan, but at that time it was not standardized for the commercial world of private lending,” Tesch explained. “It was as simple as mandating that once you had spoken with a customer and come to terms, you issued a commitment letter. We were very above-board, and it had a lasting impact on our business and on the industry.” “Nothing Without the Team” Not surprisingly for a man who daydreams about being a professional race car driver, Tesch places an extremely high value on his crew at RCN. Today, that crew numbers nearly 250, and he emphasized that the RCN infrastructure and his extended team are the key to the company’s success and the success of clients. “Lending money is not an easy business, and you have to work with people who are truthful, honest, and hardworking. What can be even harder on the lender’s side is that you need people willing to have difficult, honest conversations with customers about loan approvals and denials when necessary,” he explained. “We have a really, really deep bench of people who do exactly that. They care about the company and making a difference as well as their paycheck.” Tesch hires with this type of mindset as his goal, noting, “We want people who are fired up to make a difference.” He described one of his earliest hires, a young employee who had been working at a car dealership answering phones. Despite the mundanity of the position, “she came in with the attitude that she was going to do an amazing job,” Tesch said. “In fact, she did such an amazing job we moved her into a position as a loan processor, where she wrote a manual for all the other processors we have ever hired. Then, she moved into underwriting, and now she is a loan officer. She could have come in with no expectations, but instead she helped build up the entire company and our customers as well. That kind of fire is what we are all about.” In addition to direct, private lending, RCN operates a proprietary system dedicated to supporting real
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