September 2023 – Page 6

Q&A with Erik Barlow and Avery Rucker of FundSource Financial

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A Conversation About the Economy, Lending and the Real Estate Industry Erik Barlow is the President of FundSource Financial LLC, which he formed in 2014 along with Avery Rucker, the Vice President of the firm. With a combined 35 years of experience in real estate and business finance, they understand the challenges and time constraints real estate investors face on a daily basis. REI INK sat down with Erik and Avery to get their thoughts on the current state of the economy and the real estate investment and lending industries. Erik and Avery, can you give a quick overview of your professional journeys? Barlow // My career started in financial planning in 1999. In 2004, I started looking at the mortgage business and fell in love with it. I started with traditional residential mortgages then switched to the commercial side. Consequently, I started a commercial lending business which is where I first met Avery. The business then transitioned to working with private investors providing financing for both residential investment and commercial properties. This all led to me forming FundSource Financial in 2014. Rucker // My path was a little different. After graduating college in 1998, I became an investment banker, but I didn’t like it because I had no work life-balance. So, I transitioned to trading, and got involved in real estate. At that time, the trading world was changing so I focused more on real estate and became an account rep for a private lender. That’s how I met Erik. How about your company, FundSource Financial? Barlow // We formed it in 2014 and we now lend in 37 states. Our focus is on the “everyday” real estate investor with one to four units that need money for rehab projects or just to buy properties that are in good condition. We also focus on commercial investors that acquire multifamily, mixed-use, warehouse, self-storage, retail, office, restaurants/bars, automotive and mobile home parks. Rucker // We’re different from most lenders because we don’t require our borrowers to have experience investing in real estate. We will work with borrowers to finance their first flip as well as work with experienced operators that own hundreds of units. Our sole focus is to provide our clients with the optimal financing solution to get their project across the finish line on time. It’s frankly what we’ve built our business on. Expert guidance, and efficient execution. Barlow // To add to that, our goal is to be our clients’ finance partner. We “build up” the new investor by taking a chance on them. For example, we had a 19-year-old client who most lenders typically would not take a chance on for lack of experience, but we did. Today, that young man is very successful; he is 24 and has completed more than 20 deals in the last five years. It is also important to understand that when we structure a deal we are shooting to keep as much money in our client’s pocket as possible. Some lenders require significantly more money down than we do. We have found that the stronger the client’s bank account AFTER closing, the more likely they are to be in position to handle any unforeseen expenses and complete the project. How is the overall economy affecting your business? Rucker // It’s always been important to us to get industry and economic data from the best sources possible. It’s allowed us to make program changes early so that it doesn’t have a negative effect on our borrowers or our business. The only real change we’ve seen is a change in the ratio of our loans. We’re still doing a lot of fix and flip deals but we’re also doing a lot of buy and hold deals. Barlow // Also, our clients are adapting and diversifying as well. Buy-and-hold investors are now entertaining fix-and-flips and vice versa. Our buy-and-hold to fix-and-flip ratio used to be 80/20. Now it is closer to 60/40. The bottom line is we adapt to our clients when they adapt to the market. What are your thoughts on the current economy? Rucker // All I can say is that we are busy all day — everyday. Our borrowers are taking changes in stride and adapting. Capital is flowing. There is more capital available today than ever before. Barlow // At the end of the day people are still buying houses. Investors are very smart people and can figure things out. They realize that if their profits go down that they just need to do more deals to compensate. And that is also where we come in — we advise our investors. Thoughts about 2024? Barlow // As Warren Buffet stated, “Be fearful when others are greedy and greedy when others are fearful.” It is going to be very important who investors take advice from. I believe 2024 will be a great time. More properties will hit the market. Our seasoned investors are chomping at the bit. A good partner is key. We are experienced and we know how to advise. We are not simply transactional; we want to have clients for 50 deals and not just one. Rucker // Additionally, we take a consultative approach with our clients. We listen to their wants and needs and give them honest feedback. We’re always willing to tell a client that their considering a bad deal. We care more about the relationship and making them successful than just closing a deal. Do you have some parting thoughts or advice? Barlow // The one piece of advice that I have for new people looking at real estate investing is that you make your money when you buy a property and not when you sell it. At the outset, you need to structure the deal correctly. And for fix-and-flip investors, it’s important that you put out some affordable housing that people can qualify for; products under the FHA loan limits for their local markets. Rucker // Investors need to understand their financing before they

Getting Ahead of the Storm

by Nickalene Badalamenti-Kalas
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Property Management Pre- and Post-Disaster By Nickalene Badalamenti-Kalas Weather extremes and severe storm events are occurring more frequently across the United States and around the world. These events have not only caused significant damage to properties but also impacted new regions that are not fully prepared to confront them. The increasing occurrence and intensity of natural disasters calls for proactive measures to mitigate potential property damage and expedite recovery efforts. The Need for Predictive Disaster Management The growing frequency and severity of weather-related disasters such as hurricanes, floods, tornadoes, and wildfires have wreaked havoc on communities and caused substantial financial losses. According to the NOAA Climate Disaster Report, the total cost of damages due to weather effects in 2022 exceeded $165 billion in the United States alone. There is little or nothing we can do to control these events, but predicting their occurrences and proactively mapping their potential paths are essential steps toward minimizing their impact on real estate assets and the people who occupy them. The CLADE™ Disaster Alert System Five Brothers, a leading field services company and provider of best-in-class asset management solutions, has developed a revolutionary technology called the CLADE Disaster Alert System. By leveraging advanced technology, CLADE enables servicers, investors, and property managers to take proactive measures to protect at-risk properties before a disaster strikes, and streamline the inspection, debris removal, and claims processes post-disaster. It presents a real-time visual presentation of affected areas, enabling a strategic approach to risk management. CLADE Key Features > Advanced Geo-Tagged Asset Locations: CLADE employs advanced geospatial technology to accurately pinpoint the location of assets, providing a comprehensive view of the properties within proximity to potential disaster zones. > Real-time Disaster Occurrence Notification: CLADE provides real-time alerts to clients whenever a potential disaster event occurs near their assets. > Layered Mapping for Disaster Zone Identification: The system utilizes layered mapping to quickly identify disaster zones, providing visual representations of the areas likely to be affected by various natural disasters. > Exportable Property Lists for Asset-Specific Analysis: CLADE generates exportable property lists that include an asset-specific analysis, enabling clients to prioritize their response and recovery efforts. > Storm Surge Mapping Layer: Recognizing the significance of storm water inundation and flooding accompanying hurricanes to coastal and inland regions, CLADE assists in identifying areas and assets most susceptible to flooding. > One-Click Access to Field Service Orders: CLADE offers a one-click access feature, allowing users to promptly place pre- and post-disaster field service orders for necessary property protection and stabilization measures. Implementation and Scalability CLADE is available both as a value-added component of the Five Brothers asset management technology suite, FiveOnline, and as a standalone application. Users can easily upload their portfolios using the intuitive CLADE interface. CLADE is scalable to accommodate portfolios of any size for default, REO, REI vacant and/or occupied properties. Pre- and Post-Disaster Field Services When at-risk properties have been identified, stakeholders can quickly engage Five Brothers’ nationwide network of field service professionals to prepare properties for the coming weather event. When the storm has passed, field service personnel are dispatched to conduct exterior and/or interior inspections with geo-tagged photos and complete documentation. Based on the report findings, bids are submitted for board removal, utility reconnection, debris removal and relocation, and tarp-over services to prevent further damage. The clear benefit CLADE brings to these services is reaction time. It provides a critical interval in which to prepare assets to minimize damage pre-disaster, and to order boots on the ground to quickly assess property conditions and accelerate the claims and remediation processes post-disaster. It represents a transformative asset management solution to the growing challenges posed by weather extremes and severe storm events. See the CLADE technology introductory video and explore Five Brothers asset management solutions at fivebrms.com.

From Telcom to Real Estate Entrepreneur

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In Order to Succeed You Must be a Constant Learner Mitchell Deminski is an independent business owner with HomeVestors® of America, Inc. in the Columbus, Ohio Metropolitan Area. He started his HomeVestors business in 2018 after years of being a real estate investor, broker, and owner of a property management company. Today, he is also a sought-after speaker traveling the country giving advice and sharing his expertise with other real estate investors. Life Before HomeVestors Mitch received his BSBA from The Ohio State University in 1988 majoring in Marketing. After graduation, Mitch worked his way into being a partner in a telecommunications company which he sold in 1996. Two years later, in 1998, he began investing in real estate and went on to start a brokerage in 2001. At this time, he also started a property management firm providing services for other investors, admittedly a very tough business. In 2017, Mitch decided he wanted more control over his life and more flexibility to spend quality time with his family. It was at this time that Mitch met his future HomeVestors Development Agent, Jeff Hotz, who was looking for a property management company to manage his portfolio. Jeff convinced Mitch to join HomeVestors, and in 2018 Mitch did just that and formed D1 Real Estate in Central Ohio. The Beginning of D1 Real Estate “I decided to become a HomeVestors independent business owner because of their proven marketing and operating systems, their well-established brand, and their outstanding reputation,’ explained Mitch. “Initially, I used HomeVestors simply to upgrade my own personal portfolio and to use that newly generated income to pay off the debt and mortgages on the properties I already owned. And once my existing properties ‘became free and clear’ I was in a great position to simply get lines of credit to purchase additional properties.” In Mitch’s first year of business, he bought and flipped five houses; in his second year he flipped 17 (and kept one); and in his third year he flipped 13 (and kept two). Present Day Mitch has leveraged his HomeVestors business into a part-time venture. He has a full team of buyers and contractors, and his wife Susie manages the accounting for the company. “To be clear, I am more of the owner but no longer an owner-operator,” Mitch clarified. “And this is what I was ultimately looking for when I first started… control over my life and more time to spend with my family. As an independent owner, HomeVestors lets you decide how to grow and run your business.” During this time, Mitch still owned his property management company, which has grown to over 550 properties under management and representing about 200 real estate investors. In September of 2022, he sold the company to Poplar Homes, a third-party property management company. Mitch works as a consultant for Poplar Homes helping them build out their Ohio market. Advice from an Expert “As I travel the country speaking at various industry events, I focus on three key pieces of advice: • Always be a constant learner. • Talk to people who are actually doing it and not just talking about it. • If you want to start investing, be well capitalized. Homevestors What exactly does it mean to be aHomeVestors® business owner? Owning a real estate business is life changing and naturally comes with risks! When you become a HomeVestors business owner, you get immediate access to motivated seller leads, financing resources for qualifying purchases and repairs, one-on-one coaching with your local Development Agent, proprietary software for analyzing properties and deals, and access to a nationwide network of coaches and peers. Your house-buying business is yours and you run it as your own venture with a focus toward your individual business goals. If you are interested in a franchise, call 866-249-6932, email Sales@homevestorsfranchise.com or visit www.homevestorsfranchise.com. Each franchise office is independently owned and operated.