Creating Opportunities
Mino Lending Solutions Prioritizes What Investors Need Most By Carole VanSickle Ellis When you think of private lending, the word “scrappy” is not usually the first word that comes to mind. However, when you think of Mino Lending Solutions, the Detroit-based, full-service, nationwide mortgage originator specializing in financing for real estate investors and actively engaged in making loans that other lenders simply cannot tackle, “scrappy” seems to fit the bill. “From the beginning, we have had that scrappy, gritty, creative element ingrained in us because it is in the culture that drives us in Detroit,” said Cason Thorsby, co-founder and CEO of Mino Lending Solutions. Although the company is based in Detroit, it operates nationally and makes not only the lower-dollar loans that investors are desperately seeking in that market but also higher-end loans on what Thorsby calls “million-plus fix-and-flips.” “If a deal makes sense, we love it and we are going to do it, period,” Thorsby said proudly. “It sometimes might seem to real estate investors that no one wants to play in the smaller-dollar sandbox, but if that is what investors need, we are going to be there.” Thorsby and co-founders Chad Skop (COO/CFO), Grant Drzyzga, and John DeSilva started the company in response to the need for real estate investors and property managers to access equity in their current portfolios, fund new acquisitions, and grow their businesses, Thorsby explained. Drzyzga and DeSilva, who are also founders of property management software platform Revela, initiated the conversation when they noticed an ongoing flow of requests from their clients for more funding for their investments. “Our clients are smaller, non-institutional real estate investors driving positive change in local economies, and there is no market where that opportunity and the need for funding is more evident than in Detroit,” Thorsby said. “Smaller investors’ appetite for risk and willingness to take on hard work and hard projects helps stabilize neighborhoods and shore up local markets. We believe they should have access to the same type of financing as the ‘big guys.’” Providing a New Point of Access to Profitability & Cash Flow When the co-founders first broached the idea of a lending company with each other, they did so in response to a clear gap in the market when it came to serving individual investors engaged in markets like Detroit, Michigan, where Mino Lending is based. Although investors are often able to get into deals with short-term loans in markets like Detroit, of which there are many in the Midwest in particular, it can be difficult to exit that funding to create profitability and cash flow. “We have roots in Detroit, and the characteristics of this market bleed into others like Cleveland, Ohio, or St. Louis, Missouri, to name just a few,” Thorsby said. He continued, “In these types of markets, valuations and properties can vary greatly street by street and even block by block, and asset prices are still relatively inexpensive compared to the rest of the country. This means there is an opportunity for people to create portfolios here that they could not create anywhere else. We are determined to help them do that.” Thorsby recalled his early days in private lending just after leaving his food-and-beverage business to become a lender. “I had a lot of experience raising money, but I had not seen how it usually worked in the real estate space up to that point,” he said. “From the ‘outside’ looking in, it just did not make sense that someone with good credit, good experience, and good liquidity could not get financed for a deal in a place like Detroit. If there is money to be made, it can be a good loan, and we are proud of our success in lending to investors in Detroit with a 0% late payment, 0% delinquency track record. We are proud that we saw something that needed to change and we are helping change it.” The Truth About “Small” Loans “Small” real estate loans are hard to come by, and this can make investing in highly attractive deals in certain markets extremely difficult for investors who rely on loans to finance acquisitions and renovations. Historically, the investor maxim regarding borrowing was, essentially, “If you’re willing to pay the price, you can borrow on anything.” However, this has never fully applied to small property loans, typically defined as $100,000 or less. To Thorsby, that inaccessibility was a problem. “In markets like Detroit, which is our home base, you can still buy a house for $50,000 and put $30,000 into it for a cost basis of $80,000. That is huge for an investor with decent liquidity who wants to invest in the Midwest,” Thorsby said. “They can create portfolios with many cash-flowing properties despite higher interest rates, but only if someone will make the loans.” Mino Lending has prioritized these types of borrowers from the beginning. “We have roots in Detroit,” Thorsby said. “As a private money lender, we understand what makes a good deal and we believe it is important for investors to be able to do those deals when they make sense.” With the average home loan amount in the U.S. today hovering just over $400,000, most lenders, “conventional” and private, tend to avoid making loans below $100,000 because they simply are not as cost-effective as larger loans. It costs roughly the same amount to originate a loan of any size, and most lenders do not choose to specialize in these small loans since relatively few of them are originated each year. While these reasons might make good business sense for lenders, Thorsby said, the truth is that the practice of only making larger loans leaves investors active in some of the most affordable markets in the country out in the cold. For Mino Lending, which already specializes in making loans of all sizes nationwide, the correct course of action was clear. “The feather in our cap is that we are an up-and-comer willing to do financing in cities
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