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Industry Insights

Turning the Tide

NPLA & Pitbull Conference By Jon Hornik The National Private Lenders Association (NPLA) is the association that represents and protects the interests of Private Lenders as it pertains to new legislation and public policy. Our organization has built a community of members made up of lenders, capital providers, brokers, developers, and industry service providers. The mission of the NPLA is to support, protect, and grow the Private Lending Industry. Pitbull Conference is known as the “Market Maker in Private Lending,” producing the largest national Private Lending conferences three times per year. Serving the Private Lending space for more than 20 years, our success can be attributed to consistently producing premium events for industry professionals to network and grow their businesses. Although the association is independent of the conference, moving forward, the NPLA will play a more prominent role in the event. The conference will provide high-caliber networking opportunities, crucial real-time information regarding marketplace conditions and industry standards, and a lineup of entertaining events. We have established a strong foundation with the brightest minds in Private Lending. Now, the changes we are making will enhance the membership experience and transform the Pitbull Conference. We welcome you to join our community of members and conference guests. Below are our membership updates and conference lineup. NPLA Membership Updates We believe a diversified and engaged membership base will enhance the experience of our members. That is why we have expanded our membership options. If you have heard about the NPLA, but have been unsure about joining, consider an Affiliate Membership to get your foot in the door. Membership Details »          $2990/year membership for one »          $200 discount to Pitbull Conference »          Access to one NPLA conference call per month »          Access to all NPLA video conference call recordings »          Full access to the NPLA Portal (Member Directory and Active Lender Directory) »          Permission to display the NPLA logo on your company website and email signature »          Legislative updates »          NPLA lapel pin This membership does not include: in-person NPLA member-only events, voting eligibility, or committee participation. Limited availability for two years. Be Prepared for What’s to Come in 2023 The NPLA hosts biweekly meetings that have become a trusted resource for members. Members and special guest speakers discuss the most critical issues facing the Private Lending Industry. We are excited to announce our exceptional lineup ofcontent that will advance our mission to build community through education and mentorship. February »          Housing Market Forecasts and Economic Outlook for 2023Learn what various research houses are saying about house prices and the broader economic outlook for 2023. »          John Burns Real Estate Consulting Session: Single-Family Rental and BTR UpdateDanielle Nguyen, Senior Research Manager March »          Cash Management for Private Lenders — How to Maximize your Balance Sheet in Tough TimesManaging cash flow is paramount in times of constrained liquidity and is essential for a company’s survival. This encompasses cost management discipline, balance sheet velocity through quick loan sales, and proactive special servicing. »          Brokering Loans, White Label Table Funding, Closed Loan SalesThough liquidity is tighter, it’s still there under the right terms. Learn about the various methods of funding and understand the risks and benefits of each. April »          Funds, REITs, Syndication, CrowdfundingAs liquidity has dried up, the private lending market has gone full circle back to some of the old ways of funding. A few examples are private placement funds, co-lender or participation of loans, and direct retail investment through crowdfunding. However, some of these methods have been refined. Learn from different lenders about the various vehicles they use to fund their loans. »          Legal (MLPAs, Participation Agreements, Reps/Warrants, Buybacks)Understanding key terms in loan sale and participation agreements. In good times these agreements are rarely looked at; however, changing markets tend to reveal weaker lending practices, which expose lenders to asymmetric existential risks. This session will discuss methods to ensure that your loan production is tight and adheres to the reps/warrants you are making. May »          Warehouse LinesFrom seasoning lines (to quickly fund and sell off balance sheet) to longer-term hold lines — mark to market vs. committed. Learn about the types of lines available and how lenders use them to expand their balance sheets and create additional liquidity when capital markets are tight. »          John Burns Real Estate Consulting Session: For Sale Market Update (New Homes and Resale)Devyn Bachman, Senior Vice President June »          InsuranceThe cryptic world of insurance leaves most lenders inadequately covered. For balance sheet lenders and those selling loans to loan aggregators, insurance losses could trigger buyback risks and principal losses. Learn why Homeowners insurance is not enough and the types of policy features and limits that are required. »          John Burns Real Estate Consulting Session: JBREC’s Macro OutlookAlex Thomas, Senior Analyst Questions about the NPLA? Contact Amy Kame, amy@nplaonline.com Join the NPLA community at https://nplaonline.com/#join Experience the New Pitbull Conference 2023 March 25-27, Ritz-Carlton, Key Biscayne, Miami Our new event structure showcases the biggest players in the Private Lending Industry, educational and motivational speakers, and newly added networking sessions with hundreds of local brokers. We welcome you to join our community and attend our upcoming conference. Register at https://pitbullconference.com/march-2023-event-registration/ See What the Buzz Is About — Key Biscayne Event Lineup Saturday, March 25 »          NPLA Golf TournamentKick off the weekend with the NPLA Golf Tournament. Members and conference guests will enjoy a day on the greens at the Miami Beach Golf Club, including lunch, swag items, awards, and a cocktail hour. This is a great networking opportunity.             Tournament fee not included in registration. This event is complimentary for Corporate and Associate NPLA members. Sunday, March 26 »          NPLA Membership Meeting and Networking BreakfastNPLA members will meet to discuss progress, goals, and strategic initiatives for the association and the industry in the coming year. We will also be hosting a member-only networking breakfast. This is a closed event for Corporate and Associate NPLA members only. »          Pitbull Networking Session #1 (NEW Event)Start the evening in the sponsor hall and network

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The Taste Tester Investor

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Co-Hosted by RCN Capital & REI INK and Sponsored by Five Brothers Asset Management, Vantage Point Title and Urban Surfaces

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A Voice for the Industry Advancing Private Lending

Building Community and Strengthening the Industry’s Legislative Voice By Jon Hornik, Esq. For decades, private lenders operated independently of one another, with little need for a unifying body to guide or protect our interests. With the influx of institutional investment, private lending has become a more sophisticated and high-profile industry. We need a collective voice and vision to help usher us into this new space. Today the National Private Lenders Association (NPLA) fills that void. Founded in September 2019 by Leonard and Kathleen Rosen, the NPLA was created to support, protect and advance the Private Lending Industry. Since its inception, our organization has served as a platform where industry peers collaborate, share expertise and information, and support the continued growth of Private Lending. In November 2022, we (Jon Hornik, Esq. and Private Lender Law, the practice group of LaRocca Hornik Rosen & Greenberg) acquired the NPLA. The organization is also guided by Managing Director, Amy Kame, and 2023 Advisory Council, including Jeff Tennyson, Lima One Capital; Eric Abramovich, Roc Capital; Jeffrey Tesch, RCN Capital; Stephan Leccese, Sharestates; and Chip Cummings, Northwind Financial. As we move into a new era with new leadership, the NPLA is focused on three foundational pillars: »          Industry Advancement »          Building Community through Education and Mentorship »          Strengthening the Industry’s Legislative Voice Industry Advancement The NPLA is made up of capital providers, lenders, brokers, developers, and industry service providers. Our organization harnesses the experience and knowledge of the brightest minds in our space. These individuals have a deep understanding of how capital markets flow and how credit decisions are made. This includes understanding interest rate and credit spread risk as well as real estate underwriting and how the concepts relate. Over the last decade, we have seen incredible advancements in the Private Lending industry. Prior to 2015, our lending environment was fragmented, consisting of family offices and individuals providing capital where conventional lenders would not. In 2015, Wall Street discovered Private Lending as an alternative asset class and transformed the industry we see today. Its participation provided legitimacy while companies formed and grew with cheaper capital. During this time, conventional lending guidelines and underwriting standards became mainstream. We are on the cusp of further innovation and advancement in the next decade. As we navigate these changes, our Best Practices and Ethics Committees will continue to set standards for the industry, ensuring our asset class becomes more institutional and attractive to additional sources of capital. Building Community Through Education and Mentorship The NPLA is about fostering community. Our role is to provide a much-needed platform for our membership base to stay connected, especially in times of market volatility and uncertainty. The NPLA is uniquely positioned to serve as a space for industry leaders to collaborate while educating and mentoring the next generation of Private Lending professionals. With the issues facing the housing market today, including low housing stock, eroding affordability, and an uncertain interest rate environment, members understand the need to collaborate on solutions. One of our most trusted resources is our bi-weekly video conference call. At the meetings, members and guest speakers discuss critical issues facing our industry, including macroeconomic changes, demographic and geographic trends, supply chain issues, legislative developments, and more. The NPLA’s pillar of mentorship focuses on facilitating partnerships and expanding members’ knowledge and perspectives. We understand that the continued growth and success of Private Lending depends on members adhering to best practices and ethical lending standards. It is up to us to move the industry forward. Strengthening the Industry’s Legislative Voice The collective voice of NPLA members will define the Private Lending Industry for years to come. Our Legislative Committee plays a significant role in this effort, as it monitors all state and federal regulatory changes that may affect our industry. The committee keeps members informed through quarterly legislative reports and timely legislative alerts, and we have built a strong track record of legislative success over the last three years. For example, we successfully lobbied against the following New York bills to protect the interests of Private Lenders: »          Senate Bill 3060E (Transfer Tax) »          Senate Bill 1061 (Commercial Finance Licensing) »          Senate Bill 5470 (Commercial Financing Disclosure) We partnered with industry groups, led by Robert Finlay from Wright, Finlay & Zak, on the Coalition Opposition to defeat California Senate Bill 1323, which proposed to amend California’s foreclosure process. Furthermore, after a strong lobbying effort from the NPLA, Governor Murphy conditionally vetoed New Jersey Assembly Bill 793. The “Community Wealth Preservation Program” proposed to revise procedures for the sale of residential foreclosure properties and would have curtailed lending in the state. As we look ahead, there is a common theme in recently proposed legislation to restrict the ability of business entities to own residential housing. Legislators across the country are selling a narrative that investors are driving up home prices, taking affordable housing stock off the market, and limiting home-buying options. To contest legislation such as this, we need to continue our collective messaging about the critical role we play in improving neighborhoods and providing access to housing across the country. The legislative landscape changes quickly. Our responsibility is to be the industry’s voice while presenting a more accurate and positive image of Private Lending to the public and legislators across America. The Importance of Giving Back As we work to support one another professionally, we also understand the need to look beyond ourselves and give back to those who are most vulnerable. That is why we are committed to partnering with organizations that positively impact our communities. In 2022, NPLA members raised $31,000 for Habitat for Humanity of Greater Miami. Donations went directly to support the construction of affordable homes in the Miami community. Since 1989, Habitat for Humanity of Greater Miami has helped over 1,300 families achieve the goal of affordable home ownership across the county. In 2023, we are proud to announce our partnership with St. Jude Children’s Research Hospital. The mission of St. Jude is to advance cures

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IMN Single Family Rental Industry Awards

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Winners and Finalists IMN hosted the inaugural SFR Industry Awards on December 4th, immediately preceding their 10th Annual Single Family Rental (West) Forum. The Awards Ceremony celebrated and honored the excellence of the SFR industry. Here are the Finalists and Winners of the 2022 SFR Industry Awards! Congratulations to each and every one of you. Best Marketing/Social Media Campaign REI INK Avantstay Invitation Homes PlanOmatic Propstream SVN | SFRHub Advisors ESG Application Of The Year Haven Home Key Man GPM Quinn Residences Excellence In Diversity FirstKey Homes Corevest Finance Sparrow DSCR Lender Of The Year RCN Capital Kiavi Fix & Flip Lender Of The Year Toorak Capital Partners Boomerang Capital Partners Lima One Capital ROC Capital Ground-Up Construction Lender Of The Year Genesis Capital Sound Capital Loans Lender Of The Year – Portfolios Corevest Finance Metlife Investment Management Sound Capital Loans Private Equity/Joint Venture Deal Or Partnership Of The Year Crowdstreet Tower Capital SFR Securitization Of The Year Nomura Securities International, Inc Corevest Finance SFR/BTR Operator Of The Year –Local/Regional Wan Bridge Camillo Properties Ltd Haven Realty Capital Quinn Residencies SFR/BTR Operator Of The Year — National Sparrow Vinebrook Contractor/Rehab Company Of The Year Lessen Prominence Homes Data Provider Of The Year Local Logic Cape Analytics HouseCanary Ivueit Propstream Cherre Data Kit For SFR Inspectify Taxproper Landlord/Owner Technology Of The Year Mezo 3E Management Lessen Inc Punchlist Usa Rently Spruce Dwellwell Analytics Rentivity Sitecapture Task Easy Property Management Company Of The Year HomeRiver Group Avantstay Poplar Homes Pure Property Management RKW Residential SFR Online Marketplace Of The Year PadSplit Bungalow Entera New Western Rentivity SVN | SFRHub Advisors Comehome By HouseCanary Mynd Roofstock Swift Homes Tenant-Facing Technology Of The Year Pinata Invitation Homes IOS App Pest Share Rently Brokerage Of The Year – Debt Berkadia George Smith Partners Brokerage Of The Year – Investment Sales Berkadia Northmarq Strata SFR BTR Deal Of The Year Overlook At Mill Creek – Resibuilt Odyssey By Soltura Republic Urban Properties SVN | SFRHub Advisors The Havenly Foundation Hills By Keystone Homes Insurance Provider Of The Year Alliant Insurance Services Obie Steadily Law Firm Of The Year Sidley Austin Costner Law Offices PLC Mayer Brown Workforce/Affordable Housing Development Of The Year Homes 4 Families Newmark Investment Inc Minority Executive Of The Year Alex Hemani Sparkle Allen Jeff Coles Mike Schwab Mahesh Shetty Woman Executive Of The Year Jami Schulman Amanda Blackmon Misty Glass Sarah Webb Pia Cornejo Brittany Murphy Lauren Shea Colleen Yaeger Rising Stars Under 35 Mike Burkentine Leah Goldmintz Casey Quinn Andrew Smallwood Garret Van Parys John Faheem Liya Mo Robin Simon Stephanie Stanley Josh Woodward

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Charting Your Real Estate Investments Through Troubled Waters

Several factors are at play in the real estate market, but cash is still king. There’s been a lot of conversation about how COVID-19 will affect the U.S. residential real estate market. As real estate investors, we want to have current information with accurate updates so we can make informed decisions. Let’s take a quick look backward before we look ahead. Range of Impact Never in my lifetime have I seen a government shut down its economy due to a pandemic. When the Spanish flu invaded our country in 1918, more than 675,000 people died. Even though the first flu vaccine wasn’t developed until 1942, our economy withstood this brutal attack. As with the Spanish flu, the impact of COVID-19 on communities and regions has not been uniform across the country. As Thomas Garret points out in his white paper on the economic effects of the 1918 influenza pandemic, Pennsylvania, Maryland and Colorado had the highest mortality rates although those states had very little in common. From this example, can we discern that different areas of our country will experience different impacts and therefore outcomes? Cash Is Still King The past decade has been stellar in both the residential and the commercial real estate markets. The stock market had experienced unprecedented growth and new highs. One would think companies should have cash in their bank accounts. What a wonder to see how many large and small businesses applied for the Payment Protection Program along with the overwhelming loan applications for the SBA’s disaster relief loan. Remember, you can run a business with a loss, but you cannot run a business without cash flow. In vacation areas, there are investors who own multiple vacation rentals who will not be able to make more than one or two of their mortgage payments. There are many small investors across our country who have invested in multifamily. Some will not capture enough rents to meet their lender obligations. So, there will be upcoming deals for investors who are able to evaluate swiftly and fund quickly. These opportunities will be available for anyone who has access to cash, regardless if they’re large investors or small investor groups that pool their capital. Limited Access to Properties There are some obvious challenges currently facing buyers and sellers. For example, appraisers are not allowed out of their homes in some parts of the country due to shelter-in-place orders. And some folks simply don’t want those appraisers trampling through their home. Open houses are reduced to non-existent in many areas due to social distancing and sellers not wanting strangers in their homes, even if they are potential buyers. These conditions will stall loans and, hence, closings for those transactions. Flippers, however, do not care whether appraisers or buyers trample through their flip at 10 a.m. or 10 p.m. So, those transactions will get to the closing table as long as lenders don’t tighten requirements. Chase just announced new lending requirements for conventional loans is 20% down and a minimum 700 FICO score. The president said he was relaxing underwriter requirements for government loans for specific items (i.e., recent pay stubs, seasoned funds, etc.) to keep this industry fluid. If that happens (I have my doubts), then these loans will close. If these requirements are not lifted, we will see a dip in sales as well as a longer timeline for a lender to close. First-time homebuyers who have young children or older parents don’t want to chance spreading this contagious virus to these family members. In addition, many first-time homebuyers have had their lives disrupted working from home, taking salary cuts or, even worse, being furloughed. The National Association of Realtors reports existing-home sales fell 8.5% in March following a February that saw significant nationwide gains. Each of the four major regions reported a dip in sales, with the West suffering the largest decrease. Access to Cash The Fed rate is zero and probably won’t go much lower. So, the cost of money is still cheap. Access to that money, however, is a different story. The Department of Treasury is responsible for distributing those individual $1,200 checks the government is giving away. They are also responsible for sending out millions of monthly Social Security checks. Secretary Mnuchin acknowledged the delays in those checks getting out due to the IRS’ antiquated software and being short-staffed. Combine those tasks with working through the banks trying to distribute loans to small businesses. So, the flow of money is going to be stalled, leading to two quarters of negative growth. Economists call two consecutive quarters of negative growth a recession. An article in Financial Times informed us that France’s government is not putting together a bailout program. Rather, the French government just paid every business’s payroll, thereby continuing the flow of money. In this scenario, rents will be paid and jobs will be maintained until the pandemic is behind us. Rather than creating government bailout programs, this strategy tries to give some semblance of normalcy to people’s cash flow. Taxpayers would continue to receive paychecks that are deposited into their bank accounts, even though they’re not working. This creates at least four positive outcomes:  1)  Alleviates the pressure on unemployment benefits 2)  Jobs are held in place 3)  The job is waiting for employees upon their return 4)  Government isn’t burdened with excessive debt If I learned anything from 2008, it’s that real estate investors large and small will lead us out of the upcoming real estate rut. Many investors are in a cash position. Others will continue to have access to short-term loans along with established credit lines at big-box stores. I do not believe real estate prices will tank as they did in 2008 since the purchase of most personal residences in our country have not been overleveraged. But there will be a slight decrease in price by those motivated to sell. The pandemic has temporarily shut down our economy, and there will be an opportunity for all types of

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