To achieve continued success, he’ll rely on the same principles that have established him and the firm as industry leaders.

It was early 2010. Jeff Tesch received a phone call from Don Vaccaro, co-founder of RCN Capital. Vaccaro wanted Tesch to help him run a new private lending company.

Nearly four million foreclosures had been filed the year before, due to the 2008 housing crash. Institutional lenders had responded by tightening lending requirements. With traditional funding restricted, private capital was becoming increasingly more important.

Vaccaro recognized the opportunity. He had built a successful software company and had the money to lend to fix and flippers. He believed the newly formed company would be a place where his money was secure, and he could control the return on his investment. And he knew he wanted Tesch, an old acquaintance, to be part of the new venture. So, he invited Tesch to become managing director.

“I knew Jeff. He had management experience with his Subway franchises, had invested in real estate and had some prior banking experience,” said Vaccaro. “Jeff makes decisions based on empirical data, rather than assumptions. He can simplify a discussion into a few key words, and I like that.”

Taking the Reins
Fast forward nearly a decade, and RCN Capital (originally named Rehab Cash Now) will welcome Tesch as its new chief executive officer on July 1. Vaccaro, will officially resign as CEO, leaving the company in Tesch’s hands.

From the beginning, Tesch has established RCN as a national brand in private lending while creating industry-wide best practices and a customer-centric approach to lending.

Tesch learned the importance of maintaining a company brand right out of college, when he purchased a Subway franchise while still in his early 20s.  “I won’t say it was turnkey, but they had everything figured out for you,” said Tesch. “So, it was really all about you marketing your business, hiring the right employees and painting the brand.”

Tesch said the No. 1 thing college did not teach him about business was the human resource element. “None of that was really taught to me in college. I kind of learned that on the fly. … I figured out how to promote people to an area of responsibility, make them empowered and give them the ability to make their own decisions,” he said.

Aside from hiring the right people, Tesch knew it was equally important to ensure a great customer experience—another lesson from his days as a franchisee. “You can be the best marketer in the world, but if you don’t have those great repeat customers, that would be a real problem.”

Years later, Tesch would transfer all these skills to the lending world.

Subway Leads to Real Estate
Tesch eventually owned seven Subway franchises. With the profits from his restaurants, he began to invest in real estate. As a borrower of money, Tesch learned what not to do.

“What I realized was using private lending or hard money was a very unsatisfying experience. So, when we went to start RCN in 2010, I took that knowledge of how to treat customers and made that the basis of how we were going to build this lending company,” Tesch said. “How would you be treated when you went and applied for a loan? How would you be treated when you got a commitment letter? How would you be treated at the various points in the process of dealing with the company?”

Tesch used the answers to these questions to structure the RCN customer experience models. That customer-centric approach distinguished RCN in the private lending space, he said.

Tesch ensures his employees deliver excellent customer service at every point—that they offer the same pricing they quote, close loans on time, distribute rehab draws quickly, expedite wire transactions and send payoff letters in a timely fashion.

“All those different items are how a customer grades the lender experience,” Tesch said. “If our prices aren’t competitive and we don’t treat our customers the right way, they will drive on down the road.”

A Conference Meeting
During the first year, the company was mostly making loans in and around the Northeast, where antiquated real estate laws can be restrictive for investors. Tesch knew that to scale the company, he needed to be able to close loans nationwide.

The first issue he had to solve was how to get valuations on multiple properties around the country. Tesch found the answer shortly afterward at a mortgage conference in Las Vegas, when he met the CEO of Appraisal Nation, Mike Tedesco. The pair found an immediate connection through their mutual love of ACC basketball.

“From there, Mike went on to explain what they do as a company,” said Tesch. “And that was how we solved our first big problem, which was getting valuations and in every county across the nation.”

Tedesco said the synergy between the two created a valuable partnership. “For us, Jeff was a huge advocate. We provided a conduit to gain access to other markets, and Jeff helped us grow the private lending space.”

Strong friendships developed between Tesch and both Tedesco brothers, including John Tedesco, senior vice president of Appraisal Nation.

“Jeff has a high level of integrity, vision and leadership,” said John, the older Tedesco.

Mike Tedesco played up Tesch’s young, vibrant energy: “Jeff has all these multiple facets to him. He is a successful businessman, but he likes to have fun. He knows more about techno music than my 22-year-old son.”

Tremendous Energy
Mike Tedesco said Tesch brings “tremendous energy” to his relationships. He’s a master at establishing key partnerships and believes they are essential to growing a business.

Tesch credits close friend and attorney Jon Hornik for resolving the second hurdle on RCN’s path to expansion. Tesch needed an expert in private lending who would ensure proper execution of the loan documents and adhere to the laws in each state. While attending a hard money lending conference in Florida, Tesch met Hornik.

“He was well-versed in the nationwide legalities of private lending and what we needed to do to expand, and I knew I had to meet this guy,” said Tesch. Hornik had the systems in place, including the state-specific language needed to execute the loans nationally.

Hornik was quick to meet the challenge, offering regulatory advice and executing closings across the nation.

“I love doing deals with him. Jeff has the ability to get to the bottom line and underwrite quickly. And that’s why RCN has grown tremendously,” said Hornik. “I close for 60 originators nationwide and think RCN is top of its class in terms of underwriting and the ability to close. That’s all due to Jeff’s leadership.”

Once RCN aligned with Appraisal Nation and Hornik, the company was well-positioned nationally. Rehab Cash Now evolved into RCN Capital, a name that helped make the company sound more institutional. Tesch credits Erica LaCentra, RCN’s director of marketing, for successfully rebranding and transitioning the company.

“When I joined RCN over six years ago, Jeff gave me the direction and guidance I needed to be successful as I was starting out, but he also gave me enough autonomy to grow and run with new ideas,” said LaCentra. “Jeff’s greatest quality is that he values his employees and the ideas and input they present to him.”

National Expansion
Successfully rebranded, with key staff and essential procedures in place, the stage was set for RCN’s national expansion. From 2012 to 2016, the company doubled in size every year, and so did its loan originations. The rapid growth brought new challenges, such as discovering additional credit sources and finding new, robust technology as other lenders came into the market.

Once again, the solutions to both obstacles came while attending, you guessed it—conferences. When Tesch met the owner of Bridge Loan Network, an online marketplace portal in the asset-based lending space, Tesch decided to acquire the fledgling company. Its system offered the basic structure required to build out the much-needed technology that would allow RCN to run its operations internally. Vaccaro, with his background in software, credits the company IT department for developing the automation that expedited the loan processing, which was fundamental for rapid expansion.

The most significant conference connection happened when Tesch crossed paths with a representative from a bank in California who was looking to finance private lenders. The investment gave RCN significantly more operating capital. Tesch vividly remembers signing the deal October 30, 2013. He knew his moment had arrived.

“That was the day we closed on our first facility that allowed us to borrow money to relend to our customers,” he said. “Up until that point we were just lending out a rich guy’s money. When we signed that credit facility, then I was like, all right, we got the brand, we’ve got people, now we got money—away we go!”

In April 2019, RCN Capital had a record-breaking month, which resulted in the company hitting $1 billion in loan originations since inception.

On the Horizon
Tesch pays close attention to the economy and its effect on private lending.

“The industry has evolved tremendously. While Jeff and I are out there speaking, we are also listening to what’s going on in the space,” said Hornik.

The two friends collaborate weekly to stay ahead of the constantly evolving private lending business. Tesch said he is often asked about the chance of another housing collapse, something he does not see happening.

“Now, will there be minor price corrections? Well, it’s possible, depending on the overall economic environment, whether it be oil prices, interest rates or any number of macroeconomic statistics. You might see dips in housing, but overall, you’re not going to see, in my humble opinion, anything even remotely close to what we went through in 2007-2008. The numbers don’t add up,” he said.

What Tesch does see trending is a lack of single-family homes being built in the United States to keep up with the high demand. According to Tesch, there isn’t enough capital being poured into new single-family construction, which is why last year Tesch positioned RCN to address that need.

“We began a concerted effort to give that single-family rental product as much weight in our portfolio as we do with our fix-and-flip model, and started marketing a product, called long-term rental financing, which is a full 30-year, fully-amortized loan for our customers,” said Tesch.

Tesch believes the industry overall needs to keep up with the changing landscape from a product diversification standpoint—meaning there just aren’t as many houses in disrepair that need to be rehabbed and kept for a profit. Recent numbers released by the U.S. Census Bureau show that while housing starts rose unexpectedly by 0.6% in April 2019, permits for single-family housing fell for a fifth straight month, suggesting a decline in housing construction in the months ahead.

What’s Next?
As Vaccaro anticipates stepping down in July, he says his departure will allow Tesch to make decisions more quickly. He trusts Tesch completely.

“Jeff has the intelligence to run it, as well as the intelligence to make logical entrepreneurial, business decisions. But Jeff also knows how to craft deals that make people want do business with us, and those win-win deals are everything,” he said.

Those closest to Tesch say that being CEO won’t change him one bit. He will always be the guy, described by his friends and travel companions as a “foodie,” who enjoys experiencing the local restaurant fare and ordering the signature cocktail. From the bright lights of a Vegas nightclub, to a private dinner party in Old Town San Diego, to a dingy piano bar in Austin, Texas, people gravitate toward Tesch’s dynamic personality and genuine nature.

“What you see with Jeff is what you get,” said Mike Tedesco.

The coming year will be a monumental one for Tesch and RCN, too, when the company celebrates 10 years in private lending. Tesch leans his ladder of success directly on his team.

“It’s my employees that have contributed to the company’s success and have made RCN what it is today,” he said.

As Tesch guides RCN into its milestone anniversary year, he will continue the same business practices he learned long ago: maintain the brand, cultivate partnerships, hire key people who share your vision and empower them, but most importantly, focus on the customer experience.