Q&A with Erik Barlow and Avery Rucker of FundSource Financial
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 start looking for a project. It directly affects every aspect of the deal. Once they understand their financing it’s much easier to determine if something is a good investment.
FundSource Financial provides short term and permanent financing for 1-4 unit residential and commercial properties. They can be reached at 877-522-3323 or Info@fundsourceonline.com
