Lake Michigan Capital Brings Experience & Imagination to Lending
by Carole Vansickle Ellis
When Lake Michigan Capital founders Mark A. Jones and David Gahm sold their decades-old lending business in the early 2020s, they knew the time had come to start something new. “We were not ready to be completely done, but we did not want to run a huge company anymore,” Jones, who is the 2023-2024 Chairman of the Mortgage Bankers Association (MBA), explained.
“We have been working together for decades, and we wanted to get more involved in what is known as ‘adjacent’ or ‘boutique’ lending in the industry,” Gahm, who specializes in originations, underwriting, warehousing, secondary marketing and hedging, and servicing loans, added. He continued, “We wanted our next step to be a business that would offer a well-rounded service proposition and offering for loan originators, and that is something we know a lot about and are good at.”
For Jones and Gahm, the timing could not have been better for an exit from an established firm and subsequent debut of a new company. With the entire home-lending market shifting as interest rates rose and home affordability became increasingly complicated, the two believed they could make the biggest difference in the industry by offering loans to investors equipped to bring new housing into the market effectively and profitably.
“We are seeing a very unique market evolving right now, and there is big demand for financing in both the DSCR (debt service coverage ratio) and fix-and-flip spaces,” Gahm said. “The piece of our business that we are most excited about right now is being a very creative, solution-based lender that is not offering typical things that other lenders are offering.”
Jones added, “This new business will run somewhat countercyclical to the A side of private lending. We are not going to deal with the retail consumer at all, but, instead, with investors. This will be a different type of loan for a different type of borrower.”
Prioritizing Creativity & Opportunity
Both Jones and Gahm emphasize that Lake Michigan Capital, which is due to launch in Fall 2026, will directly fortify the housing inventory in markets in which it operates by handling financing for real estate investors actively contributing to that important inventory. “One of the biggest problems today is inventory shortfall,” Jones observed. “There is so much demand, and some markets are overbuilt, while others are experiencing severe shortages. Lenders today cannot afford to paint the housing market with a broad brush.”
This is where the two founders’ decades of real estate investing and lending experience comes to bear, Gahm said. “We have the knowledge and practical ability to look at opportunities from a portfolio standpoint and put together really unique lending opportunities and solutions for our clientele based on their specific needs and projects,” he explained. “We find this to be great fun because we can look at opportunities with truly open minds, stay risk averse, and get pretty creative at the same time.”
Gahm continued, “We are clearly in a market where there is an inventory shortage, and new construction alone will not solve it. Repairing and rehabilitating the current inventory of housing is a really appropriately timed business model.”
Because Jones and Gahm do not securitize or sell off all of the loans they transact, Lake Michigan Capital can work with investors to establish collateral and interest in the loan in a variety of ways. “We can offer a mortgage, an equity partnership, an equity share, and many other options once we have done our due diligence on the property and the investor,” Gahm said. “We have already had great success with these strategies, and Lake Michigan Capital will pave the way to more of this type of success.”
“We definitely have some product that we do not intend to sell to third parties,” Jones said. “That way, if we are comfortable that a borrower has enough collateral, we can do the loan and just hold it. Lake Michigan Capital will make loans that can be sold off to others as well as loans that might not be considered traditionally salable.”
40 Years Experience & Counting
Jones said one of the most important things to know about Lake Michigan Capital is that despite being a startup, both he and Gahm have decades of experience in the mortgage lending space. “We both served at very high leadership levels,” he said. “My partner and I ran a company that, at the peak, had about 1,000 employees and a $6.5 billion servicing portfolio. We are excited to bring that experience to a new type of private lending.”
Gahm added, “We love creative opportunity. We provide solution-based lending, and that means that we go into transactions open-minded and ready to listen to what our clients want to accomplish. We understand the credit side; we understand the collateral side, and we understand how to have conversations to discover what a potential borrower wants to do and figure out how we might work productively together.”
Both founders emphasized Lake Michigan Capital will be run in a “risk-averse” manner, but also one that prioritizes investors’ ability to create and contribute to the housing inventory.
“We are blessed to be in an industry that provides one of the core needs of every family in the entire country,” Gahm said. “Working to create opportunity and inventory are two things we think of as part of the blessing of being in this business.”
Learn more about Lake Michigan Capital at LakeMichCap.com.
