The Business of Building Long-Term Value
Fred Lewis and Real Investor Roundtable measure their success by yours.
When Fred Lewis founded Dominion Group in 2002, he was mainly interested in lending money to real estate investors and acquiring properties.
“Our company focused mainly on providing acquisition and construction funds to investors acquiring rentals and doing fix-and-flip transactions, but I quickly also got into buying my own investment properties as well. That was a very opportunistic time to be investing in real estate,” he said.
The time may have been nearly ideal for getting started in real estate, but Lewis quickly discovered that even in the most idyllic of conditions, there are lessons to be learned. In his case, because he was lending and acquiring investment properties at the same time, he learned those lessons from both sides of the equation.
“I learned the hard way, as most investors do, that investing is not as easy as it sounds. You build up an expertise by actually learning how to acquire, renovate, stabilize and rent, and finance properties,” he said. “Nevertheless, I was able to grow my business as a result of my dual role as a lender and an investor buying and selling on my own. I also ended up creating a property management company once I got to around 50 rental units. I realized that I had to learn to efficiently manage rental units and create best practices as no one would ever manage my rentals the way I would as the owner.”
The businesses that would form The Dominion Group thrived as the country approached the housing crash, but unlike most real estate businesses, Dominion did not falter when the bottom fell out of the market. The reason, Lewis said, lay in the synergy between the lending and the real estate businesses and experience as “Main Street” investors.
“Everyone’s business models were tested during that time,” Lewis said. “The fact that we were ‘real estate guys’ and could help and guide clients through that time and, when necessary, take inventory back and reposition it as a rental was very important to our successful navigation of that time in the market’s history.”
At the end of the downturn, Dominion Group emerged stronger than ever, something that has led Lewis, his business partner Jack BeVier, and several other colleagues in the industry to place an extremely high value on continuing education among successful, active investors in the industry.
“A lot of smart investors who just did not have the best systems and operations in place went under very quickly when the market crashed,” Lewis said. “On the other hand, we were able to weather the storm and, in 2009, when everyone else was just trying to stay afloat in a very harsh environment, we looked at our business models, professionalized our lending platforms and ultimately experienced significant growth during that period.”
Today, Dominion has become a premier national lender that is able to provide loans in 49 states. “We are proud to be a Main Street lender for Main Street investors,” Lewis said. “We understand their goals, their pain and what they need to do to be successful because we have the same goals, the same pain and understand that our business is only successful when we understand our clients and put their needs first.”
Dedication to Education
As the country emerged from the recession and the Dominion Group companies continued their expansion, Lewis and BeVier realized their experience leading up to, during and in the wake of the housing and financial crises and the subsequent Great Recession had even more value than they had previously realized.
“Our focus on acquisitions, construction, leasing, property management and financing really helped us work with others in the industry,” Lewis said. “That is why in 2015, when Jack [BeVier] asked me to join an industry mastermind, I decided to take it on full force.”
After very little time in the mastermind world, however, Lewis realized the industry needed a new type of mastermind for the next era in real estate.
“I soon realized there was a need in our industry for a mastermind that did not glorify selling information, coaching or the next get-rich-quick scheme,” he said bluntly. “I wanted to be involved in a mastermind built on the principles of creating value for all that would only involve people focused on building long-term value in the real estate business.”
Lewis ultimately created Real Investor Roundtable (RIR) to meet that need.
“In our industry, you have traders and you have investors, with investors buying houses that they are going to either hold or sell to homeowners for a profit (ideally) and creating an infrastructure to enable that process and with traders providing information, usually to new or would-be investors, about how they might also create that sort of platform and enact that process,” Lewis said. “The problem is that the failure rate of people learning from those traders is extremely high, because they usually are primarily trading in information rather than having a primary focus in real estate.”
The solution, Lewis determined, was to create RIR, a group that would enable active, successful real estate investors to exchange ideas and strategies in a way that would help grow, sustain and protect their real estate businesses for the long haul.
“Real estate investors should be interacting with others in the industry,” he said.
He said that they should be concerned about the right technologies, best practices, software and apps, personnel practices, tax strategies, and so on, rather than about whether they will be sold information or products that do not fit their business.
“We do not promote the ‘guru culture’ that sells information, classes and products to individuals likely to fail and without the funds to lose even though that model is prevalent in the mastermind community,” Lewis said. “The goal is to have high-level, transparent conversation and sharing that is both impactful and real. That is where the name, Real Investor Roundtable, came from.”
Because he firmly believes mastermind organizers can easily lose focus when chasing the profits associated with running such a group, Lewis decided to launch RIR as a nonprofit and committed to not drawing money from the group. That way, he said, there is no incentive to invite members or speakers “not qualified to sit in the room.”
“I view myself as the lead organizer of a collective of elite and highly talented real estate professionals who love to share information because they have similar interests,” he said. “RIR judiciously invites investors that meet its high standards with the goal of growing organically with the right people sharing the right ideas.”
From the time of RIR’s founding in 2017, the group has grown exponentially and featured expert speakers and presenters, including Domonic Purviance, a senior financial specialist for the Federal Reserve, who speaks annually at the first of the group’s three yearly meetings.
“We find that some of the best economists and experts in the country return again and again because they love speaking to people in the business who are building real estate enterprises,” Lewis said. “It is a very different experience from speaking at a conference where a promoter pulled a group of novices together in order to sell them things.”
Of course, not all RIR members have been in real estate for decades. Members are invited based on how they might benefit in real, tangible ways from participation in RIR as well as their longevity in the field.
For example, Lewis cited one Texas-based business that joined about a year ago when they were “struggling with the next phase of how to get bigger while protecting what they already had built,” as he put it.
“They wanted to make sure they were growing right and working with the right professionals to make that leap,” he said.
Today, that business is growing faster than ever, but the investors keep their feet firmly on stable ground thanks to strategic insights and guidance from their RIR colleagues.
“Every time I see them, they say, ‘You have no idea how much RIR changed our business,’” Lewis said.
RIR also places a high value on community and, unlike many masterminds and other real estate training events, encourages members to interact with each other outside of the three yearly meetings.
“Every time we meet at RIR, we hear people talking about how they got together, looked at each other’s businesses, compared notes on deals or even worked together since the last meeting,” Lewis said.
A No-Nonsense Reputation
Lewis has been in the industry for a long time and, as he puts it, “Often my reputation precedes me.”
He said that over the years, he has developed a reputation for refusing to tolerate misleading statements or falsehoods about real estate investing.
“I’m no-nonsense. If someone says something inaccurate or just plain untrue, I will call them out, even if we are on a panel or in a meeting. I think that, over time, it has made me someone people respect for keeping it real. People enjoy seeing that no-nonsense approach, especially when I voice concerns they were thinking about but may have had difficulty verbalizing.”
Because his no-nonsense approach to real estate and related strategies extends to RIR, Lewis said the group receives a lot of applications from word-of-mouth referrals. To keep the integrity of the group’s membership process intact, Lewis created a series of committees that keep all aspects of RIR focused on its goal of supporting, sustaining and growing active, successful, real real estate investors.
“We have a membership committee, a content committee and a board of advisors,” Lewis said. “The board of advisors came first and consists of individuals who were instrumental in creating RIR and wanting to be a part of it.”
Board members frequently present at events and, interestingly, are not all directly involved in real estate investing. However, every member, including board members, must serve the RIR and the real estate industry in a direct, primary way.
For example, one member, Rob Nickell, has a virtual assistant (VA) business that “touches every aspect of a real estate investing business, which enables him to contribute a lot of valuable ideas,” Lewis said. “His platform enables him to provide a very valuable service from which real estate investors can succeed by learning how to leverage the time, growth potential and control that VA services offer.”
RIR considers Nickell to be “a giver and a sharer,” said Lewis. “His first goal is always to teach investors how to incorporate VA services into their businesses, not to sell them his particular services.”
This no-nonsense, no-holds-barred approach to the real estate mastermind concept has served Lewis and his colleagues well. In fact, many of the nation’s premier educators, analysts, strategists and economists line up to speak at the event because they believe the group serves as a window into the operations, minds and motivations of the active real estate investing community.
“We do not just get information and insight from our guests and speakers. They leave with ideas about how to improve their platforms and grow their companies as well,” Lewis said. “We are all part of the market research that grows our businesses and our industry, and that is why people have gravitated to RIR so quickly.”
Sidebar: How Evolutionary Lending Serves the Real Estate Community
One of the benefits of the Dominion Group’s longevity combined with RIR’s highly transparent, supportive environment is that business partners Fred Lewis and Jack BeVier have a clear bead on the lending products real estate investors need most in today’s real estate environment. They are constantly refining loan products and creating new lending programs to best serve active investors and to cultivate those investors’ success and solid returns.
The latest product to evolve in this manner is the 30-year fixed-rate rental loan, historically the sole domain of traditional lenders and “big banks.”
“Because we have been doing fix-and-flip lending since 2002, we have been following the non-bank rental loan market since around that time,” BeVier said. He noted that during and in the wake of the housing crash, Dominion’s ability to take back properties, when necessary, and then reposition them as rentals was key to the company’s survival and growth.
“Until recently, however, we stayed out of the rental lending space because we felt we were not positioned to offer a distinctive product that would truly serve main-street borrowers,” BeVier said. “When you work with a ‘traditional’ rental lender, you usually see somewhat draconian prepayment penalties and extremely high costs on products that were more flexible. Today, that type of loan structure does not make sense because the real estate market does not look the same as it used to. Prices are up and yields are down. In most cases, your yields will not permit you to pay 7% financing—at least not comfortably or while making a reliable profit.”
BeVier recounted how Dominion Group evaluated rising prices and falling yields in order to determine if they could create a loan product that might compete with and surpass, in terms of value, existing bank and non-bank offerings.
“We are now at the point we can offer rates that are competitive with local banks, terms as long as 30 years, loan products to LLCs, and a hard-money closing experience that is less than 30 days instead of two months or more,” he said.
They base these rental loans and rates off the property’s
debt service coverage as well as the
quality of the borrower.
BeVier said Dominion Private Lending will likely emerge as a serious disruptor in the industry as a result of the new loan product.
“This is how lending is supposed to be. The culture of banking is no longer congruent with the culture of the successful real estate entrepreneur, and investors are no longer bound to banks or non-bank lenders with incredibly stringent terms in today’s market,” he said.
He said that it’s not hard to lend close to bank rates since hard money rates have come down so much within the last five years.
“Our borrowers are bankable, but they choose not to wait for their loans when instead, we can close in 30 days or less in most cases and offer rates that are nearly as good, if not as good, as the ones offered at the bank,” he said.
Sidebar: Being a Fly on the Wall at an RIR Meeting
With a membership “gatekeeper” like Fred Lewis (you have to complete a phone interview with the RIR founder before you can even attend as a guest), many real estate investors wonder if they will ever get a seat at the roundtable and experience the insights, education and networking that come with membership in this group. For those wondering if RIR might be right for them, Lewis offered a breakdown of a meeting:
“First of all, our members fix and flip more than 20 deals a year and/or own 75 rental properties or more and/or have built real estate businesses around alternative strategies in the industry. Because we are dedicated to building, sustaining and protecting our real estate businesses, we cover some crucial topics at each meeting, including raising and optimizing capital, optimizing technology, managing construction, implementing operational best practices, establishing the right corporate structure, employing tax strategies and much, much more,” he said.
Lewis said that most meetings involve multiple expert speakers making presentations on timely topics with a dedicated focus on “sharing and giving” information and insight rather than selling a product or service.
“Our speakers are part of RIR when they are with us. They eat with us. They hang out during and after the meeting. They listen, contribute, and learn from us as well as us learning from them,” he said.
Dennis Cisterna, an RIR board member and CEO of Guardian Residential, said, “This event shines a light on the tough issues investors have to face to succeed in today’s market and answers them by bringing experienced professionals together to work in a collaborative fashion.”
Lewis said, “We are here to serve the active real estate investor, wherever that investor may be. I’m excited for that group of investors, and I’m excited for us because we are right by them ready to support them and learn from them.”
