We caught up with the brilliant and insightful Warren Ifergane a few weeks ago and have shared our conversation below.
Warren, thanks for joining us, excited to have you contributing your stories and insights. Can you recount a time when the advice you provided to a client was really spot on?
Many believe hard money lenders are here to take advantage of borrowers that find themselves in bad situations, only for them to foreclose on their property in predatory lending schemes. While there may be a few unethical lenders in this regard, this falsely depicts the industry as a whole.
CERTAINTY OF EXECUTION & SPEED
Hard money and private money perform a valuable service for real estate investors: they provide liquidity in a timely fashion where other sources of cash cannot. For instance, if you try to get a mortgage from a conventional bank, they may take two months to do so—if they even pull through. This makes offers with financing contingencies much less appealing to sellers, and your offer is much more likely to be rejected. Conversely, you can make offers using hard or private money, with a reasonable expectation of closing in a couple weeks.
COSTS
Another misconception is interest rate. While there are certainly hard money lenders that can charge exorbitant fees and rates, hedge funds have indirectly poured money into the space via credit facilities, securitizations, participations, crowdfunding, and more. This has driven rates down. In addition, while a loan may be a 9% rate, that rate is interest only with no prepayment penalty, so if you keep the loan for 6 months, you really only paid 4.5% on a nominal basis. As such, hard and private money have gotten much more affordable.
As always, we appreciate you sharing your insights and we’ve got a few more questions for you, but before we get to all of that can you take a minute to introduce yourself and give our readers some of your back background and context?
I’ve been managing ICG10 Capital for 7 years, and prior to that, I was an executive in the private equity world, and I’ve managed billions in real estate-backed mortgages. We were buying non-performing loans from big banks during the sub-prime crash of 2008. Subsequently, many hedge funds started competing for these loans, and we repositioned to lending directly instead. This way, we could get cashflow day one, not be stuck with a property in horrific condition, and choose our borrowers carefully.
ICG10 Capital now is the leading lender for fix-and-flip, rental, and construction loans—with over $200MM funded in 2021. We provide the most competitive rates and the highest LTCs (loan-to-cost) so the borrowers can come out of pocket with the lowest possible amount of cash. But what really sets us apart is our execution and speed. No one in the space even comes close.
What do you think helped you build your reputation within your market?
The number one factor for building reputation is execution, plain and simple. And this goes for any business. If you do what you say you’re going to do, then clients will come back. They will tell their friends and associates. For ICG10 Capital, speed and execution has built us a stellar reputation. Of course, we’ve also couple that with the most competitive rates. The second factor is social media presence. If you build a following on Facebook, Instagram, and LinkedIn that focuses on what you can do for them, you’ll be successful. The marketing should always be geared towards what you can bring to the client, not the other way around.
Let’s talk about resilience next – do you have a story you can share with us?
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