If You Thought I Had Big Goals, Check Out These Investors From FICON 2014

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Last week I went to Santa Monica to attend the FICON Single Family Investment Forum.  I was not sure what to expect at the conference and I was blown away by the caliber of the investors present.  I have some big goals like buying 100 single family rental properties in the next 9 years and selling 300 houses as an agent this year, but now my goals seem rather meek after attending the conference!  I was also able to gather some great info on new financing programs at the conference as well.

Fix and Flip Experts

I did 10 fix and flips last year and my goal is to do 15 this year, which I think is a big goal.  On the fix and flip panel at the conference they had a gentleman whose company completed 2,300 fix and flips in 2013!  Another panelist had completed 600 and another only 105 fix and flips.

And I thought my goals were big!

For those of you out there who don’t think you can find properties to fix and flip, think again!  The gentleman who flipped 2,300 homes works in 13 different states.  If you want to buy fix and flips, you may have to make some sacrifices and invest outside your area. For example, J Scott- a popular BiggerPockets Forum member- recently moved his entire fix and flip operation to a new state to find the best deals he could.

Related: Flipping Houses: The Ultimate Step by Step Guide

Long-Term Hold Investors

The conference had some very impressive rental operators as well.

I met a gentleman in Florida who had 600 single family rentals.  I guess my goal to buy 100 is not quite as huge now.  There were many other individuals with hundreds of rental properties at the conference.  Then there were also hedge funds at the conference and the amount of properties they own is staggering.  Blackstone was not there, but their lending ARM B2R Finance was at the conference.

Last I checked Blackstone had over 40,000 single family homes.

There was much talk of securitization for the hedge funds and what the future holds for Blackstone, Colony and America Homes 4 Rent.  securitization allows the hedge funds to bring in more money by selling bonds to the public.  The hedge funds are looking to get more money, which means they want to buy more homes.

Ratings of the Big Hedge Funds

Gentleman from Moody’s, Credit Suisse and Citicorp talked about how they rated the America Homes 4 Rent securitization.  They said they assumed 50% vacancy and 40% depreciation of the assets for a worst case scenario.  Even in the worst case scenario the hedge fund would still make money according to the experts and that is why it got such a high rating.

It does not look like the hedge funds are going away anytime soon.

New Loan Options for Investors

I believe this topic was covered before on a blog post here at BiggerPockets, but B2R and First Key are offering commercial loans for investors looking to finance multiple properties.  There is a huge gap for investors looking to find financing on more than ten mortgages and here are the basics of the loans:

  • Lend nationwide
  • Minimum of 5 properties financed
  • Minimum of 500,000 loan
  • Maximum $100,000,000 loan
  • DSCR of 1.2(cash flow must be 1.2 times the mortgage payment)
  • 5-7 % interest rate
  • Five or ten year term with balloon payment
  • Prepayment penalties
  • Must lend to an LLC with no bankruptcy clause non-recourse and recourse loans
  • Houses need to be worth $50,000

Related: Show Me the Money: Options for Funding Your Real Estate Deals

 Conclusion

It was interesting being in the company of extremely rich and powerful people.  It made me realize my goals aren’t that big and that I can accomplish them as well.

Photo Credit: popofatticus

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About Author

Mark is Real Estate Broker and investor in Greeley, Colorado. Mark invests in long-term SFR rental homes and also does 8-15 fix and flips a year. Mark started a blog this year that focuses on investing in long term single family rentals.

11 Comments

  1. I think the editors forgot to edit this article before posting.

    From minor stuff like “(insert link to big goal article)” – no link, “j Scott” not being capitalized, and “Ratings of the Big Dedge Funds” (rather than Hedge), calling it an “I retest rate” instead of interest rate, to bigger issues, like calling “securitization” “secularization” three separate times (something that, I’m sure, would be confusing for a newbie that doesn’t know about securitization, and tries to google “secularization”), it seems like maybe this article wasn’t edited before posting…

    That’s besides the minor typos like capitalization and punctuation stuff, which aren’t worth mentioning.

    (And typically I ignore minor errors – this is the first time I believe I’ve commented on them, ever – but this article just had a ton, and the securitization mistake happening 3 times was too big not to mention.)

  2. Mark – Great info!
    I am very curious to find out how B2R and First Key are different from each other. I do have some idea of B2R but hadn’t heard about First Key being in the same space. Do you have any more info on that?

  3. Hey Mark. I thought about going to this. By the sounds of it looks like it was worth it for you.
    Did they have any breakout sessions or training rooms for specific interests…….
    I have properties in another state I was looking to refi out my private money with a bank or lending facility. Do you have a contact of someone you met. I have one LP with 9 properties and another with 4. The 4 most likely I will be doing.
    Thanks for sharing your experience there. Don’t beat yourself up on the typos. It happens.

    • Hi Michael, It was a pretty small conference. They had specific panels on subjects but no breakout sessions. B2R and First Key both offer the bulk financing, but you have to have at least 5 properties. They are easy to talk to. B2Rfinance.com and firstkeyholdings.com

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