2-4 unit lender and investor, turned rescue developer, turned developer/sponsor

[Lane Aldrich]

I spent 15 years on the residential mortgage and construction lending side — structuring financing for 4,000+ townhome style 2-4 unit rentals throughout Utah, Idaho, Arizona & Texas. I grew my own portfolio to 14 doors during my time in this space. In 2024, I stepped in to stabilize AZ & UT rental developments where the GC failed mid-construction. Along with a with a few incredible colleagues, we worked with the investors, lenders, title, cities, insurance, HOA's & new contractors to get them all back on track. I now run Lone Tree Capital Partners, a GP in the BTR space focused on submarkets across Kentucky, Kansas, and Iowa.

Here's what that journey taught me that I think is actually useful here:

On contractor risk — when we diagnosed what went wrong on those distressed developments, the common thread wasn't bad underwriting or a bad deal. It was capital misuse that went undetected too long. Watch for draw requests running ahead of verified completion, vague or missing lien waivers from subs, and any GC who resists third-party inspections. If something seems off, or if the dialogue doesn't match reality, there is likely an undisclosed problem. 

On lending — in 1-4 unit construction financing for investment properties, the best lending partners are almost never the national names. They're $500M–$2B community banks and credit unions. Happy to give referrals to my favorite construction lenders specific to UT, ID & AZ that I funded 12+ developments with.

On proforma analysis - a proforma is two things: a formatted spreadsheet and manual data entry. Any person can enter any number into an cell for any reason. When reviewing information someone sends to you, validate data with supporting material or research. Sometimes, especially in the new construction space, assumptions and projections have to be made. But the assumptions should be based on data and trends, not on other assumptions. 

Looking forward to interacting with you all, I'm happy to offer insights or help troubleshoot anything I have come across in my career in real estate. 

[Jay Hinrichs]

agree on the funding source i have been with community/commerical banks of the size you mentioned for the last 30 years.. mainly with HML ing facilities . however I have also done 8 subdivisions with them and built over 500 homes were they lent me the money to go from farmers dirt to buyer living in the house.

And in fact on my last 90 home project I paid off the last vertical loan today!!! 

So pretty cool day for us.. I had breakfast with my banker today and he is like OK now that you paid me back 70 mil whats next :)  they are nervous when the money is out then nervous when they get paid off and have to find new deals.. like all of us I suspect. 

I have funded 4 BTR subdivisions over the last 5 years as a lender and currently have 4 LARGE development deals going were we are the money and the exit is to Toll and Lennar.  those are a little bit of  pucker  going into them but very satisfying when we get paid off.

Keep up the good work !