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

Real Estate Agent · Cape Coral, FL · Member since 2023 · 392 posts · 175 votes

6mo

Great post!

It is so good to hear about lessons learned. This is noone in this space that has not made mistakes or at least been involved in the process. It is so good to look back and diagnose what the root problem was. Thanks so much for sharing your thoughts.

best of luck moving forward.

[email protected]651-492-5652

0 Reply

Logan M.

Investor · Provo, UT · Member since 2016 · 759 posts · 626 votes

6mo

Quote from @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.

I love seeing you on here @Lane Aldrich you are probably one of the most experienced people I know in this niche.

Here is my favorite gold nugget from your post:

"If something seems off, or if the dialogue doesn't match reality, there is likely an undisclosed problem."

Let's connect soon!

0 Reply

Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

6mo

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 !

Podcast Guest on Show #222

JLH Capital Partners51 Review

Website View Page

1 Reply

Lane Aldrich

OP

Developer · Orem UT (investing in KY, KS & IA) · Member since 2026 · 4 posts · 7 votes

6mo

@Logan M. I'm excited to join in! Yes for sure, I'd love to catch up on some of the deals I know you were starting on back in the downtown provo office days.

And yes. Pro tip- if a GC points to someone outside their organization for delays, cost overruns, miscommunications, etc, immediately ask for a three way call with this new individual to corroborate the story. You get to the bottom of the real issue much quicker.

0 Reply

Lane Aldrich

OP

Developer · Orem UT (investing in KY, KS & IA) · Member since 2026 · 4 posts · 7 votes

6mo

@Todd Anderson I appreciate it! Absolutely- there's a lot to gain by learning from past mistakes and ky insights from others that have been thru some wild things.

1 Reply

Lane Aldrich

OP

Developer · Orem UT (investing in KY, KS & IA) · Member since 2026 · 4 posts · 7 votes

6mo

@Jay Hinrichs Those are big deals, what a great tribute to the dedication of your team and leveling up over time. The feedback you got from your lender: "when is the next one?" That is one of the most validating bell weathers in this space. Building each capital stack moving forward is a lot easier when you have proven yourself to your lenders and they know they have hitched their wagon to a strong horse.

1 Reply

Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6mo
Quote from @Lane Aldrich:

@Jay Hinrichs Those are big deals, what a great tribute to the dedication of your team and leveling up over time. The feedback you got from your lender: "when is the next one?" That is one of the most validating bell weathers in this space. Building each capital stack moving forward is a lot easier when you have proven yourself to your lenders and they know they have hitched their wagon to a strong horse.

One other tidbit I wanted to mention much like you or the title of this thread I became and accidental builder.. I had partnered with a builder who needed my financial strength to get bank construction loans so he did not have to use HML.. well he went busto and started stealing the bank draws.. I had to step in to save my banking relationships I had fostered over the decades and finish the houses myself ( which at the time I had never built a home) and had to clear the liens b/c he did not pay subs to the tune of 250k out of my pocket.. got it done saved the bank and me.. then I decided right there that as a lender and capital partner on build projects if I am going to at the end of the day take the financial risk ( deep Pockets scenario) I mine as well just do this myself and hire a GC per door and control the whole Mary Ann.. so off I went and I control all the money no more giving it to GC and trust they will pay subs I pay the subs.. my bank understood how I honored my commitment to them and that I was not the one who stole the money.. So as they took back lots in foreclosure they fed me the lots they allowed me to use my unsecured LOC i had with them 1 mil to buy their reo lots and then they provided me with the vertical loans.. so I had 100% financing from the plus interest reserves and GREAT deals on the lots and off I went.

Then when I did my first subdivision with them were they did the horizontal and vertical it was the first one they had funded prior to the GFC . It was kind of funny my banker and I working through it as it had been so long since he did one we both had to work through it..

Moral of the story those who worked through the GFC like me and or partner with Duds like me and honor banks and make sure they are paid ended up as premier clients and the bank backed me for the last 15 years and hundreds of new builds. Community commercial bank and banker high enough in the bank can change your life.. trying to find the cheapest money is a fools errand in my mind many times.. when the music stops you want a great banker in your corner not some semi private lender who will just throw you under the buss and not work with you if you have a water landing. This is my experience and my point of view only may not be appropriate for others but I did want to share since we are talking about how we got started in this game and scaled.

So today as I wrap up most of my construction we are now capital partners for others who need a great money partner to help them climb the mountain.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
1 Reply
Logan M.
Investor · Provo, UT · Member since 2016 · 759 posts · 626 votes
6mo
Quote from @Jay Hinrichs:

Quote from @Lane Aldrich:

@Jay Hinrichs Those are big deals, what a great tribute to the dedication of your team and leveling up over time. The feedback you got from your lender: "when is the next one?" That is one of the most validating bell weathers in this space. Building each capital stack moving forward is a lot easier when you have proven yourself to your lenders and they know they have hitched their wagon to a strong horse.

One other tidbit I wanted to mention much like you or the title of this thread I became and accidental builder.. I had partnered with a builder who needed my financial strength to get bank construction loans so he did not have to use HML.. well he went busto and started stealing the bank draws.. I had to step in to save my banking relationships I had fostered over the decades and finish the houses myself ( which at the time I had never built a home) and had to clear the liens b/c he did not pay subs to the tune of 250k out of my pocket.. got it done saved the bank and me.. then I decided right there that as a lender and capital partner on build projects if I am going to at the end of the day take the financial risk ( deep Pockets scenario) I mine as well just do this myself and hire a GC per door and control the whole Mary Ann.. so off I went and I control all the money no more giving it to GC and trust they will pay subs I pay the subs.. my bank understood how I honored my commitment to them and that I was not the one who stole the money.. So as they took back lots in foreclosure they fed me the lots they allowed me to use my unsecured LOC i had with them 1 mil to buy their reo lots and then they provided me with the vertical loans.. so I had 100% financing from the plus interest reserves and GREAT deals on the lots and off I went.

Then when I did my first subdivision with them were they did the horizontal and vertical it was the first one they had funded prior to the GFC . It was kind of funny my banker and I working through it as it had been so long since he did one we both had to work through it..

Moral of the story those who worked through the GFC like me and or partner with Duds like me and honor banks and make sure they are paid ended up as premier clients and the bank backed me for the last 15 years and hundreds of new builds. Community commercial bank and banker high enough in the bank can change your life.. trying to find the cheapest money is a fools errand in my mind many times.. when the music stops you want a great banker in your corner not some semi private lender who will just throw you under the buss and not work with you if you have a water landing. This is my experience and my point of view only may not be appropriate for others but I did want to share since we are talking about how we got started in this game and scaled.

So today as I wrap up most of my construction we are now capital partners for others who need a great money partner to help them climb the mountain.

I have been working to establish a good relationship with a few different community banks, I am sure @Lane Aldrich has worked with them or at least knows of them. One of them is known for higher rates but they are probably the best partner around. Most of the local developers doing ground up have some type of relationship with them.

What I want to know though is if you think paying 1.5-2% more to use them is worthwhile in the long run. When we are talking about multi million dollar loans they start looking really expensive.
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6mo
Quote from @Logan M.:

Quote from @Jay Hinrichs:

Quote from @Lane Aldrich:

@Jay Hinrichs Those are big deals, what a great tribute to the dedication of your team and leveling up over time. The feedback you got from your lender: "when is the next one?" That is one of the most validating bell weathers in this space. Building each capital stack moving forward is a lot easier when you have proven yourself to your lenders and they know they have hitched their wagon to a strong horse.

One other tidbit I wanted to mention much like you or the title of this thread I became and accidental builder.. I had partnered with a builder who needed my financial strength to get bank construction loans so he did not have to use HML.. well he went busto and started stealing the bank draws.. I had to step in to save my banking relationships I had fostered over the decades and finish the houses myself ( which at the time I had never built a home) and had to clear the liens b/c he did not pay subs to the tune of 250k out of my pocket.. got it done saved the bank and me.. then I decided right there that as a lender and capital partner on build projects if I am going to at the end of the day take the financial risk ( deep Pockets scenario) I mine as well just do this myself and hire a GC per door and control the whole Mary Ann.. so off I went and I control all the money no more giving it to GC and trust they will pay subs I pay the subs.. my bank understood how I honored my commitment to them and that I was not the one who stole the money.. So as they took back lots in foreclosure they fed me the lots they allowed me to use my unsecured LOC i had with them 1 mil to buy their reo lots and then they provided me with the vertical loans.. so I had 100% financing from the plus interest reserves and GREAT deals on the lots and off I went.

Then when I did my first subdivision with them were they did the horizontal and vertical it was the first one they had funded prior to the GFC . It was kind of funny my banker and I working through it as it had been so long since he did one we both had to work through it..

Moral of the story those who worked through the GFC like me and or partner with Duds like me and honor banks and make sure they are paid ended up as premier clients and the bank backed me for the last 15 years and hundreds of new builds. Community commercial bank and banker high enough in the bank can change your life.. trying to find the cheapest money is a fools errand in my mind many times.. when the music stops you want a great banker in your corner not some semi private lender who will just throw you under the buss and not work with you if you have a water landing. This is my experience and my point of view only may not be appropriate for others but I did want to share since we are talking about how we got started in this game and scaled.

So today as I wrap up most of my construction we are now capital partners for others who need a great money partner to help them climb the mountain.

I have been working to establish a good relationship with a few different community banks, I am sure @Lane Aldrich has worked with them or at least knows of them. One of them is known for higher rates but they are probably the best partner around. Most of the local developers doing ground up have some type of relationship with them.

What I want to know though is if you think paying 1.5-2% more to use them is worthwhile in the long run. When we are talking about multi million dollar loans they start looking really expensive.

my bank right now is at 1/2 point to 1 point and about 6.5% NO JUNK fees at all other than apprasial costs.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
6mo
Quote from @Logan M.:

Quote from @Jay Hinrichs:

Quote from @Lane Aldrich:

@Jay Hinrichs Those are big deals, what a great tribute to the dedication of your team and leveling up over time. The feedback you got from your lender: "when is the next one?" That is one of the most validating bell weathers in this space. Building each capital stack moving forward is a lot easier when you have proven yourself to your lenders and they know they have hitched their wagon to a strong horse.

One other tidbit I wanted to mention much like you or the title of this thread I became and accidental builder.. I had partnered with a builder who needed my financial strength to get bank construction loans so he did not have to use HML.. well he went busto and started stealing the bank draws.. I had to step in to save my banking relationships I had fostered over the decades and finish the houses myself ( which at the time I had never built a home) and had to clear the liens b/c he did not pay subs to the tune of 250k out of my pocket.. got it done saved the bank and me.. then I decided right there that as a lender and capital partner on build projects if I am going to at the end of the day take the financial risk ( deep Pockets scenario) I mine as well just do this myself and hire a GC per door and control the whole Mary Ann.. so off I went and I control all the money no more giving it to GC and trust they will pay subs I pay the subs.. my bank understood how I honored my commitment to them and that I was not the one who stole the money.. So as they took back lots in foreclosure they fed me the lots they allowed me to use my unsecured LOC i had with them 1 mil to buy their reo lots and then they provided me with the vertical loans.. so I had 100% financing from the plus interest reserves and GREAT deals on the lots and off I went.

Then when I did my first subdivision with them were they did the horizontal and vertical it was the first one they had funded prior to the GFC . It was kind of funny my banker and I working through it as it had been so long since he did one we both had to work through it..

Moral of the story those who worked through the GFC like me and or partner with Duds like me and honor banks and make sure they are paid ended up as premier clients and the bank backed me for the last 15 years and hundreds of new builds. Community commercial bank and banker high enough in the bank can change your life.. trying to find the cheapest money is a fools errand in my mind many times.. when the music stops you want a great banker in your corner not some semi private lender who will just throw you under the buss and not work with you if you have a water landing. This is my experience and my point of view only may not be appropriate for others but I did want to share since we are talking about how we got started in this game and scaled.

So today as I wrap up most of my construction we are now capital partners for others who need a great money partner to help them climb the mountain.

I have been working to establish a good relationship with a few different community banks, I am sure @Lane Aldrich has worked with them or at least knows of them. One of them is known for higher rates but they are probably the best partner around. Most of the local developers doing ground up have some type of relationship with them.

What I want to know though is if you think paying 1.5-2% more to use them is worthwhile in the long run. When we are talking about multi million dollar loans they start looking really expensive.

so sometimes rate shopping we miss the forest for the trees I get it with cash flow long term debt but for development and construction debt in my mind you need a good banker in your corner if things dont go right .. I have been with the bad bank and when market shifted no option your note is due pay up even if you have to take loss.

With good bank.. extensions are granted or term out for 3 to 5 year to let market recoup. Did that twice in charleston sc with my local community bank there. And of course my bank in Oregon that went toe to toe with the feds .. when the feds told them to call all my loans and they refused and kept my credit lines in tact granted went from a 5 mil unsecured line to 1 mil and having to give full financials every 90 days and that went on for about 2 years.. and allowed me to use that 1 mil to make money.

Many of our younger investors have never been through a truly tough credit market. Now the MF C class syndicators certainly are now.. Leveraged the crap out of their deals with short term debt and we are seeing the fall out of company like Ashcroft and open door etc etc.

end of the day depends on the type of assets and credit facility one needs wants or currently enjoys. I will gladly pay 1 point more for a one year loan and be with my banker of 30 years who knows my character and finances.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
1 Reply

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

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

Most Popular Reply

10 Replies