Phoenix Hard Money & Rehab Projects: Insights from a Local Lender - Versara Capital

February 23, 2024

Brett Tanner from Versara Capital shares some insights about real estate investing and hard money lending in Phoenix, Arizona.

Video Transcript

Speaker: Brett Tanner, CEO, Versara Capital

What are the dynamics which are driving real estate investment activity and hard money lending in Phoenix?

Brett Tanner: The real estate dynamics that are driving investment activity in Phoenix, Arizona are a couple of different things. One we are always the place where people are migrating to. If you look at the people coming in and out, it is always more people coming into Arizona and that is going to continue to happen. Secondly, we have job growth. There are tons of people in the job space, employers are coming in here creating jobs which creates opportunity. And Maricopa County has long been the county with more real estate transactions than any other county in the country which makes it the ideal environment for real estate investment activity specifically and hard money lending in Maricopa County in Phoenix, Arizona.

Are there any particular cities or neighborhoods in Phoenix where you've seen a lot of activity?

Brett Tanner: We see investment activity all throughout Arizona. There is definitely different pockets where there is more activity. I would say anything in northern Central Phoenix seems to be really, really hot. 85032 is a zip code. We see a lot of activity typically where we got properties built in that 1970 to 1990 is where we're going to see a lot of our rehab activity taking those properties that have never been touched. A zero maintenance free home. That's a joke. Actually, they're going to go in there and do all the deferred maintenance and make it new. And we see that in a lot of the markets throughout the valley, we can always tell you which markets are the hottest at any given time.

How do you differentiate yourself from the competition in Phoenix?

Brett Tanner: We've really got two different groups of hard money lenders in Phoenix, Arizona. You've got the mom and pop small where they've got some funds and they're able to do a loan or two. And then when they're out of capital, they're out, then we got the really big players who are going to have a cumbersome process, they're going to bounce you around and it's harder to get through. What makes us unique is all the capital I'm lending is my own capital. I make the decisions and I don't have anybody else doing it and we're fully funded, do all the investments that make sense. We'd love the opportunity to earn your

Brett Tanner: What makes Versara Capital different is our loan products. For example, we will lend on a lot of properties that other people won't. As an example, we'll lend on mobile homes. We're very comfortable that we're comfortable with land. We're comfortable with commercial. So we do all things. We do the bread and butter, fix and flip, but we're also able to help our customers when they've got all their capital in a project and it's on the MLS and they're looking for that next property. We can create a bridge loan that allows them to take that equity. They now have because of the increased equity after repairs and then move that to the next loan. So we got a lot of creative options that don't fit the normal box. So we're totally different because it's all of our own capital. We making our own decision internally.

What types of hard money loans do you typically fund in Phoenix?

Brett Tanner: We fund all types of hard money loans from purchase to refinance to cash out refi to rehab to rental properties. We do residential multifamily commercial land. We handle the gamut of anything and everything. Our primary product is the standard fix and flip product that is very, very common, but we will look at any type of asset that is in Maricopa County.

What are some of the trends you're seeing with rehab projects in Phoenix?

Brett Tanner: We've got a couple trends that are going on with rehab projects in our area. Some people are looking to take the smallest house in a area where that is the highest price square footage and add on square footage and leverage that. The additional square footage. The price per square foot that homes are selling at is their value at. So they're able to make a return that way. We've also, we're starting to have some of the additional dwelling units also known as ADU. That's another trend that's starting to come out to Phoenix from California.

Tell us about the common challenges and exit strategy for your clients.

Brett Tanner: The real estate investors that I talked to have two main challenges today. They're having a hard time finding great deals and they're having a hard time finding great deals at great margins. And so that's the biggest challenge investors are facing right now.

Brett Tanner: The most common investment strategy for our clients is, is really fix and flip. But a close second is rehab to rent and then they cash us out. But I would say of our business fix and flips probably 70% of that number and a 30% being either rehab to re to rent or commercial.

Tell us about your loan program for rehab projects in Phoenix.

Brett Tanner: We lend on all types of rehab projects. Whether that's just a simple paint and carpet, whether that's a full blown tear to drywall, or whether that's really, we don't do adding square footage, but we do everything from a basic remodel to a full ticket to drywall to studs and start over. We would fund both of those types of projects.

Brett Tanner: Our typical rehab loan is gonna take 20% down. It's all gonna be depending on the deal, but normally we're gonna be 20% down, and the points and fees are gonna depend on the deal. But usually our rates are gonna be somewhere between 9.9% and 12.9%. That's all depending on the down payment of the asset that you are borrowing.

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