He feels it's the "exact right time" to launch a lending business
In this climate of higher rates spurred by inflation, one might be hard pressed to find someone launching as a lender amid a softened landscape. William Tessar (pictured) is not only undeterred, but aims at market domination for his nascent firm.
The former president of Civic Financial Services, Tessar took much of the team from his old job in recently launching CV3 Financial Services – a private lender providing financing for fix-and-flip and rental properties to real estate investors in more than 20 states. The lender provides business purpose loans for non-owner-occupied properties to experienced real estate investors. Financing options include bridge, fix-and-flip rehab loans and rental property financing in 21 states and the District of Columbia.
Tessar departed Civic Financial Services as president in January of this year, citing the decision of Pacific Western Bank – which announced its acquisition of the company in February 2021 – to restructure the business after lengthy discussions.
Recognizing the realities of the market
“What’s clear is that conventional interest rates are high and they’re high relative to where they were in the last 24 months when we had historic lows,” he acknowledged during a recent telephone interview with Mortgage Professional America. But this isn’t Tessar’s first rodeo: “I’ve been in lending a couple of years shy of 40 years, so I’ve seen rates that are higher than they are today, and I have that perspective that I kind of draw back on when I think about the market and where the opportunities are.”
It’s a matter of not missing the forest for the trees, he suggested: “So yes, I would say that you would be ignorant not to acknowledge that the take-out financing on the conventional side is higher which might box some people out from the qualifying standpoint. How I would counter that is that the incremental increase on the business purpose loans still leaves an awful lot of meat on the bone for flippers to transact and they’re doing that.”
Another secret weapon of sorts is his assembled team at CV3. He’s joined by an executive leadership team, along with business support staff and originators, that represent 90% of their predecessor firm’s 2022 loan production of $3 billion, he detailed in launching the firm. Together, this group has originated and funded more than $10 billion in private money loans over the last five years, he noted.
“What began as a vision by the most decorated leadership team in the industry, of what a private lender could and should be, is an organization with unmatched integrity, trusted expertise, and deep operational support to best serve our clients’ needs,” Tessar said.
He cited “hundreds of millions of dollars” worth of real estate from which to capitalize across the country. “And yes, I’ve watched the average return on investment that flippers are realizing now and it’s off a little bit - most of that is because of the cost of capital but you still have people north of $50,000 of transaction and, in my mind, that still leaves a powerful lot of excitement to get in there to beautify a home to transact out of it.”
Encouraged by the attitude change
Attitudes have shifted in his favor now too, he added: “The other part that has made me enthusiastic about starting now is for the first time in an awfully long time we have the ears of the conventional world,” he said. “Forever, the conventional world was refinancing your and my loan over and over and over again as the rates continued to drop. When our folks would go visit these conventional lenders there wasn’t a lot of attention spent on them. And why would there be? They were doing that easy loan, yours and mine, over and over – not a lot of effort there, and so now there’s a whole lot more receptiveness to take a look at the product offerings that we bring to the table… and I think that’s going to open up an entire new channel of opportunities that didn’t exist for the last three or four years.”
It actually could be the perfect time to launch a lending business, he added: “I’m actually excited,” he said. “I actually think this is the exact right time you’d want to open a business today, which is why we did it.”
Tessar’s confidence is such that he predicts great things for his startup: “We are launching what we believe will quickly become the dominant lender in the industry, with a fresh start and without any legacy issues,” he said in announcing his new company. “This enables CV3 to pursue our mission to be the number one choice for financing by real estate investors.”
Here’s how he sees the growth occurring: “I think we’ll be going from zero to $100 million a month, in about four to five months – and that will be a controlled growth – and then as I think about 2024, it will be a billion and a half to two billion, somewhere around there. We will add two more products at the end of the year. We’re starting with the retail and the wholesale channels, and we’ll add correspondent at the beginning of the year.”
Rounding out the leadership ranks in his fledgling firm are Merced Cohen, executive vice president, operations: Alan Dettelbach, executive vice president, general counsel; Matt Flores, executive vice president, digital innovation; Josh Fuchs, senior vice president, valuations and construction; Jack Helfrich, executive vice president retail lending; Elizabeth Hillestad, chief marketing officer; Sophie Kim, chief of staff; Cameron King, chief information officer; and Ben Shaevitz, executive vice president, wholesale lending.
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