Adam Torres and Ruben Izgelov discuss real estate investing.
Subscribe: iTunes / Spotify
Apply to be a guest on our podcast here
Show Notes:
WE LEND aims to take the headaches out of real estate loans. In this episode, Adam Torres and Ruben Izgelov, Co-Founder & Managing Partner at WE LEND – NATIONWIDE PRIVATE LENDING, explore Ruben’s journey as an entrepreneur and the current state of the real estate market.
About Ruben Izgelov
With over a decade in the real estate industry – acquiring, flipping, developing, and financing over $500MM in real estate – Ruben has quickly become a renowned real estate expert, speaker, and guide for many professionals in the industry.
He is the co-founder and managing partner of States Capital (a private real estate debt fund) and We Lend (a private real estate lending platform).
Ruben graduated from St. Johns University and Touro School of Law, earning a BS in legal studies and his JD, finishing cum laude and magna cum laude.
About We Lend
We Lend is a Nationwide Private Lender focused on providing quick and low-cost capital for investment properties. We Lend’s approach to lending is centered around the investor, allowing the investor to focus more on their investment and less on the loan process. The We Lend team is here to assist in the expansion of your real estate portfolio!
Full Unedited Transcript
Hey, I’d like to welcome you to another episode of Mission Matters. My name is Adam Torres, and if you’d like to apply to be a guest in the show, just head on over to missionmatters. com and click on be our guest to apply. All right. So today’s guest is Ruben Izgalov, and he is the co founder and managing partner over at WeLend.
Ruben, welcome back to the show, man. Good to have you back on. Thank you so much, Adam. It is a pleasure to be here. Thank you so much for having me on again. All right, so we’re going to of course talk about we lend, we’re going to get into capital raising, we’re going to get into investors, of course.
But that being said, I guess just to get us kicked off we’ll start this episode the way that we start them all with our mission matters minute. So Ruben, as you’re aware at mission matters, our aim and our goal is to amplify stories for entrepreneurs, executives, and experts. So that’s our mission.
Ruben, what mission matters to you? Legacy. I think that’s one of the biggest, biggest missions for us is to leave on a good legacy, good children with amazing values. , we came to the U. S. with very little. I was only six years old. My father had only about 1, 500 to 1, 700 in his name. With six mouths to feed and the only thing that we had at that moment was a mission to live an American dream, but never lose the values that we had back home.
So that for us resonates with me and my siblings and my cousins and my family to this day. And I think, you know, it’s hard, it’s hard to continue that legacy as, you know, you assimilate and as you grow in a different country. But in an amazing country so, you know, having to be able to continue to instill that and grow those values with our children, I think is critical.
Amazing. , when did you know, or when did this idea of entrepreneurship come about for you? Like, when did you know you were going to go down that route? Oh, since day one, like I said my parents back home they were entrepreneurs, right. And that was at a core of everything they
did.
My father, all times always says, you’re an entrepreneur. I was an entrepreneur. You got to keep that growing. So I don’t think it ever ended, but I think one of the times that it really kind of resonated with me more than ever was when I was about 13 or 14 years old, when I just started kind of door knocking with my cousin out in Queens, New York, we were doing nothing to try to buy or help them buy real estate because I was a lot younger than him, obviously.
So I had a lot more doors opening for me then. then doors opening for him being a 13 year old, you know, mini George Clooney looking kind of guy, right? Yeah, you were the you were the secret right there. You were the sneak attack, huh? Definitely helped it definitely helped So I think seeing the business seeing How things got done really really resonated with us and it just never affected What do you think those early experiences of even door knocking, like, how do you think that helped shape you?
I’m a little jealous I didn’t get to door knock that early. I, I, sorry, I did some door knocking when I was in out, out of college, like after college I did. But man, if I would have been doing that as a kid, like, how do you think that helped shape you? Well, look, I mean, that was like my version of selling lemonade on the corner, right?
Yeah. Instead of selling lemonade at the corner. Because we probably didn’t even know how to spell lemonade at that time. I was door knocking in Queens, New York, right? To try to find properties, distressed properties, and try to reposition them. At that time, I didn’t know anything about, real estate.
All I knew is that my little cousin just needed some help. He was willing to pay me something during the time, but, you know, seeing the evolution of a deal from nothing to something really, really kind of, like I said, resonated with us and with me, at least specifically, you know, seeing the deal from a door being closed to a door opening all the way down to the deal closing months later really, really spoke to me at the court.
Did you have an affinity to real estate in the beginning or was it just something like, was it one of those things where you caught the bug and didn’t even know what it was? Or did you like, were you into real estate at the beginning? Like, was that kind of like your first, you never wanted to leave it after that?
So I think being a 13 year old boy and, , seeing the type of money that was made at that time by my cousin and just being a part of it from, , soup to nuts. Like I said, the bug definitely bit me, but I knew very little, right. But as I got into my , mid teen, late teen, I started working in the mortgage financing world, right.
I was doing, I was a loan originator. We were in a, in a boardroom full of call callers, just banging out calls to try to see who would be interested in selling their properties or refinancing their properties or what have you. So, , seeing the type of money that can be made and again, trying to live that American dream, that entrepreneurial spirit being alive and well just continued growing.
So yeah, that for us, for me at the very least, like I said, with. Was all I needed to see. Yeah. What would you say to some of those , that next group in that , I like to get in a pay it forward question when I can that next group of would be entrepreneurs that want to go the real estate direction, like obviously , you’re many years in hindsight, right?
2020, . We get to look back and say, you know , with experience , what would you say to that next group of entrepreneurs that will be going down the real estate route? What kind of advice would you give them? I’ll tell you a little bit about , the pitfalls of real estate.
Look, it’s, it’s an amazing industry, whether you are a real estate investor, real estate broker mortgage broker, I mean, whatever realm of real estate you dive into. It’s an amazing, amazing business to be in, right? really legacy, , forming and general wealth building. The only challenge in a real estate is that it takes time.
Right. And I think,, over the years I’ve been in real estate for about. Probably about 20 years now, I’ve seen a lot of people come and go. And many of the people that are no longer in the business and they probably started, , right around the same time as I did and started with us shoulder to shoulder, the reason why they left is because they just didn’t have the patience and they wanted instant results and it doesn’t happen.
Right. If you’re a real estate investor, you’re probably not going to execute on your first deal. For a good couple of months, and then after that, you’re not really going to actualize or realize the return for a good couple of months after that. Right? So you’re looking at at least a year for you to actually break a profit, even if you do.
I was in my synagogue earlier in the morning and I was talking to a friend who is a novice real estate investor and he was telling me that he, he sold , his first real estate spec. And I was like, great. You know, I probably already knew the answer, but I was like, how much did you earn?
What was your cash on cash and ROI? And his return, you know, his, his answer to me was Ruben, I broke even, I didn’t make any money on this deal. And, you know, he sounded and looked upset about it, but I said, what, that’s a win. That is a win. Because on your first deal, exactly, on your first deal, a lot of people expect to make, a killing.
But if you didn’t lose money and you broke even or a little below even or a little higher, Greater than even, it’s a win. You should be happy. Price of tuition right there. Like that’s the price of tuition of knowledge and learning. Like it doesn’t come easy. Exactly. Exactly. You got to pay to play. That’s the bottom line.
Yeah, great., let’s get a little bit more to present day now. And thanks for that. Cause I like when people to have good expectations. Cause I, I just love the real estate industry. I think there’s so much opportunity. I mean some, you know, depending on what, when you’re, what your expectation is, I mean, that makes a difference, right.
And what your expectations are. So thank you for sharing that perspective. Let’s get into Wheelan. to kick that piece off just tell us, , what you do for the audience. Yeah. Yeah, so, we essentially have two verticals that are essentially interdependent to one another.
One vertical that we lend is that we lend money, right? And we’re essentially lending to real estate investors and speculators on the acquisition of value add properties. They’re essentially buying properties that are physically or financially distressed. And their reposition, I’m in a period of eight to 12 months.
So we provide the financing, the bridge loans that they need to be able to execute on those projects. And we pride ourselves in having the ability to close on loans and as quick as sometimes 24 to 36 hours. But on an average of anywhere between five to seven business days nationwide, that’s essentially one vertical.
The other vertical is that we do manage a 506 C Reg D, an exemption through the SEC fund. So we essentially work with a lot of high net worth, ultra high net worth investors who want to passively invest their hard earned money. So they invest with us into our fund to be able to return or earn. Mid team returns.
And that’s exactly what , we’re hitting for our investors today. , we’re earning essentially about a mid team return with monthly distributions. So as our borrowers are paying us, , their monthly payments that are interest only we are essentially distributing that over to our investors.
And our investors, they’re, like I said, high net worth, ultra high net worth, doctors, dentists, architects, attorneys some of them are even our borrowers on the borrowing end. We’re just trying to , put their money to work as fast as possible and earn a good yield on it. And that’s exactly what we’re able to do.
By making a loan in their first position collateralized by real estate. Are you seeing a lot of opportunity in the market right now for everybody that’s listening to this just in case you’re listening to this in two, three years, we’re recording this in 2024, June 27th. So I’ll repeat the question, Ruben.
I’d like to, I’d like to get that in there because I’m not, I’m going to be listening to it. You never know. You never know when they’re going to be listening. Man, I already, I do know. I know somebody’s going to send me an email. What did Ruben say? Say, come on, you listen to it in five years. Relax. , that being said what, what are you seeing right now?
Like, are you seeing some opportunity out there? What are you seeing? So we’re seeing a lot of opportunity. I mean, look, there are a lot of private lenders. You know, that essentially were very aggressive in their financing that are no longer around or they’re in the corner, look in their rooms because they made loans that they never should have.
Right. They were making loans without an appraisal. They were making loans without vetting the borrower. They were making loans without vetting the deal. Looking at the borrower’s history or background or experience, all of which we do, and we pride ourselves in doing that because look, I mean, Investor security.
Is critical. You know, I am personally invested in my fund. So are many of my friends and family and my neighbors and people from my synagogue, my aunts and so on. They’re all invested in the funds. Every dollar we deploy, we view it as though it’s our own money. So, that’s one of the reasons why we’re still around.
We’re still rocking and rolling. But there’s a lot of opportunity because a lot of the lenders out there who were a little new. , cowboyish, you can say are no longer around. So, we’re seeing a record breaking month for us for this month. And that’s only because there’s a lot of opportunity out there, you know, prior to launching, we lend, we ourselves were speculators, , , we were essentially the same clients that are borrowed from us.
That’s exactly who we were, right. We were buying, selling, flipping, developing real estate throughout the New York area. And today we’re seeing a lot of opportunity on the acquisition side. And again, kind of goes down to people being aggressive when they were buying, you know, two years ago before the rate hikes, with the expectations of the rents continuing to climb up or the rates continuing to stay low or go even lower.
Those are the cowboyish mentalities that are now essentially licking their wounds. And that brings us a lot of opportunity to buy properties that are now essentially re evaluated and valued based on existing values with market selling opportunities. And that’s where we’re seeing a lot of opportunity as well.
It’s not only continuing to lend , with security in mind, but also on the acquisition side to be able to buy these properties with a value add component, ultimately have a very short exit with high yielding returns. Hmm. Let’s talk about from the borrower perspective for a moment, like terms, liquidity, flexibility, like what, what maybe differentiates WeLend from some of the other lenders out there?
Yeah. So look, one thing, a lot of , our borrowers, , they’re coming to us because of our speed, right? We’re able to execute and fund the deal with as quick as 24 to 36 hours, but an average of about five days, depending on, on who the borrower is, how fast they’re responsive to us and so on., that’s one thing, right?
It’s the speed. Secondly , is the asset classes. We are essentially funding properties that are one to four units, multifamily. And makes use and we’re lending nationwide. We’re also lending to borrowers that may not be as experienced as we were in the past. So they’re novice investors, you know, obviously with borrowers of that caliber, we’re not as aggressive on the leverage side today, within a very experienced borrower, we’ll go up to 85, 90 percent of their acquisition and a hundred percent of their construction.
With rates of anywhere between, again, we’re in 2024, June of 2024. So. Today, our rates are anywhere between 11 and 12%. And we’re very creative with how we get these deals done, right? There sometimes will be two points at origination. Sometimes it’ll be one point in one point out. So it all really depends on the borrower.
It depends on how many loans we’ve done with them in the past., we pride in the fact that 70 percent of our loans today are with returning repeat borrowers. And the reason why that is the case is because we provide them the service that they need outside of just providing financing. We provide our input, right?
while we’re only lenders on the property, we’re not personally invested into the deal from an equity position, we’re only lenders. So we’re in a much safer part of a capital stack from an investment standpoint of view, but their success is our success. And we look at the deal as though we’re actually buying the deal.
Although we’re not. And the reason why is because if a bar is not actually going to be Breaking a profit or earning some money on the deal, there’s a higher chance of default. And we try to keep the default as low as possible. So that’s why we look at the deals and we consult them and give them advice as to what the deals look like and what they, the execution would be.
And kind of taking the the other side of the question there. Now you on one side, of course, you have , that side of the business where you’re, you’re lending now on the other side of it, you’re also accepting a investment from outside accredited investors and otherwise., how do you deal with mitigating risk and managing risk on that side of things?
It’s a very good question. So look, I mean, , there’s a lot that goes into the deal, right? There’s a lot that goes behind the scenes to make sure that the deal makes sense. But the model that we have is hope for the best, but prepare for the worst. Right. So, we, at this point are tightening and we have in the past couple of years, we have tightened our lending criteria and underwriting and increase our standards for credit.
Right. So essentially we reduced our leverages. And require the borrowers to have more skill in the game. That is critical have we want to have borrowers that are invested into the deal You know a lot of times we get calls from borrowers who are saying hey Can you provide me a hundred percent financing or 110 financing?
The answer is no and the reason why is because , if you’re not of course,, the chances of you, going defaulting is is higher. Today 89 percent of our borrowers are institutional grade with FICO scores You And experience and high net worth, which is important because, , obviously the more experience they have, the more institutional they are, the higher rate of execution.
Additionally, we stress test every borrower’s exit strategy. We ensure that if they do not sell the property, which a lot of them plan to do, they plan to buy a property, fix it up and then flip it. But if they do not sell the property, So there’s going to be enough cash flow to cover our mortgage and qualify for a refinance for a takeout on our loan.
Additionally, we focus our loans on deals with a lighter rehab. We don’t want to do rehabs that are a million dollars, 2 million. We want to see rehabs that are a little bit smaller in size because it’s a higher rate of execution and a quicker turnaround. we also try to keep our loan sizes to be consistent with the median cost of housing.
Those properties move a lot quicker, right? You don’t want to do being a luxury kind of space because they, there’s a huge delay and there’s a lot of market shifts that come along with it. Additionally, we try to keep our pricing consistent with the market conditions. We don’t want to,, make low rate loans and then ultimately be behind the ball when the rate pipes come in again, if they were, I mean, some signs point to may be happening.
So we always want to be ahead. Of the ball and not behind the ball. And we also want to narrow our lending landscape. And, from going from national to regional, we want to be lending in our own backyard. So that in the event that a borrower defaults and we have to take back a property, which we hope we never do.
But if we do, at the very least, we already know the backyard. We know the space. We know the area and the location to be able to reposition it and do so successfully. Great.
So that their hard earned cash is preserved and grow fantastic. Ruben, this has been a man. It’s been great catching back up with you and having you back on the show. And also get an update that there’s opportunity out there for those that are, , positioned well and are looking for opportunities.
Always opportunity real estate. So sometimes you hear, you get the. The bad news, a lot of other things that are going on, but I’m glad to hear that you’re having some a record month and everything’s well over there and that you’re still helping borrowers out there and investors that are looking for a stable returns and that are looking for investment opportunities.
That being said Ruben, if somebody is listening to this and they want to learn more about we lend what’s the best way for them to do that? Visit our website www. welendllc. com. We’re also on all major social media platforms. Our handle on Instagram, on LinkedIn, and the like is welendllc. Come by and visit us.
Perfect. And for everybody listening to this just so you know, we’ll put the links to WeLend in the show notes, so you can just click on the link and head right on over. And speaking of the audience, if this is your first time with Mission Matters just so you know, this is a daily show. Each and every day, we’re bringing you new entrepreneurs, um, ideas, and hopefully new inspiration to help you along in your journey as well.
So and if that sounds good to you, then, and it sounds good to me, then hit that subscribe button or that follow button. We definitely want you to catch the next episodes and to get those notifications. So make sure you subscribe. So you get tomorrow’s episode as well. And Ruben again, thanks again, man for making time for us.
Thank you, Adam.