July 11, 2025 • 24 mins
In this episode, Joey Romero sits down with Andrew Falde, Senior Vice President of Capital Markets at DBL Capital, to unpack the inner workings of the DBL Capital Fund. Andrew discusses the fund's purpose, strategic approach, and regulatory compliance. He also shares insights on today’s capital raising environment, current and future market trends, and how DBL handles investor liquidity and waterfall distribution. Whether you're a passive investor or fund manager, this episode offers valuable takeaways on navigating capital markets with clarity and confidence.
Andrew Falde is the Senior Vice President of Capital Markets, whose extensive background spans Wall Street, private equity funds, and institutional investment groups. With over $300 million in real estate transactions under his belt, Andrew brings a deep understanding of deal structuring, capital raising, and long-term value creation. In this episode, he shares valuable insights into navigating today’s capital markets, building scalable investment strategies, and aligning finance with real estate growth.
In this episode:
- Joey Romero introduces Andrew Falde, Senior Vice President of Capital Markets at DBL Capital.
- DBL Capital Fund Overview: The purpose and mission behind the DBL Capital Fund.
- Fund Strategy & Compliance: Discussion on the fund’s investment strategy and how it aligns with SEC regulations.
- Insights into the current real estate and capital markets, along with future expectations.
- Capital Raising Challenges: Andrew shares the biggest obstacles when raising capital in today’s environment.
- Investor Liquidity & Distributions: Explanation of liquidity options and how waterfall distributions are structured for investors.
The Norris Group originates and services loans in California and Florida under California DRE License 01219911, Florida Mortgage Lender License 1577, and NMLS License 1623669. For more information on hard money lending, go www.thenorrisgroup.com and click the Hard Money tab.
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Narrator (00:01):
Welcome to The Norris Group real estate podcast, a
show committed to bringing youinsights from thought leaders
shaping the real estateindustry. In each episode, we'll
dive into conversations withindustry experts and local
insiders, all aimed at helpingyou thrive in an ever-changing
real estate market. continuingthe legacy that Bruce Norris
(00:24):
created, sharing valuableknowledge, and empowering you on
your real estate journey.
Whether you're a seasoned pro ora newcomer, this is your go-to
source for insider tips, markettrends and success strategies.
Here's your host, Craig Evans.
Joey Romero (00:45):
Welcome everybody to The Norris Group Real Estate
Podcast. Today's guest is AndrewFalde, the SVP of Capital
Markets for DBL Capital. Withthe background spanning Wall
Street private funds andinstitutional real estate
groups,he's brokered over $300million in real estate
transactions and spent hiscareer structuring deals,
raising capital and buildingsystems that create long term
(01:05):
value. Andrew brings a uniqueblend of strategic thinking and
hands on experience to everyconversation, and today, you're
going to hear exactly how heapproaches the game. Let's
welcome Andrew. Thank you,Andrew for joining us. It's good
to have you on today.
Andrew Falde (01:18):
Glad to be here.
Thanks, Joey.
Joey Romero (01:20):
All right. So we thought we just, you know, we
get a lot of questions about DBLCapital. We send out Craig's
corner every week, and we'regetting some some good responses
and some good engagements. But,you know, I think people still
have this idea that it'ssomething, that maybe it's not
really. So we thought we'd haveyou on today to just kind of go
(01:42):
over what DBL Capital is. Whythe Fund was created, and you
know what the plans are and whatthe future is for DBL Capital.
So let me, let's just get rightinto it. Usually, we do a whole
lot of hey, let's learn aboutour guests. And it was kind of
funny last week we got a little,a little feedback like, hey, a
little less on the guests, andmore of like, why they're on the
(02:05):
show, you know.
Andrew Falde (02:06):
Let's do it first, right? Yeah,
Joey Romero (02:08):
Yes, absolutely. So can you, tell us why the fund
was actually even launched?
Andrew Falde (02:14):
Yeah. So, I guess there's two ways to talk about
the why, the big why behind thefund. So one is like, what is
the fund doing? And then, why isit the way it is? So what the
fund is doing is affordable homeconstruction in parts of
America. You know, wespecifically targeted Florida
right now, but it's really abouttargeting those places where
(02:37):
affordability is becoming acrisis, where home ownership is
becoming very difficult toachieve, where a lot of demand
is for more expensive homes, andhas been that way for many
years, and even historically andreally going into those target
markets and making housingaffordable to own and rent
(03:00):
primarily for ownership, butalso rentals will be in there.
You say, well, you could do thatas one off deals or syndications
and all that. So you say, thoughthat's the purpose behind the
fund. So why a fund? Why notsyndications? Why not just say
you can be the investor and thesister company, Douglas Brook
(03:21):
Homes can be the builder. Solike so, why is there a whole
fund structure around it? Andthat's for accessibility. So
accessibility and efficiency. Soefficiency creates more value,
more profit, more opportunity,faster builds, faster use of
capital. So the old way thatworked, worked very well, but it
(03:42):
was limited to who could be init. The old way, which built
well over $100 million ofaffordable homes throughout the
target markets, was that anindividual investor had to buy
fund or sign the debt for soeither fund out of cash or get
the loans for 10 homes at atime, in order for there to be
(04:04):
enough efficiency for thebuilder, for the manager, and
that's Craig, to produce enoughvalue for that investor.
Otherwise, if you come in andyou say, 'Hey, build me one
house that I can flip'. Youknow, I want to, I want to build
a house and I want to sell itfor a profit, or to deal with
one at a time. You're payingretail. You have to pay full
(04:26):
price, just like the end user,what is the value you're
creating there? So you have tobuy in bulk, and so that limits
how many people can do that. 10homes, you know, if it's you
could be 3 million, $4 millionin total value. So you either
have to sign that much debt orcontribute that much cash, or a
combination of the two. Then,besides that, it was all right,
(04:49):
well, you decided you wanted todo those 10 homes, and now, so
now the process just starts theday you sign the contract. So
that mean, okay, well you wantto do it? Great. Now we'll start
looking for land. Now we'llstart the entire process. And so
you had this build up period oflag, or, as you'll see in a
(05:10):
future video from Craig, calledthe dead zone, where the capital
is working or you're working,but there's nothing being
earned. We're still in thewaiting game. Well at this point
now, with a fund, somebody cantap into and they can contribute
a much smaller amount. They getthe wholesale access to the
fund. And there's already apipeline of homes under
(05:31):
construction, near completion,lots in contract, homes in
permitting, and you joinimmediately as a fractional
owner of the entire pipeline,rather than saying, hey, I
wanna, I need to put up 10 timesas much capital or debt and just
start at the beginning. Sothat's the reason for the fund
being formed, to pass alongthose economics to investors at
(05:54):
a much lower risk and at a muchfaster cycling of capital.
Joey Romero (06:00):
So, can you describe the fun to me like I
was in third grade?
Andrew Falde (06:04):
I love that. Just describing like a third grade,
which I have a lot of experiencewith, because I have three kids
under 12 and under right now,and one of them just ended third
grade, and one is in third gradea few years ago. So I have a lot
of experience saying, Well, whatdoes that mean? How does that
work? What are you doing? Theylook at me writing code, or what
are you doing, you know, like,okay, so yes, I'm familiar with
(06:28):
that concept. I think it'svaluable for all of us, you
know, to really like what'sgoing on here. So the fund as to
a third graders that you'resaying, right? Exactly? This is
fun. I would take that thirdgrader and walk them into any
old neighborhood and then pointat houses and say, 'See that
house, or you see the house youlive in, say, that would be a
lot of work to build that right?
Like, if it didn't exist, it wasjust land there. There'd be a
(06:51):
lot of time, a lot of people.
There's probably 50 or 100different people that will work
on that house. You have thepeople in charge of buying the
land, person decorating it,designing it, and then you have
to pay for it, and then you haveto go borrow the money for it.'
You say, like, all of this hasto happen in order to make a
house exist. Well, the fund is away to help people not have to
(07:14):
go through figure out all ofthat. They can just put their
money into a fund, which is agroup of investors, a group of
people putting their moneytogether, and that pays for all
of these houses to be built, andthen that will give the
opportunity for the person, andin that it can be done more
affordably, because it's done asa professional organization. And
then people can buy and live inthese homes, because there's
(07:36):
more of these homes that are atprices they can afford for their
family. So I think that would bethe simplest way to put it.
Joey Romero (07:43):
Is it just like, you just talked about building
houses, what else is the fundgoing to do? Is there more that
there's gonna do?
Andrew Falde (07:50):
Yeah, so building is the core strategy, because,
as the fund is co-owned themaster organization, DBL
Unlimited, it also owns the homebuilder, manages the fund and
the mortgage company, so there'sthe most profit margin in
(08:10):
producing a new home. So that'swhy it's the core strategy, and
will always be a big driver toit. And then the other will be
distressed or discountedacquisitions. So not paying
retail, not going to MLS, notjust taking the first thing off
at a standard cap rate, butreally going in and finding
(08:32):
where can value be added. Andthe one way we can force value
to be added is throughconstruction, building
something. Because you can justsay this product is needed, this
it can be put here and then makeit happen. All the others are
opportunistic, either based onmarket conditions or individual
projects that are distressed orin trouble.
Joey Romero (08:52):
Okay, so we just went from third grade to now
we're going to go to over myhead. Is the fund SEC regulated?
And what does that mean forinvestors?
Andrew Falde (09:00):
Yes. So it's regulated. SEC regulated, and
that's important to know, like alot of it will say, Oh, we're
regulated. Everyone's regulated.
This podcast is regulated by theFTC. Like, in some way, everyone
has regulations they're under.
But the strictest ones that youcan find for any type of
investment opportunity is SEC,Securities and Exchange
(09:23):
Commission to have oversight. Sothis is a Reg D fund, so it's
private placement, it's foraccredited investors, and that's
very important, because smallsyndication, small
opportunities, don't have asmuch oversight. And the reason
for that is there would be toomuch to monitor, too much to
control. And the governmenthasn't said this outright, but
(09:47):
the way I interpret it, and allthe rules as far as you could go
out and put a deal together with15 family and friends, you know,
10 million, $20 million deal,and just fly right on under the
radar, because they say, Well,if as long as you don't hurt a
lot of people, and you don'thurt people more than once, like
(10:08):
we can't oversee every littledeal that's happening, but when
you go and put yourself out tothe public and advertise to be
allowed to take on the generalpublic's capital, you can hurt a
lot of people. And so because wehave exposure, and because we're
saying we're going out and we'reoffering this to many people
(10:29):
publicly, that has the strictoversight of the SEC, especially
Joey Romero (10:33):
And so even though there's, you know, there's
the way that it's structuredhere with the fund.
explicit risk, and you know,when there's always disclaimers,
it does offer some protectionfor the investors, right?
Andrew Falde (10:45):
Yep, just every time I have a meeting with
Craig, and we're going throughnumbers and things like that, in
a 20 minute conversation, he'llstop me five times and say, be
careful. We can't say that. Becareful. We can't say that, you
know, just to make sure we can'tover promise. We can't
overstate. We have to beconservative. Ultimately, we
just have to let the performancespeak for itself. And we can't,
(11:09):
you know, over promise oroverstate what's possible.
Joey Romero (11:12):
So where does DBL capital invest now, and how is
that going to change in thefuture?
Andrew Falde (11:17):
So right now, it's affordable, the lowest price
point that we can build that'sattractive to small families or
individuals in the SouthwestFlorida market, that's one where
affordability is it not is nonexistent. Most people are stuck
(11:38):
renting right now as interestrates have gone up, then their
price point has come down evenmore than it had. As is, prices
have gone up since 2020.
Accelerated very rapidly. It'sgone out of their range. Prices
are down a little bit right nowbecause of interest rates,
because of just a market cycle,but we're still above where we
had been three years ago, three,four years ago. So we are in a
(12:02):
rising market with a little dipright now, a little bit higher
interest rates, some would say alot higher, but really just kind
of more torn historic normsreally.
Joey Romero (12:13):
It's we're supposed to be.
Andrew Falde (12:14):
Yeah, exactly.
It's hard to complain, you know?
It's just you complain if youdidn't get it before or you
can't get it again.
Joey Romero (12:22):
What you think about is a whole, it's almost a
whole generation of of peoplewho are going into home
ownership that have never seenthe sevens. But you know, you
talk to anybody over 50, they'regoing to be like, What are you
talking about? Like, oh, that's,that's right. We're supposed to
be.
Andrew Falde (12:36):
Yeah. I've heard of people saying, Oh, my first
mortgage was 18%.
Joey Romero (12:40):
Yeah.
Andrew Falde (12:40):
Like, well, I guess that's why your home was
$80,000 too.
Joey Romero (12:45):
Yes.
Andrew Falde (12:46):
Yeah.
Joey Romero (12:47):
How is DBL Capital gonna identify the new markets
and when will that happen?
Andrew Falde (12:52):
Okay, yeah, so it's wherever the profit margin
can be found without dependingon appreciation and where there
can be a solid infrastructureput in. So like anyone with
construction experience can goto another market. But do you
have a team in place? Do youhave the disposition broker in
place? Do you have theacquisition broker in place, the
(13:15):
one who finds the landprofessionally knows all the
problems there and avoids thoseproblems, whether it's, you
know, environmental issues orheight issues and needing more
fill these types of things. Sowherever you have to have
expertise. Now, Craig's built inmany different markets,
different states, so he doesknow these things. But this is
(13:35):
the market we know. This is themarket that's been very
attractive for growth for over20 years, and has been through
big spikes and those correctionsas well. But those, that's
volatility. It's just like anytech stock or any type of fast
growth asset, you know, thinkBitcoin, think anything where it
(13:58):
didn't exist before and there'ssomething new happen, you're
going to get volatility. Sothere's volatility in this
market, but that volatilitycontinues to be like be overcome
by demand. So the demand keepscoming in, demand keeps coming
in, and at that affordableprice. And if you just take an
(14:18):
aerial view over all these submarkets and sub markets that
we're in. There's so much greenspace still left. There's so
many empty lots streets that youjust look down on and see, you
know, only 30, 40% of the streethas houses on it, and this is
the affordable area to live.
It's very nice, good weather,close to a lot of employment,
close to major airport,university, all these things
(14:40):
that you need, that there'sreally just a lot of opportunity
here left. I think the firstmove outside of this market will
be acquisitions rather thanconstruction, and then moving
into maybe Central Florida, thisis my take. I mean, Craig and I
have talked a little bit aboutit, but my take is the central
Florida market just, it'sastounding. As you drive
(15:04):
through, you just see trees,trees, trees, Orange Grove,
Orange Grove. Just nothing,nothing, nothing. And then you
see a Lennar community beingbuilt, like, just a brand new
one under construction, landbeing cleared, like, Oh, okay.
So there are the migration tothe center of the state is
happening, and that bringsdirect access to Disney World,
(15:25):
if you're into that. It givesyou direct access to either
coast. So you have a lot ofopportunity there, in either
direction. It gets you a littlebit higher and people like that,
because it's for any kind offlooding concerns, also the
weather, if you're Central, kindof a little bit mid Central, a
little bit north, the weather isa little bit cooler. It's five
(15:45):
or 10 degrees cooler a lot oftimes in that area. So it's very
attractive. And a lot of peopleare saying, hey, you know what?
I'm from Indiana. Hey, I'm fromOhio. I'm from Illinois. Well,
we didn't have a beach anywherenear us. I just don't want to be
cold anymore. I don't need to be15 minutes from the beach. I'm
more than happy to be an hourand a half from the beach and an
(16:07):
hour closer to Orlando and allthese different things, and
still in a place that's not overbuilt and just feels
everything's new. So there'sjust tons. Just look up any
aerial map on Google Maps,Google aerial images, all that,
and you're just going to seethis wide open territories being
built. One's called BabcockRanch is being developed. A
(16:29):
whole new city is being built.
And when it was first started,they're like, who's wants to
live out there? Well, that'sproven. There's a lot of people,
a lot of people are saying, morethan happy to not live. I've
lived before my whole life. Idon't like the beach. And I'm
like, I get it. I don't need Idon't need to be anywhere near,
I don't have need a boat.
There's rivers, if I reallycared, there is so much
(16:52):
opportunity there.
Joey Romero (16:55):
Part of your job, correct me, if I'm wrong, is
being really involved withcapital raise. What is, what is
the hardest part of the initialcapital raise? Because, once
these things get into the 10sand 20 million range, it's like
people can't wait to throw moneyin there, right? But what's, so
what's the hardest part ofgetting this off the ground?
Andrew Falde (17:16):
Yeah, it's kind of, I don't know if you ever
seen the the illustration, likethe physical illustration where
the small domino hits the biggerdomino hits the bigger domino
until you can, like,theoretically, you could knock
over, like the Statue ofLiberty, you know, starting with
a little Domino and that's thesame thing with capital, where
the in any kind of investment atan early stage, you have the
(17:37):
angel investors, the round ainvestors, and then it finally
goes to mainstream, where peoplejust start doing, like, direct
deposits on a monthly basis, youknow, like add to the account.
And so we're at that because thefund, this fund is new, and
there will be more funds. Therewill always be a fund release
(17:58):
that says, hey, this fund isjust for land acquisition and
development prior to the housingfund building on so there'll be
a new fund for that. It'll benew. So the reality is, you have
to look at the fund manager, youhave to look at the team and
say, Are they new to this? Well,that's not even close. You have
multi decade experience. Youhave the exact same team and
(18:22):
infrastructure and constructionlicense, all that has been going
on for well over $100 million injust the last five or 10 years.
And so that is not new. So it'sjust the, okay, instead of take,
like we talked at the beginning,instead of taking one investor
or one small group and doing 10houses here, then another person
(18:44):
or group do another 10 houseshere. We're saying, Hey, you can
not take multi seven figure riskcapital or debt, and you can do
that with six figures of capitaland debt have the same
economics, maybe better,depending on how you slice the
debt component, because you'renot signing for the debt
anymore. So the economics arestill just as attractive, and
(19:07):
the speed of returns is faster.
So the long and short of it isusually it's that after you see
that first year of likedelivered statements, and then
that's when those who have beenon the sidelines start to kick
in more. Feel a little bit lesslike the angel, a little bit
less like, you know, the earlyadopter is like, 'all right,
(19:29):
here's our one year quarterlystatements. Here's our annual
distribution was done. Here arethe houses that were completed'.
So that's that first year, andwe're about eight months into
that, I think, right? Maybe,maybe 10 months, because we have
part of last year and this yeargoing on. So I think when we're
completed with that year, it'sgoing to become a little bit
(19:50):
more of a less of an uphillbattle.
Joey Romero (19:54):
Liquidity is important for a fund. What's the
targeted liquidity for the fundand where is it out right now ?
Andrew Falde (20:00):
The target, I believe, is 30% so there's
liquidity, and then there's alsonot having aggregate leverage,
not over 70% but our aggregateleverage level is more
conservative and our liquiditylevel is more conservative than
you normally see in a fund, justbecause we want to be positioned
(20:20):
for long term, generationaloperating not just one
opportunity, not just say, Hey,we're just going into this.
What's the point of having thecash on the side? What's the
point of having that excessmargin in there to work with if
it's just one syndicate or justone opportunity. You know, we
(20:41):
just need a little breathingroom in there. So we're more
positioned for, hey, we're gonnahave dry powder. So if land
prices are down like they are,we can jump in and grab a bunch
of watts at half price. Butpeople who say, I have to sell
now, you know, it was 40 lastyear, but it's 25 right now,
fine, I'll sell it or less. Sothat's what that is really for
(21:04):
safety and opportunity for thefund to do what it needs to do.
Joey Romero (21:10):
Can you tell our listeners, what does Waterfall
Distribution mean? And then whatthe actual Waterfall
Distribution of DBL capital is?
Andrew Falde (21:19):
Got it. Yeah, so waterfall means that it's not
just at the end of the year, wejust slice everything up and
send it out. There's actuallybecause you don't know what the
return will be. If the return isgoing to be eight or it's going
to be 28 we just don't know. Andthat's market conditions
operating, you know, all thesedifferent things, how much
(21:40):
capital came in, when it camein, and all these different
factors. So what we do is wehave the investors, the cash,
the capital paid first. Sothat's called the pref, or
preference, preference paidpayment. So the pref is the 8%
amount that goes to theinvestor, and then from there,
(22:03):
and it's all spelled out in thedocs in exact form, in exactly
what order and what has to bepaid in what order. But the most
important thing is the capitalinvestor is paid first, then a
asset management fee, then thesplits start. So after the asset
management fee is paid, which isafter the pref, then we had the
(22:24):
80/20 split, 80 to the investor,20 to the manager. And that
takes it all the way up until12% return has been calculated
and distributed. And then above12% is 50/50. So the 12% is
called the target return, whichcan be misleading. It sounds
like, oh, you try to make 12%and that's the end of the story.
(22:46):
And I don't even get all ofthat. I have to split some of
it. So the reality is that's thetarget before we get excited,
that's the target to say we'retrying to get up and through
that and then based on marketconditions and efficiencies and
speed of construction, all theseother factors, when the cash was
in, when the capital came in,all those other factors. Now
(23:06):
we're playing the real game,which is we're splitting 50/50
above that. So that's wherewe're really trying to get, is
north of 12% and take that 5050,split above that.
Joey Romero (23:16):
Okay everyone that's going to do it for this
week's episode, please be sureto tune in next week for part
two.
Narrator (23:24):
For more information on hard money loans, trust deed
investing and upcoming eventswith the Norris group. Check out
the norrisgroup.com for moreinformation on passive investing
through the DBL capital RealEstate Investment Fund, please
visit DBL capital.com
Joey Romero (23:43):
The Norris Group originates and services loans in
California and Florida underCalifornia DRE license 01219911.
Florida mortgage lender license1577 and NMLS license 1623669.
For more information on hardmoney lending go to
thenorrisgroup.com and click thehard money tab.
Welcome to The Norris Group real estate podcast, a
show committed to bringing youinsights from thought leaders
shaping the real estateindustry. In each episode, we'll
dive into conversations withindustry experts and local
insiders, all aimed at helpingyou thrive in an ever-changing
real estate market. continuingthe legacy that Bruce Norris
(00:24):
created, sharing valuableknowledge, and empowering you on
your real estate journey.
Whether you're a seasoned pro ora newcomer, this is your go-to
source for insider tips, markettrends and success strategies.
Here's your host, Craig Evans.
Joey Romero (00:45):
Welcome everybody to The Norris Group Real Estate
Podcast. Today's guest is AndrewFalde, the SVP of Capital
Markets for DBL Capital. Withthe background spanning Wall
Street private funds andinstitutional real estate
groups,he's brokered over $300million in real estate
transactions and spent hiscareer structuring deals,
raising capital and buildingsystems that create long term
(01:05):
value. Andrew brings a uniqueblend of strategic thinking and
hands on experience to everyconversation, and today, you're
going to hear exactly how heapproaches the game. Let's
welcome Andrew. Thank you,Andrew for joining us. It's good
to have you on today.
Andrew Falde (01:18):
Glad to be here.
Thanks, Joey.
Joey Romero (01:20):
All right. So we thought we just, you know, we
get a lot of questions about DBLCapital. We send out Craig's
corner every week, and we'regetting some some good responses
and some good engagements. But,you know, I think people still
have this idea that it'ssomething, that maybe it's not
really. So we thought we'd haveyou on today to just kind of go
(01:42):
over what DBL Capital is. Whythe Fund was created, and you
know what the plans are and whatthe future is for DBL Capital.
So let me, let's just get rightinto it. Usually, we do a whole
lot of hey, let's learn aboutour guests. And it was kind of
funny last week we got a little,a little feedback like, hey, a
little less on the guests, andmore of like, why they're on the
(02:05):
show, you know.
Andrew Falde (02:06):
Let's do it first, right? Yeah,
Joey Romero (02:08):
Yes, absolutely. So can you, tell us why the fund
was actually even launched?
Andrew Falde (02:14):
Yeah. So, I guess there's two ways to talk about
the why, the big why behind thefund. So one is like, what is
the fund doing? And then, why isit the way it is? So what the
fund is doing is affordable homeconstruction in parts of
America. You know, wespecifically targeted Florida
right now, but it's really abouttargeting those places where
(02:37):
affordability is becoming acrisis, where home ownership is
becoming very difficult toachieve, where a lot of demand
is for more expensive homes, andhas been that way for many
years, and even historically andreally going into those target
markets and making housingaffordable to own and rent
(03:00):
primarily for ownership, butalso rentals will be in there.
You say, well, you could do thatas one off deals or syndications
and all that. So you say, thoughthat's the purpose behind the
fund. So why a fund? Why notsyndications? Why not just say
you can be the investor and thesister company, Douglas Brook
(03:21):
Homes can be the builder. Solike so, why is there a whole
fund structure around it? Andthat's for accessibility. So
accessibility and efficiency. Soefficiency creates more value,
more profit, more opportunity,faster builds, faster use of
capital. So the old way thatworked, worked very well, but it
(03:42):
was limited to who could be init. The old way, which built
well over $100 million ofaffordable homes throughout the
target markets, was that anindividual investor had to buy
fund or sign the debt for soeither fund out of cash or get
the loans for 10 homes at atime, in order for there to be
(04:04):
enough efficiency for thebuilder, for the manager, and
that's Craig, to produce enoughvalue for that investor.
Otherwise, if you come in andyou say, 'Hey, build me one
house that I can flip'. Youknow, I want to, I want to build
a house and I want to sell itfor a profit, or to deal with
one at a time. You're payingretail. You have to pay full
(04:26):
price, just like the end user,what is the value you're
creating there? So you have tobuy in bulk, and so that limits
how many people can do that. 10homes, you know, if it's you
could be 3 million, $4 millionin total value. So you either
have to sign that much debt orcontribute that much cash, or a
combination of the two. Then,besides that, it was all right,
(04:49):
well, you decided you wanted todo those 10 homes, and now, so
now the process just starts theday you sign the contract. So
that mean, okay, well you wantto do it? Great. Now we'll start
looking for land. Now we'llstart the entire process. And so
you had this build up period oflag, or, as you'll see in a
(05:10):
future video from Craig, calledthe dead zone, where the capital
is working or you're working,but there's nothing being
earned. We're still in thewaiting game. Well at this point
now, with a fund, somebody cantap into and they can contribute
a much smaller amount. They getthe wholesale access to the
fund. And there's already apipeline of homes under
(05:31):
construction, near completion,lots in contract, homes in
permitting, and you joinimmediately as a fractional
owner of the entire pipeline,rather than saying, hey, I
wanna, I need to put up 10 timesas much capital or debt and just
start at the beginning. Sothat's the reason for the fund
being formed, to pass alongthose economics to investors at
(05:54):
a much lower risk and at a muchfaster cycling of capital.
Joey Romero (06:00):
So, can you describe the fun to me like I
was in third grade?
Andrew Falde (06:04):
I love that. Just describing like a third grade,
which I have a lot of experiencewith, because I have three kids
under 12 and under right now,and one of them just ended third
grade, and one is in third gradea few years ago. So I have a lot
of experience saying, Well, whatdoes that mean? How does that
work? What are you doing? Theylook at me writing code, or what
are you doing, you know, like,okay, so yes, I'm familiar with
(06:28):
that concept. I think it'svaluable for all of us, you
know, to really like what'sgoing on here. So the fund as to
a third graders that you'resaying, right? Exactly? This is
fun. I would take that thirdgrader and walk them into any
old neighborhood and then pointat houses and say, 'See that
house, or you see the house youlive in, say, that would be a
lot of work to build that right?
Like, if it didn't exist, it wasjust land there. There'd be a
(06:51):
lot of time, a lot of people.
There's probably 50 or 100different people that will work
on that house. You have thepeople in charge of buying the
land, person decorating it,designing it, and then you have
to pay for it, and then you haveto go borrow the money for it.'
You say, like, all of this hasto happen in order to make a
house exist. Well, the fund is away to help people not have to
(07:14):
go through figure out all ofthat. They can just put their
money into a fund, which is agroup of investors, a group of
people putting their moneytogether, and that pays for all
of these houses to be built, andthen that will give the
opportunity for the person, andin that it can be done more
affordably, because it's done asa professional organization. And
then people can buy and live inthese homes, because there's
(07:36):
more of these homes that are atprices they can afford for their
family. So I think that would bethe simplest way to put it.
Joey Romero (07:43):
Is it just like, you just talked about building
houses, what else is the fundgoing to do? Is there more that
there's gonna do?
Andrew Falde (07:50):
Yeah, so building is the core strategy, because,
as the fund is co-owned themaster organization, DBL
Unlimited, it also owns the homebuilder, manages the fund and
the mortgage company, so there'sthe most profit margin in
(08:10):
producing a new home. So that'swhy it's the core strategy, and
will always be a big driver toit. And then the other will be
distressed or discountedacquisitions. So not paying
retail, not going to MLS, notjust taking the first thing off
at a standard cap rate, butreally going in and finding
(08:32):
where can value be added. Andthe one way we can force value
to be added is throughconstruction, building
something. Because you can justsay this product is needed, this
it can be put here and then makeit happen. All the others are
opportunistic, either based onmarket conditions or individual
projects that are distressed orin trouble.
Joey Romero (08:52):
Okay, so we just went from third grade to now
we're going to go to over myhead. Is the fund SEC regulated?
And what does that mean forinvestors?
Andrew Falde (09:00):
Yes. So it's regulated. SEC regulated, and
that's important to know, like alot of it will say, Oh, we're
regulated. Everyone's regulated.
This podcast is regulated by theFTC. Like, in some way, everyone
has regulations they're under.
But the strictest ones that youcan find for any type of
investment opportunity is SEC,Securities and Exchange
(09:23):
Commission to have oversight. Sothis is a Reg D fund, so it's
private placement, it's foraccredited investors, and that's
very important, because smallsyndication, small
opportunities, don't have asmuch oversight. And the reason
for that is there would be toomuch to monitor, too much to
control. And the governmenthasn't said this outright, but
(09:47):
the way I interpret it, and allthe rules as far as you could go
out and put a deal together with15 family and friends, you know,
10 million, $20 million deal,and just fly right on under the
radar, because they say, Well,if as long as you don't hurt a
lot of people, and you don'thurt people more than once, like
(10:08):
we can't oversee every littledeal that's happening, but when
you go and put yourself out tothe public and advertise to be
allowed to take on the generalpublic's capital, you can hurt a
lot of people. And so because wehave exposure, and because we're
saying we're going out and we'reoffering this to many people
(10:29):
publicly, that has the strictoversight of the SEC, especially
Joey Romero (10:33):
And so even though there's, you know, there's
the way that it's structuredhere with the fund.
explicit risk, and you know,when there's always disclaimers,
it does offer some protectionfor the investors, right?
Andrew Falde (10:45):
Yep, just every time I have a meeting with
Craig, and we're going throughnumbers and things like that, in
a 20 minute conversation, he'llstop me five times and say, be
careful. We can't say that. Becareful. We can't say that, you
know, just to make sure we can'tover promise. We can't
overstate. We have to beconservative. Ultimately, we
just have to let the performancespeak for itself. And we can't,
(11:09):
you know, over promise oroverstate what's possible.
Joey Romero (11:12):
So where does DBL capital invest now, and how is
that going to change in thefuture?
Andrew Falde (11:17):
So right now, it's affordable, the lowest price
point that we can build that'sattractive to small families or
individuals in the SouthwestFlorida market, that's one where
affordability is it not is nonexistent. Most people are stuck
(11:38):
renting right now as interestrates have gone up, then their
price point has come down evenmore than it had. As is, prices
have gone up since 2020.
Accelerated very rapidly. It'sgone out of their range. Prices
are down a little bit right nowbecause of interest rates,
because of just a market cycle,but we're still above where we
had been three years ago, three,four years ago. So we are in a
(12:02):
rising market with a little dipright now, a little bit higher
interest rates, some would say alot higher, but really just kind
of more torn historic normsreally.
Joey Romero (12:13):
It's we're supposed to be.
Andrew Falde (12:14):
Yeah, exactly.
It's hard to complain, you know?
It's just you complain if youdidn't get it before or you
can't get it again.
Joey Romero (12:22):
What you think about is a whole, it's almost a
whole generation of of peoplewho are going into home
ownership that have never seenthe sevens. But you know, you
talk to anybody over 50, they'regoing to be like, What are you
talking about? Like, oh, that's,that's right. We're supposed to
be.
Andrew Falde (12:36):
Yeah. I've heard of people saying, Oh, my first
mortgage was 18%.
Joey Romero (12:40):
Yeah.
Andrew Falde (12:40):
Like, well, I guess that's why your home was
$80,000 too.
Joey Romero (12:45):
Yes.
Andrew Falde (12:46):
Yeah.
Joey Romero (12:47):
How is DBL Capital gonna identify the new markets
and when will that happen?
Andrew Falde (12:52):
Okay, yeah, so it's wherever the profit margin
can be found without dependingon appreciation and where there
can be a solid infrastructureput in. So like anyone with
construction experience can goto another market. But do you
have a team in place? Do youhave the disposition broker in
place? Do you have theacquisition broker in place, the
(13:15):
one who finds the landprofessionally knows all the
problems there and avoids thoseproblems, whether it's, you
know, environmental issues orheight issues and needing more
fill these types of things. Sowherever you have to have
expertise. Now, Craig's built inmany different markets,
different states, so he doesknow these things. But this is
(13:35):
the market we know. This is themarket that's been very
attractive for growth for over20 years, and has been through
big spikes and those correctionsas well. But those, that's
volatility. It's just like anytech stock or any type of fast
growth asset, you know, thinkBitcoin, think anything where it
(13:58):
didn't exist before and there'ssomething new happen, you're
going to get volatility. Sothere's volatility in this
market, but that volatilitycontinues to be like be overcome
by demand. So the demand keepscoming in, demand keeps coming
in, and at that affordableprice. And if you just take an
(14:18):
aerial view over all these submarkets and sub markets that
we're in. There's so much greenspace still left. There's so
many empty lots streets that youjust look down on and see, you
know, only 30, 40% of the streethas houses on it, and this is
the affordable area to live.
It's very nice, good weather,close to a lot of employment,
close to major airport,university, all these things
(14:40):
that you need, that there'sreally just a lot of opportunity
here left. I think the firstmove outside of this market will
be acquisitions rather thanconstruction, and then moving
into maybe Central Florida, thisis my take. I mean, Craig and I
have talked a little bit aboutit, but my take is the central
Florida market just, it'sastounding. As you drive
(15:04):
through, you just see trees,trees, trees, Orange Grove,
Orange Grove. Just nothing,nothing, nothing. And then you
see a Lennar community beingbuilt, like, just a brand new
one under construction, landbeing cleared, like, Oh, okay.
So there are the migration tothe center of the state is
happening, and that bringsdirect access to Disney World,
(15:25):
if you're into that. It givesyou direct access to either
coast. So you have a lot ofopportunity there, in either
direction. It gets you a littlebit higher and people like that,
because it's for any kind offlooding concerns, also the
weather, if you're Central, kindof a little bit mid Central, a
little bit north, the weather isa little bit cooler. It's five
(15:45):
or 10 degrees cooler a lot oftimes in that area. So it's very
attractive. And a lot of peopleare saying, hey, you know what?
I'm from Indiana. Hey, I'm fromOhio. I'm from Illinois. Well,
we didn't have a beach anywherenear us. I just don't want to be
cold anymore. I don't need to be15 minutes from the beach. I'm
more than happy to be an hourand a half from the beach and an
(16:07):
hour closer to Orlando and allthese different things, and
still in a place that's not overbuilt and just feels
everything's new. So there'sjust tons. Just look up any
aerial map on Google Maps,Google aerial images, all that,
and you're just going to seethis wide open territories being
built. One's called BabcockRanch is being developed. A
(16:29):
whole new city is being built.
And when it was first started,they're like, who's wants to
live out there? Well, that'sproven. There's a lot of people,
a lot of people are saying, morethan happy to not live. I've
lived before my whole life. Idon't like the beach. And I'm
like, I get it. I don't need Idon't need to be anywhere near,
I don't have need a boat.
There's rivers, if I reallycared, there is so much
(16:52):
opportunity there.
Joey Romero (16:55):
Part of your job, correct me, if I'm wrong, is
being really involved withcapital raise. What is, what is
the hardest part of the initialcapital raise? Because, once
these things get into the 10sand 20 million range, it's like
people can't wait to throw moneyin there, right? But what's, so
what's the hardest part ofgetting this off the ground?
Andrew Falde (17:16):
Yeah, it's kind of, I don't know if you ever
seen the the illustration, likethe physical illustration where
the small domino hits the biggerdomino hits the bigger domino
until you can, like,theoretically, you could knock
over, like the Statue ofLiberty, you know, starting with
a little Domino and that's thesame thing with capital, where
the in any kind of investment atan early stage, you have the
(17:37):
angel investors, the round ainvestors, and then it finally
goes to mainstream, where peoplejust start doing, like, direct
deposits on a monthly basis, youknow, like add to the account.
And so we're at that because thefund, this fund is new, and
there will be more funds. Therewill always be a fund release
(17:58):
that says, hey, this fund isjust for land acquisition and
development prior to the housingfund building on so there'll be
a new fund for that. It'll benew. So the reality is, you have
to look at the fund manager, youhave to look at the team and
say, Are they new to this? Well,that's not even close. You have
multi decade experience. Youhave the exact same team and
(18:22):
infrastructure and constructionlicense, all that has been going
on for well over $100 million injust the last five or 10 years.
And so that is not new. So it'sjust the, okay, instead of take,
like we talked at the beginning,instead of taking one investor
or one small group and doing 10houses here, then another person
(18:44):
or group do another 10 houseshere. We're saying, Hey, you can
not take multi seven figure riskcapital or debt, and you can do
that with six figures of capitaland debt have the same
economics, maybe better,depending on how you slice the
debt component, because you'renot signing for the debt
anymore. So the economics arestill just as attractive, and
(19:07):
the speed of returns is faster.
So the long and short of it isusually it's that after you see
that first year of likedelivered statements, and then
that's when those who have beenon the sidelines start to kick
in more. Feel a little bit lesslike the angel, a little bit
less like, you know, the earlyadopter is like, 'all right,
(19:29):
here's our one year quarterlystatements. Here's our annual
distribution was done. Here arethe houses that were completed'.
So that's that first year, andwe're about eight months into
that, I think, right? Maybe,maybe 10 months, because we have
part of last year and this yeargoing on. So I think when we're
completed with that year, it'sgoing to become a little bit
(19:50):
more of a less of an uphillbattle.
Joey Romero (19:54):
Liquidity is important for a fund. What's the
targeted liquidity for the fundand where is it out right now ?
Andrew Falde (20:00):
The target, I believe, is 30% so there's
liquidity, and then there's alsonot having aggregate leverage,
not over 70% but our aggregateleverage level is more
conservative and our liquiditylevel is more conservative than
you normally see in a fund, justbecause we want to be positioned
(20:20):
for long term, generationaloperating not just one
opportunity, not just say, Hey,we're just going into this.
What's the point of having thecash on the side? What's the
point of having that excessmargin in there to work with if
it's just one syndicate or justone opportunity. You know, we
(20:41):
just need a little breathingroom in there. So we're more
positioned for, hey, we're gonnahave dry powder. So if land
prices are down like they are,we can jump in and grab a bunch
of watts at half price. Butpeople who say, I have to sell
now, you know, it was 40 lastyear, but it's 25 right now,
fine, I'll sell it or less. Sothat's what that is really for
(21:04):
safety and opportunity for thefund to do what it needs to do.
Joey Romero (21:10):
Can you tell our listeners, what does Waterfall
Distribution mean? And then whatthe actual Waterfall
Distribution of DBL capital is?
Andrew Falde (21:19):
Got it. Yeah, so waterfall means that it's not
just at the end of the year, wejust slice everything up and
send it out. There's actuallybecause you don't know what the
return will be. If the return isgoing to be eight or it's going
to be 28 we just don't know. Andthat's market conditions
operating, you know, all thesedifferent things, how much
(21:40):
capital came in, when it camein, and all these different
factors. So what we do is wehave the investors, the cash,
the capital paid first. Sothat's called the pref, or
preference, preference paidpayment. So the pref is the 8%
amount that goes to theinvestor, and then from there,
(22:03):
and it's all spelled out in thedocs in exact form, in exactly
what order and what has to bepaid in what order. But the most
important thing is the capitalinvestor is paid first, then a
asset management fee, then thesplits start. So after the asset
management fee is paid, which isafter the pref, then we had the
(22:24):
80/20 split, 80 to the investor,20 to the manager. And that
takes it all the way up until12% return has been calculated
and distributed. And then above12% is 50/50. So the 12% is
called the target return, whichcan be misleading. It sounds
like, oh, you try to make 12%and that's the end of the story.
(22:46):
And I don't even get all ofthat. I have to split some of
it. So the reality is that's thetarget before we get excited,
that's the target to say we'retrying to get up and through
that and then based on marketconditions and efficiencies and
speed of construction, all theseother factors, when the cash was
in, when the capital came in,all those other factors. Now
(23:06):
we're playing the real game,which is we're splitting 50/50
above that. So that's wherewe're really trying to get, is
north of 12% and take that 5050,split above that.
Joey Romero (23:16):
Okay everyone that's going to do it for this
week's episode, please be sureto tune in next week for part
two.
Narrator (23:24):
For more information on hard money loans, trust deed
investing and upcoming eventswith the Norris group. Check out
the norrisgroup.com for moreinformation on passive investing
through the DBL capital RealEstate Investment Fund, please
visit DBL capital.com
Joey Romero (23:43):
The Norris Group originates and services loans in
California and Florida underCalifornia DRE license 01219911.
Florida mortgage lender license1577 and NMLS license 1623669.
For more information on hardmoney lending go to
thenorrisgroup.com and click thehard money tab.
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