February 19, 2025 • 26 mins
Welcome back to the Super Entrepreneurs Podcast! Today, we’re diving into private lending and how it’s changing the game in real estate. My guest is Ruben Izgelov—an industry expert who’s flipped, developed, and financed over $500 million in deals. He’s also the co-founder of States Capital and We Lend, helping investors earn solid returns without the headaches of owning property.
We’re talking about why more investors are ditching traditional banks, how private lending gives you flexibility and speed, and the mindset shifts that fuel massive success. If you’ve ever wondered how smart investors make money without dealing with tenants or renovations, this episode is for you. Let’s get into it!
Chapter Stamps:
01:33 The Rise of Private Lending
02:34 Ruben's First Successful Deal
07:47 Challenges and Lessons Learned
08:56 Support System and Recovery
09:59 Confidence and Motivation
10:49 Expanding Horizons
13:22 The Role of Positive Energy
17:13 Capital Stack Explained
21:38 Investor Security in Volatile Times
23:08 Returns and Fees
24:19 Foreign Nationals and Lending
26:16 Conclusion and Final Thoughts
Pullout Quotes:
"The biggest reason investors come to us? Speed, flexibility, and the ability to close deals that banks won’t touch."
“I lost about $400,000. I had $6,000 in my bank and was six months behind on rent. That deal in Brooklyn changed my life."
“As a private lender, we have the capacity to move very fast. I’ve had calls on a Sunday saying, ‘I need to close by Tuesday.’ And we make it happen."
“Being a lender instead of a landlord means you’re the last one in, but the first one paid. That’s how you protect your money."
“If you think good, you will do good. Your energy and mindset create your success."
“I don’t know how, but I just knew—I’m going to get this deal done. Two weeks later, we made it happen exactly as I envisioned."
Social:
Website: https://www.welendllc.com/
Linkedin: https://www.linkedin.com/in/rubenizgelov/
Disclaimer: Please be aware that the opinions and perspectives conveyed in this podcast are solely those of our guests and do not necessarily represent the views, ideologies, or principles of Super Entrepreneurs Podcast, its associated entities, or any organizations they represent or are affiliated with. We provide a platform for discussion and exploration, and the content of each episode is understood to be independent expressions from our guests, rather than a reflection of the beliefs held by the podcast or its hosts.
Notice to the Super Entrepreneurs community:
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The only limits in our life are those we impose on ourselves.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Being
(00:00):
the bank, you're a lot more secured thanany other investor because you're the last
one into the deal, but always the firstone out and you are on the highest part
of the capital stack because of that.
This is the end of the video.
I hope you enjoyed it.
If you did, please like and subscribe.
I'll see you next time.
(00:22):
Outro music.
Welcome back everyone.
This is shahid Durrani your host ofsuper entrepreneurs podcast today.
We have with us.
Ruben Izgelov.
A real estate expert with more than adecade of experience flipping, developing,
(00:44):
financing over 500 million in deals andco founder of States Capital and We Lend.
Ruben allows investors to earnstable returns without taking the
risk of owning physical real estate.
Today, we are diving into thatalong with his thoughts on the
(01:05):
future of real estate financing.
Ruben, thanks for joining us, my friend.
It's
a pleasure to be here, Shahid.
Thank you so much for having me on as aguest and I look forward to not only this
episode, but many more episodes to come.
Yes, thank you so muchand welcome to the family.
Appreciate it.
Yeah, no, it's great so private lendingseems to be Growing in popularity,
(01:30):
especially with the banks Makingit super difficult, for dreamers
To dream and to create, privatelending comes in as a superhero,
helping people in different aspects,
obviously, it costs more, but you hearstories of people's lives completely
shifting by that one person that believedin them or trusted them to provide their
(01:55):
money, even though they paid a lot for it.
That injection helped.
them go to that next stepto continue that journey.
So what would you say are the biggestreasons investors and developers
are choosing lenders like we lend,compared to traditional banks.
I know we talked about a little bit here,but what is your deep sense of that?
(02:18):
So look, I think it's necessity.
I think it is one necessityand also it's just convenience.
To your point about, that one, investoror person who invested into you in
the beginning that really helped youtake things to the next level that
was actually my private lender manyyears ago when we were buying, selling,
developing real estate for quitesome time before we founded BeLend.
(02:41):
It's like I read your mind.
Yeah you I don't know how you'reprobably like, with the neural
links or whatever it is that you'redoing out there, but getting there.
So our private lender at that timewas a, older gentleman, who's actually
an investor in our fund today.
And, we've become very good friends.
He, lent us money onour first acquisition.
(03:03):
In Brooklyn, New York.
And, that was one of the mostsuccessful acquisitions I've had.
I've tried to repeat that over andover again, but I guess it was just
God's blessing for at that time.
So it's hard to repeat that samedeal, but nevertheless, it was
a deal where we purchased for,several hundred thousand dollars.
It was about 260, 000 acquisition.
We've put another 200, 000 intorenovation, and then we ultimately
(03:26):
flipped that property for about 1.
4 million.
So we made nearly a million dollarsjust on our first buying, selling,
flipping, developing real estate.
And that was all because.
Our private lender at the time reallytrusted us and invested into us clearly
that at a much greater premium than say,going to a lender or another lender that,
(03:47):
like a regional bank, but the reason whywe went to this private lender was, like
I said, in the beginning necessity, right?
The property that wewere buying in Brooklyn.
It was in really bad shape.
The property was uninhabitable,although there was people living there.
I don't know how, it wasjust not mortgageable.
So that's one, that's one of thereasons why a lot of our investors
(04:09):
or borrowers rather borrow from us isbecause the properties that they're
buying are really in bad condition andthey just can't get a mortgage on it.
Secondly, it's because the investorhimself needs to close very quickly.
There
are times, Oh, totally.
Like there, there are timeswhere investors call us
on a Monday, or a Sunday.
I had a call just last night,Sunday saying, Hey, I got to
(04:32):
close this deal by Tuesday.
There's no ifs, ands, or buts about it.
I got a steep discount onlybecause I told them I'll close by
Tuesday or Wednesday, the latest.
As a private lender, we have the capacityand the flexibility to move very fast.
Yesterday I already orderedan appraisal yesterday.
We already got, our inspectorsout to the property.
They're actually going there.
(04:52):
They're actually there today, right now.
Inspecting the property,making sure that it's something
that we're willing to invest.
Our hard earned money and ourinvestors harder money, the bottom
line is that speed is anotherreason why they come to us, right?
They need to close quickly.
If you go to a, a bank chase bank, WellsFargo or a regional bank wherever they're
wherever you're located, you're lookingat least a 90 day to 120 day close, right?
(05:17):
Even longer than that.
So that's another reason why a lot ofborrowers use this, but also it could
be that they're not mortgageable, right?
The investor themselves, like alot of our investors, there are
experienced full time operators.
They don't have a W 2 job.
They don't have, perfect taxreturns, and sometimes they
don't have the perfect credit.
Their credit might be at 640, 650.
(05:38):
We're okay with that because we'renot really lending to the borrower.
We are.
Obviously, there's a principlebehind the entity that we lend on,
but we're really just looking andfocusing on the collateral, right?
On the
pet property.
So our focus is, of course, there's a lot.
That's good.
Are we're in the principle, but the mainfocus is the collateral because at the
end of the day, while all of our loansare perceived guaranteed by each and
(06:02):
every bar, where the asset is really ourkind of, go to in the event of a default.
I would say those are the main reasonswhy, bar was come to us because
of the speed because of the typeof properties we went on and the
flexibility to be able to get thingsdone, regardless of what your personal
status may be at that specific time.
(06:26):
Wonderful answer.
Thank you, Ruben.
I love the detail because you made it veryclear to people what Why do people choose
privately, even though it's so expensive,
so that clarity was very importantas we continue this conversation.
And that part about you saying thatmillion dollars that you received,
even though you paid a lot forit, it changed your life, yeah.
(06:48):
And then, that feelingis when you made profit.
It created something very special in yourbody, in your existence, where you started
creating this more solid belief in what ispossible, and that also, that power, that
energy, that power behind you, that youwent and you started, trying to multiply
(07:11):
that same idea, but you're still, as youzoom out, looking down, you could still
see the success is obvious, it's obvious.
Could you say that energy increase ofhow you felt had some something to do
with the success from that point on?
And also if you had that beforestarting your journey, how
would that outcome also reflect?
(07:36):
I think you hit it on the head.
I think prior to, this deal in Brooklynthat I mentioned at the start of this
episode was, we weren't doing wellfinancially, um, right before that.
I don't want to say I got swindledout of, my life savings, but I went
into a partnership where the otherpartner wasn't entirely honest.
(07:57):
And I, it happens a lot.
It happens and I was foolish to andgullible to go on a handshake deal But
it taught me a very valuable lesson.
Yeah Oh, yeah.
It was a handshake deal.
I was supposed to get X. He was supposedto get Y. And when, the deal did come to
(08:20):
fruition, I got almost nothing, right?
It was a family friend?
It was a family and childhoodfriend, you could say.
He wasn't my childhood friend, buthe was a family's childhood friend.
Close
enough.
It was someone that I really trustedand, it was a very valuable lesson.
So it really set us back to a pointwhere I lost about 400, 000 at that time.
(08:42):
I had 6, 000 in my bank and Iwas six months behind on my rent.
So I was really down on my lastlimb, you can say, but thankfully
I had, a very good support system.
I had good friends, really goodfriends that really believed
in me, that trusted me.
And when I came to him and toldhim the situation, they were all.
Open to writing me a check just to helpme support myself for the next few months.
(09:03):
And believe it or not, thosesame friends are actually friends
that borrowed from us today.
But it's, the world isjust it's round, right?
So like you help them outjust as they've helped you.
And I've always had thisconversation with them about Hey,
you gave me that support system.
But at that specific moment to yourquestion, before I purchased this property
in Brooklyn, in terms of confidence, I, I.
(09:24):
I did not have theconfidence to move on, right?
I really didn't.
I had the motivation to move on,but I just didn't feel confident in
the ability to be able to recuperateand make the money back, right?
I was just like, shoot, I lost everything.
And I was young.
I was.
In my early twenties.
But nevertheless you lose that confidence.
(09:45):
The one thing that you dohave is your motivation, your
drive, your support system.
And I think at that moment, whenI did close that deal and we were
able to cash in our chips, youcan say, and we had that, almost a
million bucks come into our account.
Matt, it was a huge weight.
Off your chest, right?
Like it's like shit, forgive me,but you made it like you did it.
(10:08):
You did it.
You recuperated them on the money.
I don't know why I justrelived that moment.
It felt great.
Thank you so much.
I just relive that.
I want you.
I want you to relive it for this episode.
Actually, everything forme, everything is energy.
Oh, yeah.
Oh, yeah.
So it was a huge boost of confidence.
It also gave us theability to start focusing.
Yeah.
(10:28):
On the future, the roadmap, where do we go?
How do we do it?
How do we get there?
And so on.
And this has been what?
Almost 15 years now, right?
That this happened.
And, thankfully, who would haveever known that we would be.
A private lender that we would be,very, active real estate investors
developers for so many years.
(10:49):
And, hindsight is 2020, but I would havenever thought, in my early twenties that
I would be sitting here talking about,the amount of money we've deployed.
And today it's nearly 600 million dollars.
Across 1300 asset classes, right?
Nationwide, we're not justtalking about New York.
We're talking about theentire nation, right?
We've made loans in statesthat I've never been to, right?
(11:10):
Alabama Alaska, Hawaii.
I should be in Hawaii, but Ihaven't been to Hawaii yet.
I haven't been to Alabama andAlaska, for all the right reasons.
In states that I've never stepped myfoot into, and yet we've made loans
there, we've transformed lives there.
We've improved people that we'veimproved, neighborhoods, cities, people's
livelihood, and I'm so thankful to bein a business where I can help people
(11:33):
just like people has have helped me.
I have borrowers that, call mefrom time in time out, thanking me.
The same way as I thanked my privatelender many years ago and that in this
Brooklyn deal, I called him I said,hey, thank you so much for trusting me.
Thank you so much for obviously chargingme all this interest But hey, you gave me
the confidence back and that's that means
(11:53):
nothing.
Yeah, what a big grand schemeof things That means nothing.
Oh, yeah the interest that we paid him.
I think it was peanuts comparedto what we've earned Yeah,
it's all ROI, that's wonderful because,what I was trying to get at or understand
is that, where you were on that level whenmajor advancement happened in your life.
(12:16):
And then also where youwere before it happened.
So I was connecting, that feeling,imagine if you had that feeling that
you're going to make complete confidence,complete knowing, complete faith.
And you're with that energy feelingthat you're already a success and if you
just bring yourself back to that time,can you see how much more you would
(12:39):
do as like you, you wouldn't, you, itwouldn't be a very low type of effort.
It would be a very high intensity, asense of urgency because you're so excited
and enthusiastic about making thingshappen and it changes the dynamics.
Of, of you as an entrepreneur, whenyou feel, when you think and feel
(13:03):
something powerful, even thoughyou might not be in the physical
reality, how it shifts your results,
that was where I was taking this.
Totally.
I think you hit it on the head.
Look, I am naturally avery cautious person.
I'm not a risk taker.
A lot of my friends know me forthat, that I am not a risk taker.
A lot of my friends arereally big risk takers.
Some have done extraordinary well.
(13:26):
And some have done really bad, right?
Because they've just risked all their,all their life savings into deals
and they really lost everything andthey'll recuperate it back and they've
done well for themselves as well.
But yeah, I am a very cautious person.
I like to cross every TI like to dot every I,
and I think
that, I'm also an attorney, right?
I don't practice because wheelingis all I really do, but I'm also an
(13:47):
attorney and going through law school,you are taught, for a person that's
already, cautious naturally in lawschool, they teach you to be paranoid.
You can say, and the reason why is becauseas an attorney your brain is supposed
to be wired to protect the downside.
You protect the downside, you protect thedownside, you protect the downside, right?
At all times, you put in, clausesand things into your contract to
(14:10):
be able to protect your clients,and you protect the downside.
So me being naturally cautious, me beingan attorney going through law school
and, this whole career in law school,four years or what have you, you come out
of there Like a paranoid freak, right?
You come out of the okay, howdo I protect the downside?
What do I do to make sure that I'm okay?
(14:30):
So I think, one of the thingsthat I failed to recognize to your
point was that, if you think good.
You will do good, right?
And I have this one deal where,recently I was supposed to
actually, not get this deal done.
And I don't know what happened,but something was just like,
I'm going to get this deal done.
(14:51):
I don't care what everyone is saying.
I'm not going to get it done,but I'm going to get it done.
And I had no idea how to get it done.
I was just like, I'm going to, Idon't know what I'm going to do.
So I called my broker.
I'm like, listen, man, I,we gotta get this deal done.
He's Ruben, there's nochance it's not happening.
It's just not gonna, ithappening that you want.
And what hap I'm just like,look, you, it's happening.
You believe in God?
He's I believe in God.
I'm like, I believe in God too.
(15:12):
I just lost, my dad let'sit, I'm really religious.
I'm like, you are gonna get this done.
Get it done.
I, you got time.
Yeah.
Figure it out.
Hung up the phone.
Yeah.
Two weeks later, he calls me, says Ruben.
We got it, we got what you wantedand it was getting done and
exactly where I wanted the deal toland is exactly where it landed.
I think
to your point, it's allabout positive energy.
(15:33):
It's all about thinking positive,it's all about doing good things.
Yeah, Ruben, you said it so nicely, man.
And it really, at the end of theday, you mentioned, some of the
friends that lost everything, thatonce you have the right mindset, you
can lose everything multiple times.
You always find yourself towhere your program to be.
(15:56):
That's for sure.
Now you're just always show up.
there.
But we're trying to make it much bigger.
So we're trying to make it to get towhere that's why I feel like taking
risk is good because it puts you inthat area where you can actually develop
and grow and learn to expand yourself,
and, God forbid if you do.
(16:16):
Obviously lose stuff, you always findyourself back to where your program
to be and then grow from there.
But anyways, taking those chances, takingthose beliefs that you have in yourself,
those thoughts, those feelings that createthe energy in your body through your
central nervous system, you're going at itbecause having that faith and belief that
(16:37):
it's going to be okay in the big picture.
Grand scheme of things, not based on justthis one little thing it's very minute.
And when we look at life like that, westart making things happen more often.
It's like the art of being luckyat the end of the day is how you're
thinking, how you're feeling, andthen how you're acting is being
(16:58):
that's having that self awareness.
And you said it beautifully.
Thank you so much for that.
Yeah.
And another question I have is that,I know we talked about a lot of other
things, I'm sure it's going to add valueto people that are listening and watching,
but could you explain the capital stack,how does it help protect investors money
(17:22):
by, and also giving them a solid return,that part, can you elaborate quickly?
Yeah,
Of course.
Thankfully today and again, goingback to what I was mentioning,
like I would have never thought I'dbe doing where I'm doing what I'm
doing today and where I'm at today.
But, everything justworks in its natural form.
But today we do manage a 506 C reg D.
It's an exemption through theSEC. It's a private debt fund.
(17:43):
Essentially we have a lot ofentrepreneurs, high net worth, ultra
high net worth investors who arebusy with their day to day jobs.
These are attorneys, they are architects,they are doctors entrepreneurs who
really just want to be able to deployand invest their hard earned money, some
(18:03):
of them actually are borrowers they'rereal estate investors they want to
invest their hard earned money into realestate, but they just don't have the time
to be able to manage the real estate.
Some of them, own real estate or theydid own real estate and they're just so
fed up with having to deal with tenants.
Deal with the construction, dealwith, department of buildings.
(18:25):
All that comes with owning real estate.
So a lot of our investors today,they don't want to be landlords.
They want to be lenders.
And that's what we provide to themtoday is the option of being a
lender versus being a landlord.
So our investors, they invest into ourfund, which makes a portfolio of loans.
(18:47):
All of our loans are first lien positions.
Collateralized by real estate, personallyguaranteed by each and every borrower
at a very low and conservative leverage.
All of our borrowers are comingin with equity into the deal.
They're experienced operators who arebuying properties at a huge discount.
(19:07):
Because they're able to closewithin two or three days.
They're buying propertiesthat are, uninhabitable.
They are really bad shape.
They're able to buy these propertiesat a huge, steep discount because
of their position in the deal.
And we give them a percentage oftheir discounted purchase price.
So essentially ourinvestors are very secure.
(19:30):
In the sense that we're, we're giving thema percentage of the purchase price that is
already discounted from the, as is value.
And we are firstly in position,which means that, a lot of our
borrowers they're using also investorsthat are investing with them.
Into the deals and these investorsare coming in with the equity, and our
investors are coming in with the debt.
The beautiful part about, us beingdebt providers is that we're the last
(19:53):
one into the deal, but we're the firstones out, which means that, being the
last one in, that means the borrowerhas already done their due diligence.
They made sure that the deal is vetted.
It makes sense, but they're also thefirst ones to put their money in.
Now we're the last ones out,which means the first one's out.
What that really means is that beforeanyone takes out a penny of their
(20:14):
money, we as lenders are repaid first.
Look, I, I'll use myself as an example.
I have we're recording.
It's structured
that way.
Oh yeah.
It's beautiful, right?
Like I'm reporting in my home.
I have a mortgage on my propertytomorrow if I choose to sell my
property and buy another house beforeI take out my blood, sweat, and tears.
(20:35):
My equity in my home, I gotto pay off my bank first.
So being a investor in a debtfund, you are the bank, right?
You
are the bank.
Being
the bank, you're a lot more secured thanany other investor because you're the last
one into the deal, but always the firstone out and you are on the highest part
of the capital stack because of that.
(20:57):
I like that.
So the state startup is about bringingin the money and the, we lend is about
providing that money to private lendersor private people that need private money.
Okay.
The very
good is ecosystem.
Yeah.
Thank God.
Yeah.
Yeah no, it's good.
Obviously real estate is unpredictable andit can be, if you do your analysis like
(21:23):
you said, if you cross your D's, dot yourI's properly, you should be pretty secure.
But is there anything that investorsshould look at to feel more secure
during, say, volatile times?
So that's when it's the besttime to really invest into
debt, in my opinion, right?
When the market is uncertain.
(21:44):
In fact, a lot of our borrowers, when,there was uncertainty in the market, when
the rates were going up, they were onthe sidelines, because they just didn't
know exactly where the market was going.
So they had a lot of equity that wassitting in their bank, and they just
didn't know how to deploy it, becausethey were afraid to buy real estate.
So what we, what they were doingwas actually investing into our
(22:04):
fund for us to be able to deploy it.
And That's the beauty about,on certain markets, right?
And certainty in the markets isknowing exactly where to invest into.
So I feel like being a debt provider,being a lender, being that it's a
natural kind of secure position inthe capital stack is really the best
time to really invest into vehicleslike ours is doing on certain markets.
(22:25):
And that's only because you're ableto get high yielding returns, monthly
cash flows, first need positions,personally guaranteed by the borrower,
is collateralized by real estate withabout 40 percent of equity into the deal
by being a lender, regardless of whetherthe market is certain or uncertain.
That's what a lot of our investors likeis they like to invest into our vehicles.
(22:46):
They don't want to haveto manage the real estate.
They don't want to have to deal with
anything
to that effect.
They just want to be able to get,as they say, mailbox money, right?
Mailbox.
Yeah.
What kind
of percentage is it to return?
So today it depends on the investmentamount, but it's anywhere between
about 11 to 13 percent on an annualizedbasis with monthly deposit to the bank.
(23:08):
That doesn't go, all of itdoesn't go to the investor that's
putting in money to states.
Oh that's to the
investor.
So no, for example, if somebody putsin 100k into the, into this company
to utilize that money as a bank toother people that need money, will they
be receiving for the 100k, 11, 13%?
(23:32):
Okay.
Good.
So all that money that theyinvest into gets deployed into.
So you take a fee.
We do take a fee.
So our fund makes between,I would say about 15 to 18
percent on annualized basis.
And that's to the investor about11 to 13 percent really depends
on, their investment amount.
(23:53):
We have class A, B and C shares.
So it really depends on theirinvestment amount, but it usually
ends anywhere between 11 to 13.
Wonderful.
Ruben, we try to keep ourepisodes up to maximum 30 minutes.
That's where people areenjoying our show the most.
One other question I want to ask youis the clients that you work with,
can they be from outside of us on bothsides, investing and money requirements?
(24:18):
So
investing, the answer is yesto lend outside of the us.
It's not something that we do.
We only learn inside,
inside us to build a portfolio,but they have not a us citizen.
So we would want them if there's a foreignnational, the bottom of the answer is yes.
High level answer is yes.
But we would want them to have some kindof tax ID number or something that we
(24:39):
can work with in the event of a default.
So the answer, the highlevel answer is yes.
If they want to borrow from us asa foreign national, it's something
that we can do, but the assetalways has to be in the U. S.
That's what I mean.
So if the asset is in U. S., it has agood cash flow analysis to back it up.
You're lending on the property, right?
(25:00):
So if, say, Canadian becomes friend,friends with you and says, let's
get somebody going for this project.
Will you mostly be looking at theproperty and then what are the
required, I guess the requirements forthe foreign national is to make sure
the properties in the U S number one.
And what are the other ones?
So one, we always checktheir credit, right?
(25:21):
So they may not have a social security.
We would want to see their tax IDnumber, or something to be able to tie
them to the U S now in the event thatthey don't have credit or anything to
that effect, which mostly they won't,if they're, foreign nationals, we just
will be very conservatively leveraged.
Which means that they'll just have tocome in with more dollars to the closing.
(25:42):
Versus us having to give them alot of money, we'll just give them,
we'll still finance it for them, butwe'll just want them to have more
equity and skin in the game, right?
Today, the average skin or leverageto the bar was right around 70%,
which means that the borrowers arecoming at around 30 percent of equity
into the deal for a foreign national.
We'll probably be at about 50%.
So the foreign national, the investor hasto come in with at least 50 percent of the
(26:04):
equity.
Okay.
Wonderful.
Thank you so much, Ruben.
It was great talking to you.
I appreciate your time todayand, wishing you all the success.
Keep helping others grow.
Amen.
Amen to that.
And you as well.
Thank you so much fordoing what you're doing.
I've listened to some ofyour podcasts last night.
You're doing an amazing job.
Keep it up.
Thank you so much.
Oh, thank
you so much.
Being
(00:00):
the bank, you're a lot more secured thanany other investor because you're the last
one into the deal, but always the firstone out and you are on the highest part
of the capital stack because of that.
This is the end of the video.
I hope you enjoyed it.
If you did, please like and subscribe.
I'll see you next time.
(00:22):
Outro music.
Welcome back everyone.
This is shahid Durrani your host ofsuper entrepreneurs podcast today.
We have with us.
Ruben Izgelov.
A real estate expert with more than adecade of experience flipping, developing,
(00:44):
financing over 500 million in deals andco founder of States Capital and We Lend.
Ruben allows investors to earnstable returns without taking the
risk of owning physical real estate.
Today, we are diving into thatalong with his thoughts on the
(01:05):
future of real estate financing.
Ruben, thanks for joining us, my friend.
It's
a pleasure to be here, Shahid.
Thank you so much for having me on as aguest and I look forward to not only this
episode, but many more episodes to come.
Yes, thank you so muchand welcome to the family.
Appreciate it.
Yeah, no, it's great so private lendingseems to be Growing in popularity,
(01:30):
especially with the banks Makingit super difficult, for dreamers
To dream and to create, privatelending comes in as a superhero,
helping people in different aspects,
obviously, it costs more, but you hearstories of people's lives completely
shifting by that one person that believedin them or trusted them to provide their
(01:55):
money, even though they paid a lot for it.
That injection helped.
them go to that next stepto continue that journey.
So what would you say are the biggestreasons investors and developers
are choosing lenders like we lend,compared to traditional banks.
I know we talked about a little bit here,but what is your deep sense of that?
(02:18):
So look, I think it's necessity.
I think it is one necessityand also it's just convenience.
To your point about, that one, investoror person who invested into you in
the beginning that really helped youtake things to the next level that
was actually my private lender manyyears ago when we were buying, selling,
developing real estate for quitesome time before we founded BeLend.
(02:41):
It's like I read your mind.
Yeah you I don't know how you'reprobably like, with the neural
links or whatever it is that you'redoing out there, but getting there.
So our private lender at that timewas a, older gentleman, who's actually
an investor in our fund today.
And, we've become very good friends.
He, lent us money onour first acquisition.
(03:03):
In Brooklyn, New York.
And, that was one of the mostsuccessful acquisitions I've had.
I've tried to repeat that over andover again, but I guess it was just
God's blessing for at that time.
So it's hard to repeat that samedeal, but nevertheless, it was
a deal where we purchased for,several hundred thousand dollars.
It was about 260, 000 acquisition.
We've put another 200, 000 intorenovation, and then we ultimately
(03:26):
flipped that property for about 1.
4 million.
So we made nearly a million dollarsjust on our first buying, selling,
flipping, developing real estate.
And that was all because.
Our private lender at the time reallytrusted us and invested into us clearly
that at a much greater premium than say,going to a lender or another lender that,
(03:47):
like a regional bank, but the reason whywe went to this private lender was, like
I said, in the beginning necessity, right?
The property that wewere buying in Brooklyn.
It was in really bad shape.
The property was uninhabitable,although there was people living there.
I don't know how, it wasjust not mortgageable.
So that's one, that's one of thereasons why a lot of our investors
(04:09):
or borrowers rather borrow from us isbecause the properties that they're
buying are really in bad condition andthey just can't get a mortgage on it.
Secondly, it's because the investorhimself needs to close very quickly.
There
are times, Oh, totally.
Like there, there are timeswhere investors call us
on a Monday, or a Sunday.
I had a call just last night,Sunday saying, Hey, I got to
(04:32):
close this deal by Tuesday.
There's no ifs, ands, or buts about it.
I got a steep discount onlybecause I told them I'll close by
Tuesday or Wednesday, the latest.
As a private lender, we have the capacityand the flexibility to move very fast.
Yesterday I already orderedan appraisal yesterday.
We already got, our inspectorsout to the property.
They're actually going there.
(04:52):
They're actually there today, right now.
Inspecting the property,making sure that it's something
that we're willing to invest.
Our hard earned money and ourinvestors harder money, the bottom
line is that speed is anotherreason why they come to us, right?
They need to close quickly.
If you go to a, a bank chase bank, WellsFargo or a regional bank wherever they're
wherever you're located, you're lookingat least a 90 day to 120 day close, right?
(05:17):
Even longer than that.
So that's another reason why a lot ofborrowers use this, but also it could
be that they're not mortgageable, right?
The investor themselves, like alot of our investors, there are
experienced full time operators.
They don't have a W 2 job.
They don't have, perfect taxreturns, and sometimes they
don't have the perfect credit.
Their credit might be at 640, 650.
(05:38):
We're okay with that because we'renot really lending to the borrower.
We are.
Obviously, there's a principlebehind the entity that we lend on,
but we're really just looking andfocusing on the collateral, right?
On the
pet property.
So our focus is, of course, there's a lot.
That's good.
Are we're in the principle, but the mainfocus is the collateral because at the
end of the day, while all of our loansare perceived guaranteed by each and
(06:02):
every bar, where the asset is really ourkind of, go to in the event of a default.
I would say those are the main reasonswhy, bar was come to us because
of the speed because of the typeof properties we went on and the
flexibility to be able to get thingsdone, regardless of what your personal
status may be at that specific time.
(06:26):
Wonderful answer.
Thank you, Ruben.
I love the detail because you made it veryclear to people what Why do people choose
privately, even though it's so expensive,
so that clarity was very importantas we continue this conversation.
And that part about you saying thatmillion dollars that you received,
even though you paid a lot forit, it changed your life, yeah.
(06:48):
And then, that feelingis when you made profit.
It created something very special in yourbody, in your existence, where you started
creating this more solid belief in what ispossible, and that also, that power, that
energy, that power behind you, that youwent and you started, trying to multiply
(07:11):
that same idea, but you're still, as youzoom out, looking down, you could still
see the success is obvious, it's obvious.
Could you say that energy increase ofhow you felt had some something to do
with the success from that point on?
And also if you had that beforestarting your journey, how
would that outcome also reflect?
(07:36):
I think you hit it on the head.
I think prior to, this deal in Brooklynthat I mentioned at the start of this
episode was, we weren't doing wellfinancially, um, right before that.
I don't want to say I got swindledout of, my life savings, but I went
into a partnership where the otherpartner wasn't entirely honest.
(07:57):
And I, it happens a lot.
It happens and I was foolish to andgullible to go on a handshake deal But
it taught me a very valuable lesson.
Yeah Oh, yeah.
It was a handshake deal.
I was supposed to get X. He was supposedto get Y. And when, the deal did come to
(08:20):
fruition, I got almost nothing, right?
It was a family friend?
It was a family and childhoodfriend, you could say.
He wasn't my childhood friend, buthe was a family's childhood friend.
Close
enough.
It was someone that I really trustedand, it was a very valuable lesson.
So it really set us back to a pointwhere I lost about 400, 000 at that time.
(08:42):
I had 6, 000 in my bank and Iwas six months behind on my rent.
So I was really down on my lastlimb, you can say, but thankfully
I had, a very good support system.
I had good friends, really goodfriends that really believed
in me, that trusted me.
And when I came to him and toldhim the situation, they were all.
Open to writing me a check just to helpme support myself for the next few months.
(09:03):
And believe it or not, thosesame friends are actually friends
that borrowed from us today.
But it's, the world isjust it's round, right?
So like you help them outjust as they've helped you.
And I've always had thisconversation with them about Hey,
you gave me that support system.
But at that specific moment to yourquestion, before I purchased this property
in Brooklyn, in terms of confidence, I, I.
(09:24):
I did not have theconfidence to move on, right?
I really didn't.
I had the motivation to move on,but I just didn't feel confident in
the ability to be able to recuperateand make the money back, right?
I was just like, shoot, I lost everything.
And I was young.
I was.
In my early twenties.
But nevertheless you lose that confidence.
(09:45):
The one thing that you dohave is your motivation, your
drive, your support system.
And I think at that moment, whenI did close that deal and we were
able to cash in our chips, youcan say, and we had that, almost a
million bucks come into our account.
Matt, it was a huge weight.
Off your chest, right?
Like it's like shit, forgive me,but you made it like you did it.
(10:08):
You did it.
You recuperated them on the money.
I don't know why I justrelived that moment.
It felt great.
Thank you so much.
I just relive that.
I want you.
I want you to relive it for this episode.
Actually, everything forme, everything is energy.
Oh, yeah.
Oh, yeah.
So it was a huge boost of confidence.
It also gave us theability to start focusing.
Yeah.
(10:28):
On the future, the roadmap, where do we go?
How do we do it?
How do we get there?
And so on.
And this has been what?
Almost 15 years now, right?
That this happened.
And, thankfully, who would haveever known that we would be.
A private lender that we would be,very, active real estate investors
developers for so many years.
(10:49):
And, hindsight is 2020, but I would havenever thought, in my early twenties that
I would be sitting here talking about,the amount of money we've deployed.
And today it's nearly 600 million dollars.
Across 1300 asset classes, right?
Nationwide, we're not justtalking about New York.
We're talking about theentire nation, right?
We've made loans in statesthat I've never been to, right?
(11:10):
Alabama Alaska, Hawaii.
I should be in Hawaii, but Ihaven't been to Hawaii yet.
I haven't been to Alabama andAlaska, for all the right reasons.
In states that I've never stepped myfoot into, and yet we've made loans
there, we've transformed lives there.
We've improved people that we'veimproved, neighborhoods, cities, people's
livelihood, and I'm so thankful to bein a business where I can help people
(11:33):
just like people has have helped me.
I have borrowers that, call mefrom time in time out, thanking me.
The same way as I thanked my privatelender many years ago and that in this
Brooklyn deal, I called him I said,hey, thank you so much for trusting me.
Thank you so much for obviously chargingme all this interest But hey, you gave me
the confidence back and that's that means
(11:53):
nothing.
Yeah, what a big grand schemeof things That means nothing.
Oh, yeah the interest that we paid him.
I think it was peanuts comparedto what we've earned Yeah,
it's all ROI, that's wonderful because,what I was trying to get at or understand
is that, where you were on that level whenmajor advancement happened in your life.
(12:16):
And then also where youwere before it happened.
So I was connecting, that feeling,imagine if you had that feeling that
you're going to make complete confidence,complete knowing, complete faith.
And you're with that energy feelingthat you're already a success and if you
just bring yourself back to that time,can you see how much more you would
(12:39):
do as like you, you wouldn't, you, itwouldn't be a very low type of effort.
It would be a very high intensity, asense of urgency because you're so excited
and enthusiastic about making thingshappen and it changes the dynamics.
Of, of you as an entrepreneur, whenyou feel, when you think and feel
(13:03):
something powerful, even thoughyou might not be in the physical
reality, how it shifts your results,
that was where I was taking this.
Totally.
I think you hit it on the head.
Look, I am naturally avery cautious person.
I'm not a risk taker.
A lot of my friends know me forthat, that I am not a risk taker.
A lot of my friends arereally big risk takers.
Some have done extraordinary well.
(13:26):
And some have done really bad, right?
Because they've just risked all their,all their life savings into deals
and they really lost everything andthey'll recuperate it back and they've
done well for themselves as well.
But yeah, I am a very cautious person.
I like to cross every TI like to dot every I,
and I think
that, I'm also an attorney, right?
I don't practice because wheelingis all I really do, but I'm also an
(13:47):
attorney and going through law school,you are taught, for a person that's
already, cautious naturally in lawschool, they teach you to be paranoid.
You can say, and the reason why is becauseas an attorney your brain is supposed
to be wired to protect the downside.
You protect the downside, you protect thedownside, you protect the downside, right?
At all times, you put in, clausesand things into your contract to
(14:10):
be able to protect your clients,and you protect the downside.
So me being naturally cautious, me beingan attorney going through law school
and, this whole career in law school,four years or what have you, you come out
of there Like a paranoid freak, right?
You come out of the okay, howdo I protect the downside?
What do I do to make sure that I'm okay?
(14:30):
So I think, one of the thingsthat I failed to recognize to your
point was that, if you think good.
You will do good, right?
And I have this one deal where,recently I was supposed to
actually, not get this deal done.
And I don't know what happened,but something was just like,
I'm going to get this deal done.
(14:51):
I don't care what everyone is saying.
I'm not going to get it done,but I'm going to get it done.
And I had no idea how to get it done.
I was just like, I'm going to, Idon't know what I'm going to do.
So I called my broker.
I'm like, listen, man, I,we gotta get this deal done.
He's Ruben, there's nochance it's not happening.
It's just not gonna, ithappening that you want.
And what hap I'm just like,look, you, it's happening.
You believe in God?
He's I believe in God.
I'm like, I believe in God too.
(15:12):
I just lost, my dad let'sit, I'm really religious.
I'm like, you are gonna get this done.
Get it done.
I, you got time.
Yeah.
Figure it out.
Hung up the phone.
Yeah.
Two weeks later, he calls me, says Ruben.
We got it, we got what you wantedand it was getting done and
exactly where I wanted the deal toland is exactly where it landed.
I think
to your point, it's allabout positive energy.
(15:33):
It's all about thinking positive,it's all about doing good things.
Yeah, Ruben, you said it so nicely, man.
And it really, at the end of theday, you mentioned, some of the
friends that lost everything, thatonce you have the right mindset, you
can lose everything multiple times.
You always find yourself towhere your program to be.
(15:56):
That's for sure.
Now you're just always show up.
there.
But we're trying to make it much bigger.
So we're trying to make it to get towhere that's why I feel like taking
risk is good because it puts you inthat area where you can actually develop
and grow and learn to expand yourself,
and, God forbid if you do.
(16:16):
Obviously lose stuff, you always findyourself back to where your program
to be and then grow from there.
But anyways, taking those chances, takingthose beliefs that you have in yourself,
those thoughts, those feelings that createthe energy in your body through your
central nervous system, you're going at itbecause having that faith and belief that
(16:37):
it's going to be okay in the big picture.
Grand scheme of things, not based on justthis one little thing it's very minute.
And when we look at life like that, westart making things happen more often.
It's like the art of being luckyat the end of the day is how you're
thinking, how you're feeling, andthen how you're acting is being
(16:58):
that's having that self awareness.
And you said it beautifully.
Thank you so much for that.
Yeah.
And another question I have is that,I know we talked about a lot of other
things, I'm sure it's going to add valueto people that are listening and watching,
but could you explain the capital stack,how does it help protect investors money
(17:22):
by, and also giving them a solid return,that part, can you elaborate quickly?
Yeah,
Of course.
Thankfully today and again, goingback to what I was mentioning,
like I would have never thought I'dbe doing where I'm doing what I'm
doing today and where I'm at today.
But, everything justworks in its natural form.
But today we do manage a 506 C reg D.
It's an exemption through theSEC. It's a private debt fund.
(17:43):
Essentially we have a lot ofentrepreneurs, high net worth, ultra
high net worth investors who arebusy with their day to day jobs.
These are attorneys, they are architects,they are doctors entrepreneurs who
really just want to be able to deployand invest their hard earned money, some
(18:03):
of them actually are borrowers they'rereal estate investors they want to
invest their hard earned money into realestate, but they just don't have the time
to be able to manage the real estate.
Some of them, own real estate or theydid own real estate and they're just so
fed up with having to deal with tenants.
Deal with the construction, dealwith, department of buildings.
(18:25):
All that comes with owning real estate.
So a lot of our investors today,they don't want to be landlords.
They want to be lenders.
And that's what we provide to themtoday is the option of being a
lender versus being a landlord.
So our investors, they invest into ourfund, which makes a portfolio of loans.
(18:47):
All of our loans are first lien positions.
Collateralized by real estate, personallyguaranteed by each and every borrower
at a very low and conservative leverage.
All of our borrowers are comingin with equity into the deal.
They're experienced operators who arebuying properties at a huge discount.
(19:07):
Because they're able to closewithin two or three days.
They're buying propertiesthat are, uninhabitable.
They are really bad shape.
They're able to buy these propertiesat a huge, steep discount because
of their position in the deal.
And we give them a percentage oftheir discounted purchase price.
So essentially ourinvestors are very secure.
(19:30):
In the sense that we're, we're giving thema percentage of the purchase price that is
already discounted from the, as is value.
And we are firstly in position,which means that, a lot of our
borrowers they're using also investorsthat are investing with them.
Into the deals and these investorsare coming in with the equity, and our
investors are coming in with the debt.
The beautiful part about, us beingdebt providers is that we're the last
(19:53):
one into the deal, but we're the firstones out, which means that, being the
last one in, that means the borrowerhas already done their due diligence.
They made sure that the deal is vetted.
It makes sense, but they're also thefirst ones to put their money in.
Now we're the last ones out,which means the first one's out.
What that really means is that beforeanyone takes out a penny of their
(20:14):
money, we as lenders are repaid first.
Look, I, I'll use myself as an example.
I have we're recording.
It's structured
that way.
Oh yeah.
It's beautiful, right?
Like I'm reporting in my home.
I have a mortgage on my propertytomorrow if I choose to sell my
property and buy another house beforeI take out my blood, sweat, and tears.
(20:35):
My equity in my home, I gotto pay off my bank first.
So being a investor in a debtfund, you are the bank, right?
You
are the bank.
Being
the bank, you're a lot more secured thanany other investor because you're the last
one into the deal, but always the firstone out and you are on the highest part
of the capital stack because of that.
(20:57):
I like that.
So the state startup is about bringingin the money and the, we lend is about
providing that money to private lendersor private people that need private money.
Okay.
The very
good is ecosystem.
Yeah.
Thank God.
Yeah.
Yeah no, it's good.
Obviously real estate is unpredictable andit can be, if you do your analysis like
(21:23):
you said, if you cross your D's, dot yourI's properly, you should be pretty secure.
But is there anything that investorsshould look at to feel more secure
during, say, volatile times?
So that's when it's the besttime to really invest into
debt, in my opinion, right?
When the market is uncertain.
(21:44):
In fact, a lot of our borrowers, when,there was uncertainty in the market, when
the rates were going up, they were onthe sidelines, because they just didn't
know exactly where the market was going.
So they had a lot of equity that wassitting in their bank, and they just
didn't know how to deploy it, becausethey were afraid to buy real estate.
So what we, what they were doingwas actually investing into our
(22:04):
fund for us to be able to deploy it.
And That's the beauty about,on certain markets, right?
And certainty in the markets isknowing exactly where to invest into.
So I feel like being a debt provider,being a lender, being that it's a
natural kind of secure position inthe capital stack is really the best
time to really invest into vehicleslike ours is doing on certain markets.
(22:25):
And that's only because you're ableto get high yielding returns, monthly
cash flows, first need positions,personally guaranteed by the borrower,
is collateralized by real estate withabout 40 percent of equity into the deal
by being a lender, regardless of whetherthe market is certain or uncertain.
That's what a lot of our investors likeis they like to invest into our vehicles.
(22:46):
They don't want to haveto manage the real estate.
They don't want to have to deal with
anything
to that effect.
They just want to be able to get,as they say, mailbox money, right?
Mailbox.
Yeah.
What kind
of percentage is it to return?
So today it depends on the investmentamount, but it's anywhere between
about 11 to 13 percent on an annualizedbasis with monthly deposit to the bank.
(23:08):
That doesn't go, all of itdoesn't go to the investor that's
putting in money to states.
Oh that's to the
investor.
So no, for example, if somebody putsin 100k into the, into this company
to utilize that money as a bank toother people that need money, will they
be receiving for the 100k, 11, 13%?
(23:32):
Okay.
Good.
So all that money that theyinvest into gets deployed into.
So you take a fee.
We do take a fee.
So our fund makes between,I would say about 15 to 18
percent on annualized basis.
And that's to the investor about11 to 13 percent really depends
on, their investment amount.
(23:53):
We have class A, B and C shares.
So it really depends on theirinvestment amount, but it usually
ends anywhere between 11 to 13.
Wonderful.
Ruben, we try to keep ourepisodes up to maximum 30 minutes.
That's where people areenjoying our show the most.
One other question I want to ask youis the clients that you work with,
can they be from outside of us on bothsides, investing and money requirements?
(24:18):
So
investing, the answer is yesto lend outside of the us.
It's not something that we do.
We only learn inside,
inside us to build a portfolio,but they have not a us citizen.
So we would want them if there's a foreignnational, the bottom of the answer is yes.
High level answer is yes.
But we would want them to have some kindof tax ID number or something that we
(24:39):
can work with in the event of a default.
So the answer, the highlevel answer is yes.
If they want to borrow from us asa foreign national, it's something
that we can do, but the assetalways has to be in the U. S.
That's what I mean.
So if the asset is in U. S., it has agood cash flow analysis to back it up.
You're lending on the property, right?
(25:00):
So if, say, Canadian becomes friend,friends with you and says, let's
get somebody going for this project.
Will you mostly be looking at theproperty and then what are the
required, I guess the requirements forthe foreign national is to make sure
the properties in the U S number one.
And what are the other ones?
So one, we always checktheir credit, right?
(25:21):
So they may not have a social security.
We would want to see their tax IDnumber, or something to be able to tie
them to the U S now in the event thatthey don't have credit or anything to
that effect, which mostly they won't,if they're, foreign nationals, we just
will be very conservatively leveraged.
Which means that they'll just have tocome in with more dollars to the closing.
(25:42):
Versus us having to give them alot of money, we'll just give them,
we'll still finance it for them, butwe'll just want them to have more
equity and skin in the game, right?
Today, the average skin or leverageto the bar was right around 70%,
which means that the borrowers arecoming at around 30 percent of equity
into the deal for a foreign national.
We'll probably be at about 50%.
So the foreign national, the investor hasto come in with at least 50 percent of the
(26:04):
equity.
Okay.
Wonderful.
Thank you so much, Ruben.
It was great talking to you.
I appreciate your time todayand, wishing you all the success.
Keep helping others grow.
Amen.
Amen to that.
And you as well.
Thank you so much fordoing what you're doing.
I've listened to some ofyour podcasts last night.
You're doing an amazing job.
Keep it up.
Thank you so much.
Oh, thank
you so much.
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