Ep. 234 Ken Avalos: Alternate Lending for Multifamily Investors

Today we talk with Ken Avalos, VP of Electra Capital, about alternative lending with a focus on multifamily financing solutions. Alternative lending is a great option when traditional lenders are unable to meet an investor's needs. The benefit of an alternate loan is more leverage (which means you put in less capital), speed, and the flexibility and creativity to work around odd structures and difficult issues. Depending on your situation, this can potentially allow you a greater rate of return.   Most investors use traditional lenders like Fannie and Freddie, or use a traditional community bank - all of which typically offers low cost and long term fixed rate financing. However, these traditional lenders will usually at best give you 65%-70% leverage, and their underwriting criteria is fairly strict. And in today's world of 3%-5% cap rates, it's hard to generate a decent internal rate of return.     Key Discussion Points [00:57] Opening remarks by Eric Odum & Steven Silverman [03:31] About our guest: Ken Avalos [04:56] How did you get into real estate and finance? [09:35] Do you think the Florida market is overheated? [14:50] Are you monitoring the rent to household income, and what are you seeing? [17:13] Explain about your alternative financing services [26:14] Does the bridge loan convert into a permant loan at the end of 3 years? [27:44] What deal size is attractive for your loan service? [28:42] Do you mainly loan to multifamily? Or do you also look at other asset classes? [30:03] Tell us about Mezzanine Debt vs. Preferred Equity as it relates to your product [42:09] How can folks reach you? [43:20] Closing comments by Eric & Steven   About Our Guest Ken Avalos is the VP of underwriting and analysis at Electra Capital. He is a graduate of Boston college, and has an M.B.A. from the Stern School of business.