David Dweck is a south Florida real estate investor, RE/MAX realtor and mortgage broker. He is founder and president of the Boca Real Estate Investment Club and co-founder and vice president of the Latin American Real Estate Investor’s Association. Dweck’s lending company, EZ Equity Loans, specializes in private loans for real estate investors.
For more than a decade, Dweck has bought, sold, renovated and brokered more than 1,000 HUD, VA, REO, distressed and high-end properties throughout his area. Dweck manages his own portfolio of rental properties and has also participated in numerous commercial transactions. His first development project, Mountain Creek Vistas, is in progress in North Carolina.
NuWire: Can you share with me how you started investing and why you chose real estate?
Dweck: I decided by the time I was 30 if I wasn’t making a certain income that I wanted to be able to be entrepreneurial, be on my own, and I thought the best vehicle to do that was real estate.
While I was employed, I decided to start buying real estate, and for every one that I bought, fixed and sold, I fixed and kept the next one. So I thought long-term real estate would be the vehicle.
At that point, I took my money out of the stock market and invested it all in real estate, and I never looked back.
NuWire: What is it about real estate investing that excites you?
Dweck: I’m passionate about what I do, and I’m passionate about it because no two days are ever the same. I wake up in the morning fired up, and even if it’s a day where I really have to dig in and it could be tough…I like the challenges. I like the out-of-the-box thinking. I like that it’s a people business and that no two deals are ever the same. You’re constantly meeting people. You’re constantly putting things in motion, constantly doing deals.
NuWire: You’re also a hard money lender. Can you tell me more about that?
Dweck: Hard money lending is synonymous with equity lending and private loans, and basically what it is, is in essence the quick access to cash.
Traditionally…it’s not credit driven. However…I have always been credit driven….I want people to have some wherewithal to be able to pay their monthly obligation. Typically hard money loans are interest-only loans, and they typically last for about a year. And then they balloon.
It’s usually a lot less stringent than when you go through a regular banking avenue where there’s…appraisals involved, surveys involved, income verification, all that. There’s none of that. The true hard money lender goes on value of the property and loans at 65 percent of what the value is.
We like to fund 65 percent of the ARV, After Repair Value….We were going as high as 70 and sometimes do, but because the market is a bit skittish and potentially dipping a little bit, you’ve got to be a little conservative because the bottom line is the private lender is putting their money at risk…
Hard money lending is really quite a nice business in that you’re able to fund people very quickly and potentially give them all the money that they need to buy a property that’s below market. And the way things are going right now, there are people that are getting really good deals.
NuWire: What about [hard money lending] is exciting to you?
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Dweck: A) it’s a nice revenue stream. B) you get all kinds of neat deals….The time value of money for me is really, really good because the system I’ve created for the hard equity lending side is fairly streamlined, and if all the ducks are in a row on that system, then we can close very quickly.
There’s a lot of back and forth and a lot of “I”s that need to be dotted and “T”s that need to be crossed in a very short period of time, and you’ve got to push, and you’ve got to control it. You’ve got to make things happen….In a very short period of time, I can make a nice return.
NuWire: What kinds of returns could somebody expect with this type of investment?
Dweck: I give my lenders…anywhere from at the low end of 12 [percent] to the high end of even 15 [percent]. And my average rate is about 13 percent.
I don’t ever pool anybody’s money; there’s one lender that’s matched to one specific borrower and the property that that borrower’s buying or refinancing.
So let’s just say if we loan $100,000 at 14 percent, that lender every month will get a check in the mail for…close to $1,200. When it pays off, they get the principal and whatever interest they’re owed back. So it’s a very easy way…for somebody to get a high rate of return on their money.
NuWire: Where do you typically find the people that you lend to?
Dweck: Well, I’m a well networked guy. And between e-mail blasting, networking, advertising, marketing, that mix, and basically being in this business for…well over a decade….Where do I find the people that I lend to? From all over. And they usually find me.
I wouldn’t loan on anything I wouldn’t want to own myself, meaning that in a worst case scenario, if the borrower defaults, either myself or my lender would be happy to take it back because at the end of the day we’ll make more money. So not that my lenders are in the real estate business per se; they’re in the lending business…that’s just the exit strategy.
NuWire: So you lend your own money, but you also partner with other people to lend?
Dweck: Yes, I lend my own money but most of what I do is I broker out other people’s money. So I act as kind of like the middleman.
NuWire: Where do you find those people?
Dweck: I have found lenders through numerous avenues. Through the Boca Real Estate Investment Club, through friends and family, through other real estate professionals. I also conduct…educational seminars, and some of my lenders have come from those seminars.
NuWire: What are the typical terms like on your loans?
Dweck: The loan to values would be 65 to 70 percent of the ARV, which is the After Repair Value. And rates and points will vary depending on the borrower, depending on the property. Could be as low as 2 points and as high as 5 points. The rate could be anywhere from 12 to 15 percent, depending on the deal….Sometimes I can even get 10 or even a single digit rate depending again on the borrower and the LTV.
When it comes down to it, the most important things are the subject property, the loan to value and the borrower. And that will dictate the terms.
NuWire: I’m curious what sort of certifications or licenses people might need to lend.
Dweck: There’s a lot of regulation. Part of that is because of the predatory lending. And hard money lenders get lumped with that, and I don’t really loan money to owner occupants. I really stick to the investor model. And it’s a whole lot easier and a whole lot cleaner.
But I have a compliance officer on retainer to ensure that my documents are done correctly and that everything is compliant with the state. I happen to be a licensed mortgage company.
Lenders, if they’re actually just lenders, don’t need to be licensed per se if they’re just lending their own money. But that law varies from state to state, and it’s really best for people to check with their own state.
NuWire: Are there any types of borrowers that you just choose not to work with?
Dweck: I want to know who I’m dealing with. And since there’s so much mortgage fraud…not only in south Florida but throughout the country, I want to make sure that my borrower is a solid real person.
If I’m going to loan $1 million on a property, I need to make sure that that borrower is for real, and we’re going to have a sit down, whether it’s my office, the lender’s office, wherever.
And if somebody is buying a property and it needs an extensive rehab, I want to see that they have the money in the bank to do it, so I’ll ask them to fax me their bank statement. I want to see credit.
NuWire: If you could give a new real estate investor some advice, what would you tell them?
Dweck: Two things: get educated and then do it….If you don’t do it, then you might have regrets for the rest of your life that you never did it. So you have to do it, but you can’t do it just to do it….You have to be able to do it to make money.
NuWire: Where do you see the greatest area of investment opportunity in the next five to 10 years?
Dweck: I still think long term, whether it’s five years, 10 years or beyond that…there’s always going to be a need for the single family home. And I think it’s the easiest place to start. I think…short and long term it’s really the best investment, and again it comes down to buying right.
NuWire: Tell me about your future goals. What do you hope to achieve?
Dweck: The big goal is financial freedom and to be able to, if and when I choose to retire…[to] do so on my own terms. I’m not going to rely on our government for Social Security because I don’t think it’ll be around, especially at the rate we’re going.
I want to build my portfolio to where my portfolio works for me, because really by the time, let’s say 10 years from now I want to just stop…I could.
