RG 338 – What You Should Know About Hard Money Lending with Will Coleman
RG 338 - What You Should Know About Hard Money Lending

What is a short-term loan, and why would a borrower choose it over a traditional loan? Let’s welcome Will Coleman of UrbanGate Capital to the show this week to shed light on some of our questions about hard money lending.

Will Coleman is a Co-Founder and the CEO of UrbanGate Capital, a real estate hard money and private capital lending company. Through his expertise in operations and investor relations, Will helps other investors earn high-yield returns on short-term hard money loans in Texas and Tennessee. Since they started two years ago, Will and his team have loaned out over $25 million.

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How do short-term loans work? And how does UrbanGate gain a profit? Whether you’re an aspiring lender or house flipper—or simply on the lookout for hard cash—you probably have a lot of questions about short-term loans. Luckily, Will is here to walk us through the short-term loan process, including how they find borrowers and keep an edge against other lenders.

Key Takeaways

  • Investors have varying risk appetites regarding short-money loans, depending on their space.

  • As long as the cost of capital is going up, values are going down (correction effect).

  • People usually don’t want to flip houses when valuations are going down.

  • Speed is sometimes hard money’s advantage against traditional, lower-interest loans.


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Podcast Transcript

Reed Goossens (00:00):

Good day Good day guys. Now, before we dive into today’s show, I want you to let you know that some of you may be aware that over the past eight years, I have built a substantial multi-family real estate portfolio here in the US worth over half a billion dollars. And in that time, my passive investors have received fantastic double-digit returns. And now you too can invest directly into my deals for as little as $50,000. So if you’re an interested investor, head over to reedgoossens.com to find out more. That’s reedgoossens.com. Now, back into the show,

Will Coleman (00:41):

A lot of people are just kind of like, I’m just selling everything now. I’m not trying to buy anything. Um, I’m, I’m offloading my books, or I’m taking a break, or I’m, I’m, I’m trying to buy for long term, like everyone knows valuations are going down, and I’m a big believer. And as long as the cost of capital’s going up, valuations are going down. And so a lot of people don’t necessarily want to flip something in a market where valuations are going down. That being said, deals are still happening. There just has to be a lot more meat on the deal, like you have to be getting at a, a severe discount, or it’s gotta be really unique situation. Um, so the deals are still happening, uh, but it, it is certainly slowing down. And with that, um, obviously not only are is the deals slowing down, but we as an underwriting perspective are being more careful on the deals we lend on.

Speaker 3 (01:46):

Welcome to investing in the US, a podcast for real estate investors, business owners, and aspiring entrepreneurs looking to break into the US market. Join Reid as he interviews go-getters, risk takers, and the best in the business about their journey towards financial freedom and the sheer joy of creating something from nothing.

Reed Goossens (02:06):

Good day Good day, a ladies and gentlemen, and welcome to another cracking edition of investing in the US Podcast from Los Angeles. I’m your host, reed goossens. Good as always, Debbie with us on the show now. I’m glad that you’ve all tuned into it. Learn from my incredible guests and each and every one of them are the cream are the crop here in the United States when it comes to real estate investing, business investing, and entrepreneurship. Each show I try and tease out their incredible stories of how they have successfully created their businesses here in the us, how they’ve created financial freedom, massive amounts of cash flow, and ultimately created extraordinary lives for themselves and their families. Life by design, as I like to say. Hopefully these guests will inspire all of my cracking listeners, which are you guys to get off the couch and go and take massive amounts of action.

Reed Goossens (02:53):

If these guys can do it, so can you. Now, as you know, I’m all about sharing the knowledge with my loyal listeners, which is you guys, and there’s absolutely no BS on this show, just straight into the nuts and bolts. Now, if you do like this show, the easiest way to give back is to give us a review on iTunes, and you can follow me on Facebook and Twitter by searching at Reed Goossens. You can find the show wherever you podcast on iTunes, SoundCloud, Stitcher, and Google Play. But you can also find these episodes up on my YouTube channel. So head over to reedgoossens.com, Click on the video link, and it’ll take you to the video recordings of these podcasts where you can see my ugly mug, but he beautiful faces of my guests each and every week. All right, enough outta me. Let’s get cracking in into today’s show.

Reed Goossens (03:41):

On the show. I have the pleasure of speaking with Will Coleman. Now, will is the founder and CEO of UrbanGate Capital, and Will is responsible for all the operations and investor relations. Now, prior to starting UrbanGate Capital will has many years of experience in investing in Tennessee and in Texas. In addition, will has worked as a credit analyst at Citibank and has been a director of finance at Rand Capital, a mortgage lending brokerage company, um, based in Texas, I believe. But I’m really excited and pumped to have him on the show today to share his incredible knowledge and experience with us. But enough at me, let’s get him out here. Good day will welcome to the show. How you doing today, mate?

Will Coleman (04:15):

I’m doing great. How are you, Reid?

Reed Goossens (04:17):

Good, thank you very much my friend. Um, where are you dolling in from today?

Will Coleman (04:22):

I’m in Nashville, Tennessee.

Reed Goossens (04:23):

Nashville, Tennessee. Awesome. Love that part of the world. Uh,

Will Coleman (04:27):

It’s a fun place to

Reed Goossens (04:28):

Be. Yeah. You probably know some people that I know as well out there. Uh, ho Holland Day Ventures. Evan Holl.

Will Coleman (04:34):

Yeah, I know Evan. Yeah.

Reed Goossens (04:35):

Yeah. Good, good, good guy. Really good guy. So, um,

Will Coleman (04:38):

Actually just, just ran into him at the bar like two weeks ago.

Reed Goossens (04:41):

, out, out doing good networking, I assume . Yeah,

Will Coleman (04:44):

That’s right. Yeah. I was like, I was with one other guy and I was like, was this planned? And he goes, no, we’re just here. I was like, great. .

Reed Goossens (04:51):

That’s awesome. That’s awesome. Well, will, with that being said, can you rewind the clock and tell me how you made your first of a dollar as a kid?

Will Coleman (04:58):

Yeah, so I, I haven’t really ever been asked that, so I had to think about it. Um, but I, I, I, my first dollar I do think was not necessarily a garage sale, but like I set up a table in my front yard when I was probably, whew, I was probably like six or seven or something like that. And I would just, things in my house that I, no,none, none of our family wanted. I would put on a table and try and sell to people walking down the street, . And I remember I sold, I made like $30 or something like that, and I used that to buy subscription to a Yugi magazine that I, I was obsessed with Yugi. Mm-hmm. Um, I was, I was selling things like my sister’s toys and all kinds of things. So that, that was my first, first dollar.

Reed Goossens (05:44):

Awesome. Bring us into the story of how you’ve come to start UrbanGate Capital. Well, speaking in a bit of the Green Room prior, prior to pressing record, you’ve got a lot of experience prior to that. So what’s the, what’s the journey into entrepreneurship?

Will Coleman (05:58):

Yeah, so I, I think like, probably like yourself, Reed and, and like many entrepreneurs, I’ve, I’ve known I was an entrepreneur since I was like 10 years old. Uh, you just, you just can’t help it. Um, but I, I, I had a real estate. I had a job at a real estate bank in Texas, and after that I got, um, an opportunity to work, uh, at a company called Rand Capital, which is with Jake and Gino, who you may be familiar with. Yes, I am. And that was it. It, it was, I wasn’t starting a company from scratch, but I was helping them build a company. And so I went from like a, a traditional W2 job to helping people build a company. And so I, I did that for about two years, and that was the mortgage brokerage. And I learned all the lessons of what you need to do to build a business.

Will Coleman (06:47):

But for some like that, that business just wasn’t, I, I kept running into more walls than I feel like you should, as like, growing a business is already incredibly difficult. Mm-hmm. , but this seemed insanely more difficult than it should be. So I, I kind of, after a couple years, I sat down and I was like, why is this business not working? And then how can I build a business that doesn’t run into these same problems? And that’s what was kind of the origin of, of UrbanGate Capital. And at the time I was a commercial mortgage broker, and Urban Gate Capital is a, is a hard money lender. So, um, I made the jump from Rand to start Urban Gate after kind of looking at the principles that I learned from not a failed business were successful, but it was, was like, why is this so hard? Mm-hmm. And I took those lessons and used that to start my, uh, my new venture, which is Urban Gate.

Reed Goossens (07:37):

Well, Jake and Gino are good friends of the show. I’ve had both of them on before they’re asked. Um, and I, I, I, I was the mc at one of their first ever conferences back in the day. So yeah. Good big shout out to the boys. Um,

Will Coleman (07:49):

Was that in Nashville?

Reed Goossens (07:50):

No, that was, uh, was that Nashville? That was in the one in Knoxville? Uh, one of like the first ever ones back in the day. Um, I’m, I think it’s 16, 17, I can’t remember. So yeah, I did go to the one in Nashville and I did speak at that one. So, um, but what, you know, talk to me about what, what, what failed, um, you know, you don’t have to tell me all, all the goss, but, but what was, what was, what, what didn’t work? What, what walls were you running into in terms of that company? Maybe just describe for the listers what the company was in order to, you know, give some context to you.

Will Coleman (08:22):

Yeah, so, um, and it, the company didn’t fail. I, I shouldn’t have phrased it like that. It, it was actually profitable. We were making money and, and we were, we had customers and we had business. Um, so what the company was, it was a mortgage brokerage mm-hmm. , uh, specifically for multi-family. So for you and probably a lot of your listeners, um, purchase multi-family properties, when you get a a deal under contract, you get it financed through a bank, through Fannie, Fannie, and Freddy through a bridge lender, a private lender, what, whatever it may be. And what we did is we were a broker. So if you, uh, we brokered debt, so we didn’t provide debt specifically, but you could come to us and we would say, here’s four quotes. Here’s a bank quote, here’s a bridge quote, here’s an agency quote, which one do you want to go with?

Will Coleman (09:11):

Um, and then the customer would, would pick the best option and, and choose that option. And we would broker between the person purchasing the property and, and, and the lender. And we just had a, a large book of business, a lot of relationships in the debt space. And, um, the main challenge I would say is, and it, it’s not that this business can’t flourish, but I, I just got tired of being the middleman really. Mm-hmm. Is, was kind of the best way to sum it up of, you know, like the, the, the, my client, the person who’s purchasing the property, they could not that this really happened, but they had the ability to go, once we worked with that lender one time, they could just call that lender directly the second time. Right. Um, so that, like, I kind of had the realization that my clients would eventually outgrow me.

Will Coleman (10:03):

And I, I wanted to have clients that would come to me consistently and over a 10 to 20 years. Um, so that, that was a big lesson is, uh, I, I wanted to be in a business where my customers would be long-term customers, not one that once they use me a couple times would go and, and source the debt, uh, directly. Uh, the second lesson, and this is really the main one I would say is that a debt broker provides value. It is helpful, but it’s not like insanely valuable, meaning like, it’s not a needed, it’s not needed product. It’s, it’s more of a, like, it’d be nice to get a couple other quotes , but most operators like yourself, they already kind of know their lenders are they, um, they’ve got a good relationships with multiple lenders. So they’re like, yeah, I’ve got my guys, can you provide a quote? Can you provide some extra quotes? Okay, cool. Like, those are good. We’ll think about it. And so I wanted to have a product like, uh, uh, whatever my product was at the time, I didn’t know I would go into this space, but I wanted to have a product that people were like, wow, that’s, that’s really good . Like, I like that. Let’s do that. Uh, and that they could have that product for as long as they’re in business. So those are really the main two things that frustrated me at, um, at, at the brokerage business.

Reed Goossens (11:23):

Yep. And is Rand still operational? Assume assume they are.

Will Coleman (11:26):

I don’t think so. I, I think they’ve more so just, um, they’ve got like a referral program set up. Cause they have all those students. So they’ll, they’ll just refer their students to that, that book of business that we Rent out, and then they’ll get, um, some compensation through that. Yeah.

Reed Goossens (11:40):

No, I, I could just knowing Jake and Gino personally, it, it’d, it’d make sense with what they’ve built to, to go and try and start a whole, you know, brokerage company. But it’s, you know, in itself it’s a very difficult thing to g do. Right. And you get a little bit of shiny object syndrome. So it’s sort of like, uh, but not, not necessarily it’s a bad thing. It’s just you, you go and you go and scratch that itch. It may or may not work out and, but at least you scratched it. So, um, talk to me about what you then pivoted into UrbanGate Capital. So you got these challenges. You, you, you worried about people going around you. How do you solve that in the, in the real estate investing space? So you don’t, you are providing value.

Will Coleman (12:19):

Yeah. Um, so it, the origin of Urban Gate really starts with my business partner. His name’s Brandon Thornbury. Um, uh, he, uh, he’s been investing in Nashville for 15 years. He’s flipped a hundred houses. He owns, um, uh, probably four to 500 units in apartment complex, uh, in multifamily. And so he’d been very successful in the real estate investing space and he started lending out his own personal cash to people who were flipping houses. Um, so buddies of his friends of his that he know in the house flipping industry, he would lend them on a two month note, a six month note, um, the capital to flip the house. And at the time I knew him just in the real estate space and we were talking and he was like, man, there’s a real demand for these short-term loans for people who were flipping houses.

Will Coleman (13:13):

He, he was surprised by the amount of demand for these types of loans, and he very quickly ran outta his own capital. Um, so while I was kind of in this head space at Rand and, and looking at other options, I went to him and I was like, well, what if we raised capital and launched a fund, uh, in order to, uh, we’d raise capital and then use that capital to lend out to people flipping houses, the same network that you’ve been working with. And, uh, that was just under two years ago. And, um, we’ve been grown since then. So in, in the last two years, we’ve raised probably about 13 million and we’ve done loan, we’ve lent out probably about 25 million, um, since, since we’ve started.

Reed Goossens (13:58):

And what type of, uh, just curious, because I’m interested in the Green room before we press record here. I part of, and if you go back to some episodes that I’ve interviewed on this particular podcast, one gentleman in particular, um, was, uh, a gentleman by the name of Michael Epi. Epi Scope, who’s from Origin Investments in Chicago, big multi-family firm. And one of the things I remember he always said to me is like, we are in, we’re in three businesses. We buy, we sell, we lend mm-hmm. . And I was like, tell me about the lending. And he and he, he went down this rabbit hole of, well, we don’t ha we needed a product to, you know, make sure our investors, when they come to us between these bigger deals that may only happen 4, 5, 6 times a year, you’ve got something to, to offer them in between.

Reed Goossens (14:44):

So they’re not waiting all the time. Mm-hmm. lo and behold, all of a sudden I start seeing this common thread. Brian Burke is another gentleman. I networked with him very closely. He’s been on this podcast, and all of a sudden I started to see these, these bigger guys, you know, ma you know, buying deals are fantastic and that’s the, that’s the, the nucleus of their business. Right. But they needed something else to offer their clients in order to keep, when they came through the door, there wasn’t just nothing, oh, sorry, we, we just closed on a deal, you missed out. And we might have another one in three or four months time. Three or four months time comes around, the money’s not there. Right. So it is a very interesting concept to create that ecosystem of you’re buying deals, you’re selling deals, which is the, the main nucleus, but then you’ve got this other la arm of the lending. So, and I just say that is more like, cuz I’m interested in it. Right, right. Um, and, and like, like Jake and Gino, I’ve got a, I’ve got a curious mind and, and and do I need to go and, you know, start that business all on its own. But, but I, but I’ve seen other people, passive investing do do it as well. Right. They’ve got a, I think flip wallet, I think the name is, and they raised the fund.

Will Coleman (15:44):

Rehab wallet. Yeah.

Reed Goossens (15:45):

Rehab wallet. Rehab wallet. So, yep. So, so to, so you mentioned 13 million. Um, and I actually was just looking up Brandon Thornbury, he’s on, is he Quatro Capital as well?

Will Coleman (15:54):

So he’s done some deals with With

Reed Goossens (15:57):

Got It. Got it. got it Yeah. Cause I just inter interviewed, um, one of the guys on from Cuattro on the show literally like two weeks ago. Oh, nice. Um, so 13 million you’ve raised mm-hmm. . What’s the, you mentioned you’ve Rent out 20, so what, what, walk me, what’s the, that doesn’t make any sense. You’re, you’re gonna go 13, do what, what, how do you, what do you go do to to, to do, to connect the, the rest of it?

Will Coleman (16:18):

Yeah. So, um, when we lend the money out, we’re what’s we, we personally love short term loans. So like our AV uh, today our, our average loan term I think is 107 days.

Reed Goossens (16:31):


Will Coleman (16:32):

So we, our, if like, if, if we raise a million dollars from you, Reed mm-hmm. , our goal is to lend that out, get it back, lent it out, get it back, lend it out, get it back three times in one year. Mm-hmm.

Reed Goossens (16:43):

, um,

Will Coleman (16:44):

That would be, if we did it three times, that would be killing it. So mm-hmm. as, as of right now we’re just over, you know, we’re probably like 2.2 times. Um, but that’s our goal is to, to lend that money out three times, um, within one year. So that’s how we’ve been able to raise around, uh, I don’t have the exact number. I’m, I’m kind of guessing, averaging out to 13 million mm-hmm. . Um, and then our loan volume is about 25 million is cuz we’ll, we’ll use that capital multiple times.

Reed Goossens (17:09):

Got it. So you’re not, cause I do know there’s other, you can go out and speaking to people like Brian Burke, you can raise 50% of the money, ie 13 million, and then you can go get a warehouse line of credit. That means that your overall lending pool is, you know, you, you, you, you, your warehouse line is, you know, at a cheap rate combined with what you are giving your investors on the equity side, you can lend, you know, say it’s 6% and it, then it’s 2% on your line of credit, you know, and you’re lending out at eight or nine, there’s an arbitrage there. You can take the delta. That’s how I understand, you know, an element of the business. Or you can just purely raise the money yourself. You’re self-funded and don’t have any warehouse line. But that is how bigger banks do do it. Correct. If I’m, if correct me if I

Will Coleman (17:53):

That’s, that’s exactly right. And um, every bigger operator I’ve asked for advice, they all say go get a warehouse line of credit . Mm-hmm. Like a, anytime I talk to someone, it’s like, okay, here’s what we’ve done. Here’s our team, here’s our scope, here’s our average, you know, weekly volume, etcetera. What should we be doing next? And everyone has said, go get a, a warehouse line of credit. I I can be a bit of a control freak . Um, so I, I don’t like the, I like a warehouse line of credit. I, I’ll admit I’m, I don’t know exactly what they’ll do, but I’m sure they’ll have a little bit more red tape. Right. So they’ll want, they’ll want certain documentation I have to get to get approval on each deal or, and maybe it’s not that bad. Um, but I, I just love the fact that like, we have 100% control, control of what we left funds out at.

Reed Goossens (18:43):


Will Coleman (18:43):

Can do also, it’s a creative stuff. Yeah.

Reed Goossens (18:45):

The, the only problem there is you’re limited to 13 million. Right. You wanted to go do bigger loan sizes. You know, you’ve got someone’s coming along and say, Hey, I’ve got a 7 million acquisition I want to do, you know, uh, $5 million, you know, loan. Well guess what? That’s, that’s only nearly, it’s 40% of, of, of your bank, of, of your balance sheet. So the idea of getting that, it’s, it’s the, you know, just from, for the listeners out there, it’s the loaner, the line of credit will help build up that book of business so you can lend bigger amounts. Uh, yes. Click up. So, yeah.

Will Coleman (19:16):

Yeah. And I, I, I think I’ve, I’m starting to come to the conclusion like, let’s go get the line of credit. Even if we don’t use it, let’s have it. Right. Right. Um, and that, that’s, I think that’s gonna be, you know, a big goal for the next year.

Reed Goossens (19:29):

Yeah. So tell me how you’re then, you know, with the business, how you’re building it from a soup to nuts in, in, in the, in the sense that like how you’re finding your lenders, right. Because today’s world is different lending environment and, and I would, I would argue to say that I think the Freddy average 30 year mortgage is around six and a half, 7%. Yep. Which is, uh, I know that I’ve lent at hard money le levers before that’s, that’s approaching, you know, 8% hard money, you know, type of rates. So how are you handling that right now? When, when the, when the common on the street every day blue collar, sorry, not blue collar, blue chip lenders are lender at nearly same interest rates as you guys? Or are your interest rates now pushing up to say 10%?

Will Coleman (20:18):

So our interest rate has st has stayed the same. Um, we are, uh, uh, a little bit higher than 8% . So we’re, we lend at 12% and then we’ll do two to three points on the origination side. Mm-hmm. . And what’s, what’s exciting about that? So let, let’s say it’s three points, 12%, three points, that’s 15%. If we’re able to lend that capital three times in one year, it all of a sudden becomes, we’re earning 18% on, um mm-hmm. , oh no, sorry. Yeah. It’ll be slightly more. Cause cause we’re getting a three points three times.

Reed Goossens (20:48):

Three times. And that’d be like, be 20%.

Will Coleman (20:51):

Yep. Yeah. So the, um, it’d be 21%, I think 21%.

Will Coleman (20:56):

Yep. My mental math is not great, I’ll admit. But, um, so that’s, that’s why our goal is to, to cycle it so many times. But, um, to answer your question, our rates have stayed the same. Our rates were 12 and three a year ago, and that’s what they are today mm-hmm. . And it’s, it’s made it significantly easier to say those rates out loud. , right? Mm-hmm. . Cause uh, when we were lending at 12 and three, the banks loans were 3% mm-hmm. , um, three, 4%, and now they’re 8%, 7%, and we’re still at 12 mm-hmm. . So all, all of a sudden, 12 sounds much more affordable to people. Um, and so we, I mean, we just have slightly more negotiation power when we’re talking to borrowers. Right. Um, and then, and the question as to where are we finding our borrowers? I, I will, I’ll admit to you, I was extremely lucky to partner with Brandon because he’s been flipping houses for so long in Nashville. He’s got a huge network of people who flip houses. So anytime someone, I’ve talked to a handful of people that are wanting to start this type of business, that’s, that’s always their biggest struggle is where do I meet people to lend the funds too? Right. Um, cause how

Reed Goossens (22:11):

How do we get on the street?

Will Coleman (22:13):

Exactly. Yeah. So I, I was lucky to be able to tap into his network where he could say, Hey, here’s 20 people that I know want to borrow our, our money. Hmm. Um, so that for someone starting out, that takes time to build up and you could probably partner with people in the area and things like that. But, um, that’s how we found our network is we were lucky enough to have be tapped into that, to Brandon’s network. And then yeah. Just as rates have increased, our terms seem that much more affordable mm-hmm. , um, we, we are getting some pressure from investors to increase our rates, um, but we haven’t felt the need to as of yet. Um, but I, I can see that if we continue in this direction, I can see that happening.

Reed Goossens (22:57):

For those of you who are interested in staying up to date with all the latest happenings in my business, or to learn more about passively investing directly into my multi-family value add deals, then head over to reedgoossens.com And sign up for my monthly newsletter. By signing up, you’ll automatically be notified about my new up and coming investment opportunities. You’ll be able to stay up to date with all the latest real estate news here in the United States and much, much more. So head over to reedgoossens.com and sign up today. Now, back into the show. It’s interesting you say that because I would, I would’ve thought that, you know, 12%, you would’ve, you’d be generating more business today than you would be say 12 months ago. When, when, when, when, when Freddy’s at three and you’re at 12, why the hell would I come to you? Because, and I also know as a borrower of hard money in the past, I’m like, I could probably get seven or eight somewhere else, you know? Yeah. So how have you, how does 12 justify is what I’m probably asking?

Will Coleman (24:01):

Mm-hmm. Yeah. It’s, it is a good question. I think I would argue we are the easiest, fastest, and most convenient lender in Nashville. Mm-hmm.

Reed Goossens (24:14):


Will Coleman (24:14):

Like, I don’t think we, like, we may have some competition, but we’re, we’re top, we’re in the top five in Nashville. Like out of everyone. Um, like I, I guess maybe if you have a uncle or a family member that doesn’t even care about the property and just wires you 200 grand without asking, they’ll beat us . But, um, so like for example, a lot of our competition that lends at seven, eight, 9%, they’ve probably increased rates a little bit over the last six months. They might be closer to nine, 10% now, where if we stayed the same. But also, a lot of those guys are based outta California, they’re based out of Philadelphia, they’re based out of, you know, different areas and they have to get appraisals. They’ve gotta, they need a little bit more time to close. They, they don’t really know the market that well.

Will Coleman (25:03):

Whereas in Nashville, we’re local, our team’s here in Nashville, uh, Brandon has been here for a long time. It’s very common that, um, someone will call us for a deal and Brandon will be like, oh, yeah, I used to own that property . Or like, I, I own a property on the same street. So we can approve deals much faster than almost anyone can. Right. And we’re willing to go a little bit higher on leverage because we understand the risk a little bit better. So we’re, we’ll fund a little bit higher on the leverage. We can close faster. We know the deals just better. Um, because again, of, of Brandon, like, he’s a, he’s a serious advantage on our team. Um, so like borrowers call us and we’re saying like, we’re, sometimes we’re advising them on the deal because we know the deals better than they do. Right. So it’s a long, long-winded answer. The real answer is speed. We can close, someone can call us and say, Hey, I’ve gotta close this deal in three days. Can you do it? And we, we don’t like to do that, but we can.

Reed Goossens (25:57):

I, I, I remember my first fixing flip in Philadelphia back in 2013. I used a local banker, I can’t even remember who it was, but it essentially was a hard money lender. Right. And, uh, the guy who ran it would be the guy who, who’d come and tour the property, you know, who’d know the area, uh, and, and get, you know, then have his assistant sort of, you know, fi figure us out the, the, uh, the mortgage or the, the, the note and mm-hmm. , you know, that would, that would be it. Right. And, and I know I’ll just talk to a lot of other hard money lenders around the country, around, you know, I, I now live in la I’ve, I do business, you know, in Texas and Greenville and Phoenix. It is local, being local and speed is, is really sort of that cost of capital.

Reed Goossens (26:39):

They can, you can swallow. Okay, yeah, you’re 12, I probably could get an eight or a nine somewhere, but it might take me an extra two weeks I need to close to, you know, this week. So it’s, it’s sort of just, you know, it’s, it’s short-term pain for long-term gain if you’re getting a really smoking hot deal. Uh, but, but, but you know, by and large, I see a lot of the hard money lenders focusing really local on their area. So Yeah. Even actually the house I live in today, you know, we, we bought, this is not built in 1912 in Los Angeles, uh, was gonna get, you know, I worked for my, I’m, I’m self-employed, so, you know, getting a a a regular loan is very tough. Yeah. And I remember we, we put about $300,000 into this house to fix flip it, uh, would do it up.

Reed Goossens (27:19):

And yeah, the, I had to go get a hard money, uh, 8% as, as Covid hit, you know, all the, the warehouse lines of credit, you know, went away. And, uh, I had to ring up a guy and, you know, put it in my business name and pretend that like, oh yeah, I’m not moving into it. And he’s like, he’s, he’s, he’s looking, he’s looking at the numbers like, these, these numbers don’t work, dude. And I was like, okay, it’s a personal house. Like , like I, I’ve got you, you, you know, you’ve know me for a long period of time and it, it just things you gotta do to, to make, to make it work. So, yeah. Um, it’s, uh, it, it’s a definitely interesting business. What, what is, what are some of the, the biggest things that you get pushback from investors and how are actually defining investors? Probably is the other question coming into the fund, what are you doing and, and offering, I’m assuming the 12% interest rate, you know, are you paying the full 12 two investors or are you doing a split with them?

Will Coleman (28:05):

So we pay ’em a flat 8%. Yes. Uh, it’s a, it’s a flat 8% through monthly distribution. And it’s, um, yeah. So the, the, the way the fund is set up is it’s a 8% preferred return through a monthly distributions. We, we have a six month hold period, so you have to leave your funds in for at least, at least six months. And then after that you can withdraw that capital on a 90 days notice. Yep. So it’s, um, a flat percent, but you have the ability to withdraw your capital depending on how soon you withdraw. There. There, there might be some withdraw penalties, um, but you do have the capability to withdraw the capital, um, within

Reed Goossens (28:44):

90 days. Yep,

Will Coleman (28:46):


Reed Goossens (28:47):

Yep. No, it’s easy. Sounds like every single, everyone I keep talking to, I’m starting to get all these ideas. And it’s the same, it’s the same thing, you know, like you’re offering liquidity, you’re offering a, you know, first, first lie. So if anything goes wrong, you, you, the only disadvantage of that is, you know, the triangle of liquidity appreciation or whatever. The other thing is is that you don’t get the tax benefits because you’re sitting in the first position. So

Will Coleman (29:08):

That’s exactly right.

Reed Goossens (29:09):

Yeah. There, there, there is a, there is a downside for those listeners out there listening, but there is a way to be that you get your money working for, for you in the short term when you’re waiting for that big multi-family deal or that big commercial deal to come through with, with a particular, uh, group in order to then invest in that and make, you know, good multiples on your money. Yep. Um, no, very, very interesting stuff. So what are you, what are you looking to do in the next sort of six to 12 months? And where are you seeing investors’ appetite right now? Are they still wanting to, to, to lend and and are you still seeing fix and flipping happening right now, now given where we are?

Will Coleman (29:43):

Yeah, so I, I’ll start with the last question cuz it, that kind of yields what everything else looks like of, um, the, our deal volume in terms of the requests we’re getting for fix and flips is certainly slowing down. I mean, um, the, a lot of people are just kind of like, I’m just selling everything now. I’m not trying to buy anything. Um, I’m, I’m offloading my books, or I’m taking a break, or I’m, I’m, I’m trying to buy for long term. Like everyone knows valuations are going down and I’m a big believer, and as long as the cost of capital’s going up, valuations are going down mm-hmm. . And so a lot of people don’t necessarily want to flip something in a market where valuations are going down. That being said, deals are still happening. There just has to be a lot more meat on the deal.

Will Coleman (30:32):

Like you have to be getting it at a, a severe discount or it’s gotta be really unique situation. Um, so the dealers are still happening. Um, but it, it is certainly slowing down. And with that, um, obviously not only are is the deal slowing down, but we as an underwriting perspective are being more careful on the deals we lend on. Uh, so just, just in October we had a 50% fund rate, meaning that we turned down, um, one out of every two deals that was sent our way. Um, so we really we’re still very risk averse. Yeah. Yep. Um, which I, I, I, before we started tracking that number, I would’ve thought we were funding much higher. But after we started tracking, I was like, okay, well we actually are pretty conservative in terms of the deals we’re doing. Um, so yeah, on, on that end, it is, it is slowing down, but it is still happening.

Will Coleman (31:27):

And in a market as busy as Nashville, there’s always a need for capital. Like a lot of our deals aren’t just fixed and flip. Like some are very unique or someone needs to buy land or they need to refinance a, an investment property so they can close on another deal. And, um, there’s, there’s a handful of unique situations that still require capital. And like the past 30 days have been a good example of that, where the deals aren’t as straightforward as they were six months ago of just buy it, paint it, sell it. The deals are becoming a little more like unique situations, but people are still finding ways to get deals done. Mm-hmm. . Um, and then on the, on the investor side, there’s a handful of different perspectives that investors are taking. Like some investors are saying, I’m, I’m completely out. Uh, I I don’t want to put any money to work.

Will Coleman (32:17):

Like I’m on pause. Some investors are, Hey, I’ve got half, you know, I’ve got half a million dollars in my 401k. I want to, I want to, or a self-directed ira. I I don’t wanna be in the stock market. I wanna put all of that with you. And then some investors are, I’m losing money in everything else. If you can say you can get an 8% preferred return, uh, I’ll take that all day. Uh, and then some are saying, well, I can put money in a treasury and earn two to 3%, like, why would I risk it and go an 8%? And I’m like, so I’d say the majority of people are like half are kind of in that risk averse space and half are in that I don’t want to be in the stock market anymore. Mm-hmm. , I’d rather put my funds with you. Got it. Um, that, that kind of summarizes that.

Reed Goossens (33:02):

H how, how are you finding your investors? Are, are you doing online advertising? Are you trying to, you know, word of mouth, uh, what are you doing? Um, because obviously proof’s in the pudding, right? You start paying out monthly distributions, everyone’s like, this is bloody great. I, you know, tell around the water cooler. Tell, uh, Jim and Bob and Carol about now these boys.

Will Coleman (33:21):

Yeah. Most of it is, it started with me and Brandon just calling our network. Um, we’ve been able to raise a, a pretty healthy amount just from the people that we knew, you know, like my time in the Jake and Gino community, his time, uh, uh, partnering with people and buying deals and then it it, from there, it’s mostly been word of mouth. Mm-hmm. . So we’ve had a bunch of referrals, a bunch of investors that, um, have had success with us and they’ll refer it to their friends. And I’m, I would imagine that’s probably similar to you, Reed of like, you, you, you touch base with your network and then once you succeed with them, they tell their friends and it grows from there. And that’s, that’s how it’s mostly been. We, we’ve or raised some fr funds from podcasts and online, but less than, you know, less than 5% I’d say. Yep,

Reed Goossens (34:09):

Yep. In terms of what I was saying before about the, the, the ecosystem of the buy, the sell, the lend, have you seen that successfully rollout with other groups from scratch? Like, I know I I we won’t in passive investing, before we mentioned Brian Burke, we mentioned, uh, origin Capital. But have you seen it ever just, you know, roll into, or you’ve been asked, am I the first person who’s asked, say, I’ve got a existing, you know, commercial, you know, investing, you know, platform and I wanna add this element to it?

Will Coleman (34:37):

Yeah, I, I do think asset investing is the best example I’ve seen. Um, I think Dan does a great job of, like, he’s built like a, a whole network of investment options mm-hmm. , uh, which is, is really incredible. Um, so that, that’s the best example I’ve seen of it. I do think it’s a really good fit. And kind of what we were talking about earlier is a lot of our investors are people that are buying or invest like our LPs that are investing in real estate deals and they want to put their money to work in between doing those investments. That’s, that’s pro that’s probably like 75% of our investor base, right. Is understand real estate. They’ve got a, a handful amount of cash and they don’t want it sitting in a bank account and they’re waiting to buy another multi-family deal. Mm-hmm. . So I think there’s a ton of synergies there. I I thi I do think past investing is the best example I’ve seen of that. Um, and then we’ve been approached by a couple, uh, groups like yours to like kind of do what we, we do under their brand. Right. Like

Reed Goossens (35:38):

A white haven, like a white label

Will Coleman (35:40):

. Yeah. We haven’t quite found the right fit. And again, it, it comes down to what I said about like, I wanna be in control .

Reed Goossens (35:45):


Will Coleman (35:46):

Right. Um, so, um, but it, yeah, it, it does seem to naturally have a natural synergy to it, I would say, for sure.

Reed Goossens (35:54):

Mm-hmm. . Yeah. Awesome stuff. What, la last question before we get into the lightning round. Were you seeing the next 12 months both in the economy and where you wanna take the business?

Will Coleman (36:03):

Great question. Yeah. So right now, uh, so we launched our fund in July. Uh, prior to launching the fund, we’ve just been doing individual deals with investors, um, kinda like syndicating each loan almost. Uh, so we launched the fund in July. Right now we’re still pretty small in the fund. We’re at 2 million that we’ve raised to the fund. Uh, by the end of 2023, we’d like to be at 10 million mm-hmm. . So we’d like to, to five x the capital and our fund by the end of 2023. Um, with that being said, I’m, I’m also very conscious of the and market environment we’re in now, and I, I don’t wanna raise a bunch of money into a, you know, a worsening economy. So we’ll be very careful in terms of the amount of capital we raise and, and making sure we’re doing that in a responsible way.

Will Coleman (36:49):

But that’s the goal is raise, raise 10 million, uh, through the fund. And so again, with that then it’d be a 30 million loan volume. So that’s our goal is 10 million raise, 30 million loan volume. And then in terms of the economy, I, I, I don’t necessarily know, I don’t think anyone knows, but I, I think to me it’s very simple as, as long as the cost of capital’s going up, values are going down, um, and they’ll be, uh, the, you know, the pendulum is swinging even once the cost of capital. So once, even as interest rates are climbing, even when it levels off, there’s still gonna be a correction effects evaluation. So keep going down, but I’m pretty much purely operating by the concept of don’t fight the Fed . Like that’s, that’s really the only thing I’m paying attention to. So if as long as the Fed is increasing rates, the eco economic situation’s gonna get worse once they stop, once they pause and start going down, it’s gonna get better. And I, I don’t really try and overcomplicate it af over that.

Reed Goossens (37:52):

Right. And I think the, the only thing you can do in, at least in my 2 cents, you gotta keep hanging around the hoop. You gotta keep underwriting deals cause it’s gonna be deals still to be had out there. It just, you, you just gotta, you can make money in any market. You just gotta keep doing the work. Don’t, don’t just be pencils down and do nothing. So absolutely things can get done in today’s environment and, and, and you can actually kind of pick up some, some nice sweetheart deals in, in these times. So I think that’s, that’s a, at least a message from what I’m telling everyone . So yeah. Keep optimistic. So, yeah. Yeah. With that, with that being said, uh, let’s get into the top five investing tips. You ready to get into it?

Will Coleman (38:29):

Let’s get it

Reed Goossens (38:30):

Mate. Question number one. What’s the daily habit you practice, keep on track towards your goals?

Will Coleman (38:35):

Uh, meditation, I’d say.

Reed Goossens (38:38):

Yep. You do? What do you, what sort of meditation are you doing?

Will Coleman (38:41):

So, I, I med, I do transcendental me meditation Yep. Every morning. Um, 15 to 20 minutes every, every morning. And, um, it’s done wonders for like my mental capabilities just in terms of staying calm and not, uh, overreacting the situation, especially in a position of leadership, like, um, controlling my emotions and things like that. It meditation is, um, incredibly valuable.

Reed Goossens (39:05):

Yeah. I, I, I, I do it. I’m a big student of it as well. I’ve just had a new baby. It hasn’t been, the mornings are a little different now. Uh, yeah. So laying on the floor in the middle of a living room and meditating for 15 minutes, is, uh, is, is a luxury that’s, it’s long gone, but we’ll get back into it eventually. But no, I do. I I do love that.

Will Coleman (39:23):

Congrats on the newborn.

Reed Goossens (39:24):

Thank you so much. Uh, question number two is, who’s been the most influential person in your career to date?

Will Coleman (39:30):

Hmm. I know there’s a fire rounds, I’m supposed to them quickly, but I have to think about that. Man, that’s tough. There’s, there’s definitely a handful. Um, it’s, it’d be hard to pick one. Uh, it, it’s kind of cheesy, but I guess I’d have to say my dad, fun. Um, he, uh, he was the original person that put me onto real estate and, um, I, I’d say the biggest lesson I learned from him was, uh, you know, just integrity. Integrity and being true to your word. And, um, that has been a extremely important guiding factor. So I, there’s plenty more that I could choose from, but I, I’d probably stick with him.

Reed Goossens (40:04):

Love it. No, I, I, I, I point to my dad as all my parents. At least the same, same thing. Yeah. Uh, question number three is, in your business, what’s the most influential tool? And when I say a tool, it could be a notebook, a physi, like a physical tool, like a notebook or a, a cell phone, or it’s a piece of software that you just can’t run the business without. What is it?

Will Coleman (40:21):

Uh, uh, so we use a sauna. Mm-hmm. is what I would say. And we have a, I mean, my team probably gets annoyed of how system oriented I am, but we have a, a a 62 step process for every loan we do. And it’s, there’s, everyone gets assigned a task in the sauna and it, uh, it’s beautiful.

Reed Goossens (40:39):

, 62 steps. It’s a lot of steps.

Will Coleman (40:42):

Yeah. It, hopefully it might be less, but when I first made it was 62, um,

Reed Goossens (40:47):

I, I’ll ch I’ll challenge you to be like, if I, if I was a partner, be like, dude, let’s get down that down to 10 .

Will Coleman (40:52):

Yeah. Yeah. And that’s the goal. Yeah. It’s definitely the goal is, is to reduce as much as possible, but yeah.

Reed Goossens (40:56):

Yeah. Love it. Love it, love it, love it. Question, uh, number four is, in one sentence, what’s been the biggest failure in your career? What’d you learn from that? Failure.

Will Coleman (41:04):

Failure. Um, I, I mean, I guess add to one sentence, my biggest failure was, uh, trying to start a company that didn’t add enough value to its clients. Mm-hmm. and making sure that if you’re gonna start a business, you’re tr you’re providing a tremendous amount of value.

Reed Goossens (41:25):

I love that. Adding value to your clients. Yep. Yep. I love it. Last question, mate, is where can people reach you to continue the conversation that ought be in your sphere? Where do they go?

Will Coleman (41:33):

Yeah, so, uh, our website, urbangatecapital.com. If you’re interested in being an investor, there’s an invest, uh, invest button. And then my email is will urbangatecapital.com. Um, will@urbangatecapital.com just shoot me an email.

Reed Goossens (41:48):

Awesome stuff, my friend. Well, look, I wanna thank you so much for jumping on the show today. I just wanna reflect some of the things I took away from today’s show. I think, look, thank you for being open and honest about how the, the, the, the business works, right? It’s, it’s a, it’s a, it’s a, it’s interesting. I’m definitely personally interested with my company at RSN Property Group offering a lending arm at some point in the future. And I’m seeing it through other people that we’ve just spoke about, you know, at length, uh, throughout the show. Um, but that, that last statement that you made about, you know, adding value to a company and tying that back to what the lessons you learned with coming outta Rand Capital, not that it was, there was a problem, but just that you saw that you were, um, dispensable at some point, you know, being that middleman, being a broker, you know, of debt, it, it’s like, I can go around you at any point and how do you provide a true service?

Reed Goossens (42:33):

Because debt brokers, you know, it’s like a commodity. Everyone, everyone seems to be doing it. Um, so I think having those lessons and then taking it into your business to create something that you knew would work because you saw the need there, but you just needed to tweak. Yeah. Just give it a little bit of a tweak, a little bit of oil around those rusty parts and get rid of those, you know, those barriers, those walls that you are running into at the previous firm and just making it a little bit more user friendly and customer orientated, which I think is extremely important. Um, but did I leave anything out in that little summary?

Will Coleman (43:02):

No, that was, that was very impressed. Well done.

Reed Goossens (43:04):

Awesome. Awesome my friend. Well, look, again, thank you so much for jumping on the show. Enjoy the rest of your week. Hopefully we’ll catch up soon at a, at a conference here or there. And, um, we’ll talk, we’ll talk very, very soon.

Will Coleman (43:13):

Sounds great. Thanks Reed.

Reed Goossens (43:15):

Well, they have another cracking episode jampacked with some incredible stuff from Will, if you do, are you iffr are interested in lending or, you know, getting into the lending space, head over to urbangatecapital.com. You wanna invest there Short term capital, talking about the two times, two and a half, three times the use of a money in a given calendar year. I think that was really, really key from terms of the business model of it. Um, and yeah, check out, check that out at will, uh, sorry, urban Capital uh, dot com. It’s also will@urbangatecapital.com. Uh, I wanna thank everyone for taking some time out of their day to tune in, to continue to grow your f your your financial iq. Cause that’s what we’re all about here on this show. If you do like this show, the easiest way to give back is to give it a five star review on iTunes. All the links from today’s show will be up on my website @ reedgoossens.com. And we’re gonna do this all again next week’s. Remember, be bold, be brave, and go give life a crack.