Commercial real estate construction and development tend to be cyclical — trending up and down in line with other economic indicators. Despite the volatile nature of this industry, commercial mortgage originators sometimes may find developers to be overly optimistic, hoping that somehow a new building boom will be different from previous ones and will not end up in a bust.
One active West Coast player in the middle market lending space is finding growing opportunities to answer the question: Why don’t banks fulfill this lending gap in Ca for small scale developers? States Jan Brzeski, founder of LA-based Arixa Capital Advisors (www.arixacapital.com),“The banks are too slow to accommodate the small developers in this space, as the California market dynamics requires them to be both nimble and well-capitalized to turn properties around and resell them into this competitive market.
Arixa Capital's principals, Jan Brzeski and Greg Hebner, specialize in private lending secured by real estate. Drawing from, and building on their past professional experience, they share how they set up an income-oriented, risk-controlled, capital preservation niche strategy across U.S. west coast real estate.
A Los Angeles investment firm is seeking to raise a combined $100 million for two funds that provide short-term construction loans to builders of single-family home projects. Arixa Capital is targeting high-net-worth individuals, family offices and other types of investors in its capital-raising drive. Arixa’s founder, Jan Brzeski, hopes to raise the bulk of the targeted $100 million by the end of 2017. The firm’s two open-ended funds — Arixa Fund 1 and Arixa Fund 3 — are able to offer investors liquidity terms that are similar to those available to limited partners in hedge funds.
Bridge loans can be ideal for clients needing access to fast financing. A popular video game, “Need for Speed,” features go-fast cars that cost more than the average automobile. Bridge loans for homebuyers are similar in concept. They cost more than traditional financing, but sometimes it’s worth paying a premium for speed. In addition, bridge loans can solve problems for homebuyers, mortgage brokers and Realtors. They can provide financing exactly when and where it is needed, without the complexities and time required to close on a conventional loan.
Single-family construction is an untapped market for mortgage originators. In Silicon Valley, a "unicorn" is a private company valued at more than $1 billion based on its most recent round of funding. Such businesses are known as unicorns because, historically, so few private venture-backed companies reached this lofty valuation.
Working capital loans are the building blocks of niche construction. Home Builders are once again becoming an engine of growth for the U.S. economy. Many small builders remain cut off from bank financing, however, and may need help from mortgage brokers who are willing to work with private lenders.