Brett Tanner of Versara Capital offers valuable insights into hard money lending and rehab projects (fix & flip, rehab & rent) in Phoenix, Arizona. He discusses current trends, strategies and most popular areas investors are capitalizing on, while also advising caution regarding some challenges facing investors in today’s market. Watch the video or read the transcript below.
Interview Summary: Real Estate Investment & Hard Money Lending in Phoenix
Market Dynamics Driving Real Estate Investment & Hard Money Lending
Brett Tanner highlights that Phoenix, Arizona, remains a prime location for real estate investment due to continued population migration and strong job growth. Employers are bringing new opportunities to the area, and Maricopa County consistently records the highest number of real estate transactions in the country. These factors make Phoenix an ideal environment for both real estate investment and hard money lending.
Hot Investment Areas in Phoenix
While investment activity spans across Arizona, certain pockets stand out. Northern Central Phoenix, particularly the 85032 zip code, sees significant investment. Properties built between 1970 and 1990 are particularly attractive for rehab projects, as they often require full-scale renovations to modernize outdated homes.
Competitive Differentiation in Hard Money Lending
Tanner identifies two main types of hard money lenders in Phoenix:
- Small-scale lenders with limited capital, often running out of funds quickly.
- Large institutional lenders with complex approval processes.
Versara Capital differentiates itself by using its own capital, allowing for quick and independent decision-making. Unlike many lenders, Versara offers flexible loan products, funding deals on mobile homes, land, and commercial properties. Their ability to create bridge loans—helping investors leverage equity from one project to fund another—further sets them apart.
Types of Hard Money Loans Offered
Versara Capital funds a variety of loans, including:
- Purchase loans
- Refinance and cash-out refinancing
- Rehab loans
- Rental property financing
- Residential, multifamily, commercial, and land loans
Their primary product remains the fix-and-flip loan, but they consider all asset types in Maricopa County.
Trends in Rehab Projects
Key trends shaping rehab projects in Phoenix include:
- Expanding small homes: Investors add square footage in high price-per-square-foot areas to maximize returns.
- Additional Dwelling Units (ADUs): Borrowing from California’s market, ADUs are emerging as a strategy for increasing property value.
Investor Challenges & Exit Strategies
Two main challenges for investors:
- Finding profitable deals in a competitive market.
- Securing properties with strong margins.
The most common investment strategies are:
- Fix-and-flip (70% of clients)
- Rehab-to-rent and commercial projects (30% of clients)
Loan Programs for Rehab Projects
Versara Capital funds a wide range of rehab projects, from minor updates (paint and carpet) to complete interior overhauls (gut renovations). However, they do not fund projects that expand square footage.
Typical Loan Terms:
- 20% down payment (varies based on deal structure)
- Interest rates: 9.9%–12.9% (based on down payment and asset type)
- Points and fees: Dependent on deal specifics
