DLP Capital Partners earns consistent, high-yield returns not only by investing directly in real estate but also by lending to real estate investors. Since 2014, our DLP Lending Fund I, LLC has been quite successful. We’ve achieved a historical annual return of nearly 14% for investors.
After building a large real estate portfolio of a few hundred million dollars, in addition to successfully renovating and “flipping” hundreds of homes, you may ask: Why enter the lending business? Why bother with loans to other investors and flippers?
The reason stems from our history. We’re in the lending business to deliver great returns for our investors, of course. But we also want to empower real estate entrepreneurs to achieve success.
To learn more about why we got into lending, you have to go to our beginnings.
Our beginnings in real estate
Before we became a lender, we acquired, renovated, and sold hundreds and hundreds of homes. We did all the work finding and negotiating deals. We ran a big construction company, did the heavy renovations, and handled all the marketing and sales.
It was a lot of work.
“When I first started in real estate, I basically took all the risk. For each house, I earned roughly an average of $20-$25K in profits. That was nice. However, the lenders I was working with were earning $12-$15K per transaction, and they weren’t doing much work nor taking on as much risk,” states Don Wenner, CEO of DLP Capital Partners.
Additionally, we discovered the real estate lenders didn’t deliver quality service. They lacked a true understanding of the real estate investment business.
“Most of the real estate lenders we worked with probably never flipped a home themselves. That lack of experience showed me a gap in the market and the opportunity we could capitalize on as lenders. We knew the real estate flipping industry and could do so much more as a lender, both for entrepreneurs and our own investors,” adds Wenner.
Becoming real estate lenders
Following that decision to become a real estate lender, we quickly began accumulating knowledge, skills, and resources. We wanted to become the go-to lender for the real estate investment industry.
“We had already built tremendous knowledge on how to flip homes, how to evaluate deals, mitigate risks, keep costs down, maximize the renovation, and more. We knew we could leverage that knowledge. Over the years, we also built relationships and resources, as well as a list of reliable vendors. All of this could provide significant value to other investors,” says Wenner.
So, in 2014, we made the leap. We became real estate lenders. Specializing in direct lending, we’ve had consistent success in our 5+ years of lending. We mostly focus on lending to those involved in real estate flipping, but also assist entrepreneurs with multi-family investments.
We separate ourselves with how we manage our fund. Unlike other lenders who rely on outside institutional capital or other lenders to fund deals, we truly are a direct lender. We control our own capital through our fund and our 800+ investors.
Our lending success so far
We like to let our numbers speak for themselves. We’ve achieved:
- 5+ years of 12%+ returns each year
- 14% average annual return since inception
Thanks to our success, our DLP Lending Fund, which has a targeted annual return net to investors of 11%, has grown substantially. We have a diversified portfolio of 400+ loans and have successfully funded 1,000+ loans with zero loan losses. We’ve also limited risk with low loan-to-value ratios (LTV). Our average LTV is just 55% and the average loan-to-cost (LTC) is 73%.
“We have over 45 professionals running our strategy and we’ve been consistent in our approach. We’ve never missed a targeted return and we’re able to provide a 10% preferred return to our investors. Our investors get 10% before we earn anything. We do not even earn our management fee until investors receive a monthly distribution of a 10% annualized return,” details Wenner.
Moreover, with the growth and success of the fund, DLP Capital Partners gives investors the liquidity they desire. In addition to monthly distributions, we offer 90-day liquidity (redemption).
Our real estate lending strategy
You can’t throw darts and expect to hit the bull’s eye every time. You need a strategy to ensure your success.
First, we offer short-term loans (6-12 months). We provide first-position, real estate-backed financing, giving our borrowers the capital they need to execute deals. This strategy also produces monthly cash flow for our investors.
Second, we are a good news lender. We lend capital to successful, typically “bankable” real estate investors.
“Our average borrower credit score exceeds 700. They may be new to DLP, but they should have a proven track record with real estate construction projects and often fix-and-flip projects,” describes Wenner.
For the team at DLP, partnering with good borrowers is key to mitigating risk and producing higher returns. On average, our borrowers have a net worth of over 3 million dollars, have at least $500K in liquidity, and have completed 25+ real estate deals. They have the resources to execute deals and realize profitable outcomes.
Here’s a profile of a recent borrower we had. She successfully fixed and flipped a property in Tampa for $240,000.
As you can see, DLP Capital Partners doesn’t only work with creditworthy clients, but we also work with experienced real estate pros.
Third, we diversify private money lending across various markets and types of real estate investments. Look at the chart below:
We have 400+ loans across more than 20 states and 80 markets. We currently work with more than 70 borrowers.
As real estate lenders, we know concentrating our loans in one market carries too much risk. A downturn in that area could spell trouble.
By providing real estate-backed bridge loans, partnering with creditworthy borrowers that are real estate pros, and diversifying our markets and types of loans, we ensure consistent, solid returns for our investors. Our private money lending strategy sounds simple but takes discipline and deep market knowledge.
“We do deep due diligence, including third-party appraisals, third-party construction inspections, a thorough internal valuation process, and full underwriting on the borrower. We also have deep experience as an operator. We currently own 10,000-plus homes and apartments in our portfolio. These properties are in many of the same markets and are the same asset types as we lend on. We are very comfortable with the real estate and our ability to ‘step in’ if needed.” attest Wenner.
The road ahead as direct lenders
We believe we’re well-positioned for continued growth and success as real estate lenders. We started on the ground, as real estate agents, investors, and flippers, and know what it takes to succeed in real estate. As lenders, we’re happy to empower others like ourselves to real estate investment success.
We also entered the lending industry with the right approach. As true direct lenders, we have great control over our strategy and capital. By working with highly qualified real estate entrepreneurs, prioritizing our investors, and diversifying across many markets and borrowers, we have the ability to realize continued consistent high yield returns to our investors.
Interested in joining us on this journey? At DLP Capital Partners, we’re ready to help you enjoy solid financial growth through our funds.