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- March 5, 2024
- Insights
I recently had a very lively conversation with my friend and colleague Kevin Kim on his Lender Lounge podcast. We covered a lot of topics related to the current state of the private lending industry, talked a lot about where we see things going in the near future, and discussed how Encore’s business model took shape.
You can watch the interview here or listen on Apple podcasts. Below are some of the highlights from our conversation:
How a combination of commercial, residential, and securitization expertise shapes the way Encore Finance operates
Encore takes a unique approach that uses elements of commercial loan structure to address opportunities in the residential market. This approach is key to creating loans and assets that fill important needs in the current market.
Why I started Encore Finance amid such a challenging rate environment
In short, there is still a need for creative and innovative lenders to positively impact this space. Our niche has yet to fully mature and come into its own, and our clients are counting on us making that happen.
Why it’s more important today than ever to match loan products with the right capital sources
When capital was flowing more readily, it was easier to find a one stop shop to fund all of your various asset classes. Investors today have much narrower outcome requirements, meaning you need to do a lot more work to match the right capital with the right product.
The challenge of making a “bespoke” loan model both scalable and profitable
Encore brings the bespoke model of commercial loans to the residential space, allowing for products that really fit the current market’s need. The clear challenge here is retaining scalability and profitability. Technology is a big part of the equation – particularly the ability to streamline processes and improve efficiency.
Control isn’t everything when considering a capital partner
The reality is that if you as an entrepreneur are seeking a capital partner, you’re negotiating on uneven ground: they have the money and you don’t. That means you’re likely going to give up some control, and that’s okay. It’s often better to go for alignment rather than fixating on retaining contractual control in terms of voting rights. Alignment will tend to create better partnerships and is likely to take you farther and get you better results in the long run.
A better way to think about securitization
Some in the lending space think of securitization simply as an offloading of risk. I prefer to think of it as a very attractive financing vehicle. This encourages better structures that benefit buyers and sellers, build a more reputable brand, and create stronger long-term relationships.
You can watch the full interview here or listen on Apple podcasts.
