Innovative Lending Strategies with Charles Farnsworth of 1892 Capital Partners
Welcome to another insightful episode of the A.CRE Consulting Podcast! This time, we dive into the dynamic world of private lending and innovative financing strategies with Charles Farnsworth, Fund Director of 1892 Capital Partners. With over three decades of experience in real estate investment, finance, and banking, Charles brings a wealth of knowledge and a unique perspective to private lending. At 1892 Capital Partners, a family-operated firm out of the Seattle-Tacoma area, Charles and his team provide flexible, long-term lending solutions tailored to fill the gaps left by traditional financial institutions. From RV parks to car washes, their nimble approach is redefining private credit lending.
In this episode, Charles shares the origins of 1892 Capital Partners, the advantages of working with a family office, and their focus on regional lending. He offers invaluable advice for borrowers navigating today’s complex financing landscape, emphasizing the importance of strong collateral, creative capital stacks, and building trust-based relationships. Whether you’re a seasoned real estate professional or just getting started, this conversation is packed with actionable insights and timeless lessons. Let’s get into it!
Charles Farnsworth and Michael talk about Innovative Lending Strategies
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Episode Transcript
Charles Farnsworth – Fund Director of 1892 Capital Partners LLC
[00:00:00]
Michael Belasco:
Hello and welcome everyone to the ACRE Consulting Podcast. We have a great episode for you today. I have a friend and partner actually in, um, and a lot of you guys have, have heard about our RV park development that we’re working on. And Charlie, Farnsworth, who’s here with me today in 1892 capital is the group that provided the debt financing on this.
So they’re a great group. Out of the Seattle Tacoma, uh, area, Washington state. And, um, I’m excited to, to share more, uh, with our audience about you guys. And, uh, it’s going to be great. So let me, let me kick off. I’ll introduce Charlie and then we’ll, we’ll get into what will be a great conversation. With over 30 years in real estate, investment, finance, and banking experience. Charlie Farnsworth manages 1892 Capital Partners private lending operation. After graduating from the university of Puget sound, he founded a finance company, raised private capital and served as VP in corporate banking and private wealth management. In 2008, he returned to private capital. Managing secured debt portfolios and real estate investments in 2021.
He joined 1892 capital partners to expand a real estate debt, secured lending portfolio for Corliss management group, LLC, Charlie. Welcome. And, uh, thank you for joining us. Appreciate you coming on.
Charles Farnsworth:
Yeah. It’s great to be here. It’s good to see you again.
Michael Belasco:
Yeah, of course. Of course. So as I said, I know Charlie, we go back, actually, it’s not too long. We met back in May. I went back and looked through our emails and uh, you know, we’ve had probably a hundred, close to a hundred conversations at this point and I’ve had quite a few meetings. So why don’t we kick things off? Why don’t you give us a little bit of background on 1892 Capital Partners, how it came to be and what you guys do.
[00:02:00]
Charles Farnsworth:
Yeah. So, uh, 1892 Capital Partners is a, I would say it’s a true private lender, private credit lender. Um, we’re a family office. So we’re, we’re financed largely by a single family, a great family, two brothers, um, run the operation. We have both a lending arm and an assets under management arm. I run the lending arm with one of the brothers, Steve Corliss. Um, we are, uh, Unique in that, unlike other lenders that have short term goals or short term requirements to meet their lending performance or manager portfolios, we have a much more longer term view. So we’re a legacy family. Everything we look at is more 5 to 10 years out. So we don’t have to meet certain performance criteria is in short periods of time, which allows us to make, um, different types of lending decisions that are aren’t Essentially, institutional investor base that have performance requirements. Um, so that allows us to be very
[00:03:00]
flexible. We don’t have any underwriting specific underwriting criteria. Um, we can pursue almost any asset class. We’re interested in right now. We’re focusing a lot on. What I call gap financing, where regional banks and other lenders aren’t interested in participating, such as construction of the RV parks. We’re doing a car wash. Um, but we’re very flat, very small, very nimble organization. Um. We, um, decision making is basically a committee of four people. Um, and so we’re, I would say we’re very, um, we’re very unconventional relative other lenders. And I think that gives us, uh, gives us some opportunity to, to look, it’s very interesting, you know, lending opportunities.
Michael Belasco:
Yeah. And I would say from personal experience of all the groups I’ve talked to, like you’re the way you guys think and how open you guys are. It’s not, here’s our box. We’re
[00:04:00]
limited to this. Right. And that’s it. And we’re closing the doors. It’s like, you guys are very open minded. And when we had the early on conversations, I got that sense where it’s very, if you have a great group, a great investment strategy, we’ll, we’ll come and work with you.
And I found that to be just, You know incredible and even beyond that like the whole team that we’ve met even post close has just been like It feels, it feels family ish. I want to say, and less corporate, which is great for, for any borrowers out there, I would say like our experience has been awesome to date, you know, just being able to get on the phone.
I mean, when I was out there last, when we went up to the site, like just to get together and spend time with you. So it’s very. Um, different in all the right ways, in my opinion. So I, I personally can
Charles Farnsworth:
Well, I, I appreciate that’s a very, that’s really what we’re trying to be like. So the fact that, you know, hearing that from you, um, and your experience, it means a lot to us because yeah, we do, we do feel, we do think we’re different, but you, you operate in
[00:05:00]
your own little corner. You don’t know how everybody else, everybody else’s experiences. So it’s really nice to hear that.
Michael Belasco:
It’s great. So question. I always, uh, I’m curious. I want to get your, where did the, where did the 1892 name come from? How did you guys come up
Charles Farnsworth:
So that is when the actual family began. The family started in a sand and gravel natural resources. So it’s fifth generation. So that’s actually when the company began. So that was a, that was
Michael Belasco:
Oh, wow. So they’ve always been in the Seattle Tacoma sort of
Charles Farnsworth:
Yep. And the mailing’s Tacoma, South Seattle area.
Michael Belasco:
Awesome. So what’s interesting is that our site is a former gravel pit. So I
Charles Farnsworth:
Oh, that I didn’t
Michael Belasco:
Oh, you didn’t realize it was a former gravel pit. So I thought there was some synergy there. So, so yeah. Yeah, that’s great. So, um, so you guys do, so there’s two, I guess there’s kind of two branches. There’s the lending. Um, you mentioned a couple, you mentioned a car wash, you mentioned our, you know, RV park development we’re working on. What other,
[00:06:00]
what other stuff has come your way, whether you guys did it or not invested or not. I’m just curious to hear like, how many, what are you guys looking at? What excites you particularly, if there’s anything you guys are hearing about that, that gets you excited.
I’m just
Charles Farnsworth:
Yeah. I mean, we, uh, as any lender that likes to avoid risk, we obviously love bridge loans, you know, we’ve done a couple bridge loans for apartment buildings that had been finished that were planning to sell underlying lender, just didn’t want to hang in there anymore and they need it out. Um, but we see all sorts of stuff we’re doing.
We’re doing a plat. Um, 66 lots were building 47 homes with another lender. Um, we do land loans, entitlement loans. Um, we’re seeing a lot of, like I said, regional gap deals anywhere between 3 and maybe 12, 000, 000 where banks, the regional banks are just not not lending. Right.
Michael Belasco:
Yeah.
Charles Farnsworth:
and. real estate fund business, sort of this private lending business, you [00:07:00] know, has evolved a lot in the past 10 years.
And, um, it, some of it’s been very commoditized. Um, we used to do fix and flips, which you don’t do anymore just because there’s a big syndicated commoditized market for that. And we don’t generally play in that. We, we see ourselves as sort of an added value player that looks for lending opportunities or other banks or, Regional players just won’t do it for reasons that don’t make sense to us, you know, that they can be mitigated. So, um, You know the other day we were the other day. I saw a deal. We’re seeing all sorts of things our primary Our primary lead gen are brokers. We have established relationships with some really good brokers that you know Have us look at deals and so yeah,
Michael Belasco:
Excellent. Excellent. And we have to introduce, you have, you have a guest in the background who we mentioned before, but I think it’s worth sharing with the audience. You have a, you have a cat back there.
Charles Farnsworth:
Can you hear it?
Michael Belasco:
Yeah, no, it’s great. Yeah. We were just talking offline before it started, but I think it’s awesome.
Actually you
[00:08:00]
should, if you can get her on, I know you have You have
Charles Farnsworth:
Yeah, she’s the problem is, so we have a cat that lost an eye and became deaf and I’m interning at my office and, um, for the podcast, I’d move the furniture around and now she’s absolutely confused, um,
Michael Belasco:
She’s great. I started crawling around back there, just to look at what she’s all she’s like, how old is she?
Charles Farnsworth:
You know, I don’t know. She’s over 15 years old. She stumbled into our house 15 years ago, actually about 13 years ago. Um, yeah, and we just brought her in and
Michael Belasco:
Nice.
Charles Farnsworth:
care of her. Yeah. I was hoping you might not be able to hear it through the microphone, but
Michael Belasco:
No, it’s great. No, I’m not. We were talking. I’m a dog person. I do like cats though, but, uh, I’m, I’m fighting the good fight in my house to get, to get some animals in here. I got to get my wife over the hump though.
Charles Farnsworth:
once you get one, it’s easy. The rest come easy.
Michael Belasco:
Well, she grew up with German shepherds and, uh, she’s like, no more. She’s like, I’m going to be taking
[00:09:00]
care of it. Kids are at school Um, but Yeah, let’s get, let’s get back in. Um, I, since this. Our podcast is, um, very much geared towards, you know, young professionals, people getting in the industry, people looking at their first, second, third deal. We hit a lot of different folks, but, um, I’d love to get your advice for our listeners out there.
If somebody is approaching 1892 Capital and they have a deal, you know, what are some best practices. Like, what are some things that you look for? And this is, this is kind of off the cuff here. No, um, you know, just, this is advice. Like if people are prepping and by the way, anybody listening to this, if you have an opportunity, are you guys across the country, by the way, are you
Charles Farnsworth:
so, you know, we’re regionally focused. We’re we’d like to stay in Washington, Utah and Hawaii. One of our principals, one of the brothers lives in Utah. So yeah, we’ve been targeting mainly those states for now.
Michael Belasco:
Okay. So if you’re in one of those states, yeah, go, go ahead.
Charles Farnsworth:
Yeah, but if you
[00:10:00]
know, if there’s a unique opportunity that doesn’t have a added value or construction component, like a bridge loan or something, we might look at those. But anything that’s value out of construction components kind of hard to manage. We’re not comfortable managing things that we can’t go see. You know what I mean?
Michael Belasco:
Totally. Totally. So why don’t, so for, for folks in those states and you have a connection to Hawaii, which we can get into in a little bit, but, um, for folks in those states or anybody that has an interest in reaching out to 1892, what, what are like, and for any, for any lender out there, what are some best practices, some things you look for, some things that give you concern, just, you know, anything that comes to your mind that, that could help people when they’re preparing to, to reach out to you.
Charles Farnsworth:
Uh, you know, I wouldn’t call it a lender of last resort, but I always encourage people to look at what their options are, whatever their project is right? Um, some of the reasons why banks turn well, banks, [00:11:00] some of the reasons why banks turn deals down don’t make a lot of sense. Right? So we like to be easy approachable.
We don’t have like a formal application process. Um, honestly, I just ask people to reach out by email or give me a call. And just Lucy talked about that deal. We’re very collateral based though, you know, so, um, the more collateral we have, the more comfortable we feel. And that also allows us to overcome other things that maybe banks or their lenders weren’t, weren’t willing to overlook. Um, You know, what I see a lot is or what interests us a lot are deals where let’s say the loan to cost might be a little bit higher than typical, but the loan to value the add value is overcomes that, right? The loan to value is lower. We have issues where maybe the cash reserves aren’t perfect, or there’s an experience issue, um,
things that things that don’t make logical sense, but once they etch them
[00:12:00]
in stone, they can’t, you know, they can’t make decisions around them. So. Just
Michael Belasco:
gotcha, gotcha. So, so then,
Charles Farnsworth:
Give us a call, you know, just give me a call and talk. But we like deals between two and two and maybe 12 million. We don’t like to go to higher than that. That’s our, I would say that’s our sweet spot.
Michael Belasco:
Got it. So like, how do you, so a deal comes to you guys, you know, you’re open to hearing a lot of different opportunities. If it makes sense, it’s geographically preferential. There’s, there’s collateral. Um, you know, then once it comes in, like, how does your decision making process work when you guys are in there lately? And, and, And what role, if any, do clients have in the process during during that decision making process?
Charles Farnsworth:
Yeah, good question. So if somebody calls, first thing that I kind of go through is size the deal, measure the guardrails. We have good loan to value, loan to cost on the transaction term. We don’t generally like to go more than a year. So it kind of fits those really easy
[00:13:00]
buckets. And the next thing becomes the asset type. Um, and generally that’s where I take it to loan committee and me alone committee once a week. We just meet for an hour. We talk about deals on the board. And if it’s a asset type and location we’re interested in, then I’ll engage the client for more due diligence, then we kind of roll our sleeves up and, you know, see if we can make the deal work again, we’re largely governed by value.
So what ultimately comes down to is either an internal comfort where we internally evaluate it, or we send it out. For value, you know, like your transaction, um, Never done RV park before we’re new to the process too, but we believe in your team. Um, the guardrails are great in your deal. And, but because of that, you know, we, we made you go get a, an appraisal, right?
Which took a little time. But, um, once we got comfortable with that, it was. You know, it becomes easy for us. So same, we went through the same process on the car wash. We had never done a car wash before, so we’re not just going to say
[00:14:00]
no. But what we did was we leaned on other consultants to give us a feasibility study and client again, you know, was willing to go through that process, which I think they appreciated too, because it was their first car wash.
So. More eyes looking on it saying it’s a good project made them feel comfortable. And so when that visibility came back and values came back just as we expected then we move forward. So
Michael Belasco:
Awesome. And yeah, that’s, that’s some advice because, you know, that was one of our challenges coming into the space too. And I’ve, you know, we’ve talked about this on our site.
It’s, it’s, you know, we have a lot of experience On our team, but for us, it’s our first RV parks. We had all the real estate, I think combined, it’s like a hundred plus years of real estate between development and investment experience on our team. But the RV park was a new asset class. And, and, um, one of the things we did to solve that. And, you know, by the time we showed up with you, we had, um, uh, we had a subject matter expert on the team, which luckily we found he was in the town of Port Angeles where the project is
[00:15:00]
just, we met this guy a year ago that. Helped us a lot in terms of, you know, and you met him, this guy could
official him on site. And, you know, that to me is like, if you’re entering a new space, build a team. Like if you don’t have the subject matter expertise, either you. Bring them in or you hire them and that gets capital. The, the biggest challenge for us was convincing a capital partner that you have the expertise, you have the sophistication, you know what you’re doing.
Going into a new space is challenging. So round out that team. You know, I think the other thing that helps you guys is, yeah, we were significantly invested already in the deal. So like if we’re putting a significant amount of money, you know, we’re going to be paying extra attention to it and doing everything possible to make it We
Charles Farnsworth:
Yeah, and you know, I think part of That was a huge part and I think you know, we’ve discussed recourse and non recourse too, right? And what we are seeing most lenders like recourse or who doesn’t um, But if the deal makes sense, we’ll look at you know, some limited year
[00:16:00]
and t type situations um You You know, we’re seeing more complicated capital stacks, right? And as a capital stack, it’s more complicated. Everybody can’t sign. And one guy who’s a The GP is not going to sign for everybody. So, you know, that’s also something willing to look at, which a lot of lenders just won’t. So that, that’s makes it difficult for people who have creative capital stacks.
Michael Belasco:
Yeah, like, like our, I mean, we had, we had a syndication with some folks and, um, yeah, so that was, you know, honestly really helpful. And so, I mean, it’s, it’s been great and hopefully, you know, we continue this, right. Um,
Charles Farnsworth:
Yeah. I’d love to do more. Let’s see you guys. Looking forward to getting out there. Take, take a look at the first draw here too.
Michael Belasco:
yeah, yeah. Which is upcoming. So every, so, you know, for the people that know, we try to update, we haven’t done an update on the site in a while about the RV park, but, um, but we’re, we’re due on, on ACRE. So talk, so how did the family. Uh, this is the Corliss family. They got into real, so they were in gravel pits. They got into real estate.
[00:17:00]
How did they get into the lending space? And are you, did you come to them with this or how did you guys connect? How did the whole lending side start? Um, uh, give us a little, give us a little color on all that.
Charles Farnsworth:
Uh, you know, so that’s like fate. I’m not sure the best way to describe it. I, uh, might’ve been almost 20, 15, 20 years ago, 2008. Maybe around 2010 when there was absolutely no capital in the market. Um, Eric Corliss, one of the brothers showed up. I was running a small private lending office. Um, he was referred to me by a land, a land guy and showed up from my office.
And, um, that’s how we met. And, um, I didn’t think we were an appropriate fit for their needs just cause they were a very strong borrower. And so I kindly told him, I think you could, you know, I, it has to work, right? Like It has to be a good fit. If it’s not a good fit, I’m going to tell my clients you can go get better money
[00:18:00]
or
Michael Belasco:
Love that. Yeah.
Charles Farnsworth:
Um, and so that’s kind of what I did. And then over the years, we just became friends, uh, Eric and I, we, we would meet maybe every quarter, have lunch, hang out. Just friends. Nothing. I expect anything out of it to continue to do what I did. He continued to what he did. And then, uh, about three years ago, they came into a very large liquidity event when they sold their, their legacy sand and gravel business and, um, got more heavily into real estate, um, and one of their advisors, um, Great guy, my name is Bill Schur, also recommended maybe they look at private lending, and I just happen to know Eric at the time, and so yeah, they approached me and said, Hey, we’d like to kind of get this private lending thing going.
Would you be willing to do it? And said, Sure, sounds great. And they’re, they’re just They’re a great family, great people to work. I, you know, I’ve been in wealth manager for 10 years and seen a lot of, let’s call it interesting families. And, um, yeah, they’ve done a great job. They’re very value
[00:19:00]
based, they’re great stewards.
They’re trying to keep the family together. They have very good legacy planning. They rely on advice. They do all the right things. So it’s very fortunate to be involved with them. About
Michael Belasco:
That’s awesome. And when did you guys start? When did 1892 get officially underway?
Charles Farnsworth:
years ago now.
Yeah, and it would hockey stick. We again, I have great respect for them. They put a great deal of trust in my ability to just start lending their capital. Um, and, you know, we put a certain amount on it and then that double the next year and then that double the next year. And now we’re probably, I would say, right size.
We like to remain small and nimble, you know, an approach to, you know, yeah. Get into the commodity space, do a lot of fix a flip loan sale that we just, that’s not, that’s like I said, that’s not what we do. Um, it’s not, that’s not what we like to do is play in the commodity space. So, um, so I’d say we’re right size.
Like I said, we’re a small team. There’s only four of us. And
[00:20:00]
you know, if you call us, you’re generally talking to me and, um, I’m at least one of the decision makers at loan committee, so it’s, I enjoy it. It’s, it’s, it’s, yeah, it’s, it’s great. Couldn’t ask for
Michael Belasco:
That’s awesome. One of the things I want to hit on that you, it’s like such a core lesson in our industry and you had said, um, indirectly, but how you met, it was Eric that you met, correct? And back in, and it was, and the conversation was. I have a product, but you’re not the right fit. So I’m not going to this, you don’t need me.
And so therefore I’m not going to sell you what I have. I’m not going to try to be a salesman here. I’m just here to tell you that I’m not a good fit for you. But what happened was you established the relationship. Without any expectation, right? It was like, Hey, we’re let’s hang out. We’re in kind of the same space and this relationship happened.
Right. And that was in 20, 2008, you said?
Charles Farnsworth:
Yeah, maybe 2010 or so. Yeah. I mean, I’m,
[00:21:00]
I’m a, I’m a believer of the sort of the go giver mentality, right? You just, you just do what you can do to help people. And if you, if you do that, then it generally comes back one way or another. You just never know, you never know how that’s going to present itself.
You know,
Michael Belasco:
Yeah, no, I love that. So it was like, you know, so if it was three years ago, it’s almost it’s 10 plus years later without expecting anything. Right. Um, you know, we
Charles Farnsworth:
I also enjoyed, I also just enjoyed his friendship because, you know, and I, during that time, I, you know, he was going through a lot of the legacy planning, so just. We just had a chance to talk about in my experience and seeing some of that. And yeah, so it was
Michael Belasco:
Yeah, so there’s relationships. It’s like, don’t worry about what it’s not about the dollars. It’s about like connecting with people and that in every business. Right. But especially in real estate, having relationships with people, creating friendships, creating deeper than it’s not about business all the time.
Business sort of comes. As a result of growing
[00:22:00]
your network and your relationship. And that is a true story and proof of that. And even at ACRE, like when we started this thing, we had this model. It was like give without the expectation of getting anything in return. And like, you just build up goodwill and it’s just fun.
Right. And then you, you make these connections, you meet people, you end up doing business with them. Um, or who knows what happens down the road? No, not always. And it’s not always about that. It’s just about like getting out there. So I love that story. I know him forever. We talked, we were friends and, um, you know, it just, it just sort of happened.
So, so that’s awesome. So where do you guys see yourselves now? Let’s say. You know, do you guys have like a five year trajectory taking it year by year? Like what’s the ultimate plan? Where are you guys? Where are you guys heading? Or do you do you know yet?
Charles Farnsworth:
We don’t, I think we got to point what I call right sized and sort of trying to make that decision, you know, in, as you know, in businesses, you. If you’re right size and there’s balance, if you, if
[00:23:00]
you turn it up, then you start to begin this merry go round and some balanced businesses, you can just, it’s at a nice steady pace.
If you, if we go up another notch, the merry go round starts to spin faster in that you now are committing more. You know, fixed capital to it. You got to keep it at a certain pace. You got to, you got to, you have to achieve that next level in order to sustain, which means you take on a certain level of business risk to have to deploy more capital.
And then I don’t think we ever want to be in a position where we have to deploy capital. Um, you know, the part of the decision to get this business was to be opportunistic and not be forced. Being forced to do loans or to make more loans to make up for bad loans or whatever Some lenders do is just that’s not it’s not a path that we’d like to be on, you know, so we’re probably
Michael Belasco:
are out of size now, or you don’t have to you don’t have to feed anything in
Charles Farnsworth:
I think, you know, there’s been
[00:24:00]
the family can, if they want to deploy more capital in the space, but we’re, you know, we, we, we already grew much larger than we already anticipated.
And, um, you know, takes a while for loans to perform. So, you know, in reality, although we’ve been at three years, we might have two years worth of, of performance because loans are just maturing coming through. And so, um, yeah, I think the family is, has done a good job committing to certain a level that.
Give us a good right size for successions and sustainability and nimbleness and everything. So it’s, I think we’re probably made the size for a while. Um, it also allows us to develop stronger relationships with our existing clients and do deals. For them, like support their business strategies and not just constantly go out and get new clients, but be there for our existing clients, um, until they get to a point where, you know, they can, they can obtain, you know, cheaper capital or more flexible capital. Um, so that, that, that’s safer for the
[00:25:00]
portfolio as well.
Michael Belasco:
Yeah. Awesome. That’s that’s great. And I we we appreciate that The fact that you
Charles Farnsworth:
Well, yeah, I’m looking forward to this working and doing more with you guys. So I really, it’s been a good relationship and that’s, I think we’re very fortunate. We, I mean, become friends with a lot of my clients. We’re just, we, we don’t have to do business, right? So we’re very fortunate to be able to choose to work with people we want to work with.
Michael Belasco:
Yeah, now you guys have been so it’s been three years. I imagine there hasn’t been any like war stories or stuff where You could share that could be and maybe you just say there’s nothing yet because everyone we’ve done so far has been
Charles Farnsworth:
Oh no, I have a lending and everything takes in real estate, everything takes too long, um, costs more than you expect. Um, Oh
Michael Belasco:
Not ours. We’re under budget
Charles Farnsworth:
no, you guys are perfect. Um, but you know, because they’re willing to take risks with people, sometimes you oversee things, right?
[00:26:00]
And that’s one of the reasons why we, we were comfortable with your team.
We felt you guys had a good team to, and, and, you know, the ACRE background and just looking at deals, you guys can, you can see what’s, what you need to do. Some people don’t see it all. And, you know, you ask them enough questions to see if you think they see it all, but sometimes they don’t. And so we get into those situations where we have to sort of help people through it.
Um, But we’ve been, we’ve been very fortunate to get them through it. Um, and we haven’t, we’ve maybe taken back one or two over the past three years. Um, and I would say they’re amicable, you know, uh, long talks with clients forget to that point, give them every opportunity to try. Um, I, you know, I still talk to them today.
It’s, it’s just. It’s at a certain point, it becomes business, right? It’s just, and if everybody understands that and they understand the risk, you know, then it’s fine, you know, so
Michael Belasco:
Yeah. What are, what are some, can you, are there any like off the top of your head lessons learned from those deals or, um, like
[00:27:00]
looking back hindsight, 2020 stuff that, that like, you know, you, you might think of, ah, we probably should have done this or that, or just things just turn or the market turned, there was a macro impact
Charles Farnsworth:
So most of my experiences in life that resulted in things not going as planned has been black swan events.
Michael Belasco:
Yeah. And there’s been plenty of them as best
Charles Farnsworth:
uh, yeah, so 2008 was one, uh, it’s heavily in that business when that black swan event happened, um, and who thought interest, you know, interest rates when we went into COVID and they were printing money, I’m like, it’s going to, this is going to come back eventually, just not sure when, um, didn’t think it would come back so fast and furious, right?
The nice thing about private lending, and I’ve been doing this for so long is real estate generally takes a little bit of time to work its problems out. Unless it’s just a crazy black swan event like 2008 where all the spigots, all the capital spigots just shut off, right? That, that was just unheard of.
Um, but
[00:28:00]
typically it’s a safe space because you have a year or two to pivot. And if you’re doing short term loans, clients can get out in time. Everybody can get out in time. Um, but when rates went up that fast, um, capital shut off deals that were in the hopper for two years now don’t pencil. And I don’t think we’re done yet. We’re not, we haven’t done seeing them yet.
Michael Belasco:
Yeah. I think there’s a lot of, there’s a lot of lagging things that are coming to, to
Charles Farnsworth:
Yeah, I think the banks are finally at a point that they, everybody’s hoping rates would return and they’d be able to work some of these things out. And they’re just not returning as fast as I think everybody would hope. So I think we’re going to start seeing a little bit more, um, but it’s, it’s working itself out.
And then, you know, cap rates are finally capitulating to higher interest rates, which they were holding out for a long time.
Um, everything’s starting to find a middle, but we’re still not quite there yet,
Michael Belasco:
yeah, no, I would agree with that. I don’t think we’re out. And I think, yeah, there’s, there’s still, there’s a lagging and the lagging effects that take
[00:29:00]
years. I mean, COVID and all this, you know, 2020, 2021, 20, we’re not, we’re not really
Charles Farnsworth:
No, and for what happened in the single family market, I don’t even know how long that’s going to take to work itself out.
Michael Belasco:
Yeah. Yeah. Um,
Charles Farnsworth:
yeah, that’s,
Michael Belasco:
I had a little weird. I was exploring the, we bought me and a buddy bought two rentals. We were exploring in this area where I live, which is Bucks County, PA. Um, we were exploring. I didn’t do it for many reasons, but one is we got, we got in with two of them with good, great interest rates and then things change.
And it’s a very, Management intensive. We were buying like singles around certain neighborhoods, not just, I mean, and it’s, it’s hard to kind of deal with for the dollar amount. It’s challenging. Um, but the interest rate market, you know, we got in great. I mean, we got, uh,
Charles Farnsworth:
Anybody who got in that launch rate should just never let go. You know, you just rent and that’s part of the problem. So the, the resale activity is completely non existent. So there’s no, nobody’s willing to sell and, and it, it
[00:30:00]
costs a certain amount to build a house. So that number is now making it relatively unaffordable unless the land is free and nobody gets free land. So it’s, it’s an interesting place for it right now.
Michael Belasco:
What was it? The westward expansion? I forget the name of it, where you just had to move west and they gave you
Charles Farnsworth:
I don’t know where you can get. Well, now everybody’s moving. Everything’s everybody’s moving through the middle. Now that’s. Yeah, even those prices are now starting to go up. It’s just, it’s, it’s an interesting time.
Michael Belasco:
It really is. It really is. Well, Charlie, this is, this is awesome. So, uh, any, any final words, 1892 Capitol, maybe how people can reach you guys. Um, uh, you know, anything you want, final thoughts or anything you want to share with our, with our audience.
Charles Farnsworth:
Uh, no, just, you know, if you have a deal that looks interesting, it’s got good collateral and for some reason somebody’s not helped me out, feel free to give me a call. Even if I can’t, I’ll give you as much advice as I can, um, and direct you to somebody who may be able to, but, um, yeah, we’re very approachable.
I always
[00:31:00]
look forward to chatting with people.
Michael Belasco:
Awesome. Awesome. Yeah. And I, I can attest the, this is a great group of people at 1892. Um, And yeah, I look forward to our, our continued relationship. And, uh, you know, like many folks in this industry, Charlie’s just one of those guys that is, you can reach out to, he’s just, he’s a great person. And, and, you know, if you connect with him on LinkedIn or wherever and try, I’m throwing you out there, but, uh, I hope you, I
Charles Farnsworth:
I think that’s how we, that’s how we met, right? You came in, um, I can’t, yeah.
Michael Belasco:
I think I was, yeah, we, we were doing, we were dialing for dollars and, um, yeah, you came up some, I, it could have even been like us. I may have connected. I can’t remember how I, how I found you. Um, but yeah, so, you know, hopefully, hopefully
Charles Farnsworth:
Yeah, don’t be afraid to call. I always like, I mean, a lot of people are afraid to call because, you know, just call. Give me a call. Let’s chat. Talk about a deal. Yeah,
Michael Belasco:
Awesome. All right. Well, Charlie, thanks for joining
[00:32:00]
us
Charles Farnsworth:
absolutely, Michael. It’s good to see you. I look forward to seeing you when you come back in town again.
Michael Belasco:
Definitely, definitely. And to all our listeners, , out there listening to this, we look forward to seeing you on the next one and we’ll see everyone soon.
Mhm.
