Commercial Capital Training Group February 5, 2014 Presenters: Jeffrey Tesch Dave Olson Brian LaBua Managing Director VP of Finance and Business Development Chief Loan Officer Jeffrey Tesch Managing Director Program Agenda I. Introduction/Company Overview II. Company Products III. Target Market IV. RCN Capital’s Niche in the Industry V. Loan Criteria VI. Loan Qualifying Factors VII. Transactions RCN Capital Will/Will Not Fund VIII. Application Process IX. Deals that RCN Capital Has Funded X. Questions & Answers RCN Capital™ Overview •RCN Capital, LLC is a national private lender. We provide short-term, residential and small balance commercial, non-owner occupied, property-backed loans. •Founded in 2010, RCN Capital is located in South Windsor, CT, and is affiliated through common ownership with TicketNetwork, a large competitor of StubHub. RCN Capital is audited by KPMG. •RCN Capital services its own self-funded portfolio in excess of $50M, with $25M in additional available capital. •RCN Capital has funded 350 nationwide transactions since its inception and has doubled in size every year. •Approximately 75% of our business is through brokers. Brokers protected. We Brokers! Private Commercial Loans •Primarily used to fund the purchase of non-owner occupied (NOO) residential and small commercial properties. Highly focused on the underlying asset and the loan to value ratio, rather than the personal credit of the borrower. •Provide financing for various scenarios to small business owners, real estate investors, developers and contractors with sound exit strategies. •Can also provide renovation, rehab and construction funds or small business financing. •Close in as few as 10 days because the underwriting and documentation processes are more streamlined than conventional lenders. Private Commercial Loans (cont.) We provide short-term, bridge financing. •Commercial Bridge - Acquisition Financing •Distressed Construction •Flip and Rehab - Residential, Multi-family, Apartments, etc. RCN Capital™ provides solutions Our flexibility and ability to close quickly provides our borrowers with a clear business advantage. Private loans are not for everyone, but can be a financial game-changer. Dave Olson Vice President of Finance and Business Development Identifying Opportunities: RCN Capital’s Target Market Primary Channels Small Business Owners Real Estate Investors Real Estate Developers Builders/Contractors Personal Contacts/Networks Secondary Channels Other Lenders Commercial/Residential Real Estate Attorneys Brokers Traditional Bank Lender vs. RCN Capital™ When is Funding Available? Loan Scenario Traditional Bank Lender Purchase of an owner occupied property Purchase of a non-owner occupied property Maybe Purchase of a foreclosure Maybe Purchase of a mixed use property Maybe Borrower has filed for bankruptcy Maybe RCN Capital Purchase of a distressed property Borrower is already financing multiple properties Loan needs to be closed in two weeks Borrower has bad credit Collateral Non-owner occupied (NOO) residential, mixed use or commercial real estate Term 12 months Interest Rate 12% monthly (no prepayment penalties) Loan Amount $50k to $2M+ LTV Closing Lending Area Up to 80% of the “as is” value of the property As few as 10 business days Nationwide (except CA, NV and AZ) Brian LaBua Chief Loan Officer Broker Referral Program Referral Fee Split Points 50/50 Minimal Involvement Heavy Involvement RCN Capital™ offers simple referral options for brokers. The amount of compensation earned depends on the broker’s level of involvement and the loan scenario. Fundamental Pyramid of Loan Approval Income Credit Equity RCN Capital™ Loan Qualifying Factors Exit Strategy Resume Experience/Background Cash Flow Existing Leases Reserves Saturation Levels Acquisition Market Approval Type Above all factors, RCN Capital places an emphasis on the borrower’s exit strategy. Common Exit Strategies •Sell the property and use the funds to pay off the loan. •Refinance with a conventional mortgage lender, SBA lender, finance company, ABL lender, etc. •Buy and hold. Loans RCN Capital™ Will Not Fund Owner Occupied Properties Partial Owner Occupancy of a Property Heavily Contaminated Properties Projects Without an Exit Strategy Properties That are Inflated Post Down Payment Properties That Have Been Equity Stripped Over a Short Period of Time Application Process We need the following items to complete the application: Personal financial statement Borrower signature authorization for credit and background checks Form 4506-T Two years’ tax returns 2 months bank statements Appraisal authorization form Purchase contract Basic Timeline 10 Days 20 Days Residential Rehab Small Commercial 30 Days Construction Deals RCN Capital™ Has Funded Commercial Steakhouse in Greenwich, CT $2.4M Bridge Loan •The borrower had a commitment for long-term financing through a traditional lender. •However, he needed immediate funds to pay taxes on the property and to payoff the existing second mortgage. •RCN Capital financed a bridge loan to fill the gap while the borrower waited for the bank loan to close. •The broker earned $36k in fees from the deal. Three-Unit Residential Property in Mount Vernon, NY $89k Loan for the Purchase of a Distressed Property •The borrower was eligible to receive funding from a traditional bank, but the property itself was not because of the condition it was in. •Private lenders often look into the project that the borrower wants to accomplish and are willing to lend on non-traditional properties. •The broker earned $2,700 in fees from the deal. Single Family Colonial Home in Chatham, MA $1.2M Bridge Loan •The borrowers were seeking conventional financing but needed to close quickly. •RCN Capital™ provided funding so the borrower could purchase the property. The borrower could then get a conventional loan in 60-90 days. •The broker earned $24k in fees from the deal. 51-Unit Apartment Building in Houston, Texas $625k Bridge Loan •The borrower needed a loan to payoff seller financing that had come due. •The borrower had high credit scores, steady income and a great deal of assets, and would have easily qualified for conventional financing. •However, a bank would take 3-6 months to provide him with the financing he needed and he needed funding immediately. •RCN Capital™ was able to provide him with the funding he needed. •The broker earned $7k in fees from the deal. One-Story Retail Strip Mall with Seven Units in Centereach, NY $1M Commercial Bridge Loan • A repeat borrower needed a bridge loan to fund the purchase of an investment property. •The borrower was eligible to receive funding from a traditional lender, but needed to close quickly, which a bank could not do. •Using a strip mall that he owned free and clear as collateral, the borrower was able to utilize dead equity to acquire new assets. •The broker earned $20k in fees from the deal. Hotel and Multi-family Portfolio in North Stonington, CT $1.5M Loan •The borrower wanted a loan to refinance several mortgages and various small bank loans. •RCN Capital™ secured 11 properties allowing the borrower to expand his real estate portfolio while reducing his monthly outlay by funding a large blanket mortgage. •The broker earned $16k in fees from the deal. Broker Compensation •Fees are paid to brokers off the HUD and are memorialized in a transaction-specific agreement. •A check is sent directly to the broker at closing. •All fees that are earned by the broker are disclosed on the commitment letter up front. Contact Information Brian LaBua Chief Loan Officer [email protected] P \ 860.471.1024 RCNCapital.com Questions?