As part of our Strategic Partners program, we’re bringing in local experts who will provide you with in-depth information about their role in the real estate process. Today, we’re highlighting another Strategic Partner: Spearhead Commercial Capital. Marcus Davis and William Foy are the founding partners. Spearhead Commercial Capital is a commercial mortgage brokering firm in Denver, Colorado.
- Listen to the podcast “#357: Introducing Your Commercial Financing Matchmakers: Spearhead Commercial Capital” on the Denver Real Estate Investing Podcast
- Watch the YouTube video (at the bottom).
- Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.
How I Know Marcus and William
At the beginning of the pandemic, the commercial lending world got turned upside down for a couple of months. I had a couple of local banks that were our go-to, but their loan committees stopped lending or dramatically increased rates. In my search for new commercial lenders, I got in touch with William and Marcus. They were able to save the deal by creating a great loan product.
Both Marcus and William are former bankers who have 12+ years of experience underwriting deals for banking institutions. After a while, they got tired of having to say no to clients at the bank. Banks can change their appetite for types of asset classes and other real investment real estate terms, which can be challenging for clients who are building businesses around commercial real estate.
They started Spearhead Commercial Capital so their clients always have options. They take great pride in understanding their clients’ strategic priorities and matching them with the appropriate lending structure. To accomplish this, they’ve cultivated relationships with a wide variety of lenders and capital partners both locally and nationally.
Who Does Spearhead Commercial Capital Service?
Commercial lending can get very technical very fast, so to explain how Spearhead works, we’re going to look at five common transactions and client types:
Client #1: First time commercial investor
The first type of client is a common one: an investor transitioning from 1-4 unit residential properties into a true commercial property. Commercial properties are multifamily properties of 5+ units or any other property that generates income through rentals: office space, industrial buildings, or self-storage.
They recently worked with a local investor who had company stock and a couple of single-family residences in her real estate portfolio. She wanted to take some of her stock earnings and put them into a 22-unit multifamily property in a mountain town.
Unlike residential real estate, experience and track record factor heavily into commercial lending. There are different programs available for someone with a more substantial portfolio and experience, but there are also lenders who will work with first-time investors.
In the end, Spearhead found the right lender for her, and she was able to take some money out of her stock account and diversify her investments with this multifamily building.
Typical loans are $1MM and higher.
Client #2: Investor with a few smaller commercial or multifamily properties that has reached the ceiling with their existing lender’s capabilities
The next type of client is someone who has a substantial portfolio but requires more creative lending terms. In this case, they had a client who owned 28 single-family residences that each had their own loan. He had reached the ceiling of his usual lender could loan but wanted to purchase a 56-unit multifamily property.
The great thing about commercial loans is that there’s room to be creative with them in order to meet the investor’s goals. This client had experience in commercial real estate, so they were able to pool the 28 loans together into a blanket commercial loan and pull out cash. He was able to use this cash to invest in the multifamily property while still keeping his residential properties, too.
Typical loan sizes between $2MM and $5MM
Client #3: Active investors, but limited time
The Investor has a portfolio of 10+ properties and has constant disposition needs but doesn’t have time to source their own lending options. They would value someone taking on that task plus bringing several loan options with specific competitive lending criteria. Typical loan sizes between $5MM and $20MM.
William and Marcus were called by an investor about a property his group had under contract. The investors were set to close within 40 days with a hard timeline set by the seller who wanted to close before year end. They had good terms in-hand from a lender who they’d worked with before, but wanted to see if Spearhead Commercial Capital could beat that structure and still close on-time in order to improve their projected returns on the property. Within 24 hours they had a term sheet that saved nearly $30,000 annually. The deal still closed with the desired timeline.
Client #4: Commercial developers
Developers building for-sale residential, commercial, or multifamily properties in need of competitive construction financing for the ground-up and permanent financing upon completion/stabilization. Loan sizes of $5MM and up.
Client #5: A very sophisticated commercial investor or investor group
These clients have sizable portfolios ($100MM+ portfolio of assets) and would like to see different creative lending ideas outside of conventional Commercial Mortgage-Backed Securities(CMBS) lenders.
Spearhead Commercial Capital recently worked with an investor in Houston who owns over 2500 units. When he purchased a building with a $28M loan, he got hit with an unexpected insurance requirement for windstorm coverage. This requirement was costing him $300K a year, so he wanted to refinance as soon as possible. Spearhead was able to get the refinance done within 30 days, not only reducing the insurance coverage but also lowering his effective interest rate. This was a total win for the investor.
Loan sizes of $20MM – $50MM
Connect with Spearhead Commercial Capital
As Strategic Partners, William and Marcus will be creating a lot more content with us in order to teach you more about commercial lending. Look for them on our new quarterly commercial market updates show, as well as deal analyses.
Connect with Us
And if you have any questions about your portfolio or creating your investing goals, reach out to us. We’d be happy to look at your portfolio or find properties that match your long-term goals.