Derek sits down with securities attorney Kevin Kim (Fortra Law) to demystify raising capital for real-estate deals—covering when to use a syndication vs. a fund, realistic startup costs, 506(b) vs. 506(c) advertising rules, what actually happens when regulators come knocking, and how note offerings compare to LP/GP fund structures. They also hit modern twists like series LLC funds, why most beginners should avoid tokenization, and a pragmatic outlook for late-2025 across SFR, small multifamily, and shaky commercial sectors. If you raise money (or plan to), this is your compliance-and-strategy cheat sheet straight from a former regulator.
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Welcome to the Generations of Wealth podcast. I am your host, Derek Dombeck. And we got an awesome guest today. I know I say that every time because all of our guests are awesome. But, you know, we’ve had people on the show talk about syndications and funds and these different types of structures for commercial real estate investing. But today we’ve got Kevin Kim, who actually works for a securities law firm out in California. And this is what they do. They are establishing funds. They are doing all of the legal work to be able to do this. So we’re going to pick Kevin’s brain and awesome show. Before we do that, thanks for being here. You know, anything that you can do to help us expand our reach, grow our network, help more people, I would greatly appreciate. And anything that I can do or my team at Generations of Wealth can do to help you, please don’t hesitate to ask. So you can always go to DerekDombeck.com. Actually, if you’re watching the video, you can see the books over my shoulder that I’ve been a part of. You can get free downloads of that at DerekDombeck.com. Anything that we have going on typically is there. You can go to thegenerationsofwealth.com. That may be where you’re listening to the show if you’re not listening to it on a third-party platform. But no matter where you go, there’s contact information. Get a hold of me and let me help you. So with that, let’s bring on our guest. And here he is, as promised, all the way from Irvine, California, Mr. Kevin Kim. Kevin, thank you so much for joining us on the Generations of Wealth show.
So thanks for having me. I appreciate it. Well, you and I were chatting a little bit and, you know, I do want you to tell the audience about yourself, but we discovered that you were actually in the Midwest in your youth in Wisconsin and then Michigan. And then you relocated out of country to California. Yeah, that’s a good way to put it. You know, if you ever want to come back to the United States, feel free. True, right? there are pockets and i live in the i live in the last one of the last conservative bastions of of california orange county but yeah i’m originally my parents immigrated to america in 81 and the first immigrated to wisconsin um and i was born in a neighboring state in minnesota and then we moved to michigan where my aunt lives she still lives there my cousin still lives there and we lived there until i was about six or seven and then we moved to california uh right around then and we’ve been here ever since and you know i’ve been working and studying here in california my whole life although i did have a uh moment during covid where i was like this close to moving to texas and i should have i should have done it but my uh my mom she just couldn’t do it i can’t i can’t move away that far from my mom yeah well i can relate to that um so what got you uh you know you got California, obviously, because your parents moved you there. But like your expertise right now, why don’t you talk about what you do? Yeah. And how you got to that point. And then I’m going to definitely pick your brain. Sounds good. Yeah. So I’m a partner at Fortra Law.
We are a boutique shop that focuses primarily in private lending and in real estate investment. On the on the investment side of things, right? So securities law. So the corporate securities team here at Fortra, we primarily do security transactions, right? So fund formation, syndication, esoteric structuring, crowdfunding, up and down kind of the life cycle of a business. And we work with all shapes and sizes, right? We have clients that are brand new emerging sponsors doing their first deal and all the way up to the institutional desk. And we do it globally as well, right? Now on the lending side, the firm is full service. On the real estate side, we just do the securities work. But my practice has evolved over the years. We have been working with both sides of the house in real estate, debt and equities. And it’s become interesting because not only do we serve the role of counsel, but we also serve the role of advisor and sometimes even broker. We have to find lenders for deals that are a little bit tricky. And so by virtue of us having a very well-known presence in the private lending sector, we’re able to help our real estate sponsors find, for example, construction loans or bridge loans and that kind of stuff, even perm debt. As for me, the reason why I ended up here as basically a corporate securities attorney, I had been a banker before I went to law school, graduated college, went to Cal Berkeley, graduated, and went to work for a bank as a loan officer and underwriter and loved it and learned a lot. Hated bank life, but loved the topic of what I was working in and also the business development aspect of it. Went to law school and really doubled down in the world of corporate law, securities law, transactions, and went to work for the SEC. And, you know, 09. The great financial crisis happened. And so I was left jobless and I went to go work for small boutiques all across Los Angeles doing, you know, corporate securities work for companies small and large, mostly doing work with multinational companies from Korea. And, you know, I was doing contract work at the same time and ended up here at Fortra. And that was in 2014. And never look back. We’ve grown the firm, we’ve doubled the firm multiple times over. The firm has grown significantly by virtue of, I feel like, the real estate investing community and the private lending community becoming industries of their own, right? And the middle market has grown significantly well past what used to be something that only institutions could do. And that comes with the relaxing of regulations after the GFC and the resurgence of private capital. And that’s been something that’s fueled our business for now 12, 15 years. And, yeah, we specialize primarily in securities offerings.
So I get guests on here that talk about syndications. They talk about the different types of funds that they might be involved in. But this is the first time I’ve got somebody here that can actually kind of maybe walk us through baby steps to begin with, just explain the different types of funds. But then we’ll dive a lot more into specifics. But, you know, the one question that most people always ask or maybe think in their mind is, you know, I’m too small to start a fund or is it worth starting a fund? What does it cost to start a fund? And the answer I always give them is it depends what you’re going to do with the fund. I’ve had several funds in my past as a former hard money lender and other things. So start kind of at the bottom. In general, what’s an average cost to start a fund for, let’s just say, an apartment syndication?
Yeah, I mean, syndications and funds are different, right? So syndications are a single deal, right? You’re going to go after one project. You’re raising the capital for that project. It’s isolated to that project, usually to an LLC. A fund is multiple assets. You know, you’re going to be going after, you’re going to be doing between 10 or 20 projects or maybe even five, right? There’s no hard and fast number because it’s sponsor-specific, right? So the more complex the strategy, obviously the more expensive it’s going to be. I would probably budget, on a syndication project, I’d probably budget anywhere between probably the low end, 15, 20,000 on the high end, probably like 30 or 40,000. Syndications are a lot more affordable than funds are because they’re a single strategy. Now, what most often happens at our firm is syndicators will repeat, right? And so, you know, the cost goes down significantly because we built their infrastructure up front. The challenging part with syndication, I’ve noticed at least, especially in the middle market, is that a lot of, people cut corners on this on this on this securities issue and we see a lot of i would call them really hokey documents put together really pool quality structuring and compliance in place and the number one thing i always hear is like oh it’s an lc it’s friends and family it’s not securities right like well by the way the interest stocks lp interests are de facto considered to be securities by the regulators so you have a burden to prove that they aren’t right and so you know you have to go in thinking especially if you’re raising the capital it’s not like you’re partnering with you know your business partner to actually go and build it together you’re raising capital from passive investors you cannot expect to you can’t expect the security self not to apply right and so and then the more complicated fact that comes in is like okay do we need private placement memorandum or offer memorandum i i’m of the camp that says it doesn’t matter If this is a small deal or a big deal, I’m of the camp that it’s always good to have it, right? Because it’s better to have it and not need it than need it and not have it, right? But at the same time, cost sensitivity becomes an issue and the deals are small, right? If you’re doing like, you know, a single family residential or a four unit syndication, it’s challenging. The problem with the law is that the law says if any of your investors are non-accredited, right? even one non-accredited investor, that investor is entitled to receive the equivalent of a prospectus. The law mandates that. And that’s oftentimes forgotten because the challenging part about the real estate industry is you have a lot of attorneys that are real estate attorneys. They’re fantastic real estate attorneys. And then they get asked to do securities work and they figure out how to write a PPM, but they don’t really understand what the regulators are looking for and what can get their client into hot water. and they’ve never fought a regulator in their life or been one. And so that’s the challenging issue is that we see this a lot, right? We see a lot of sponsors come to us with like a five-page package. I’m like, do you have not accredited? Yes. Okay, you got to stop, man. That’s one of the biggest flags that we see a lot. And that influences the cost, right? If everyone’s accredited, the cost can be smaller for a small deal.
Yeah, for sure. I’m going to bring us back to that topic because I love it, but I just thought of something. I was writing it down. So I see this and hear this so many times. And it’s people that are out there on social media looking for money for a deal and just blatantly putting a post on Facebook or Instagram saying, I’m looking for a money partner for this deal. And they think they’re never going to get caught. They think the SEC isn’t watching for that type of stuff. Do you have any horror stories or any experience? I don’t know. That’d be great just to quite honestly scare the shit out of some people that are listening. Yeah. I mean, so even if the most, even if the kind of tiny little football violations, right? So there’s kind of two facts that you presented. So there’s two stories that you, two variations to the story, right? One variation is like, I’m just looking for like a JV partner, right? And I’m looking for a partner to do my deal with. and it’s a little more active participation. It’s an active partnership. It’s not necessarily just a pure passive investor. In those circumstances, you’ve got a wobbler argument that it isn’t a security. But the problem with that is that, well, are you acting as a real estate broker then? Because that’s also a problem, right? So then you have the more common issue. It’s like, oh, hey guys, I’m raising money for this great deal. You want to take a look, right?
That kind of stuff, right? And they post a photo of the property and quote some return. they’re offering and that kind of, and I see that all the time on Facebook, even on Instagram. And it drives me nuts because what people don’t understand is that federal and state securities regulations, they’re all fixated on this idea of advertising and promotional activity regarding the investment opportunity, right? The sale of the security. Many, many, many, many regulations outright prohibited. Most of them do. There’s only one exemption on the private side that really allows for it. But you’re limited to verified accredited investors only. 506C, right? Under Reg D. So what happens here? So even if it’s this minor… Okay, so you have to understand the regulators are government agencies, right? So they have limited resources. And this is what everyone’s banking on, right? Everyone’s banking on, I’m just going to fly on the radar. But like, are you though? Because you’re online, right? So like, it’s really like a rolling of the dice, right? So if you’re a gambler, by all means, roll the dice. And, you know, when the regulator comes to knocking, I’m here to help. Right. But, but the problem is I told you so. Right. But even when the regulator comes to knocking on a minor issue, right. The problem is that the way the regulators do these things, and I used to do the same thing. They don’t nitpick on that one little thing. Right. They don’t say, hey, we found this one little thing. Can you explain it, please? They don’t do that. What they do is they’ll send over what’s called a subpoena business take-home, right? And then basically, think of it like this. It’s subpoena requesting documentation and information for almost everything under the sun regarding your business. And so now you’re basically going through a proctology exam with the regulator because the regulator knows that, like, hey, this is a flag, but this is probably not the only flag. So let’s send over something that, you know, it’s a broad-spectrum response. And they know what they’re looking for. and most often than not we know what we did wrong on our side of the client but that’s how they approach it and the problem with that is that the cost to respond to that and defend that is astronomical right like because you have to think through discovery rules evidentiary rules you have to reserve objections you have to also negotiate with the regulator they’re not the easiest to deal with there’s procedural aspects to it and so you know we had we had a simple case right it wasn’t even an online it was before social media uh simple seminar you know seminar back these days seminar right it was like an investment seminar well the strategy wasn’t allowed to promote right it was not it was under a 506b at the time which prohibits advertising and promotion they had invited strangers to come to this event and they had immediately begun soliciting them about investing in their platform and it was a real estate strategy well lo and behold buy around the third event, they get a subpoena from the California regulator. And right around the fifth event, they get a subpoena from the SEC. And so, granted, do these go anywhere? Not really. Kind of slap on the wrist, don’t do it again, pay a fine. It’s not the end of the world, the end result. The end result is not what I’m concerned about. Getting to the end result, right? Because I think the client probably ends up spending upwards of $50,000, $60,000 in legal fees. right and it’s all hourly billing you know at the time my hourly rate was not high people always say oh but your hourly rate’s so high i’m like really though because like you can go to like morgan lewis a junior associate’s going to charge you fifteen hundred dollars an hour me as a as an equity partner at fortra i’m billing you at 700 an hour 800 an hour now back then i was doing a 400 an hour that’s like that’s a very reasonable price right so you’re asking your it’s not that much and And I don’t bill every single minute, right?
So it’s like you can imagine how much work goes into responding just to the number of requests. And you can’t leave out stuff, right? And one other situation happened was the client came to us way later. They didn’t hire an attorney, basically, and didn’t respond correctly and just threw their hands up and said, all right, we give up. Do what you will with us. And ended up in the worst possible scenario because they ended up getting disqualified. Disqualification in the securities world means that you have this thing where the regulator files this final settlement action, basically, right? And you sign it. But they know what they’re doing, and they’re going to hit you hard on it because they know what you did wrong, right? So they’re going to – and the client didn’t have an attorney because he wanted to save some money. Well, what he didn’t realize was by signing that paperwork, it landed him into the world of disqualification, right? Because one of the means of being disqualified under the bad actor rules under federal regulations is that you signed a final state order about a securities action, right, without a carve-out provision. And so that sponsor was outright prohibited for five years from raising money, ever, right? And so that was a problem. It basically got blackballed, right? So these are things that you don’t want to mess around and find out, you know? And my thing is, like, guys, this is so easy to comply with, right? But, like, you as a sponsor need to understand that doing this, raising money is serious business, right? It’s not some fly-by-night, you know, thing that you can just do. The best and brightest in the industry do it with very high standards. And so should you. And a lot of, you know, unfortunately, the market has expanded so much that you have a lot of low cost providers, a lot of like, like kind of guru, like non-lawyers that like, you know. So and that gets me really scared. Right. It’s like I spend a little bit more money. Right. It’s a business expense anyway. What’s the problem? Right. So that’s how I look at it. I’m a little bit more conservative than most, but I, you know, as an attorney and former regulator, I understand the authority the government has.
Well, I feel the same way about people in the education space on real estate investment strategies. Like, you know, right now there’s people out there teaching subject to purchases and things that like it’s something brand new that’s never happened before. And in and of itself, that strategy is not bad, but when done incorrectly, it absolutely can harm people. And there’s so many newbies and even experienced people that just go in and they’re like, okay, I’m going to – I read this book. I went to YouTube University, so now I’m an expert on buying sub two. And then they’re shocked when they end up in handcuffs or should be in handcuffs. Yeah, education is even worse, right? Because a lot of what I find on the investment side of things is there’s a lot of online education platforms that effectively give investment advice. Oh, yeah. And yeah, they’re not being paid for it. They’re being paid for indirectly. But behind the scenes, they’ve got platforms to do things, right? And that drives me nuts because, you know, the regulatory framework in that circumstance is very strict, right? You cannot hold yourself out as an investment advisor without being registered as one. And that, I see it all the time, both in private and public investments, right? So it is what it is, right? But, you know, I always have an attorney to answer some questions and you’ll be safe, you know?
Right, right. And there’s so many people brokering without licenses. It’s crazy. They’re like, oh, my goodness. Yeah. It’s like, no, I’m not doing that. Well, you have a property under contract. you have any way of actually closing on it. Well, no, I don’t have any money, but I’m going to wholesale it. Yep, you’re brokering without a license. And every state requires a license to be a real estate broker, and people forget. Yeah, and that’s going to be in lending too, right? So we see that all the time. We’re like, oh, I’m going to do a hard money deal in California. Oh, but did you know that California is very strict? And you’re probably violating our usury laws, and a bunch of states regulate hard money lending. And that drives me up the wall. people think that there’s no rules to the business. And like, especially in real estate, there’s so, after the GFC, there’s so many regulations in real estate and investments in the securities realm. You know, people forget. Doc Frank was massive in its impact. And a lot of these folks jumped in well after the GFC and yeah. Yeah. Well, let’s circle back a little bit back to types of funds. And what are the pros and cons of each type of fund? Where would a debt fund versus an equity fund?
Yeah. You know, things like that. Let’s get Carlin’s like lined up first, right? So I use the word debt fund a little bit differently, I think. So in the lending world, when we say debt fund or credit fund, we’re talking about an LPGP structure. We’re raising money, equities, capital. It’s a fund, right? And it’s owning loans. is making and owning loans and distributing the income that’s derived from the portfolio of loans. And then you have a real estate fund that buys and sells real estate, but it’s still an LPGP strategy. And then you have what a lot of people call debt funds, but they’re not really debt funds. It’s a note offering, right? So they’re offering the equivalent of like privately offered bonds, right? And so these are kind of the three big buckets in the real estate world. And then there’s the variations to the structures, right? So that’s kind of topic-wise from the different industries. On the lending side, there’s kind of two big reasons. You’re a lender, right? If you’re a lender, you need to raise money. You can do it a number of different ways. And the fund structure for lenders is a very accretive strategy because, A, you own all the loans. B, you’re portfolioing the loans, so you have control over the lending decisions. And you have a portfolio of loans that you can manage. And that spends the risk, right, as opposed to going direct deal by deal. You can now lever the loans because you’ve got a pool of loans that you manage inside of an entity, right? You can now sell the loan because you own the loan as opposed to an individual investor owning the loan. And then also, you know, the funds, LPDP structures can be adjusted, right, by adding mortgage rates to them. And this is a real estate. And there’s now a tax bill passed on the fourth. And so that 20% pass-through deduction is valid, it is permanent. And so you can structure a REIT to garner a $199 deduction regardless of tax bracket. So there’s a lot of things you can do as compared to, let’s say for example, in the hard money world, people just do like individual placement, right? Like, hey, you got a whole loan, Bob’s gonna buy it, or Bob’s gonna fund it. That’s great to start with. But what happens is, and then they do fractional too, right? And what happens is that becomes immensely inefficient, right? Because you’re having to match everything, every deal with every individual investor or group of investors. It’s supremely inefficient.
Trust me, that’s how we did it when we started our hard money. Everyone does it that way. And then you also have a secondary market now and you can table fund. But the problem with that is that not every loan is going to fit that box because they have their box. So it’s a very, very useful strategy and it’s done by all the best and brightest in the space. In the real estate sector, a fund is different because most clients can get, most sponsors can get away with doing syndications for a very long time. And investors tend to prefer them because they get isolation to the asset. And they get the same depreciation, but they don’t get the same risk hedging, right? But they get a comfort of the fact that they’re investing directly into an asset that they can identify, as opposed to a fund to limit a blind pool. And they don’t identify the assets. But the issue is the same issue on the lending side. When a sponsor finds that all my deals are basically the same, they’re in the same region or geography, and the return models are not that divergent. They’re not that different. Why am I doing them deal by deal, right? That gets exacerbated by some private lenders that now offer kind of like line of credit as opposed to individual bridge loans, right? And so they realize, well, yeah, this is kind of a waste, right, of energy and resources, right? And then on the note offerings, these are basically, and this applies to any industry really, right? These are dead instruments, right? So you’re offering an investor a note. Now, I hear this a lot, so I want to make sure your audience understands this. Oh, I’m borrowing money from my investor. That’s not a security. Well, hold on. The U.S. government borrows money from you, the citizen or foreign government, via treasury bond. Did you know that treasury bonds are securities, right? RMBS, EMBS, corporate bonds, those are all loans. They’re borrowing money from the investor. Those are securities, right? You know in your brain that bonds are securities. Why would a loan from an investor not be a security? It’s not an arms-like negotiated actual loan like you borrow from a bank, right, from an actual going concern. It’s an investment.
And so we will tell the client that it’s security here that you comply. The pros and cons of that is really – the pro is that it’s very simple, right? Investors understand it. You have mailbox money. It’s 9%, 10%, whatever it is, right? It’s easy math and easy processing. downside is that it’s debt, right? So you’re levering your business and you have to make sure you cover that debt service. Your business, your investment strategy better be able to meet that debt service obligation. And then you have maturity risk, right? So with any debt, there’s maturity risk, right? These aren’t 30-year loans, right? No investor in their right mind is going to do a 30-year loan with you. They’re typically 12 months, right? Or sometimes demand structure. And you have to manage the liquidity. And as the market shifts with different, with the cost of capital, you need to have flexibility to change the rate. You can’t really do that because it’s a modification of a loan, right? So these are concerns that I find long-term with note offerings. They’re very useful, especially kind of at the middle or early stages for sponsors that just want a very simple, straightforward strategy. What I find on the real estate side is that the sponsor is kind of missing the forest, right, because they’re just focusing on the tree of simplicity. And that has to do with taxes, right? Yeah, the investor is getting an X percent interest rate and they’re getting a 1099 INT. It’s really easy. But what they’re not getting is depreciation. And I don’t understand why your investors would want to miss out on that.
Right. And the second issue is that, well, if you have debt instruments, that creates some stress points for leverage. If you want to get a loan, that creates complications. You need to have some planning around that. So, you know, it’s not a bad strategy. I think it’s not scalable past a certain size. Yeah, and you’ve got to be able to do enough volume. And the challenge that we see, those of us that have been in this business for more than, you know, the last five or seven years, we’ve been through several cycles. And, you know, when you go through cycles, there’s always peaks and valleys in deal flow. So you get in too deep. And, I mean, look at a lot of the syndications. They got in too deep with shitty paperwork and bad bridge loans. And now they’re going belly up and their investors are going to lose money or have very large capital calls. Right. 2024 and 2025 have been the year of the capital call, right? Right. It’s unfortunate. It’s the same thing if you start a fund. Our fund for my former hard money lending company, it was a straight 9% to our investors. If we didn’t keep that money working, which we always did, we always had a shortage of funds. But if you don’t keep it working, you know, we got to be paying that 9%. And just as you pointed out. That’s kind of the downside of the debt side more than the equity side. With the equity side, you have a little bit of cushion. You can draft in. And, yeah, it’s an investor relations issue, but, like, it’s equity, right? So you can adjust the obligation. With debt instruments, you’re on the hook for 9%. Like, it’s there. You’re in default if you don’t pay it, right? So, you know.
Yeah. So, Kevin, what’s one question I should have asked you that I didn’t? I mean, we can go deeper on these structures, right? Because one thing I want your audience to think about is there’s been a lot of advancement in the world of real estate strategies. You know, series LLC funds are all the rage right now, right? And they kind of give you the best of both worlds with syndications and funds because you can isolate assets, right? I would caution your audience not to necessarily fall for the fund that does this, right? Fund that allows the investor to cherry pick into a given asset, but doesn’t have a series structure, right? Because if I’m a regulator and I look at that, I’m going to be like, that looks like an SMA to me, right? Separately managed account. That looks like it’s a separately managed account. You’re not an investment advisor. How are you doing this, right? So that’s the concern. And it’s also a massive accounting nightmare. The accounting on it is immense. Any CPA worth their salt will tell you, don’t do that. It’s a huge nightmare on the P&L. So that’s the concern I have in that kind of structure. But the series LLC structure is quite common now. I think we see a lot of prop tech companies doing it and tech companies doing it. The other thing is we’re seeing a lot more interest in tokenization, but that’s not, I want a war of warning, right? It’s not for like the smaller organizations. This requires a significant investment because the diligence work and the maintenance is significantly higher, right? But it is a topic that’s coming up a lot more. Now that the SEC is more friendly, I think tokenization is going to become a much more popular topic, and that is something that is useful for kind of the higher echelons of the middle market. I do not encourage new market entries or smaller sponsors to pursue it because the legal part of it is the easy part. Getting the necessary people on board to handle tokenization and the trading, that’s a very expensive endeavor. And it’s also very complicated and fraught with landmines. So it’s not something that is good for a beginner sponsor. Same with crowdfunding went under Reg A. But it’s becoming more popular, it seems like.
It seems like crowdfunding was really popular 10 years ago, maybe even 12. And then it kind of fell. Right after the GFC, man, right after that GFC happened. Yeah. And it fell off. Well, think about it, right? I mean, the institutions, Wall Street was dead. Yeah. Sponsors needed to find capital. They were used to, you know, so they basically said, well, there’s a lot of wealthy high net worth individuals out there. And also, why not let the regular retail investor find their way into private capital formation? And so, all in all, you know, it was a good idea. The problem is the regulations were not very well thought out and not very well executed on. And so that leads to a lot of weird events happening in the market. I think a lot of sponsors realize, I think we’re better going after high net worth investors and accredited investors than doing this whole crap. The headache that comes from a $1,000 ticket is so much. Oh, and even that, if we were talking about actually just raising money over the years and after raising money for a long, long, long time, somebody that’s got $25,000 versus $250,000 is going to take so much of your life. because they’re so worried about their $25,000. And rightfully so.
It’s a lot of money to them. Absolutely. But you’re going to spend more time babysitting them than the person with $250,000 that understands this is an investment, there is risk. And the likelihood is that that $25,000 investor also is not as sophisticated. And so they’re less likely to understand the absolute flow of the investment. Absolutely. That’s extremely, like a $25,000 investor was like, They got their K1 and they were freaking out about their PHA. I got a loss. I’m like, that’s a good thing, guy. You want that. Go talk to your CPA, right? And then they’re like, I need a CPA. I just go to H&R Block. Uh-huh. Yeah. That’s the thing that, like, I think the market realized come 2017-ish that MerhapBundi really is not scalable. Now, it’s been proven wrong by a few platforms, but they have venture money and they have significant resources to manage. Definitely. Well, Kevin, we’ll kind of wind this up, but what’s your crystal ball show for the second or the tail end of 2025?
Well, so it’s a year of uncertainty in the real estate world. I think the nice part is that there’s pockets of opportunity, right? So SFR and small multifamily is still relatively active and there’s opportunity there. And that mainly has to do with the availability of permanent financing. And cap rates are finally kind of starting to make sense in certain markets, not all markets. The former wisdom of like coastal markets are great has been disproven, right, with the whole insurance debacle we’re having. And so we’re seeing a lot of sponsors heading kind of to the middle of the country, which is great, right? And then beyond that, on the lending side, if you’re a private lender, I mean, it’s a year of uncertainty because yield flow is like this. It’s kind of not down, but like this, all over the place. Yeah.
But from a capital standpoint, it’s never been better, right? There’s a significant amount of capital flooding into the market, both private and public. And so that’s a great opportunity for you to scale, but you have to do things right. It’s not the old school hard money methods that work anymore. And then for your real estate investors, you know, I would say follow the wisdom of the institutions, right? There’s a lot of pullout from office, retail, even industrial with tariffs. And so what was once the darling of commercial real estate investing, commercial, especially light industrial, light industrial especially, all the warehouses, not so much anymore. And so be careful if you’re going to do it. If you’re not sure, if you can’t underwrite it, don’t do it. That’s my advice on the real estate side. If you can’t underwrite it, don’t do it. If you don’t have the skills to underwrite it, don’t do it. Yep, 100%. Those are very, very wise words of wisdom. Well, I guess if anybody needs to get a hold of you guys, if they’re watching the video, they can see your website on the video. But if they’re just listening, why don’t you throw Fortra’s website out there?
Yeah, you can find us online at www.fortralaw.com, F-O-R-T-R-A law.com. We’re all over social media as well, LinkedIn, Instagram, Facebook, Fortralaw online. And then you can also find us on YouTube. I have a podcast as well, Lender Lounge with Kevin Kim. It’s primarily a hard money lending, private lending podcast. And then you can also email me at k.kim, as in Mary, at fortralaw.com.
Awesome. Well, my listeners know I don’t often have my guests actually give out all that personal information. But here’s the reason I do with you and a few of them. It’s when you’re in a specialty and, you know, you clearly are very good at what you do based off of this conversation. I want to bring that value to you and my guests. You know, because as you said, there’s a lot of bullshit out there. my words not yours but um you know and places people are getting information that is going to hurt them so i’d much rather they have the easy button to find people like you so thank you i really appreciate that absolutely well we’re gonna wind this up kevin again thank you so much and uh for everyone else until the next show go out do some deals do them right and uh live your vision, love your life. See you next time. Thank you.
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About Kevin Kim
Kevin Kim leads the Corporate & Securities team at Fortra Law. His expertise lies in fund formation, private placements, and other securities offerings for private lenders, real estate developers, and investors of all sizes. Kevin and his team have advised and prepared hundreds of securities offerings, including mortgage funds, structured debt offerings, real estate syndications, crowdfunding offerings, EB-5 projects, and Qualified Opportunity Funds.
Kevin’s passion lies in serving his clients as a pragmatic advisor focusing on real- world solutions. Kevin is also a nationally recognized expert in mortgage fund formation. Kevin is the lead instructor for the American Association of Private Lender’s Certified Fund Manager courses, where he teaches mortgage fund managers throughout the United States on fund management and securities laws. Kevin hosts the podcast Lender Lounge with Kevin Kim, where he interviews industry leaders, friends, and colleagues in the private lending space to learn what makes them tick.