Private Money411 Magazine - The Source for Real Estate Finance Spring 2014 | Page 9

Market Intelligence
with Robert Fragoso
anchor Loans

M

And while the acquisitions arm is
significant – in 2011, Anchor Loans itself
flipped around 500 properties in L.A.
County – the lending is still the company’s
“backbone.” Fragoso said Anchor Loans
is, in important ways, more of a private
equity firm than a traditional “hard money” lender.
“We don’t have a set matrix,” said
Fragoso. “It’s very easy for us to adapt
and tailor make a loan program required to
meet any needs.”

by Robb Magley

arket statistics roll off the
tongue of Anchor Loans’
Robert Fragoso with the
practiced ease of a true industry
wonk; he’s got a real interest, not
only in what makes things tick, but in
knowing about it before the next guy
does – and in making sure his investors can act on that information.
Having the best information means
the difference between having a great
year and living through a financial disaster, according to Fragoso,
Anchor Loans diverse organizational
interests is part of what gives them
their “edge” over the competition. In
addition to offering private financing
for investors who fix and flip properties, Anchor has an escrow company,
a construction company, a software
development division and an acquisitions arm – each offering ground-level market intelligence to one another
that can prove invaluable.
“Most lenders look at loans
strictly from a lending standpoint,”
said Fragoso. “But because we’re
actually in the market ourselves, we
can adjust more quickly than others
might. We’re able to see construction
costs the day they change. Every time
there’s a shift in the market, we can
see the effect in our own listings.”

Realty411Guide.com

flow perspective,” said Fragoso. “During
the downturn in 2008, We had a positive –
albeit slightly positive – year because we
were able to read the writing on the wall
and prepare and guide our clients through
the murky waters.”
Today, Fragoso pointed out, inventory
is lower even than it was in 2005; the
challenge, however, is that in addition to
low inventory and low interest rates, the
market is facing low buyer demand. “Nationally, 58% of all sales are cash sales,”

“It’s very easy for us to adapt
and tailor make a loan program
required to meet any needs.”
When new information comes along,
Fragoso and Anchor Loans tell their
investors to adapt too. Two years ago,
according to Fragoso, a lot of people were
having difficulty finding deals for fix-andflips in the cash-flow attractive, lower-priced properties. Because the company
had carefully studied the goals and buying
parameters of the large hedge funds
investing in the area, Fragoso and Anchor
were offering what seemed like counterintuitive advice: spend more per deal.
“We told our clients, look, you realize
all these hedge funds are coming in to
buy these properties, and it’s like trying to
fight an 800-pound gorilla,” said Fragoso.
“They don’t care about the price, and they
have a billion dollars to put out there.”
So their guidance was to step out of
that price point and look at higher-priced
opportunities. “The big guys couldn’t
buy properties at $400,000 and above,
because it didn’t make sense from a cash

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said Fragoso. “That means cash sales have
surpassed not just the first-time home
buyer, but every home buyer.”
That means the fix-and-flip investor
needs to re-think their rehabs to match the
market – and the all-cash investor isn’t
necessarily looking for the same things as
a first-time home buyer.
“Especially the guys who fix and flip in
high volume, they tend to have a cookie-cutter approach – where they do the
same thing to every house, every time,”
said Fragoso. “The problem with doing
that is you miss out on opportunity when
changes occur. If you look at the all-cash
investor, they’re looking for value add
and additional op