There are no "sure things" in the business of lending
money, but Randy Persson believes he is coming close.
Persson and his wife, Rose, are co-owners of Kenwood Mortgage, which
provides mortgage brokerage services to residential and commercial
clients in Arizona using funds from private investors.
In January, Kenwood closed 10 loans with an aggregate value of $4
million. The firm is looking to place about $5 million in February.
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Funds are provided by the Perssons along with a core group of 10 to 15
local private investors, most of whom Persson has known for more than 20
years. The majority of borrowers don't fit into a traditional profile
used by most banks and lending institutions. That doesn't worry Persson,
who says the company has a very low default rate.
Persson looks for two things when making a decision to lend.
"The property should have a desirable loan-to-equity ratio, along
with a stable borrower. We want someone we can work with if there's a
problem."
Underwriting the loan realistically is critical, according to Persson.
His job is to assess properties for such things as utility usage, flood
areas and potential zoning problems.
The typical land loan is between $2 million and $3 million; single-family
construction loans average $150,000 to $200,00.
Most loans are closed within two weeks.
"Our fastest close was 2 1/2 hours," Persson said.
"In this case, a home builder came to us. He had just learned that
he needed to exercise his option to purchase the land for one of his
homes immediately. The escrow had already been opened on the property,
but the funds had to be there."
Such a speedy close was possible because all loan paperwork is done
in-house. Rose, who was heading the escrow department at a local title
company when she met and married Randy in 2000, oversees the paperwork
along with one loan officer and an assistant.
Persson didn't intend to become a mortgage banker. At Sunnyslope High School, he says he was "compulsively"
sociable. He was student body president and joined nearly every club
possible. Persson graduated from ASU with a degree in English and
completed law school in 1973 but has never practiced.
Instead, Persson went to work as a tax accountant. While at Price
Waterhouse, he was recruited by Union Bank in Beverly Hills.
"Union Bank wanted someone with a background in accounting and
law," he said. "They took me, put me in a corner office in Beverly Hills, and said, 'Go meet the entertainers and
filmmakers and let's finance films.' "
During the next few years, Persson met dozens of celebrities such as Mel
Blanc and Clint Eastwood. He even enjoyed a brief film career when he
made a cameo appearance in a film with Elizabeth Taylor.
Persson then met a group of Persian investors, who asked for help buying California real estate.
Persson left Union Bank to form a company with the Persian investors. He
began traveling among California, Iran and Europe on
company transactions. In 1979, Persson joined Amsted, a real estate
syndicate in Beverly
Hills.
The company consisted of a core group of about 20 private investors,
mostly entertainers, who bought real estate throughout the Southwest.
In 1983, Persson moved to the Valley to focus on Arizona acquisitions for Amsted. The majority of
properties purchased were strip mall shopping centers.
Times weren't always rosy for the syndicate, however.
"When the real estate slump hit in the 1980s, we didn't have the
cash flow to pay our debts," Persson said. "We opened a
used-book store and invested in a health club and restaurant to generate
cash flow.
"None of our properties were foreclosed on, which was a success
story in real estate during the 1980s."
In 1992, the real estate cycle was on an upswing, and Persson decided to
form a mortgage-servicing firm.
"When I first began Kenwood, we focused on conventional loans, but I
quickly learned that private investor loans could earn between 12 and 15
percent return."
For several years, the firm made conventional and private investor loans.
About five years ago, Persson met and married Rose, a former escrow
officer.
"I was winding down my real estate activities, and we were looking
for something to do together," he said."
"In reviewing the investments I had made over the last two decades,
I realized that the private investor loans were the most secure and
profitable of the transactions I'd made."
For custom home builder Skip Bissett, the flexibility of obtaining funds
as needed has allowed his business to quadruple since 2000. Regency
Custom Homes at Mesa Drive and Brown Road in Mesa began with a single property under
construction in 2000. Today, the development has 60 home sites planned
with 19 under construction.
"Traditionally, banks loan small builders a construction line of
several million dollars," Bissett said. "That wouldn't work for
me. Home lots in this development are usually pre-sold, and the loans
need to close quickly. Working with Randy allows me to only borrow money
as needed for individual sites, usually $125,000 to $400,000 at a time.
"Randy is not a traditional banker. He really cares about me growing
my business. He's always available for advice and feedback about new
projects and the development of the current sites."
