The real estate market crash of 2008 was devastating. Many homeowners lost their homes while lenders were destroyed. The event was driven by greed, and it’s unfortunate that the greedy lenders got hefty bailout packages and paid their executives huge bonuses as the market was destroyed. The aftermath was also devastating as lenders were unwilling to approve loan applications that did not meet the laid down criteria. As a result, many real estate projects stalled. Alex Kleyner and Brian Hernandez, who are renowned entrepreneurs, saw the financing gap and took action. They established ABK Capital, a real estate financing company that offers funding for viable real estate projects that have difficulty getting financing from mainstream lenders.
The ABK Capital Miami Base
Miami was the natural home base for ABK Capital since the founders were based in the city. The company started off with smaller Miami-based real estate projects, but has since grown to become a major real estate financier, lending hundreds of millions of dollars to developers over the last couple of years. Most of the projects ABK Capital has financed are based in the Miami-Dade counties, City of Miami, Broward’s and Palm Beach. In South Florida, the company has financed projects in Pompano Beach, Delray Beach, Islamorada, Fort Lauderdale and Hollywood among others. In the recent years, the company has been expanding to other parts of the country due to the growing demand for the products and services offered by ABK Capital.
Real Estate Financing Solutions Offered by ABK Capital
ABK Capital offers secured loans to real estate developers. The collateral used to secure the loan is the value of the land on which the project stands. The company offers 100% senior secured loans, because land prices usually appreciate over time, so the loan to equity ratio is bound to reduce over time. This type of funding is best suited for projects that are just getting off the ground. It can cover, site clearance and excavation works as well as the foundation and first floor, depending on the value for the land and building design.
ABK Capital offers mezzanine financing, which is an unsecured type of loan. This product is offered by ABK Capital based solely on the ability of the project to offer decent returns upon completion. To qualify, applicants need to demonstrate that they have completed the foundation and first floor of the building, and need more funds to complete the project. Since it is unsecured, this loan product is more risky for the lender than senior secured loans. Therefore, the interest may be a little bit higher. The team at ABK Capital knows how to balance between the interests of real estate developers and investors, so they always offer win-win real estate financing solutions.
The flexibility of the debt financing solutions offered by ABK Capital is what has led to the success of the company. After all, the firm offers loans to both independent and institutional developers with different types of projects. The loan requirements are also simple, so any decent developer with a project that is either about to start or has stalled at some point due to lack of finances can get funding.
Alex Kleyner, the 28-year old co-founder of ABK Capital has proven to be a thriving entrepreneur, having established himself in Miami, Florida and building out great mezzanine debt lending options for other young builders who are also in their 20’s or 30’s.
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Loan applications that did not meet the laid down criteria were simply skirted around. The criteria was changed so as to include people into the housing market who were excluded before, due to financial reasons. This was the real cause of the 2008 housing market crash, along with some FED and wall st manipulation.
The housing market is set to crash again because the problems haven’t been fixed. Ditto with banking and the economy.