Raising capital and managing investor relationships are key barriers to entry in the real estate lending business. In this episode, David shares his journey from working in the oil and gas industry to founding Crown Capital Resources, a firm that has never missed an investor payment in seven years. He discusses the importance of trust, the mindset shift required to build a successful investment fund, and why real estate investing is ultimately about relationships.
David also emphasizes that once you enter the lending business, it’s no longer just about hard money—it’s about trust. He takes pride in maintaining integrity in his business, ensuring that investors never lose capital, even when deals go south. As he builds his company, he reflects on what he would have done differently and how realizing his company’s full potential earlier could have led to even greater financial success today.
Key Takeaways:
- 07:45 – Fundraising is a mindset game – You must be willing to put yourself out there and face rejection.
- 12:30 – Trust is the foundation of investing – Lending is not just about capital; it’s about building long-term relationships.
- 18:15 – Maintaining integrity matters – David and his team have absorbed losses to protect their investors.
- 23:40 – A mindset shift is crucial – Seeing his business as more than just a side investment was the game changer.
- 30:55 – Legacy and autonomy are key goals– Real estate investing is a pathway to financial freedom and generational wealth.
David primarily services Texas but is happy to assist with insights on hard money lending and referrals for other states. Tune in to this insightful episode and learn how a simple conversation can transform your business and financial future!
Ready to build your real estate legacy? Listen now!
Connect with David:
- Website: crowncapitalresources.com
- Email: david@crowncapitalresources.com
- Instagram: @crowncapitalresources
Connect with Corwyn:
- Contact Number: 843-619-3005
Shoutout to our Sponsor: ROBYN COLLINS
Do you want something more? More Meaningful Moments opportunities, deeper relationships and memorable experiences? Do you want to make a difference? If you say YES, a career and real estate could be the opportunity you’re looking for guiding people to one of the most important decisions they ever made, the purchase or sale of their home can be both rewarding and lucrative.
Exit Realty has a revolutionary compensation model training and technology that provides you with the tools you need to start and build your successful real estate career. Call me today ROBYN COLLINS with REDROBYN HOMES at 843-557-5003. Again that’s 843-557-5003 or visit RedRobynhomes.com/join.exit and make your Exit today.
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ROBYN:
Do you want something more? More meaningful moments, opportunities, deeper relationships, and memorable experiences? Do you want to make a difference? If you said yes, a career in real estate could be the opportunity you’re looking for. Guiding people through one of the most important decisions they ever made, the purchase or sale of their home can be both rewarding and lucrative. Exit Realty’s revolutionary compensation model, training, and technology that provides you with the tools you need to start and build your successful real estate career. Call me today, Robyn Collins, R – O – B – Y – N Collins with Red Robin Homes at 843-557-5003. Again, that’s 843-557-5003 or visit us at redrobinhomes.com/joinexit and make your exit today
CORWYN:
Good morning. Good morning. Good. Fabulous morning, guys. Welcome to another amazing episode of Exit Strategy’s radio show. Hey, I’m your host, Corwyn J. Melette, broker and owner of Exit Realty, Lowcounty Group in beautiful North Charleston, South Carolina. Hey, if this is your first time listening to this show, if you’re just passing through, maybe you just happen to turn the dial, hey, ho, ho, ho, don’t turn it away yet, because on this show, we give you a treat every week. You are most definitely in for a treat, if you will. So that is because our mission here on this show is very simple. That is to empower our community through financial literacy and real estate education with legacy building. That is what we do. We take the building blocks of these conversations, and if you apply these properly in your life, you’ll build you an amazing financial structure. That’s what we believe. That’s what we seek to articulate and deliver to you every week with our content, with our show. I got to give a shout out for those who listen to us faithfully, those who tune in from quote unquote one end of the state, if you will, to the other, and from one side of the world to the other. You guys rock. You’re amazing. You humble me each and every time that you bump into me and say, hey, Cole, when I’ve been listening to the show, please keep it up. I love what you’re doing. Look, we’re going to have an amazing conversation, because we’ve been on this vein where we’ve been talking about money. Y’all know how I like to talk about money. Money is my language. Look here, sometimes we go back to the old days with this thing, and we say, money. That’s what we do, because that’s what we need to make sure that we are working. Not because we’re trying to get to a place where, quote unquote, that’s what we, if you will, what we’re all about, but because we realize that by having money, we’re able to do the things and have the impact in not only our lives, but the lives of others we’re able to give to people, because we have, and in turn, if we make sure that our money is working for us, or better yet, that we’re investing properly, not only our time, our resources, but the money that we gain from our investment of our time and our resources that we invest that, that we can grow exponentially. So I’m super excited to have with us somebody who is along the same vein. I told him behind the scenes, behind the curtains, that he speaks my language. I love it. I love it. So I’m very humbled to have with us somebody, quote unquote, who, like Drake says at times, or has said at times, started from the bottom, now I’m here. He has started from the corporate world. He has made it in the financial realm of supporting real estate investors. Now, granted, if you’re not an investor today, you’ll be an investor tomorrow. So don’t you dare turn that dial. I need you to stay right here, because we got something for you. I want to introduce to you all David Little. Now, there ain’t nothing little about him. This is a big guy. He is the guy, because he has this money that he puts in the street that helps people. He is the co-founder and co-owner of Crown Capital. David, how are you doing today?
DAVID:
I’m doing well, Corn. It’s a pleasure to speak with you today, and I appreciate the opportunity to be here.
CORWYN:
Well, look here, I appreciate it. And look here, just so you know, I’m available for hire for introductions and stuff. Yeah, that’s good. No, just call me. I’ll be glad to hype the crowd up before you get there. Now, David, if you don’t mind, tell our listeners, give our listeners that introduction, that 50,000-foot view of you, who you are in Crown Capital, and what you guys do.
DAVID:
Yeah, so a little bit about myself. My background is actually in the engineering world. I went to college at A&M University here in Texas, got an undergraduate master’s in petroleum engineering, and pursued that career as a full-time job and role for approximately 15 years. While I was doing that engineering job on a full-time basis, I was always dabbling in different real estate ventures. I started out, and even before I bought my personal home, I had acquired several different just cash-flowing rental properties, built that portfolio up, and I moved into some land development deals, moved into some Airbnb. And then I actually passively invested in a hard money lending deal as well. So I ran the gamut as I was doing the W2 job. And then about 2017, so approximately seven years ago, myself and my business partner got together and decided we wanted to be the GP or the hard money lender to a real estate investor who was going out and flipping a house. And it happened pretty fortuitously. He reached out to us and said, I need some capital, but I have a great deal under contract. Would you guys fund this? And so we did our first deal in 2017. As they say, the rest is history. The company grew slowly in the background as we continued working on our engineering roles. We worked on it nights and weekends for seven years until early 2024. It really became apparent to me that our side hustle was outpacing our main hustle. I made the jump early 2024. My business partner made the jump just a few weeks ago, but for the first time in 15 years, we left the corporate world, left the engineering world, and we’re now all in doing the lending.
CORWYN:
That is amazing. That’s amazing. Some of our listeners, some of the people that tune in have that type of employment. They are professionals, whether they be entry into the professional world out of college or whether they are a little bit more seasoned and that’s what they’re doing. How did you map out that transition from the nine to five to being a full-time investor or financial investor in real estate?
DAVID:
For me, I knew I wanted to do real estate. It had always interested me and I had no idea what I wanted to do in real estate. So going into these different ventures, my thought base was always, it’s a relatively lower cost of capital for a lot of these projects to enter into this, get this experience. But really for me, I was trying to hone in on what exactly in real estate I really enjoyed doing. Because real estate is incredibly broad. You could do anything from the sourcing of materials for investors, you could do wholesaling, you could do anything in the real estate space, you could just broker deals, you could get hard money lending. So there’s a ton of stuff you can do. And when I always went into it initially, not to necessarily make money, to just gain experience and figure out what I wanted to pursue and what I didn’t. But for a long time, keep in mind, this was just additional, it was a mechanism in which we could deploy capital at a really high rate of return. For the longest time, I didn’t have the mindset of, hey, I’m eventually going to jump and do this. It was just something that genuinely interested me.
CORWYN:
Interesting. So you had this interest, essentially it was a draw. And what I’m hearing or what I heard, David, is that you, okay, this is something I wanted to do. And you just essentially aligned with what it is that you ultimately wanted to do. And you achieved this transition. Does that sound about right? Yeah, that’s correct, yeah. So my imagination tells me that you guys have had a reasonable amount of bumps and bruises, if you will, as you have worked to grow Crown Capital. So give us some insight into what that is. Obviously, it’s risky. Real estate investing has risk. If it didn’t, then everybody would be doing it, right? And there’s no set roadmap to it. But the path that you all have taken, what bumps, bruises, nicks, or tumbles have you guys taken as you’ve grown this company?
DAVID:
Yeah, as far as Crown Capital resources, in a lot of the deals, we’ve gotten really close to things not going as losing money on deals, falling through foreclosures and things like that. I will say, since we’ve operated the business in the last seven years, we’ve been in a relatively stable real estate market. And especially those first five, when we were admittedly still really learning the ropes. It took us several years to really hone our processes. And if I’m being super honest with myself, it is that the overall general trend of the market probably bailed us out of a lot of situations that were not great business decisions as we were growing and learning early on. But really, over the last two years, we have hyper-focused in on some of the risk protocols and our internal processes, getting things in place, standardizing our practices such that nothing really falls through the cracks. It’s actually been a huge leap forward and it dovetails nicely because this is a recommendation I have for anyone looking to jump in real estate. My business partner and I also joined a mastermind here about two years ago. And for anybody that doesn’t know, masterminds, they have them for any business segment that there is, whether it’s workout apparel or health nutrition supplements or real estate investing. But it’s essentially where you pay to attend typically an off-site retreat and you’re surrounded by mentors and then other people who are on the same journey as you. And we basically operated for about five years with no real mentors and learning things as we went. And we started going to that mastermind and it’s put on by a group called Hard Money Bankers. And our learnings, our processes just blew up. It just went exponential for us. So that was a huge shift for us and also a recommendation I would have for anybody who’s looking to start to grow their knowledge base and expand on their real estate journey.
CORWYN:
Wow, wow. So that’s interesting to know. One of the things you may mention of as far as, if you will, masterminds go, that yeah, they’re everywhere. People work together, they strategize. And then, you know, what I do know, and it’s funny, I had this conversation with a guest maybe a few months ago where there essentially is a calling. If you have done well at a particular thing, then there is an innate, for most or many, there’s this innate feeling, or I need to give back, which means I need to teach someone else how to do and help someone else along their journey, if you will. And in that giving, they gain, if that makes any sense. Meaning that the whole concept, I never would have thought it would have been a mastermind for this arena, but it makes perfect sense because someone is quote unquote, got into a place and hey, let me teach someone else how to get to this place. And as we all learn, then we may have more to teach others as they keep going, so that’s awesome. So hard money lending, if you don’t mind, David, define that in your own terms. What is that? Because a lot of people throw around that term.
DAVID:
Absolutely. I’ll start with that. From a definition standpoint, I hear that term, it’s almost synonymous, or used this way anyway, between hard money lending, private lending, gap lending, and really the key difference between hard money lender and some of these other lending type of products in general is that a hard money lender has a lien on a real tangible asset. So there’s a perfected lien, typically in the first position, so it’s a senior debt lien on the loan. So the difference is when a bank underwrites a property, let’s say a bank’s giving you a 30 year note for your personal home, they’re primarily lending on you as an individual. So they’re hyper-focused on your credit, your income, and you as an individual, because a bank knows that then getting that property back, owner-occupied homestead property, is a lot more difficult. Our world’s a little bit different. It’s not principally about the individual, and it’s more about the collateral, aka the property that we’re having to first lien on. Because they’re investment properties, they’re non-owner-occupied, and if you go through a foreclosure process, especially in Texas, it can be as quick as 53 days before you take possession of the property. So in our world, hard money lending is essentially a niche lending product that offers real estate flippers an opportunity to make a cash offer to be able to close within a few business days, and lending that’s not necessarily based on them having a 750 credit score, but rather the project being a very solid flip. So I say it’s a niche lending product because it is, but the market for this is absolutely enormous. We’re talking 100 plus billion dollars in these sort of transactions a year in the U.S. Wow. Yeah. In fact, I’ll give you like an anecdote or a story. I sat down to lunch with the biggest lender in the city we live in, Houston, and he talked about his loan book size, and we have a good size loan book. His was 10 times bigger than ours. And he said, how big of the market cap do you think I have just in this city? Not in Texas, just in this city. And I’m like, I don’t know, like 30%? And he said, we have less than 3% market share in the city. So then you say, well, what about the whole Texas? So he meant to say by that is we do the same thing, and we are all, the pie is really big. We’re a sliver of a sliver of the pie. And so that’s a really good thing about hard money lending as well. It’s such a big market. It doesn’t have to be, but it’s not necessarily a zero sum game. We’re always happy to meet other lenders and pass deals when we’re short on capital and get deals when they’re short on capital, et cetera.
CORWYN:
So obviously we’re talking about this, David, from two different sides of the coin. You could flip the coin in one side, you are the investor needing funding. So I think what we’ve really talked about maybe thus far has really leaned on that side. You have a project, you identify a project that you believe is a great opportunity. You can’t get funding traditionally. So you see hard money as an alternative to, or to assist with funding. But the flip side of that is when you are the person who doing the lending. So you raise capital, have your network of these people, this person to go through to pull all that together. But I’m gonna ask you a question here as we kind of lead into that. Because obviously if you want to do something like this, it needs to be lucrative. Let’s be real, why get gray hair? And for those who watch, why get all this gray hair? But if you will, with a little return. So what do returns typically look like for the hard money investor?
DAVID:
So the way that we’re set up is we actually now have everything through a 506c income fund. So we raise capital through the fund and then deploy funds out on behalf of that fund. So there’s two things you gotta think through. It’s okay, well what’s your top line capital and then what’s your cost of capital at that point? So our cost of capital, which is when I say these income funds are made, they are comprised up of currently about 75 limited partners. They have anywhere from $50,000 to $2 million invested with us. And we pay them out a 10% yield on their capital. So our cost of capital is 10%. Our top line rate of return is closer to 20%. And I’ll break down how that looks. So we charge, typically speaking, clients 12% interest and three points origination. Which is right around median of what Texas hard money managers. And so if you think about what that looks like top line, you’d say, well that capital’s working at 12%. That’s 12% interest. And then I make 3% on origination. But really, since our loans are such short duration, we’re trying to flip that capital to two and a half times a year. So that three then becomes eight, 8%. So you have 12 plus eight plus some additional fees as well. So top line you’re at 20%. Cost of capital’s around 10%. Just round numbers. So essentially you’d say, well 10% of your AUM, of your assets under management, or notes funded if you wanna think of it that way. That’s roughly your gross margin. Now the nice thing about hard money lending companies is that there’s a lot of automation that can be built in. So you don’t need a huge overhead to do this. Currently speaking right now, there’s only four people in the company. And I think with the four people that we have, we could comfortably run a, roughly a $40 million loan book.
CORWYN:
So David, just being direct about it, you’re talking about, let’s say that you have under money to invest, you got 20 million. So I’ll. Yeah. Well, Matt, let me, I’m sorry, let me elevate you. I don’t wanna hand to nobody. So we got 40 million. Let’s say we got 40 million. So every year your investors are roughly receiving a return on their investment. So they’re making roughly $4 million a year. You in turn, your company, in concert is making roughly 4 million, which then allows you to further divest your own funds and be, and fund your own deals. And not only are you making that 10% return, but you’re also making the additional 10%. So your 4 million, you can leverage it 20%. Whereas everyone else that’s invested is leveraging it at 10. Does that make sense?
DAVID:
Yeah. You essentially have an undiluted cost of capital for your own funds in the business. It’s a pretty beautiful thing. Well, it’s funny, because typically when people are our age and growing, we’re trying to grow the fund size, to increase the gross margin, not the net, or not the net percentage, I should say, the gross margin. However, what you see sometimes with people who have, we’ve seen this in the mastermind, as an example, some people who have been doing this for 30 years, over time, what they’ll do is, they’ll just have $5 million of their personal capital. And they’ll just say, I’m just gonna lend out $5 million at a time. I’m making 20% on my money. And I’m happy with that. I don’t need to run this huge operation. I can just work with repeat clients. And you see that a lot, certainly. There are definitely people in our mastermind that are more in that headspace. They might be late 50s and whatnot. They’re not interested in growing a huge company anymore and managing people and doing all that, or dealing with third-party investors. They’re just like, well, I’m just totally self-funded at this point. That’s a great place to be. Don’t get me wrong.
CORWYN:
That is awesome. So, let’s continue on this side, on this vein. So, yeah, the coin flip, we’re at the head of this thing. So, fundraising. Obviously, you gotta get people to help fund out, helps keep your deals going. Granted, you can always start out with a smaller line and just do a little bit of stuff yourself and then grow from there. But otherwise, let’s talk about that. So, what method or methodology do you use to raise capital, essentially, for you to be able to fund deals?
DAVID:
So, in regards to the fundraising, it’s a huge challenge. Let’s just be honest. Essentially, it’s a challenge because once you move outside of your personal family and friends network, as you sit down with people, you’re basically introducing them and trying to convince them of the validity of two separate things, first of which is you as an individual, right? Am I a trustworthy individual? Do I have good ethics and morals? Am I going to be a good fiduciary with your hard-earned capital? Who’s this person I’m sitting across the table from? And then secondly, oftentimes, in tandem with that, you’re also trying to explain to them what is hard money lending, why is this a security investment avenue, and what are the protections that we have in place? And so, fundraising is a huge challenge. I will say, up to now, we have primarily tapped our friend and family network pretty hard, and we’ve been able to grow pretty sizably with that, just with some of our oil and gas contacts have been very helpful. But as we’re moving out towards the realm of that, it becomes more challenging. Now, one thing that has worked well for us, and it’s an avenue that we’re gonna pursue more heavily in 2025, is the concept of just doing curated dinner. So as an example, we’ll have somebody who’s been an investor with us for one or two years. We call them up and say, hey, it’s been going well, we’re looking to grow, got some great deal flow. Is there anybody else who might be interested? Do you think we could get a few people around a dinner table? And throwing these dinners, because that way, when you’re sitting down with five people, one of those, or maybe two of those, are going to be advocates of yours. And they’re looking at that individual saying, hey, so you’ve been with this guy for two years. Hey, so you know him personally. Hey, you worked with him at the oil and gas company. And that’s a big help, for sure. But fundraising, it’s a personality thing. You have to be willing to put yourself out there. You have to be willing to face rejection. It’s a tough thing. It’s a tougher thing of our business, but it’s absolutely a barrier to entry for being a lender. You have to be able to raise capital. You have to be able to maintain investor relationships. And then past that, obviously, you have to be a fiduciary. So once you get people in the door, you’re no longer a hard money, you’re not in the hard money lending business, you’re in the trust business. And so you have to, and so we’re really proud. After seven years, we’ve never missed an investor payment. Nobody’s ever lost capital with us because on a few times where we did lose money on a deal, we as an operating company took the hit. Yeah, you take the loss. Yeah, that’s right. That’s right. So we’re really proud of that. If at all possible, we’re gonna continue going forward like that into perpetuity because the nice thing about when people join the fund now and they look up at the current makeup of the fund, these are the people I’m sitting around the table at Thanksgiving with. It’s friends and family in this network. So you’re in good hands.
CORWYN:
You wanna make sure nobody adds anything to the turkey.
DAVID:
I’m not losing mom’s retirement money. You’re good.
CORWYN:
That’s a good deal. I love it, I love it, I love it. David, you help people from basically all aspects. And I appreciate that. I appreciate you sharing what you shared thus far in the show. So if you don’t mind, let’s make sure we get your contact information out there. Well, how can people reach you, find you, plug in with you?
DAVID:
Yeah, so our website is crowncapitalresources.com. And my personal email within that is just david, D-A-V-I-D, at crowncapitalresources.com as well. That’s probably the best way to get in touch with me. Our Instagram, we’re looking to actively build it in 2025. It’s again, crowncapitalresources, that’s the handle. But it’s not overly impressive right now. That’s a work in progress.
CORWYN:
So look here, I am going in full transparency for our listeners. Guys, look, they’re a company, they’re rooted in principle, if you will, in the word. And I love that. I love on your website, referencing in Proverbs, because as we seek to build, create legacy and help people, one of the things that we talk about on this show is that the word tells us generation, generation, so forth and so on, the inheritance that we should lead. You’re helping people to actually manifest that quote unquote God has given them in his word for them to accomplish. So thank you so much for being a part of that pathway to help people to be able to do what he’s given us to do, which is that to this type of inheritance, because inheritance vary, don’t get me wrong. So David, that hindsight question, I might drop question if you will. I like to ask it of our guests, if knowing what you know now, if you would have known that way back yonder when you started being the gas man, I love that. You worked at a petroleum company, I love that. When you started being the gas man, if you will, what would you have done differently back then that you think would have had you with a fund now, if you will, or capital raised at this point, let’s say over $100 million or even a billion. What was that? What are your takeaways?
DAVID:
Yeah, great question. I think for the longest time, it was a mind frame change that I really had for me. And it really started the seeds of which were planted during the first masterminds that I attended. But I viewed Crown Capital Resources as just a kind of a side passive investment vehicle. What I didn’t realize, and what I wish I would have realized earlier was that Crown Capital Resources was essentially an avenue for which I could accomplish the things that were most important to me. And the things that were most important to me, what I realized were being able to grow and build a legacy for myself and my family, and then the autonomy to have control over my own time, the true autonomy. And the reality is, as good as the W-2 is you could potentially find, and I had a great W-2, I realized I would never be able to achieve what I was truly seeking down that path in the corporate world.
CORWYN:
Makes perfect sense. Makes perfect sense. So David, you’ve given me, myself, I’ve been over here making notes mentally and otherwise, you’ve definitely given me some nuggets. So I know that you have given in concert a lot of things for our listeners to think about or otherwise to consider. So I wanna thank you for doing that, for being a part not only of the show, but being a part, if you will, of the family and providing that insight, man. Looking at somebody at home, I’d have their whole mind blown right now about what you’ve said and the insight that you gave. So again, thank you for taking time out of your busy schedule to be on the show with us today.
DAVID:
I’m happy to be here. And I’ll make one more note. We primarily service, we only do loans in Texas, in the state of Texas. However, I passed my contact information and I genuinely would say that if anyone has any questions about hard money lending or how to potentially start in the space, or even if I have referral contacts in other states, I’m happy to help and assist in any way I can.
CORWYN:
Awesome. Well, we appreciate that. So for our listeners, guys, look, you have officially had your mind blown as you’ve gotten the introduction into, if you will, a whole nother realm. As we’re dealing with different worlds in real estate, this realm over here works and operates a little bit differently than it’s somewhat like an alternate reality. That’s funny. I like that concept. But guys, you got the introduction today. So I want you to continue to look behind the curtain. Feel free. Please reach out to David. Please check out their website. Please connect because you never know just how simple a conversation can change the trajectory of your business or of your life. So don’t be afraid to have the conversation, guys. That is a lesson that we all should learn. And most importantly, it is something that we all should endeavor for. Listeners, for the last time, y’all know how I feel. Y’all know what I say. Y’all know I always put the two of those things together and I deliver it to you this way, which is to tell you that I love you and we’re gonna see you guys out there in those streets.
