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Renovo Financial is a Chicago-based portfolio lender with a singular focus on the customer experience. Founded in 2011 on the heels of the subprime mortgage crisis, Renovo was built to withstand volatility and provide a resilient financing option for Chicago real estate investors. Cofounders Kevin Werner and Daniel Rosen were successful in this pursuit: A decade later, Renovo projects can be found in 92% of Chicago neighborhoods, and they didn’t have a single delinquency during the pandemic.
“Renovo is very much a Chicago company,” James Gaskin, Renovo’s senior vice president of corporate development, said over the phone.
However, the firm is thinking bigger as it embarks on its second decade of lending. The first tell? Gaskin was dialing in from Austin, Texas. Renovo opened seven new offices around the country since the start of the pandemic, and plans to open three more in the next month, according to Gaskin.
“We are seeking to build a bunch of great local businesses that focus on relationships,” he said. This local mindset is core to the ethos at Renovo, largely because the firm puts the customer at the center of everything it does, whether it’s their strategic growth model or innovative offerings.
The Renovo Difference
The Renovo Financial philosophy is simple: It’s predicated on the idea that most of what goes into a lending business is replicable. Most competitors are within a small range of each other on loan-to-cost (LTC) and loan-to-value (LTV). “So, how do you build a great business when 90% of your competitors are doing the same thing?” Gaskin asked. “We have to be really good at the other 10%.”
To get “really good” at the other 10%, Renovo is focused on turning a transactional business into an interpersonal one, and in a relationship business, every interaction matters. For Renovo, this means the results of every single Net Promoter Score (NPS) survey are automatically emailed to everyone in the company. If anyone who touches a Renovo loan, from the borrower to the real estate agent, scores the company below a 9, Renovo’s chief operating officer picks up the phone to see how they can remedy the situation. It’s a system that works. In 2020, Renovo received a score of 95%, meaning most customers would refer Renovo to a friend or colleague. And until last year, Renovo’s growth was built entirely on word-of-mouth referrals.
Their growth strategy brings this same level of customer awareness. “We believe that real estate is hyperlocal,” Gaskin said. “Most of the successful investors we work with operate within a very tight geographic area, sometimes down to a handful of blocks, or maybe a zip code.” With this in mind, the firm is only expanding into markets where it can find the right people. These lenders “understand the intricacies of the local market” and have networks of referral partners, including real estate agents, general contractors, and permit expediters.
“For us, innovation is about finding new and better ways to be a great partner to our customers, and we do that by listening to them and trying to find solutions to the problems that affect them,” Gaskin said.
For example, Renovo spent years building a bespoke loan origination servicing platform that handles everything from pre-origination to the final payment. Now the firm is integrating technology to accelerate construction draws and disbursements because this was one of the biggest pain points for borrowers. “We are always working on ways to get them their money faster and easier. Technology plays a big part in that,” Gaskin said.
To answer a need created by the pandemic, Renovo is offering a new bridge loan. It’s designed specifically for borrowers who are nearing the end of a construction loan but need more time. Many of these borrowers are finding their loans were sold during COVID to servicers across the country who won’t extend the loan or may be charging sky high rates. Renovo’s offering will give those borrowers a reduced interest rate loan to get them out of expensive debt and buy enough time to finish their projects. “A lot of folks are in a tight spot and really shouldn’t be, because if you take the time to get to know the market and the project, then you know it makes all the sense in the world,” Gaskin said.
Renovo has countless other little innovations that help make the lives of its clients easier. It services all its loans in-house. It runs a pod structure for lender support, so every lender has a dedicated processing team. It even has a strategic partnership with Home Depot so all its customers save on building supplies.
“The little things add up,” Gaskin said. “If we can make something a little bit easier and something a little bit cheaper, we’re going to do that because at the end of the day, that is what makes a difference.”
The focus in 2021 for Renovo is smart growth, which means preserving the customer-first, local mindset as it grows. Not only is the firm growing geographically, but it’s also expanding its channels and products. Renovo is currently launching a wholesale third party origination business, starting with six to 10 targeted relationships with regional lenders.
“We’re going to continue to find areas where we can add value to our customers through new and innovative lending products,” Gaskin said. “We’ve got a really exciting road ahead.”