Real Stories. Real Knowledge. THE Loan Originator’s Resource.

Sunset Equity: Changing the Face of Lending

Insights» Cover Story

March 31, 2022by Marketing

Read the full April 2022 edition here.

Nestled in sunny Culver City, California, Sunset Equity specializes in a full spectrum of real estate debt and private equity investments. Established in 2005, Sunset is one of the oldest private money lenders around. Amongst its group’s management team there are over five decades of experience on the front lines of an ever-changing market.

Since the firm’s founding, Sunset has originated billions in their Residential Transitionary Loans across the nation and has generated risk-adjusted returns for partners and investors alike. In addition to the flagship RTL program, other origination verticals include platforms geared towards 30-Year DSCR rentals and commercial real estate.

To better understand the inner workings of this fast-growing group, and to gain insight into Sunset’s quickly-expanding commercial division, Originate Report sat down with the group’s leadership to learn how Sunset Equity is changing the face of lending.

What is the best way to summarize the mantra of Sunset Equity? Closings. The group’s fast-paced, collaborative environment allows the team to originate on average $30M+ in loans each month. The team reviews deals, learns, trains, and researches the industry together.

This collaborative environment, however, extends outside the realm of closings.

Sunset Equity prides itself on being hands-on with its clients, which sets the group apart from other lenders.

This, in part, is because of their ability to offer first-rate products in many realms, which is shown through the construction and commercial divisions. Because many of the group’s leaders are builders themselves, this successfully lays the building blocks to understand deals holistically.

Aside from the types of products offered, a key differentiating factor – a factor that sets Sunset Equity apart from a crowded field – is the dedication and attention to detail of the group’s leadership.

The leadership of Sunset is very accessible, which is shown through the open-office environment. At any time, a loan officer could walk into the CEO’s office and gain a better understanding of a potential client’s situation. There are no barriers between management and employees – it is not about having a micromanaging environment, it is about making sure everyone has the tools necessary to succeed.

This approach to leadership has been extended into the commercial division of Sunset Equity, a division that everyone is incredibly excited about.

Sunset is bringing top-tier talent into the division, and the people who have been brought on board have years – if not decades – of experience in the field. All of Sunset’s leaders who were interviewed said the firm’s commitment to seeking this talent highlights the group’s ability to gain traction in emerging markets and offer cutting-edge products.

It is one thing to ‘talk a big game’ and use buzzwords like innovation to describe the work that is going on at Sunset. While some in the industry may think they are getting away with this, Sunset’s dedication to true innovation can be showcased in many ways, such as the group’s reaction to the COVID-19 pandemic.

While the pandemic initially pushed Sunset towards remote work, it did not affect their production. The group always had the online infrastructure and a workplace culture that allowed them to work remotely as a team. At the beginning of the pandemic, they kept their lending approach flexible and sought to deploy short-term capital in select thriving markets.

Sunset was there for many investors when other sources of funding were not. This allowed the company to continue to gain the trust of clients as a reliable lending partner. For many of these clients, Sunset had funded multiple projects.

In addition to working with repeat clients, Sunset Equity was laser-focused on working with those whose businesses were severely impacted by the pandemic.

Many lenders stopped construction and rehab disbursements to borrowers; however,  most of Sunset’s loans are construction and rehab. When the market changed during the early days of the pandemic, many of their competitors halted, but Sunset never stopped. In that short period, the firm was able to do 15-20 loans for other lenders who stopped paying the borrowers. Sunset always stayed on top of the market trends and made sure they were one step ahead of competitors.

Another tenant of Sunset’s ethos falls under the heading of thinking about how hard money lending is viewed by real estate professionals and the general population alike.

Hard Money Lenders tend to be known for their lend-to-own or bait-and-switch tactics when it comes to points and rates for their financing. Sunset Equity aimed to change the industry norm with the implementation of a standardized points and rates system that ensures consistency within financial packaging.

In addition to a reevaluation of the core components of hard money lending, investment in technology has been a boon for Sunset Equity.

Sunset is also utilizing the latest fintech that allows them to streamline the entire lending process from digital application to the use of a CRM system that allows for communication with clients, brokers, title/escrow offices, and in-house staff, all on one platform. Lending is becoming increasingly interconnected with technology, and Sunset’s commitment to offering the best tools in the industry is steadfast.

Investment in technology is an important but fruitless endeavor without an equal commitment to understanding emerging trends in housing.

Housing is, and will continue to be, in great demand. For that reason, the Sunset team closely studies both residential and multifamily local markets nationwide. There are many fintech tools available online that allow Sunset to study local markets on a more granular level. Sunset strives to improve and educate clients about RTL, commercial, and DSCR programs to ensure success.

A trend that has become prevalent throughout the pandemic is the cause-and-effect relationship between new developments and housing supply.

For-sale housing inventory improved during the summer of 2020, according to data from the Census Bureau and Zillow, but failed to keep up with overall sales growth. In 2020, there were fewer houses for sale than in 2019, which created a home buying market with competitive conditions. Prior to the pandemic, 2020 was already expected to be a large buying year because of an influx of millennials reaching home-buying age.

There has been an uptick in construction because of the shortage of inventory, but this has been impacted by situations such as the increased cost of raw materials. Investors and builders, as a result, need to come up with the inventory necessary to fill gaps in the market. During the past few years, Sunset Equity has gained many new clients and trust in the industry. The group values feedback from their broker base, data-driven trends, and marketing research to stay ahead of the curve.

One such area of market research that is critical to their bottom line is offering flexible rates for borrowers. Sunset’s bridge loan program for commercial properties, for example, helps provide investors the financing needed to transform a property, block, and even neighborhood, into a revenue stream.

At the end of the day, having intuition – paired with the ability to think like a developer or borrower – leads to a better outcome for everyone involved. When thinking about the events of the past two years, the team at Sunset has been able to work in less-than-desirable circumstances with great strength.

One example of this is the continued expansion of Sunset’s commercial division.

It is hard to bring in talent through traditional advertising because so much of this business is strongly relationship-based. To that end, Sunset strives to create those relationships with emerging and established professionals in this rapidly expanding environment to bring in top-tier talent.

The expansion of this commercial division, along with the process of bringing top-tier talent aboard, leads to the larger goal of becoming a hub for a wide umbrella of products. The leadership refers to this goal as becoming a ‘one-stop shop’.

The firm has clients in Los Angeles, for example, who are building single-family homes. What Sunset is seeing, though, is a lot of interest in properties with six to eight units. When their professionals talk about wanting to become a single stop for all these product types, this starts with boots-on-the-ground efforts to expand to different areas and make themselves known for a wide variety of expertise.

Paired with this internal goal, however, is the external goal of providing product types and services that are lacking amongst competitors. Another attribute that makes assets like Sunset’s commercial division important is the built-in failsafe when borrowers have invested in the property themselves.

According to recent data from Trulia, 3.9% of real estate contracts fell through for any reason in 2016 – this is a statistic Sunset works diligently to counteract.

There is going to be less chance of someone walking away from a property, for example, when they have money in it. Sunset’s funds are in a much safer position when there are outstanding products, so working with developers and other borrowers on value-add projects allows the group to look to the future of a project and past any short-term ramifications.

When asked about the future of Sunset Equity, the leadership team said they are excited to see how the firm continues to grow and evolve. To date, the group has originated more than a billion in Residential Transitionary Loans and added that there is no sign of slowing down.

Thanks to the group’s collective 50 years of experience, the team can quickly discern what does and what does not work for loan scenarios. This allows Sunset to provide a swift, yet educated, response to the inquiries of borrowers. This promptness goes a long way with clients because they appreciate a lender that considers their time valuable.

To learn more about the services offered by the Sunset Equity team, or to apply for a loan today, visit  www.sunsetequityfunding.com.

 

Leadership Team at Sunset Equity

Benjamin Donel is the CEO of Sunset Equity and has engaged in hundreds of transactions through trustee sales for nearly 18 years as an Attorney, Real Estate Broker, and Real Estate Investor. He is knowledgeable about all the nuts and bolts of purchasing distressed assets. Donel’s management team is comprised of in-house Attorneys, an Escrow Company, Real Estate Brokerage Firm, contractors, managers, CPA’s, and other Real Estate professionals. His professional team and company structure have enabled him to buy, rehabilitate, and flip properties in the most expeditious manner with unmatched profit margins from other competitors.

Donel is a well-known real estate mentor, lender, and educator with extensive knowledge in the areas of foreclosure, trustee sales, and note purchases and lending. As both a mentor and advisor, Donel has held numerous real estate seminars for real estate entities and companies to educate other professionals in the field of real estate.

Donel’s goal is to propel his company to new levels of achievement by utilizing a road map to success that has been perfected throughout the years.

Specialties: Hard Money Loans, Private Lending, Fix & Flipping, Auction Buying, Real Estate Foreclosures, Trustee Sales, Transaction, and Litigation

Navid Lavi is a Principal at Sunset Equity Funding. As the second-ranked executive at Sunset Equity, he oversees everyday operations and manages some of the largest clients in the company. Skilled at managing relationships and building them, Lavi brings confidence and trust to the world of finance. He trained much of Sunset Equity’s main staff, and he prides himself on the frequency with which his clients become repeat customers.

Starting his own textile company at 23, Navid bought out several clients in the fashion industry, founded two fashion lines, and produced garments for some of the top brands such as Jennifer Lopez label, Under Armour, and Adidas, amongst others.

He then sold the company and started Sunset Equity with Benjamin Donel, Sunset Equity’s CEO, building it from the bottom up. Lavi is a driven, hard worker who has executed over $1 billion in lending. Despite his time-consuming roles at Sunset, he has always managed to be the top producer in the company and has brought in more than 50% of the revenue to date. Across positions including Senior Vice President, Managing Director, COO, and now Principal, he brings insight and foresight to every project he encounters.

In the future, Lavi plans to work with Donel to take the company public, which would make Sunset Equity not only one of the premier boutique private lenders in the country, but also one of the largest that still caters to clients on a personal level.

Sash Sepehran is a Managing Director at Sunset Equity, providing a one-stop-shop for all needs in relation to lending. He created the marketing department and sales team at SEF, hiring nine loan officers while raising monthly profits from $10-15 million when he started to more than $30 million today.

Sepehran has been an entrepreneur since 2010, launching an LED company that he sold once profitable. He began his tenure at Sunset Equity in 2017, following several career highlights, namely taking two companies public, launching his own finance business, and owning and operating his own importing and exporting business. Sepehran transitioned to his current role in 2021 after working in Operations. During this time, he immediately increased Sunset’s presence on Google, social media, and on smartphone apps to generate more leads. He also manages “bealoanofficer.com”, vetting potential Sunset Loan Officers.

A lifelong visionary, Sepehran specializes in building business and organizational structures and translating both into income, loans, and sales. In his current role, his focus is to bring leads and Loan Officers to the firm to increase sales and solidify the growth of the firm.

Sepehran is goal-oriented, developing strategies from inception to completion. He believes in leading by example. Rather than simply telling his team what to do, he also performs the work himself, closing deals every month so they can bear witness to leadership in action.

Carlos Yanez is Director of Commercial Lending at Sunset Equity Funding. In his work, he provides direct private capital for commercial and residential investments for short-term debt. As the founding leader of the commercial department, his team handles loans nationwide, while Yanez himself assists by bringing in the investment sources as well as hiring and training the Loan Officers to create sensible loan scenarios. In short, borrowers come to Sunset Equity to flip, build, and repurpose top real estate projects in various cities; Yanez helps to underwrite and deploy capital as well as establish fruitful relationships for rehab, ground-up construction, and repositioning of residential, multifamily, and commercial real estate.

With a track record spanning over 22 years, Yanez has performed in a variety of positions from his role as a marketing and branding consultant for Disney, to working at real estate investment companies, to (role at) crowdfunding lending platforms, and ultimately real estate financing. Through each position, Yanez has accumulated a myriad of skills that serve him today in expanding the company’s network and lending capabilities.

Yanez remains apprised of current city and regional real estate market trends, ensuring his team is well-versed in the most thriving housing markets. Additionally, he tirelessly networks with clients, brokers, and vendors, solidifying his goal to build his department into the biggest branch of the company.