Demystifying the Emergence of GoldQuest Capital as an Upstart Hard Money Lender

Hard money lending, also called “private money” lending, is a vital niche in the real estate market and for many diversified investment portfolios. There has been some confusion in the industry about reaching consensus over using “hard” versus “private” money, as the industry went through an evolution following the Great Recession and housing market collapse over a decade ago. When there’s some industry confusion, it’s easy to understand why investors have a difficult time grasping the roadmap for an emerging company like Gold Quest Capital Inc. (OTCPINK: AVVH).

Simply put, it’s a relatively easy strategy and straightforward path.

The thing is, “hard” money is engrained in industry nomenclature as the process of non-conforming loans for commercial or investment properties funded by individuals or companies, not traditional banks. Historically, the loans were secured exclusively by the real estate and not dependent upon the borrower’s creditworthiness. Borrowers were fine with higher interest rates and short payback periods to expedite the loan process to a few days rather than a month or more with a conventional mortgage. For lenders, deals are favorable because it could be even more profitable if a borrower defaults, for which they take the property as payment.

Following the recession in 2008-2009, in combination with the plethora of information immediately available at everyone’s fingertips, lenders started looking a bit more into the borrower, which inspired the name change that has just never really caught on. By any name, hard lending remains instrumental in tens of billions of dollars of real estate transactions across the U.S. annually. Some companies, including Gold Quest Group LLC, specialize in brokering hard money deals, taking an origination fee from every transaction initiated.

While the broker makes his cut, the other side of the deal is more lucrative. The lender

also makes money off an origination fee in addition to collecting interest on the recurring loan payments every month. That’s where Gold Quest Group Chief Executive Officer Miguel Sanchez wants to position his newest company, Gold Quest Capital, which he brought public via a reverse merger with AVVAA World Health Care Products Inc. completed in January. A name and ticker change are imminent to ditch the AVVAA connection and reflect the new public company.

While they share a founder and a similar name, Gold Quest Group (let’s just shorten to “the Group” for clarity) and Gold Quest Capital are separate entities and operate under very different models. The Group will continue its operations as a successful privately-owned broker. Gold Quest Capital is a new real estate mortgage lending firm focused on three primary lines of business: hard money lending, SBA (Small Business Administration) lending, and real estate development and redevelopment.

While separate companies, the relationship with the Group is very valuable to Gold Quest Capital, akin to a new tire company having a close relationship with a car manufacturer. Instant business can be available from a company that has been serving as a broker for over 22 years, where it originates, packages, and sells “hundreds of millions of dollars” per year in mortgages. Gold Quest Capital will have the right of first refusal for all commercial and industrial loans that are originated by the Group.

Furthermore, Gold Quest Capital has relationships with other loan origination firms, including CBRE Capital, JLL Capital, Meridian, and others throughout the U.S. where it can evaluate additional loan deal flow.

To launch its operations, Gold Quest Capital is working on meeting a couple very significant milestones. One, a first-lien mortgage company needs to raise a substantial amount of capital to trigger lines of credit that it will use to fund loans. Two, it needs to complete the requisite documentation and approval process to become a preferred SBA lender. Both processes are currently underway with investors watching for updates.

Sanchez has made it known that he is also looking for a small bank to acquire to add to Gold Quest Capital’s portfolio.

It’s a savvy business model in that hard money loans are characterized by higher interest rates and strong return on investment for lenders that are relatively safe owing to the collateral. SBA loans also packaged at favorable lending rates and guaranteed by the U.S. government. This should be a steady simmer at first as the hard loans start generating revenue and cashflow that can be re-invested and so on until the laws of compounding interest take over.

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Published by Lisa Ray

Lisa has a Bachelor of Arts in journalism from Purdue University and 3 years of experience in the publishing field.