Why We Built Lendr

I want to talk about why we ultimately decided to start Lendr, our loan origination and servicing tool, which, as we do this podcast, we promote pretty heavily. But there’s a strategic reason behind why we decided to start this software company in addition to running our own private lending company.

Background

I want to go back a bit to give some context, so you can see the whole picture. My professional career has been in tech.

I’ve been in the tech space professionally for around 12 years. About a year and a half ago, I left my W2 job as an IT contractor for the Department of Homeland Security. I worked in cybersecurity, infrastructure management, servers—basically all that tech stuff—for about 10 to 12 years. Even before that, I’ve always had an interest in tech. Since I was a kid, I’d break things, tinker with them, pull them apart, and put them back together.

I’ve always been curious about how computers work. Like I said, I’ve had this love for tech for a long time. I got really started in the software space around 15 years old.

When I say “started,” I mean very limited work—building basic websites for friends and family. My first big one was for a family friend who owned a beauty salon. I built their website, and I’m honestly embarrassed to this day by what it looked like, but they ran it for 10+ years before updating it. That’s just how it started—this love for tech.

So, I graduated high school, went to college, and it always struck me when I’d hear people say, “I’m majoring in general studies because I don’t know what I want to do.” That was always appalling to me. Since I was 9, I knew I wanted to be in tech, so there was never this discovery period. I always knew what I was going to do, at least going into college. That was really beneficial because I didn’t waste time on unnecessary classes or credits.

In fact, I graduated college a year early because I wasn’t wasting time with classes I didn’t need. After college, I moved to Salt Lake City, where I did a couple of internships. The first internship didn’t really pan out as I hoped—it didn’t provide relevant experience, and I didn’t get the job I was expecting.

I did a second internship with a hospital, Intermountain Healthcare. If you’re in Utah, you’re probably familiar with them. I worked with their system administration team for about 6 months. Just around the time I was graduating, I realized there wasn’t going to be a full-time position for me at Intermountain. They said, “We’d love to keep you, but we just don’t have a spot for you.”

Now that I had my degree, I was looking for something that paid more than $15 an hour. I wanted a “big boy job.” So I started looking around and found a job with a small company about 4 hours north of Salt Lake City in Idaho Falls, where I had gone to college. I worked there for about 3 years. To be blunt, it was a poorly run company with a toxic workplace culture. But looking back, the experience I gained was invaluable.

Since it was a small company, I got hands-on experience with various tools and tech—databases, servers, storage arrays, desktop computers, VoIP phones—everything. In larger companies, you don’t get to touch all these areas; you specialize. So, it was beneficial for me to dive into all aspects of IT infrastructure. The job paid better than my internship, about $42,000/year, but it still wasn’t a lot of money.

Real Estate Beginnings

That’s when we started getting into real estate. My wife and I began by buying a couple of rental properties. We eventually moved into flipping houses and then into lending. If you’re familiar with my story, you’ve probably heard about this, but I won’t go into details for the purpose of this episode.

At the time, my W2 job wasn’t paying enough to build the life I wanted, so we used real estate as a way to supplement our income. During this process, I noticed a gap in the rental industry. I needed a tool to track my income and expenses. Now, I know what you’re thinking—“Just use QuickBooks, it does exactly that.”

The problem was QuickBooks was too expensive and a bit bloated for my needs. It offered what I wanted, but it required a higher-tier plan that was $40-$50/month at the time, which felt overpriced for my needs. I wanted to track expenses and see how individual rental units were performing—if unit A, B, C, or D was profitable based on their income and expenses.

You can do that in QuickBooks, but you’d need the higher plan, which I felt was just too much. Looking back, I should’ve just paid for it, but at the time, I didn’t value my time enough. I thought, $600/year for QuickBooks was too much just to track expenses.

That experience led me to start my first software company, Rentastic. It was essentially a QuickBooks spin-off—a small accounting tool for mom-and-pop landlords. The idea was simple: link your bank account, import transactions, classify them by unit, and generate your P&L. It showed profits, losses, and net income, and allowed me to see which units were profitable or dead weight.

I remember when we first looked at our rentals as a portfolio. On the surface, everything seemed profitable—about $3,000/month net. But when I broke it down by unit, I saw two units were deadweight—one was breaking even, and another was losing $300-$400/month. This is something people often miss when they look at their portfolio as a whole.

QuickBooks could’ve done all this for me, but I didn’t want to pay the extra cost. So, I built Rentastic, and it became moderately successful. I worked on it for about 3-4 years while still investing full-time in real estate and working a full-time job. At its peak, the software generated about $7,000/month, which was great supplemental income.

This was a pivotal moment for me. Around that time, we shifted our focus away from rentals to flipping houses. I started falling out of love with the software business. It wasn’t bad, but it was becoming more of a headache than a benefit.

So, I listed the company for sale, and after about 3 months, we sold it to a company in California. They saw it as a good fit for their existing offerings. I can’t disclose the exact purchase price due to an NDA, but it was in the mid six figures. It was a nice exit, but not life-changing money.

The big takeaway for me was understanding enterprise value. Rentastic made about $90,000/year. I sold it for 5-8X that amount, which was a huge eye-opener for me. I realized this was how people build wealth—not just from cash flow, but from enterprise value.

Cash flow used to be my main focus—making sure my expenses were covered and living comfortably. But I learned that once you’re comfortable, the incremental increase in cash flow doesn’t change your lifestyle much. What matters more is the lump sum you can invest in bigger ventures.

After selling Rentastic, we kept flipping houses and then started another software project, The Dividend Tracker. We still work on that, but my focus has now shifted fully to private lending. And that’s how we decided to start Lendr.

The reason for starting Lendr is because there’s a difference between recurring revenue, and reoccurring revenue.

Recurring revenue is essentially a subscription service—Netflix, for example. It’s the type of revenue you can depend on every month, coming in consistently regardless of any external factors.

Reoccurring revenue is repeat business, but not necessarily on a specified cadence. For example, think of makeup for women. They’ll typically buy the same brands, the same mascara, eyeliner, foundation, and so on.

Though not on a monthly schedule, they will buy it repeatedly as they run out. It’s reoccurring business.

I came to realize that having a private lending company is reoccurring revenue. It’s not recurring revenue. It’s recurring as you’re collecting monthly payments, but once the project completes and pays off, there’s no more business.

Chances are, we hope borrowers return to work with us again, but it’s still not recurring revenue—it’s reoccurring revenue, which is a solid model.

The issue is that reoccurring revenue isn’t as predictable. A friend of mine in private lending initially considered combining multiple private lending companies into one big conglomerate to sell to private equity or venture capital firms. He soon realized, however, that it might not be the best idea.

Selling a business like that is incredibly difficult. It’s hard to determine the value of a company that lacks predictable, steady income. While trends and history can offer insights, it’s still less reliable than having a solid stream of monthly income from subscriptions.

Lendr

That’s when we decided to create Lendr. I’m passionate about building something large, scalable, and profitable. Although our private lending business is healthy, it’s challenging to sell, unlike a software company, which is far easier to sell.

After seeing the multiple I received from selling my first software company, the lightbulb went off, and I realized that I always want to have a business where I can increase enterprise value and secure a high multiple when it’s time to sell.

I’m currently juggling two businesses, but I don’t treat them as separate. They’re tightly connected. I use Lendr for our private lending company, but as my lending company grows, I realize that Lendr needs to evolve too. It must be flexible, not just for my own needs, but for other lenders as well, because we all run our businesses differently.

Ultimately, that’s why we started Lendr. It’s driven by my love for technology, the desire to build something scalable, and the goal of increasing enterprise value while leveraging our private lending company to help both businesses grow simultaneously.

Now, I want to give a brief origin story of how Lendr started. We began our private lending company around three years ago. We didn’t take it seriously until about two and a half years ago, but we started dabbling about three years ago.

What happened was, in between some flip projects, we had a chunk of cash sitting idle. A friend of mine came to me with a flip project and asked if I’d be interested in funding it. I didn’t have any immediate projects lined up, so I thought, why not earn some interest in the meantime? So, we funded the project. It worked out great with no issues.

I probably didn’t charge enough, but it was fine. After about three or four months, I got a check for $6,000, and it felt amazing. It was true passive income, and I loved it. That’s when I realized the power of private lending and passive income. I thought, “This is awesome.”

From there, we started doing more private lending, gradually doing two, three, four, or five loans at a time. But I noticed a trend: I was spending a lot of time generating loan documents. I had an attorney draft up a loan package, but every time I had a new loan, I’d manually copy and paste the previous loan’s details (LLC, borrower name, loan amount, etc.) into a new Word document.

I would send the document to title, only for them to often come back and say, “Hey, you forgot something,” or “This is wrong,” or “Why are these two LLCs in here? They don’t match.”

It turned out that I had forgotten to replace one value but not the other. It was a huge pain. I’d end up spending 45 minutes going over the document to make sure it was perfect, only to find errors.

I thought, “Surely there’s a better way to do this.” With my software background, I decided to build a simple tool. Essentially, it was a mail merge in Word. I’d take my loan application form, which had the borrower’s name, loan amount, and other details, click a button, and the tool would replace those values in the document.

I noticed that when I sent the documents to title, they didn’t come back with mistakes. It worked perfectly, and now I wasn’t spending an hour on this anymore. The process was much more accurate and efficient. I could complete it in five seconds.

As I used this tool, a friend of mine who’s also a private lender saw it and asked if he could use it. I said, “Of course,” and sent it to him. He came back and said, “This is really cool, but can it do this, this, and this?”

I said, “Not right now, but I can add those features.” I made the changes, sent it back, and he was happy. Then he came back with more feature requests, like, “Can it generate a payoff statement?” I said, “Not right now, but it could.”

This back-and-forth continued, and eventually, it turned into a fully-featured software suite, the tool we now call Lendr. We spent years building it out into a one-stop-shop for everything—from origination to servicing to payoff. It tracks charges and payments, collects payments via ACH, and generates loan documents with the click of a button.

Lendr truly is a comprehensive platform for private lenders.

Future of Lendr

To recap: Lendr is the focus for the next 10, 15, or 20 years. I love private lending, but I also love software, and I didn’t want to abandon that side. Lendr serves both our private lending needs and the needs of other lenders.

Selfishly, I’d love to sell this platform in 10 or 15 years for a significant software exit with a high multiple. It serves our needs, helps others, and blends my passion for both recurring and reoccurring revenue.

That said, I would love to have you on the platform. I truly believe Lendr is a great fit for almost every private lender. Unless you’re doing something very unconventional, I’m confident it’ll work for you.

As always, please check out Lendr by going to joinlendr.com.

 

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