John Femenia. Founder and CEO of Source Realty Capital

John Femenia

We discuss today with John Femenia. John is the Founder and CEO of Source Realty Capital

John, you have a long history of financing. What led you to the financing industry?

I started off in the maritime industry after college, but I knew I wanted to pursue a career in finance.  I went back to school for my MBA from Columbia University.  After Columbia, I worked in investment banking and then later went on my own to finance real estate transactions.

Tell us about some of the early projects you worked on and the changes they involved?

When I started in the real estate finance business, I focused mainly on larger deals. Larger deals pay well when they close, but the probability of them closing is much lower than deals on the smaller side.  One particular deal was a land deal in Jersey City.  We did a ton of work on this deal, and it died at the closing table.  The lender killed it for what I think was a silly reason.  I would say that this deal was a turning point for me.  For that point on, I sifted focus to the smaller deals that close more often.

Source Realty Capital has had a lot of success in a short time. It was only founded in 2019. Can you explain the origins of the company and its creation?

We initially started out as a commercial loan brokerage, matching real estate investors with institutional lenders. We focused on large commercial deals.  Around 2019, we decided to raise capital and get into the direct lending business.  This was good fit for us, since we already had a ton of relationships with real estate investors.   A few of our borrowers decided to invest with us with the initial capital.

Source Realty Capital has originations of more than $15 million per month. How did you go from zero originations to more than $15m per month since the company’s creation?

I credit our growth to the relationships we built on the originations side of the business, as well as our ability to consistently deliver to our clients.  Borrowers want to work with lenders that can close and give them good service.  When we commit funding a deal, we always get it done.  Our borrowers appreciate this level of service.  I’m happy to say that 80% of our business is from repeat customers, or referrals from existing clients.  This has not only allowed us to grow quickly, but to grow with quality borrowers.

How does Source Realty Capital find the capital for projects?

We have several capital sources that we use to fund deals.  First, we have a pool of equity that is a combination of equity from management and outside investors.  We also have serval credit lines, both short and long-term lines.  We typically fund deals with either straight equity or a combination of equity and our short-term line.  Depending on if we portfolio the loan or sell it in the secondary market, we might decide to use our long-term line.  Our capital structure not only allows us to close fast for our borrowers, but it also gives us the ability to portfolio our loans and earn yield for our investors.

Can you explain the Fix/Flip program available through Source Realty Capital?

Fix and Flip program is designed to meet the needs of real estate investors looking to complete a “value add” deal. A value-add deal is when an investor buys a property that is in need for repairs, and their intention is to repair the property and then sell it.  These deals require financing in two stages. The first stage is the initial advance of the loan that is given to the investor at closing.  We base the initial advance of the loan on the As Is value of the property, or current value. The second stage is the financing needed for the rehab of the property.  The rehab component of the loan is based on the After Repaired Value, or future value, of the property.  Given the complexity of these transactions, we typically only fund fix and flip loans for borrowers with prior experience.

Why does the company focus exclusively on one to four-family and small-balance multi-family properties?

We focus on one to four-family and small balance multi-family properties because these asset classes are the most liquid assets in real estate. Focusing exclusively on these asset classes ensures steady deal flow in any market, as well as gives us the confidence that capital will not get tied up in any one deal for too long.

John, what are your tips for individuals interested in property investments? How can Source help them achieve their goals?

My biggest advice for individuals looking to get into real estate is make sure you understand your market and know that point of the real estate cycle your currently in at the point. Whether borrowers are looking to do value-add fix and flip or long term holds, we have the loan program to fit your needs.

Inflation has increased over the last year. How has the rise in costs altered the real estate business?

The pace of rate increases over the past 6 months has definitely impacted the real estate market. Financing costs have shot up.  Values have seemed to hold up for now, largely because of the lack of inventory. However, we expect real estate prices to pull back over the next 12 months. It’s not going to be 2008 all over again, but you will see a price decline, some markets worse than others.  Our borrower’s should be cautious and make sure they aren’t over paying.

What is the most challenging part of owning your own business?

I’d say that the most challenging part of owning your own business, especially business tied to real estate, is being able to adjust to changes in the market. As the owner of the business, it’s your sole responsibility to adjust to these market changes.  Making a wrong decision at a critical point in the cycle could be disastrous.

John Femenia

John, how is a day in your life?

My day starts relatively early, around 7am. I review emails from the day before and review any files that are closing in the next day or so.  I personally review every deal before it closes. When our staff starts work a around 9am, I run through our deals in the pipeline and map out a plan for the day of what needs to be taken care of.  Once I feel good about the state of our deal pipeline, I then focus on our marketing and other initiatives to bring in new business.  I then turn my focus on any other projects we should be focusing on, whether that is raising capital, reaching out to new banking relationships or new strategic partnerships.  When there is downtime from dealing with the day-to-day of closing deals, I always make a point to focus on future growth initiatives.  I make the point to ask myself everyday “what else can we be doing to grow?” I try to wrap my work day up around 6pm and time with my family.

What is something most people don’t know about you?

People probably don’t know that I started out in the maritime industry. I actually worked as an engineer on ship for a few years after college.

What makes you smile?

Looking back and thinking about the progress this business has made in the past few years. It’s a competitive business, so being able to grow and retain clients makes you feel good.

What scares you?

The current market…The rate of interest increases is scary. It’s really shaken up the market and it’s hard to tell when rates will stop going up. I’m looking forward to when rates start moving in the other direction.

If you had the power to change just one thing in the world what would it be?

That’s an easy question. I would eliminate bear markets!  Or at least fix the financial markets so we don’t do from boom to bust so often.  It’s a bit frustrating because the period of high inflation that we’re in right now probably could have been avoided if mistakes we’re made a few years ago.

For more information on John Femenia and Source Realty Capital, please visit





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