Mark Pate flips houses and finances others who do so
He’s one of the 41 franchisees of New Again Houses and also the Founder of Alta Capital Management, a $20 million fund that provides the capital needed by those franchisees.
Mark Pate is not afraid of challenges or entering new ventures that he had not previously considered.
A recent addition to the Knoxville community – he and his wife moved here last July, Pate grew up in Oklahoma and Kansas where his father was in the oil and gas business. He followed in those footsteps and moved to Kingsport in 2000 to serve as President and Chief Executive Officer of a privately held start-up oil and gas company.
When he decided that he wanted to teach at the college level but need a doctorate to do so, Pate willingly commuted from Kingsport to Knoxville for 3.5 years to earn his Ph.D. in Finance from the University of Tennessee, Knoxville. Then, he joined King University and has served as Dean of its School of Business, Economics, and Technology since 2018. That role will end with the conclusion of the 2022-23 academic year, and Pate will move on to his latest challenge: flipping houses and financing others that do.
Today, he’s one of the 41 franchisees of New Again Houses (see yesterday’s feature article here) and Founder of Alta Capital Management, a $20 million fund that provides the capital needed by those franchisees. How Pate and Matt Lavinder and Sam Ferguson of New Again Homes connected is more about relationships and trust.
“Matt and Sam are graduates of King University, and I ran into the two of them in 2012,” Pate told us. Lavinder was coaching soccer at the school, and Ferguson was one of Pate’s students.
“They were capital constrained but very analytical,” he said of the duo. “I was very impressed with their approach.”
So, Pate invested $250,000 initially to help the two and, as that old saying goes, the rest is history. He later helped Lavinder and Ferguson explore the franchising model and now actually has his own New Again Houses franchise that encompasses an area from Oak Ridge to Crossville and from Athens to the Kentucky border.
Over the past decade, Alta Capital Management has made 550 loans to those that are franchisees of New Again Houses without a single default. The fund now totals $20 million from 84 investors.
“I’m just a lender,” Pate says of his capital role. “The franchisees are the investors. It is a very capital-intensive business.”
Alta Capital Management describes itself as “a single purpose business and what we do is simple: we loan capital to New Again Houses” franchisees that then buy distressed homes, renovate them, and put them back on the market. It’s commonly referred to as “flipping” houses.
Pate explains that Alta Capital Management executes a promissory note on each house to provide funds to purchase and renovate it. He personally signs off on each transaction. For security, the lending company is named on the deed of trust filed with the County Clerk. Through 2021, the capital partners have enjoyed an average return on investment of 10.5 percent.
As a franchisee, Pate describes the New Again Houses process as very analytical, underpinned by a database that estimates the time required for each discrete task and applies an hourly rate to determine if an adequate return can be achieved.
“It’s the investment in that (software-based) toolbox that franchisees are buying,” he adds.