Secured Investment Corp., a Coeur d'Alene concern that claims to be one of the fastest-growing, private-money companies in the country, says it's embarking on a growth strategy that includes raising millions of dollars in capital, increasing its loan volume exponentially, and more than doubling its staff this year.

The company, established earlier this year to be the umbrella company for related subsidiaries, specializes in peer-to-peer, short-term loans to real estate investors, says Lee Arnold, its chairman and CEO. Peer-to-peer transactions generally are arranged directly between two parties without involving conventional lending institutions.

Secured Investment, through a predecessor that now is a subsidiary, has arranged more than $20 million in loans in 40 states over the last 17 months, Arnold says.

"Our goal is to get up to $40 million in loans a month," he says.

To do that, Secured Investment plans to raise capital and attract investors in the company, Arnold says.

"We're meeting with private investors and hedge-fund managers," Arnold says. "We intend to raise $1 million initially, and $10 million by July."

Secured Investment recently has hired as its chief operating officer Dean Hutchings, an executive consultant and former COO at Linux Networx Inc., a multinational computer clustering company. Hutchings will lead efforts to raise operating capital, Arnold says.

Secured Investment and its subsidiaries, which include I'm the Solution LLC and Private Money Exchange LLC, employ 30 people and occupy 6,800 square feet of leased space in a two-story building at 1121 E. Mullan east of downtown Coeur d'Alene, having moved there from north of downtown this year, he says.

Arnold says Secured Investment expects to hire 20 more people by summer and have up to 75 employees by the end of the year.

Secured Investment's main function is to lend money to real estate investors who have identified commercial properties that they want to buy at well-below-market value, fix up, and sell at a profit, Arnold says.

"Banks aren't touching this market," he says. "The only place to go if you don't have cash is to private lenders."

The company is the conduit between such investor-borrowers and lenders, who are looking for higher rates of return on their cash than they can get from banks and bonds, Arnold says.

"It's an investment opportunity forthose sitting on cash," he says.

Borrower terms typically range from 14 to 17 percent annual interest on 6- to 18-month loans, Arnold says.

The idea for Secured Investment's peer-to-peer model was born during a real estate investing seminar he led, he says.

"One person said, 'I'm finding all these deals, but I don't have money,' and another person had money but didn't want to deal with fixing plumbing and all that," Arnold says, adding that he introduced the two parties and suggested one lend money to the other.

Now, Secured Investment sees peer-to-peer lending as its biggest growth market.

"We're seeing 100 new people a week who are saying they have deals they need funding for," Arnold says.

The I'm the Solution subsidiary conducts seminars around the country and online webinars to recruit and train real estate investors to identify short sales and foreclosed properties they want to buy. "The investors are the borrowers," he says.

The Private Money Exchange subsidiary is the lending arm that matches lenders with investor-borrowers.

Arnold founded I'm the Solution in 2004, and Private Money Exchange in 2009.

"Recently, consultants and counselors suggested we roll them into Secured Investment Corp., which we did in 2012," he says.

When a prospective borrower seeks financing for an investment property, Secured Investment vets it out, and lenders decide whether they want to finance it, Arnold says.

"If we do a $100,000 loan with 14 percent interest and charge 4 points, we make $4,000," Arnold says. "When we sell it to a private lender who earns 9 percent, we're making 5 percent on the spread."

The loan goes in a lender's name and Secured Investment sets up servicing through a third-party entity.

"The lenders get a check every month," he says.

Funds are handled through licensed and bonded contractors, Arnold says.

"Investors don't provide money directly to us," he says. "Our goal as a company is to never touch clients' money."

Aside from Secured Investment's cut in the transactions, borrowers typically pay only interest on the loans until they sell the properties, at which point they repay the principal to the lenders, Arnold says.

Secured Investment's average loan size in 2011 was $82,000. In the first quarter of this year, the average loan was for $102,000.

"Prices in most markets are going up," Arnold says. "That's a good sign that the real estate market is getting more stable."

Only properties that the investor can buy for less than 65 percent of the market value qualify for the loans and even then the loan is limited to 80 percent of the purchase price, he says. For a property with a market value of $100,000, the maximum loan would be $52,000.

"We feel the loans are safe, because the borrower has to have some skin in the game," Arnold says.

In addition, borrowers must meet income and reserve standards to show they can make payments.

The company also checks out market conditions for each property to determine if the potential investor-borrower might be overly optimistic about reselling it quickly.

"We look at the volume of inventory and see if the investor's exit strategy has merit," he says. "If the market saturation indicates there's nine months of inventory, we might encourage the borrower to seek a 12- to 18-month loan."

Arnold says Secured Investment looks for borrowers who are volume investors in commercial real estate.

"We'll lend over and over again as long as the borrower proves performance," he says.

Arnold says he expects some real estate investors seeking financing will have bruised credit, but that doesn't necessarily disqualify them from borrowing.

Under today's economic conditions, the bulk of loans arranged through Secured Investment are for less than 50 percent of fair market value, and it's not uncommon for investors to negotiate purchases in the range of 30 to 40 percent of fair market value, he says.

"The profit is higher, cash flow is higher, and competition is lower than it's ever been," he says.

The delinquency rate, which kicks in when the borrower goes beyond the maturity date, is tracking at 9 percent, Arnold says.

In such cases, Secured Investment usually tries to help borrowers modify or extend loans, he says, adding that in some cases, the company helps borrowers find other real estate investors to take over defaulted properties.

Secured Investment's equivalent of bank-owned property is less than 1 percent, Arnold says. "In this environment, that's very low," he says. "Our position in the property is still well below fair-market value."