David Mandel has always had entrepreneurial spirit. Imparted by his father, who was in the variety store business, Mandel, a third-grader, took hockey and baseball cards on consignment, then flipped them for a premium.
“We sold a lot of those cards,” he laughs. “Those were the early, early years. I eventually ran ski tours to Quebec City and nightclub parties once we got there because nobody knew where to go.”
But he had bigger plans. After earning a degree in economics, he went and got another one from business school, by which time he knew there was absolutely no way he was destined to become an employee.
“I started a marketing company doing door-to-door sales, and it grew to be national within two years.”
In 1989, Mandel pursued an altogether different venture, becoming a mortgage broker. Preceding the infamous real estate crash, when prices fell precipitously for seven straight years, Mandel saw the industry’s potential. He had, moreover, made sound investments in real estate and joined a sister-in-law’s mortgage company. After spending 10 years there, in what he described as being like a family business, Mandel founded First Equity in 1998.
“I grew First Equity from a one-man show to as many as 21 brokers. Coming into the business in the late ‘80s, there were a lot of new agents and brokers who came in as well, and from all walks of life, but a lot of them didn’t have the knowledge and discipline you get from running your own business. That’s likely what led me to do more sophisticated private and commercial lending early in my career and allowed me to grow to a point where, after many years, in 2006 we finally launched First Source.”
Mandel launched First Source Mortgage Corporation with his late business partner, Lionel Larry, “a phenomenal real estate lawyer who also worked as a builder-developer. It was the perfect partnership.”
Shortly after launching First Source Mortgage Corporation, Toronto began its ascent as an international centre of commerce, and with it came a building boom that’s unprecedented in Canadian history. Moreover, the partnership between Larry and Mandel allowed a nascent First Source Mortgage Company capitalize on the flurry of new builds that changed the Toronto skyline in a matter of several years. With it, came eye-popping yields for First Source investors.
“It was as if investors couldn’t get enough of the relative safety and high yields of private mortgage investments, where we focus almost exclusively on first mortgages,” said Mandel. “We found a niche, particularly in later stage residential land development. We’ve done quite a bit of work with smaller and mid-sized developers at a time when the Ontario government’s housing policy wasn’t keeping up with rising housing demand due to immigration and rising fundamentals. We’d start out at 60-70% LTV and by the time these borrowers were moving through the development stage, our loan-to-value was 30% to 50% LTV.”
In the 13 years since it was founded, First Source Mortgage Corporation has become a leader in financing construction development—a testament to Mandel’s insight into a market that is unlike anything Canada has ever seen before.