April 1, 2025 • 55 mins
Securing financing remains the biggest hurdle for most aspiring real estate investors. When traditional banks say "no," where do you turn? In this eye-opening conversation, mortgage expert Aaron Kramer reveals the financing secrets that have helped hundreds of investors build substantial portfolios, even without perfect credit or W2 income.
Aaron breaks down how house hacking creates a perfect entry point for beginners, allowing you to live in one unit of a duplex while tenants in the other help pay your mortgage. The financial magic happens when you learn about loan programs specifically designed for this strategy – VA loans offering 0% down for veterans, FHA loans requiring just 3.5% down, and conventional options starting at 5% down. Each option provides a legitimate path to property ownership with minimal cash investment.
The conversation takes a fascinating turn when Aaron explains DSCR (Debt Service Coverage Ratio) loans – a game-changing option for investors. These loans require no income verification, allow properties to be held in LLCs for liability protection, and offer 30-year fixed rates typically unavailable through traditional bank financing. For self-employed individuals or those with complex tax situations who've been shut out of conventional financing, this could be the breakthrough you've been searching for.
A compelling mathematical breakdown reveals why waiting for interest rates to drop might cost you more in the long run. The five-year equity difference between buying at today's rates versus potentially lower future rates amounts to just a few thousand dollars – negligible compared to the appreciation and wealth-building you'd miss by sitting on the sidelines. As Corey puts it, "Time in the market beats timing the market."
Ready to explore these financing options for yourself? Connect with Aaron through Executive Mortgage or reach out through Wisconsin Discount Properties to discuss your specific situation and get pointed toward the right financing solution for your real estate goals.
To get in touch with Aaron, head to www.executivemortgage.com. To get exclusive off market deals sent to you on a weekly basis, go to www.wisconsindiscountproperties.com and put your info in today!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Hey everybody, we are back with another episode of
the Wisconsin Investor Podcastand I'm your host, corey Raymond
.
I've got another amazing guest,as I say every episode, because
everybody I bring on here I'mbringing to you guys for a
reason because they're bringingvalue, and we hope that you're
getting the value by tuning intothese episodes.
But recently I've been doingsome ads for our sponsor,
wisconsin Discount Properties,and so I just wanted to talk
(00:24):
about a deal that we recentlyhad.
I always bring these up, try tolet you know what you're
missing out on, so if you'resitting on the sidelines,
hopefully this is motivation toget you in the game.
Okay, so we had one on RooseveltStreet in Green Bay recently.
Purchase price we put it outfor was, I believe, 200,000.
I don't remember what weadvertised it for, but that's
what it ended up going for ARVon this thing was 290.
(00:45):
And the investor who bought it.
We followed up with thatinvestor and what they ended up
doing was they did some lightpaint, some cleanup, that sort
of thing.
They're going to shoot forselling it for around that 240
to 250 range.
So not a huge spread here by thetime you factor out holding
costs, closing costs, realtorcommissions, et cetera, et
cetera.
Plus the work that they'regoing to do there, they may make
(01:07):
$20,000 or $30,000.
Still not bad.
But when you factor it inwhat's going to be their profit
per hour, they figure they'regoing to get about 10 hours into
this thing.
So about $2,000 to $3,000 perhour they're going to make on
this deal.
That's from underwriting it topurchasing it, to getting their
cleaner and their painter inthere, to listing it and going
through that process A total of10 hours.
(01:28):
So if you're looking for dealslike that and you're not on our
buyers list, go towisconsindiscountpropertiescom,
plug your information in thereand you'll start getting these
deals sent to your inbox everyMonday morning and hopefully we
can help you accelerate yourreal estate investing goals With
that.
Let me introduce the man of thehour, mr Aaron Kramer.
Aaron, how are you doing, sir?
Speaker 2 (01:49):
I'm good, Corey.
Thanks for having me, man.
Speaker 1 (01:51):
Yeah, excited to have you, man.
I've known you for quite awhile now and tell everybody a
little bit about your background.
You're a mortgage broker.
How'd you get into thismortgage game and how long
you've been at this thing?
Speaker 2 (02:01):
Yeah, I've been in the mortgage business since 2018
.
Prior to that, I spent most ofmy professional career in the
corporate world intransportation, and I was
looking for to get out and dosomething different.
The corporate world had kind ofrun its course and, as most of
hopefully, the listeners know,tony Breuer with Good Faith
(02:22):
Funding and I were mutualfriends.
We'd gone to college togetherand Tony's the one who actually
got me into mortgage lending.
So I've been chasing that dreamever since 2018.
And it's just super satisfying.
There's just nothing likehelping someone get the keys to
their first home or theirvacation home or their first
(02:44):
investment property.
There's just no better feelingthan that.
So I've loved every step of itso far.
Speaker 1 (02:50):
Wow, You're a better man than me, Aaron.
I don't know if you rememberthis, but I was probably Tony's
protege right before you and Iwent through and got got
licensed and did the whole thingand I remember us talking about
that yeah and did the wholething.
And uh, I remember us talkingabout that, yeah, yeah.
And I made it about three hoursin the office with Tony and I
was like this is not for me, I'mout of here, dude.
(03:12):
I went through the whole thing,spent months, get licensed, did
all the training, I startedprocessing the loans and I was
like I can't do this man.
He's like are you serious?
I'm like yeah, dude, I'm sorryI'm out of here.
See you later.
Yeah.
Speaker 2 (03:25):
I'm a numbers guy so it just kind of came natural to
me.
When you mix numbers and sales,it's just it's.
It's what I like to do.
Speaker 1 (03:34):
Well, I'm glad that you're doing it and it's not me,
because you're much better atit than I probably ever would
have been for sure.
Well, I wanted to bring you onhere because, if you listen to
the show, guys, I'm alwaystalking about your two highest
income producing activities inreal estate are finding deals
and finding money.
Okay, aaron, here happens tohave some products and some
(03:56):
ideas around how to get you guyssome money, and I think this is
a really important topicbecause I literally I have this
conversation, aaron, every dayof the week with people who are
wanting to get started in realestate.
How do I do it?
How do I get the money?
Where do I get the money?
And there's lots of options,but you've got a few different
tools that I think would bereally helpful.
Let's start with the house hack.
(04:17):
Let's talk about A what is ahouse hack?
And B.
Let's talk about how doessomeone go about getting into a
property and doing this strategy.
Speaker 2 (04:27):
Yeah house hack really is for initial investors.
If they're looking to getinvolved in real estate
investing, one of the thingsthat they can do is house hack,
which is basically buying aduplex, living in one side as
your primary residence and thenrenting out the other side to
basically pay some to maybe yourmortgage as a result of that.
(04:49):
So house hacking has becomereally popular because, one, it
allows people to get a primaryresidence, but, two, really gets
them some experience in whatreal estate investing is all
about.
How do you work with tenants,how do you do repairs, how do
you do lease agreements, how doyou do repairs, how do you do
lease agreements, things of thatsort.
So what oftentimes what peopledon't realize and understand the
(05:13):
benefit of as well is thatbeing a primary homeowner also
helps you for future financingfor investment properties,
because there's a lot of lendersout there that require you to
be a homeowner in order to getlong-term financing.
So there's a lot of benefits ofhouse hacking that can be
utilized.
Speaker 1 (05:33):
Yeah, when you and I were talking before we started
the episode, we were talkingabout that and I don't know if
I've just not been in thatposition before where I haven't
owned a home Like.
I've owned a home since I wasin my early to mid twenties, so
I've always been a homeowner forthe most part.
I just never.
I didn't know that was a thingwhere you had to be a homeowner
in order to get some of theseloan products, but it makes
(05:54):
total sense.
Speaker 2 (05:56):
Yeah, Most of the lenders want they want mortgage
history.
They want to know that whothey're lending to.
They have the ability to pay amortgage so they're lending to.
They have the ability to pay amortgage, so they're going to
require it.
It doesn't necessarily have tobe a primary home.
It could be an investmentproperty, it could be anything.
But they just want you to haveowned a home and shown some
(06:16):
proof of mortgage paymenthistory, at least within the
last three years.
Speaker 1 (06:19):
Okay.
Is there any reason that ifthey have a proven rental
history, that that doesn't seemto carry the same weight for
these lenders?
Speaker 2 (06:28):
I don't know if I'm following Corey.
Speaker 1 (06:29):
So let's say somebody is renting for a few years and
they've got proven record, theypaid on time to their landlord,
all that sort of stuff.
What's the difference betweenthat versus them owning the home
?
Why do the lenders see a renterversus differently than a
property owner?
Speaker 2 (06:48):
Yeah, I think just more so than the mortgage
history of it.
I mean rent.
Rent obviously is almost like.
I mean you can get rentalhistory and oftentimes if I'm
lending to clients that don'town a primary home, I do need to
prove 12 months worth of rentalhistory.
But it's just.
But it's more so the mortgagehistory that shows up on their
credit because it does help andor hurt their credit score
(07:12):
depending on their mortgagehistory.
So those lenders want a12-month history to know that
people can make their mortgagepayments on time.
It just it's more of a investorrequirement for the lenders to
prove that people can, thatpeople that they're going to
lend to can make their payments.
Speaker 1 (07:31):
Well, and a lot of these are sold on the secondary
market, right.
So they packaged all theseloans up into big bundles and
they sell them off to WallStreet, and so the Wall Street
guys, I imagine, want to have acertain set of standards that
they know the underwriters arefollowing, and that's just one
of the key requirements theymust have identified as being an
important factor for them.
Speaker 2 (07:50):
Yep, I mean there are a few lenders out there that
don't require home ownership butas a result, it's more risk to
the lender investor.
So you're talking higher rates,higher costs as a result, and
oftentimes most people are goingto be homeowners at some point.
(08:12):
So having that in your backpocket, I guess I would say is
beneficial.
Speaker 1 (08:18):
Yeah, for sure.
And I was just at a conferencea few months ago where they had
a mortgage guy come in and hestudies the rates and what's
going to happen and predicts allthe stuff right and looks at
all the data.
And what he was saying wasreally interesting to me that
first-time homebuyers now theaverage age is like 35 years old
for a first-time homebuyer.
I think one of the points thatI'm taking away from this start
(08:39):
of our conversation, aaron, isif you're one of these younger
brackets and you're thinking ofyou, eventually you're going to
want to get into real estate.
You know, maybe it's time toyou know, get off the couch and
get in the game sooner thanlater to just kind of start that
clock of credibility.
Speaker 2 (08:55):
Yeah, for sure I, I.
It's amazing how many clients Isee nowadays that um, young,
younger clients I will see intheir twenties, um, that don't
have credit, that don't havecredit history either, um, which
nothing, nothing, um.
So, in order to kind of, itdoesn't surprise me that that
first time home buyer, you knowmarket is in their thirties,
(09:19):
because oftentimes you gotta,you gotta get that credit built,
that credit history, get yourscores high enough so that you
qualify for some of theseprograms.
Um.
So, starting at a, at a youngerage, credit wise, if you can
get some um, you know, get someownership under your belt, it's
definitely going to help you, um, in the long run.
Speaker 1 (09:37):
Wow, that's crazy.
I didn't realize that.
Again, maybe I just was luckythat my, my parents were like
you need to build credit.
When I was younger and 16 or 17or whatever it was.
Speaker 2 (09:48):
Ditto with you on that one, my mom, working at a
bank definitely helped me fromthat perspective.
Speaker 1 (09:52):
That gives you a little help usually.
Yeah for sure.
Let's go back to the house hackstrategy now.
So what would be the minimumrequirements if somebody was
like man, I really want to doone of these house hacks.
Like, let's talk about whatkind of capital they need to
have.
Where can they get the capitalfrom?
Credit scores, work history,like.
What does that look like?
Speaker 2 (10:13):
I know some of it may be general, but it's going to
follow some of your traditionalfinancing requirements, and when
I say that, I mean it's basedoff of your debt to income
ratios and your credit score,and things of that sort are
going to determine what loanprogram that you qualify for.
(10:34):
We'll talk about some programsfor investors and investment
properties later on that don'thave the traditional financing
requirements, but from a househack perspective, I mean,
there's a lot of programs outthere.
There's, you know, if you're aveteran, you can do.
You could do a VA loan for aduplex.
I've helped a lot of investorsactually use the VA loan for
(10:57):
duplexes.
There's the FHA loan.
Well, let me step back.
Va loan, zero down payment.
If you're a veteran, you can dozero down, which is, which is
super cool.
Speaker 1 (11:07):
Unbelievable, and you're living in it, so now
you've created an income foryourself.
I mean this, is that's correct,wow.
Speaker 2 (11:12):
Yep, fha.
Fha is probably the otherlowest down payment program out
there.
That's three and a half percentdown payment, and then you have
some conventional programs.
There are some out there thatallow you to go as low as five
percent on a two unit.
Wow.
Speaker 1 (11:31):
Let's go to the FHA one.
What are the pros and cons ofthat one?
Who can qualify for that?
Speaker 2 (11:38):
Yeah, fha allows you to have a little bit lower
credit score to qualify and ahigher debt to income ratio.
So for those that might nothave the greatest credit score
you know, you couldtheoretically go as low as 580.
580 to 600 is.
There's some lenders out therethat'll do it.
You got to have some.
You got to have some moneyavailable.
(12:00):
I mean you can still do threeand a half percent down, but
they're going to look at yourreserves and your debt to income
if your credit score is thatlow.
But it certainly can be done.
But again, it allows you tohave a higher debt to income
ratio.
So if you do have a lot of debt, it's another opportunity for
you.
So those are some of the proslower credit score, higher debt
(12:20):
to income ratio, higher debt toincome ratio.
One of the cons is that an FHAloan is a government loan and
the condition of the propertycan come into play for an FHA
loan.
So when an appraisal is done forthat property, the appraiser is
not only determining the valueof that property but they're
also doing you can kind of thinkof it as a mini safety
(12:40):
inspection to make sure that theproperty meets certain FHA
required criteria.
So, is the roof in good order?
Are the mechanicals in order?
Is there any chipping orpeeling paint?
Are there handrails?
If there's any steps, carbonmonoxide detectors, smoke alarm
detectors those things theappraiser is looking for and
(13:04):
basically needs to sign off onthose in order for an FHA loan
to be completed, where in aconventional loan you don't have
that and actually FHA VA kindof follow the same guidelines.
So the safety aspect of theproperty does come into play
quite a bit with those and inthis market, where it's right,
(13:25):
the competition is fierce and alot of the two units are going,
you want to put your best footforward from a financing
perspective.
So if a seller has multipleoffers all at the same purchase
price and one is an FHA and oneis conventional, they're likely
(13:45):
going to select thatconventional because they don't
have to worry about thecondition of the property coming
into play.
So it's a little bit of a confrom that perspective.
Speaker 1 (13:55):
Yeah, I know.
Obviously, if we're flipping aproperty or something, that's
always something we look at.
What's their financingsituation look like?
If it's FHA versus conventional, we're going to go with the
conventional one.
900 times out of you know 900times.
We're going to go conventionalover the fha, just easier for
everybody, you know.
But you only got one offer onthe table.
Let's roll the dice with thefha and see what happens.
Speaker 2 (14:17):
Yeah, for sure yeah, oftentimes with the fha
appraisal too, when, if it comesback needing repairs, they're
gonna they're gonna call theappraisal, subject to those
repairs being completed.
So they will list outspecifically on that appraisal
report what needs to be done sothat you can get those fixed.
And then we have to send the.
Once they're fixed, we send theappraiser back out there to
(14:37):
re-inspect those items and thento ultimately sign off on them.
Okay.
Speaker 1 (14:41):
Got it.
So is it a longer closingprocess typically, or can you
still get it done in about a 45day window?
Speaker 2 (14:48):
It can be, depending on if repairs need to be done
and the extent of the repairsand how quickly how quickly
those need to take place.
So in FHA loans I always try toencourage that we do an, we
order that appraisal as as soonas we possibly can in case there
are repairs that need to bedone.
So we can still try to staywithin our timelines.
(15:08):
Nice.
Speaker 1 (15:12):
The cash down right, the 3.5% and let's say the 5%.
I remember when I was getting ahome loan a while ago I mean
the latest house we didn't havethis, but the previous one they
wanted to know where all themoney came from.
Where were you getting the downpayment from?
Are there certain restrictions?
Are there and are theydifferent for FHA versus a
(15:32):
conventional of where you canget the down payment money from,
like gifts and things like that?
Speaker 2 (15:37):
um, down payment can go.
Yeah, I mean down payment cancome from.
I mean it can come from yourown funds, so you get.
You just got to verify wherethose funds came from savings
accounts, checking accounts,401ks, um, iras, any any
personal accounts you could haveyou can utilize.
Okay, um, most loan programsnowadays also allow you to get
(15:59):
gifts, so as long as you cansource those gifts from a family
member, you can certainly usethem as well.
You just got to source wherethey, where they come from.
Cool, just got to stay awayfrom cash, so large deposits
into your asset accounts thatare documented are no-nos.
Speaker 1 (16:19):
All my drug money, even all my drug money, I can't
shoot.
Speaker 2 (16:21):
I know Right these lenders.
They protect against moneylaundering and fraud, so any
those are great businesses.
Speaker 1 (16:28):
Come on.
Speaker 2 (16:29):
Right, any, any large deposits they're going to ask
you to source that aren't froman employer or that that again
that we don't have a paper trailof.
Speaker 1 (16:41):
I didn't know you could use 401ks or IRAs.
Speaker 2 (16:43):
I guess I don't know why I never thought of that, but
yeah, I have a lot of peoplethat will pull from their 401k
to use that for down payment.
Wow.
Speaker 1 (16:49):
And now, are they typically doing a loan out of
their 401k or are they actuallytaking a withdrawal?
Speaker 2 (16:54):
It depends on how their 401k is structured.
They're all kind of structureddifferently.
I've seen some that are justdoing a withdrawal from it and
some of them that are doing aloan.
So it all really depends on howit's structured and what your
401k company will let you do.
Speaker 1 (17:11):
You can tell I invest in real estate mostly only
right.
I don't know all the ins andouts of those other foreign
things.
Those, those are the.
But what about work history,aaron?
Is there a certain amount oftime somebody needs to be at a
particular job or like?
What does that look like?
Say, somebody just switchedjobs three months ago, what does
that look like?
Speaker 2 (17:26):
Yeah, that's not.
As long as they just switchjobs, it's typically not a big
deal unless there would be a biggap of employment.
Lenders are typically lookingfor a two-year work history
where you could get a where itcould get a little tricky is if
there would be a big gap inemployment or if you're
switching professions forwhatever reason.
going from W-2 to self-employedthat's probably the biggest one
(17:53):
where self-employed peoplepeople that are commissioned
sales-based we typically need atwo-year history of that before
we can use that income.
So from a self-employedperspective, it's typically a
two-year tax return history.
Speaker 1 (18:06):
Oh, so even a little bit longer.
Now.
Are there any loan programsthat you and the mortgage broker
world have that would stillwork for somebody who went that
route?
They left their job.
Now they're self-employed.
Are there ways that?
Do you have any kind ofproducts out there that you know
that somebody could be able toutilize still in that situation,
or what's their?
What are you typically seeingas their best avenue to get some
(18:28):
financing rolling?
Speaker 2 (18:30):
Are you referring to primary home financing, Corey?
Speaker 1 (18:33):
Probably more like house hack, maybe investor too.
We can talk both, you knowprimary.
Speaker 2 (18:40):
I know that's a whole different animal.
But yeah, I mean from a primaryhome perspective.
Yeah, there's there's bankstatement programs.
There's 1099 programs.
There's a variety of programsout there that that don't
necessarily follow thetraditional financing path Okay,
but you have to make sure thatyou qualify for them.
So oftentimes I think the bestexample maybe it would be for
(19:00):
those that are self-employedthat just don't show a lot of
income on paper as part of theirself-employed business.
That's traditionally how weneed to show their income from a
tax return perspective, termperspective.
But what we could do instead ifthey don't show income on paper
, we could potentially do a bankstatement program where we show
(19:22):
the revenue that they havecoming in.
The lenders will typically do acalculation to determine how
much of that income we can useand then we run debt to income
ratios based off of that.
But it's based off either a12-month bank statement history
or potentially a a 24 month bankstatement history as well.
Okay so there's somenon-traditional avenues out
(19:44):
there for for clients that don'tmeet the traditional
requirements.
That's awesome.
Speaker 1 (19:49):
And you, you have some of those products at your
disposal there.
Speaker 2 (19:52):
Yeah, absolutely we have.
We have all of those productsavailable that we utilize.
Speaker 1 (19:57):
I think that's one of the best benefits.
When I was searching for loansfor a home loan anyway I was
working with a broker versusgoing to my local Wells Fargo or
whatever.
You guys have access to a tonof different options where I
felt like my local bank orwhoever I bank with had one or
two and it felt like you kind ofweren't getting the best deal
(20:17):
there.
And sometimes I would go to thebroker Like I think I worked
with your company on a few of myhome loans and you guys would
have better rates from the WellsFargo than Wells Fargo had.
Yeah, some of those are.
Yeah.
Speaker 2 (20:29):
Some of those are really weird because I'm being
on the broker side of things.
We work with multiple lenders,so we shop those lenders on the
behalf of our clients andoftentimes the the some certain
lenders um will will have lowerwhole you can think of it as
wholesale rates versus retailrates that they that they use
internally, um.
(20:50):
So so yeah, it's, it's weird.
I did have a couple of clientsthat that had their loans sold
to, let's just say, wells Fargo,where I use the lender.
They shopped Wells Fargo andultimately the loan got serviced
by Wells Fargo down the road ata lower rate than what they
(21:11):
were hearing from Wells Fargodirectly.
Speaker 1 (21:13):
Yeah, so fascinating to me.
I don't understand the world.
But hey, whatever, I'm justlooking for the lowest rate.
That's why I go to guys likeyou Give me the brokers, baby,
give me the brokers, give me thebest deals, right, let's talk
about.
So that's house hacking, Ithink, and one of the questions
I guess I had for you.
Aaron, I get this sometimes.
I guess I'm going to stay withhouse hacking for a second.
Somebody house hacks.
(21:35):
How long?
How long do they technicallyhave to live in that house
before they can get out of thereand go to the next one, if they
say they did a five percentdown or a three and a half
percent down or a va?
Speaker 2 (21:45):
yeah, the lender's typically going to want them
there to be.
The lender's typically going towant them to be there for at
least a year before before theygo do something different.
And when I say do somethingdifferent, meaning if they're
going to potentially maybe buyanother duplex to house hack
that one.
Now there's some extenuatingcircumstances that can maybe
(22:08):
change that one year requirement.
One of the biggest ones wouldbe if you're moving for your job
and it's a decent distance away.
I have some clients I'm workingwith right now that you're
probably familiar with Corey,that lived in Milwaukee and they
moved to Green Bay for a job.
So they had a duplex that theywere house hacking in Milwaukee.
(22:30):
They got a job here in GreenBay.
They're looking to house hack aproperty here in Green Bay.
Ironically enough, we'reprobably going to meet that year
requirement anyway, but westarted the process at probably
about nine months.
So that was going to be anextenuating circumstance where a
lender was going to be like,yeah, they're moving for a job,
(22:52):
we're not really going to havethat one-year requirement where
if they own that property inGreen Bay and they were looking
to buy another property in GreenBay, that lender is probably
going to want that one-yearrequirement to be in play, okay.
Speaker 1 (23:04):
Now, if they moved out, are they coming back and
saying, hey, do you still livethere?
Or how are they?
What if you just went to adifferent lender for your next
one?
I'm not trying to say youshould do that, I'm just
literally trying to understandthis.
If this is illegal, or if youcan do this and say like hey, I
moved here, I don't like tocommute, I want to move.
(23:25):
Or hey, I moved here.
It's been 30 days, I don't feelsafe here, I'm going to move.
Speaker 2 (23:30):
Yeah, I mean, if you have an extenuating circumstance
and you can express it viawhat's called a letter of
explanation, um, the underwriteris going to use some discretion
, um, in those examples, the new, for the new loan program,
wherever you're going to for thenew loan.
Speaker 1 (23:45):
So if you're trying to do something within a year,
um.
Speaker 2 (23:49):
If it's within a year , um, and it's within the same
geography, there isn't a supercompelling story.
They might stick to that year.
But if, but, if you're worriedabout your safety, if your
family is growing, um, if youwant to get into a particular
school district, um, there thereare some compelling reasons
that can be.
(24:09):
That can be used to get by thatone year rule Cool, but it's
still a lender discretion.
Speaker 1 (24:16):
And is there a limit to how many of these house acts
somebody could do in their life?
Speaker 2 (24:21):
No, but.
But oftentimes the lender.
The lender will think thatmaybe you're playing this game
right.
You're trying to get investmentproperties with primary home
financing because primary homefinancing is better meaning
lower rates, lower down paymentrequirements than investment
property financing.
So there again, there needs tobe compelling arguments.
(24:43):
So often I've worked with a fewclients now where they're on
their third or fourth duplexthat they're house hacking.
But in each instance there'sbeen a compelling reason,
compelling reason being eachtime the duplex went up in value
, value, purchase price, okay,had more bedrooms, more square
footage, was in a better schooldistrict, maybe it was because
(25:06):
they were moving for a job.
There's always been acompelling reason.
So as long as you have acompelling reason, you can
continue doing it as often as asyou want.
I think the max I've seen hasbeen like three or four, three
or four duplexes.
Speaker 1 (25:23):
I thought there was a rule like you could only have
like 10 loan, like conventionalloans, in your name or something
like that in your personal name.
Speaker 2 (25:30):
Yeah, fannie Mae and Freddie Mac are pretty stringent
around you having no more thanthan 10 conventional loans or 10
loans in your personal name.
Once you get to 10, they kindof shut you down.
So clients need to be a littlebit careful about that If
they're doing a lot of financingin their personal name.
Speaker 1 (25:50):
Okay, and you probably want to be flipping
those LLCs anyway and gettingsome asset protection going on
after one or two of those badboys.
Correct, yeah, absolutely yeah,very good.
Yeah, absolutely yeah, verygood.
Well, that's great.
This is.
This is good stuff.
I'm learning a lot here.
Aaron, talk about DSCR loans.
This is like all the rage.
Now Tell us what is a DSCR loanand how does somebody utilize
(26:13):
this thing in the investmentspace.
Speaker 2 (26:15):
Yeah, dscr is the acronym for Debt Service
Coverage Ratio, so it's aninvestment property loan that
basically has three main talkingpoints, at least when I talk
with investors.
I don't need W would like.
You don't have to, you could doit in a personal name.
(27:06):
But it gives you the option totake title in an LLC, which in
today's world most investorswant for tax and liability
benefit reasons.
And thirdly, 30-year fixed ratefinancing.
So most investment propertyloans don't have 30-year fixed
rate financing.
So if you're trying to do acommercial loan in your LLC and
(27:28):
you go to a bank or credit union, they're typically doing some
sort of 5, 7, 10-year arm that'samortized over 20 or 25 years,
where this product has 30 yearfixed rate financing.
So from a cash flow perspective, it should benefit the investor
to have better cash flow as aresult.
Speaker 1 (27:49):
Wow, that's awesome.
Those are great points.
Yeah, and I like a mix of bothin my portfolio, like I like 20
year just because I'm payingdown more debt.
Now I could pay more debt downwith the 30 year if I was
disciplined and just made extrapayments.
But the 30 years are nice too,because you get a better mix of,
like you said, you can makesomething cashflow a little bit
easier and not a lot ofcommunity banks very rare.
(28:09):
I have a couple community banksthat'll offer 30 year, but
there's five-year balloons onall that too.
So you got to think about, like, hey, I'm not paying that much
debt down in this five years,and in five years when that
thing balloons, you know if thisbank just says, sorry, we don't
want any more real estate, Igot to hope I got enough spread
there to go to another lenderand be able to have them take on
that financing.
(28:29):
So it's a riskier propositionversus just locking that baby in
and letting it ride.
Yeah, absolutely, that'sawesome.
So no income verification.
So what are the requirementsthen?
Like, what do they need forthis DSCR loan?
Speaker 2 (28:44):
Yeah.
So the DSCR, the debt servicecoverage ratio itself, is
calculated by what the lendersdetermine as qualified rent and
then, in qualified rent dividedby whatever the all-in monthly
mortgage payment is, createsthat ratio.
So if it's one, let's just sayit's one perfectly.
It's cash flow neutral, meaningyour rent is the same as your
(29:06):
mortgage payment.
So it's a ratio of one.
The lenders typically want itto be above one because it's
cash flow positive, so it's lessrisk to them.
But there are some lenders outthere that will allow you to go
under one and and do a cap.
A cash flow negative propertycomes at a bit higher.
Yeah, it comes at higher ratesand and costs and things of that
(29:27):
sort.
But um, but yeah so and howdoes that work?
Speaker 1 (29:31):
I feel like that's just.
You're just setting somebody upfor failure here.
Speaker 2 (29:34):
I feel like that's like a 2008 product well, yeah,
let me elaborate a little bitbecause I think explaining how
the qualified rent works may getus to where I think you're
going, corey, with your question.
So qualified rent is definedtypically from the lender as the
lower of these two items, thelower of current lease agreement
(29:55):
rent or comparable market rentas defined by an appraiser.
So, for example, if you've gota brand new lease in place and
your lease is for 1500 bucks andwhen the appraisal is done, not
only is the appraiser going todetermine the value of the
property, they're also going todo what's called a comparable
market rent schedule todetermine what market rent is
(30:18):
for a property that has thosetype of characteristics.
Let's just say the comparablemarket rent comes back at $1,200
, but you have actual leases inplace for $1,500.
The lender uses the lower ofthe two for the ratio
calculation.
So they're going to use $1,200instead of $1,500 in the numbers
(30:38):
.
Now there's some exceptions tothat.
If leases have been in placefor a while and you have three
months worth of history and wecan prove that you're getting
$1,500 a month for the lastthree months, the lender is
typically willing to use thehigher amount in that example.
So $1,500 might be used.
But a lot of investors nowadays, if they're using hard or
(31:00):
private money to purchase theproperty and they need to
refinance out of that, theydon't have three months worth of
of new rents yet, um, so sothey're going to use the lower,
um again, they're going to usethe lower of the two numbers.
Okay, where to go back to yourquestion about being under the
cashflow number?
Let's just say you have currentleases in place or have been in
(31:24):
place for a while.
Let's say an investor's buyingan already existing rental and
it's got a 12-month lease outthere and it's at a thousand
bucks and market rent comes backat 1500.
Well, you have to use that$1,000.
And if your mortgage payment is, let's just say, $1,100, your
cashflow negative.
Where the investors areallowing it or the lenders are
(31:48):
allowing it to happen is theyknow that likely down the road
that owner of that property,once that year lease comes up,
they're going to bump that up tomarket rent numbers to $1,500.
Speaker 1 (32:02):
That makes a lot more sense.
That makes a lot more sense.
Speaker 2 (32:05):
Okay, I was very concerned there for a minute.
Speaker 1 (32:07):
I was very concerned.
I'm like what are we doing here?
We're going back to the olddays.
Speaker 2 (32:10):
Okay, yeah, I mean, it's still risky, don't get me
wrong, because you're payingmore monthly on your mortgage
than what you're getting in, andobviously that doesn't include
if you've got propertymanagement fees or vacancies or
anything like that.
So it's just purely qualifiedrent divided by whatever the
(32:31):
all-in monthly mortgage paymentis when you say all-in monthly
mortgage payment, aaron?
Speaker 1 (32:35):
are you talking about principal interest, taxes and
insurance, or just principalinterest payment, aaron?
Are you?
Speaker 2 (32:40):
talking about principal interest taxes and
insurance, or just principalinterests, principal interest
taxes and insurance.
And if, for whatever reason,there would be HOA fees, if it's
a condo or something like that,those fees get included as well
.
Speaker 1 (32:49):
Okay, got it.
Okay, yeah, cool, because I waslike man.
You could scoop up a ton ofproperties with this type of a
loan product and now typicallyare people using these more on
refis out of hard money orprivate money, or people using
these for purchases, or what areyou seeing on your?
Speaker 2 (33:04):
end.
I see a little.
I see a little of everything.
Um, um.
I would say if you're getting ascreaming um, if it's a
screaming deal, um, if, if it'sa turnkey property and it's a
screaming deal deal, most peopleare using hard money and then
refinancing out.
(33:25):
If it's not a screaming dealand it's a turnkey property, a
lot of people are just doing apurchase with their own funds
assets that they have HELOCfunds, something and using their
own funds for the down payment.
Okay, if it's a, if it's aproperty getting a screaming
deal and it needs a lot of work,oftentimes people are using
(33:45):
their own funds, hard money, topurchase it and then we're
refinancing out, whether we'repaying off the hard money lender
or if they're trying to get youknow, using their own money,
they're trying to get their ownfunds back out.
We can do what's called eitherdelayed financing or a cash out
refinance Once.
We can do what's called eitherdelayed financing or a cash out
refinance Um, once.
Once it's, you know it's a,it's that.
(34:06):
It's that BRRRR process.
Um, people are familiar withthe BRRRR process right, buy,
buy, uh, rehab, rent, refinance,repeat, um.
So oftentimes a lot of clientsare following that process, um,
so it's typically more of arefinance.
Um got it.
It just depends on what fundsthey're using if they're using
her money or if they're usingtheir own.
Speaker 1 (34:25):
Okay.
Is a DSCR product a little moreexpensive than, say, if they
just did a conventional cash outrefi or what's the benefit of?
Is the benefit of doing theDSCR just so you don't have that
income verification for more ofthose folks that are
self-employed or switch jobs, orwho's the main avatar for that
product?
Speaker 2 (34:43):
Yeah, I think it's more so those that want to take
title in an LLC.
Speaker 1 (34:48):
Oh yeah, that's right Sure.
Speaker 2 (34:49):
Those that are unemployed, those that want to
take title in an LLC.
Yeah, the spread betweentraditional financing and DSCR
rates is becoming less.
Oh yeah, I just talked withsome clients where the actual
DSCR financing the rates werebetter than the traditional
(35:11):
financing.
Wow yeah, so there was a biggerspread, but it's shrinking.
Speaker 1 (35:18):
Okay, it's shrinking.
Good to know, good to know theother thing with a.
Speaker 2 (35:21):
DSCR loan where, a little bit different than your
traditional financing, dscrloans typically will have a
prepayment penalty.
Okay, you don't have to select aprepayment penalty, but if you
don't, it comes at a higher ratethan, say, if you selected a
one, two, three, four to up asmuch as five year prepayment
penalty.
So the lenders, the lenders areputting those prepayment
(35:48):
penalties on there becausethey're looking to make at least
a certain amount of money onthem and if, if someone is going
to pay off that loan early,refinance early, they want to
make sure that they're securinga certain spread.
Speaker 1 (35:55):
I guess I'll call it so they got their margin baked
in, then Correct, correct, sothey can.
They margin baked in thenCorrect, correct, so they can.
They can be more competitive onthe front end on the rate Right
.
It makes sense.
Speaker 2 (36:04):
So it's, it's.
It's.
One of the cons of a DSCR loan,I would say, is the fact that
they have a prepayment penaltyand that rates are a little bit
higher.
But but the pro is, in my mindthe pros definitely outweigh
outweigh the cons of being ableto get it into an LLC name and
the fact that, depending on whatyour income is, if you can't
(36:25):
qualify traditional financing,it gives you an opportunity to
do it without having to proveincome on paper.
Speaker 1 (36:34):
For sure, for sure.
Well, and a lot of the hardmoney lenders or at least I know
good faith funding is going torequire somebody to be able to
get at least a DSCR loan.
So they know that if things golong or projected to go long,
they know they can get theirmoney back in that six month
timeframe, Correct?
Speaker 2 (36:49):
Yeah, you know, working with Tony and Jairus and
the good faith funding team,I'm fortunate enough to be on
one of their their long-termfinancing list of lenders out on
their website.
So they want an additional exitstrategy.
They want to know that even ifyou flip the property, that if
the flip doesn't happen and youcan't sell that property, that
(37:11):
you can secure long-termfinancing and keep it as a
rental.
So they're looking for thatexit strategy.
So oftentimes good faithfundings clients are coming to
me saying hey, can I getlong-term, can I get
pre-approved for long-termfinancing utilizing a DSCR loan,
should I absolutely need it?
Speaker 1 (37:31):
Yeah, yeah.
And then going back to the, thequalified rent thing, it sounds
like very similar to why weburr properties, right, Like if
you're just trying to go outthere, if you're an investor.
I remember when I got startedI'm like why does somebody need
to do private money or hardmoney or whatever?
And then refi later after it'sfixed up?
And it's similar Like when yougo out and you're going to
purchase a property, that lenderis going to take either the
(37:55):
purchase price or the appraisedvalue, whichever is lower.
So even if you got a screamingdeal and you're like, oh, I've
got 20% equity in this suckerright, the bank's like well, I
want to be even more secure, soI'm going to take the lower
value and lend off of that, andnow you pay your down payment
off of that and so now you'vegot all this dead money sitting
(38:15):
there, which is why we love thebird Sounds very similar on the
qualified rent thing.
They're gonna protect theirbutts and take the lower number
to make sure that they're beingconservative on their
underwriting.
Speaker 2 (38:27):
So we don't have another 2008.
Speaker 1 (38:30):
which is a good.
Yes, which is a good, yeah, yescorrect, for sure.
What else is?
What else have you seen outthere in the lending world right
now, aaron?
What are some other things forinvestors that you're seeing, or
then conversations you'rehaving, maybe some some stories
of some folks that you've workedwith that you know, maybe
combine some of these productsand had some success.
You know what are some.
Give us some ideas on any ofthat stuff, if any of that comes
(38:52):
to mind.
Speaker 2 (38:52):
Yeah, I think I mean the cool things out.
There are cash out refinances.
I'm seeing a lot of investorstake advantage of that, even if
it means going to a little bithigher rate.
If it allows them to get cash,is king right.
So if they can get their, ifthey can get funds to use them
(39:14):
to purchase more properties, alot of investors are doing that.
So I've been seeing that trendquite a bit, especially if
someone's at an investmentproperty rate of 2%, 3%, 4%
years back you know, years back.
(39:36):
I'm not seeing it so much inthose instances, but if it's
within the last couple of yearsand they got a screaming deal
initially on the purchase andthey can refinance now to pull
some of that equity out, I'mseeing a lot of investors do
that and again, maybe taking alittle bit higher rates as a
result, but then utilizing thosefunds to buy more properties to
improve cashflow for them.
Speaker 1 (39:52):
That's awesome, man, I love that I did a bunch of
HELOCs on my investmentproperties.
There was a commercial bank fora while and I don't think
they're doing this anymore butthey were taking second position
on HELOCs on investmentproperties, so they didn't.
Most of these community banksare gonna wanna have first
position.
If they're gonna do a HELOC,they'll want the original loan.
(40:13):
But again, if you got loans,like I got loans in the threes,
I'm not refinancing that suckerright, I'm going to keep that
thing.
So instead, a way to tap thatsame equity is like well, I'll
get a HELOC on it and then I canstill utilize that equity
without messing up my underlyingrate.
So-.
Speaker 2 (40:31):
Yeah, that's just been a challenge there's.
There's that many lenders outthere nowadays that will do a
HELOC um a HELOC on aninvestment property and
especially, like you said ifthey're not in first position.
Um it's.
It's something they they won'treally look at.
Speaker 1 (40:46):
Yeah, it's tough.
It's tough.
There's they got to.
I found with the communitybanks their appetites come and
go right.
So you, uh, you got to strikewhile the errand's hot.
If they got a hot product, youknow we built our almost our
entire portfolio, over a hundredunits, when banks were handing
out money in the in the late 20,you know, 2018, 2017, up to
2021, ish, and it was like theywere.
(41:08):
They were giving it away Like itwas candy at a parade and you
could.
They were doing ARV loans whereyou could go in and they were
coming in with the appraisalopposite side of this.
Now they were appraising themas completed on the purchase.
So you would go there and say,hey, this is my vision, this is
my rehab budget, here's what I'mgoing to do to it.
They say, oh, okay, well, ifthat's what you're going to do
to it, then the value of it'sgoing to be here.
(41:30):
We'll lend you 80% of that.
And I was like this is great.
I'd walk out of closings withchecks for like tens of
thousands of dollars.
I'm like this is amazing.
I just bought a property andgot paid to do it.
This is great.
There's still a few out there.
If you've got a longstandingrelationship, that'll still go
that route.
But it's a lot tougher thesedays to find that.
Especially if you're startingout, it's a little bit more of a
(41:52):
grind.
Yeah, you were talking aboutthe cash out refi, something
else.
Going back to that, aaron, whenyou talk about stepping up a
little bit in rate, I find thisreally fascinating.
I'm really into rentals forequity and wealth.
The cashflow is awesome, love.
Cashflow is king as well.
But if you're doing the BRRRRmethod, I've just found it's
(42:13):
tougher to.
Cashflow is king as well, right, um.
But if you're doing the burrmethod, I've just found it's
tougher to cashflow Anythingthat's really going to change
your life.
If you're, if you're trying toget into it no money, you know
it's like too good to be true.
If you're like, oh, I'm goingto make all this cashflow and I
got into it no money, thosedeals are pretty, pretty hard to
come by, right, you'll get oneor the other, right.
(42:34):
But I ran a little scenariothrough my good friends at
ChatGPT and I did a podcast onthis, I don't know, maybe eight
episodes or so ago.
And what was interesting to meis I looked at that same guy I
was talking about that waspredicting the market.
He was predicting by the end ofthis year, rates are going to
be down around that five andseven, eighths or whatever you
(42:55):
guys call it 5.85 is what I callit and where we're sitting in
this day and age, commercialloans were probably in that 7%,
maybe seven and a quarter range.
So I just ran this littlescenario for a house hacker.
I think this is reallyinteresting.
If you're going for a househack and let's say you're in a
(43:16):
VA loan and you've got no equity, you bought it for $300,000.
Today the market, let's just sayaverage appreciation is 4% a
year.
It's pretty conservative.
It's been higher than that inthe last two decades, but let's
just say four.
And you're on a 20-year AMschedule.
So now you're saying VAs aregoing to be 30 years, so it's
going to be a little bit less.
Right, you're going to haveless of this.
But in five years, at a 7% rate, you have about $106,000 of
(43:41):
equity in that property becauseyou're getting the appreciation
and you're getting your debt paydown right Now.
If your tenants are paying itdown, it's even better.
Right?
They just created $106,000 foryou.
If I change that to a 5.85% rate, you're only at about $110,000
of equity, so your equitydifference is not that big of a
(44:04):
difference.
In the grand scheme of things,you'll cashflow about 200 bucks
more a month on that, on the5.85.
So your cashflow changes, butthe equity building does not
change hardly at all.
It's nominal.
So it's better to get thatclock started earlier.
With that higher rate you'regoing to have less competition
if rates are high than when theydrop.
You're getting a better deal onthe property, your purchase
price could be lower and withsome of the products you're
(44:24):
talking about, you can lockthese things in for 30 years and
not have to worry about whatthe rate's doing.
You just let the clock work inyour favor.
So I found that reallyinteresting.
When I ran those numbers, Ithought that was fascinating.
Speaker 2 (44:41):
It's super interesting around some of those
numbers and how rates canimpact it, how the market can
impact it, how values.
Once you loop it all together,it certainly has some impacts.
Speaker 1 (44:55):
Yeah, for sure.
All right, Aaron, we always, wealways wrap with a fun question
here.
So I know I kind of I promptedyou before we started and you
weren't really sure.
So let's see if over the last35 minutes or so or whatever,
we've been talking, let's see ifthis has helped.
So, favorite Wisconsintradition or favorite place to
visit in Wisconsin.
Speaker 2 (45:14):
Favorite Wisconsin tradition or favorite place to
visit in Wisconsin.
That's a good one.
I mean Wisconsin traditions.
It's kind of hard not to talkabout eating brats, 4th of July
fires, you know, picnics, thingsof that sort.
Fourth of July fires, picnics,things of that sort.
(45:35):
So I think there's probably toomany of them to maybe outline
one as a favorite Places to go.
I'm a big sports guy, soLambeau Field, brewer Game,
bucks Game, any of the Wisconsinsports teams, I don't know.
(45:57):
I've been fortunate enough to goto some of the other
professional stadiums around thearound the country okay and to
me there is nothing like um,there's nothing like lambeau
field or a brewer game incomparison to some of the other
places I've been.
Speaker 1 (46:11):
So it's that's awesome, man I've only been to
one other nfl stadium for ongame day.
I went to the to the bearspackers nfc championship game
okay dude, it was horrible.
It's like this is like a.
I feel like everybody here wasat a funeral, like everybody was
like kind of walking aroundabout to take a drink out of the
parking ramp.
They're like you can't, ohdon't you dare, take a drink out
(46:32):
of that.
I was like what do you mean?
It's the nfc championship game.
You can't you just walk aroundwith drinks.
They're like no, you'll getticketed.
I was like what isn't this gameday?
I was so.
I was so culture shockedtotally different.
Speaker 2 (46:45):
I was out in denver back in the the far years okay
and denver has one of thecraziest.
If you, if you see a denverbronco game and it's in denver
listen very closely.
Whenever the quarterback throwsan incomplete pass, they have
this chant of incomplete.
They chant it every time theopposing quarterback throws an
(47:05):
incomplete pass.
So if you're watching a broncosgame anytime this coming year,
and it's in denver.
Listen for it, it's.
It's in Denver.
Listen for it, it's.
It's super weird Wow.
Speaker 1 (47:13):
So it's kind of lame.
Speaker 2 (47:15):
Yeah.
Speaker 1 (47:16):
I know.
So yeah, we got it.
There's just nothing like.
Speaker 2 (47:19):
Lambo, nothing like Lambo, nothing like a American
family field tailgating for fora brewer game.
Speaker 1 (47:24):
To me, it's just it just doesn't compare.
That's very true.
I love it while you'retailgating for both events.
So combine a couple of thosethings together.
That's fantastic, aaron.
Any final words of advice orany other things you want to
leave the audience here with asit relates to the mortgage
lending loan world, I think it'sjust the fact that there's a
(47:51):
lot of options out there.
Speaker 2 (47:52):
I'm biased to brokers .
I feel like we have the bestprograms out there, best
products, because we're able toshop, able to shop multiple
lenders on a client's behalf.
So even before I got intomortgage lending, when I was
buying my you know, my firsthome and financing, I used a
broker as well, just because I,because I did shop it around, I
(48:19):
shopped it with my local bankand the broker was able to get
me a better deal.
So again, I'm biased becauseit's my profession and what I do
.
But more often than not we'reable to meet and beat rates of
our competitors and the brokerside of things.
So that's awesome, definitelygive us an opportunity for, you
know, fits your primaryresidence, second home,
(48:42):
investment property, dscr loansfor an investment property.
Certainly, look me up atexecutivemortgagecom.
All our you know all the loanofficers have links out there.
Um, all of our you know all theloan officers have have links
out there.
Um, obviously I do primary homeloans as well, but my, my
specialty in the office and I'mI'm I think one other loan
(49:06):
officer has done a DSCR loan,but I'm the only other loan
officer here at the office thatthat that focuses and has
knowledge and expertise in thein the DSCR loan field.
So happy to.
Uh, you know, if anyone wantsto reach out, just look me up
out on executive mortgagecom andand reach out and happy to talk
through any opportunities youmay have.
Speaker 1 (49:22):
Love that.
Hey, last little nugget herebefore we go.
One question I was going to askyou earlier and I want to go
back to before we wrap.
Sure, If somebody is going tocome and do a loan application
with you, my advice to them allthe time is get pre-approved
from a bunch of people rightaway.
If you're going to do it,they're all going to ask you for
the same crap anyway, so youmight as well just take all your
stuff and go get with communitybanks, go get with hard money
(49:45):
lenders, go get with guys likeyou in the broker world.
Get as many lines in the water.
One of the concerns people have, though, is their credit pulls.
Can you just clarify for peopleCause I know this has been a
conversation I've had with a lotof people just put it out there
how does getting a bunch ofdifferent lenders all in the
same period of time affect theircredit?
Speaker 2 (50:02):
Well, if, if a credit poll needs to be done, some
lenders will do it, some somedon't For example, when, when
it's a DSCR loan, I oftentimeswon't pull credit, I'm going to
take them for their word on whattheir credit score is, just
prefacing it with the fact thatthe rates and numbers could
(50:26):
change depending on what theircredit score actually is,
because I will have to pull itat some point.
But for traditional loanfinancing to get pre-approved, I
need that credit report becauseI need to do some debt to
income ratio calculations whereI don't with a DSCR loan.
So, other than the score for aDSCR loan, that's all I really
care about.
But for traditional financingneeds, I need that credit report
(50:50):
, not only for the score butalso for what shows up as debts
on there so I can do somecalculations.
So if that's the case, I alwaysencourage people to try to get
your credit pulled within.
It varies a little bit.
I would say a seven day period.
If you get it pulled within a,it could be a little bit longer,
maybe seven to 10 days, but aseven to 10 day period.
(51:13):
If you have multiple creditpulls, to the bureaus it only
looks as like it's one creditpull so it doesn't impact your
score as much.
Now, if you're going to waitand have it pulled monthly by
seven different lenders overseven months, then, yeah, it's
going to impact your score andit's going to look to the
bureaus that you've had multiplepulls done versus versus one.
Speaker 1 (51:36):
Yeah, Now, I'm glad you clarified that.
I actually always thought itwas 30 days, so I'm glad you
said seven to 10.
Speaker 2 (51:41):
Yeah, I, I would, I would do it, I would do it more
in that seven day period, justto be safe.
Speaker 1 (51:49):
Okay, seven to 10 day period Good good rap there.
And period Good good wrap there.
And yeah, like I said, I thinkguys that are listening to this,
my advice, if you ask me, isget, get as many buckets of
money available to you aspossible.
Helox private money brokers,because they're all little chess
pieces you heard Aaron talktoday about.
He works with really closely,with good faith funding.
Those are two chess pieces thatyou're using together and
(52:10):
you're just using the twoproducts that they have to
create a really awesome wealthbuilding vehicle for yourself.
And that's an example of twoproducts.
You've got a house hacking toolthat Aaron talked about.
You've got conventional cashout refis.
You've got community banks.
There's so many options outthere.
There's national lenders whoare kind of a mix between a hard
money lender and a traditionallender.
(52:32):
So, get as many buckets ofmoney.
Definitely reach out to Aaron atExecutive Mortgage, and we can
put a link or something likethat in the show notes too,
Aaron.
So if people just want to gothere and check it out and get
ahold of you, don't talk toanybody else at Executive
Mortgage, just talk to Aaron.
He knows the investment world.
No, I'm just kidding.
You guys have a lot of great,great folks over there, but talk
(52:54):
to Aaron.
The investment world no, I'mjust kidding.
You guys have a lot of great,great folks over there, but talk
to Aaron.
So, with that guys, if you gotsome value out of this, creating
wealth in real estate creates aripple effect in your.
You guys can be a spark forjust one other person.
Share this episode with somebodyelse out there.
Share on your social media.
You could be the cause ofsomebody creating generational
wealth for their family bytuning into one of these
episodes, and we reallyappreciate it as well.
(53:15):
And, like we said earlier, ifyou're not ready to get on the
buyer's list yet at WisconsinDiscount Properties and you just
want to have a conversationabout your current situation, no
obligation.
Just go on our website, hit thecontact us form.
You don't have to fill out yourinformation and join the list.
Just hit the contact us formand we'd love to have myself or
Reese or Connor or somebody fromour team hop on a call with you
and help understand yoursituation and point you in the
(53:36):
right direction and get youconnected to great folks like
Aaron or a bunch of these otherlenders that we talked about as
well, if you're in that pointand ready to get going.
So, aaron, appreciate you again, man, being on here, and for
all of you guys, thanks fortuning in.
We'll see you on the nextepisode.
Hey everybody, we are back with another episode of
the Wisconsin Investor Podcastand I'm your host, corey Raymond
.
I've got another amazing guest,as I say every episode, because
everybody I bring on here I'mbringing to you guys for a
reason because they're bringingvalue, and we hope that you're
getting the value by tuning intothese episodes.
But recently I've been doingsome ads for our sponsor,
wisconsin Discount Properties,and so I just wanted to talk
(00:24):
about a deal that we recentlyhad.
I always bring these up, try tolet you know what you're
missing out on, so if you'resitting on the sidelines,
hopefully this is motivation toget you in the game.
Okay, so we had one on RooseveltStreet in Green Bay recently.
Purchase price we put it outfor was, I believe, 200,000.
I don't remember what weadvertised it for, but that's
what it ended up going for ARVon this thing was 290.
(00:45):
And the investor who bought it.
We followed up with thatinvestor and what they ended up
doing was they did some lightpaint, some cleanup, that sort
of thing.
They're going to shoot forselling it for around that 240
to 250 range.
So not a huge spread here by thetime you factor out holding
costs, closing costs, realtorcommissions, et cetera, et
cetera.
Plus the work that they'regoing to do there, they may make
(01:07):
$20,000 or $30,000.
Still not bad.
But when you factor it inwhat's going to be their profit
per hour, they figure they'regoing to get about 10 hours into
this thing.
So about $2,000 to $3,000 perhour they're going to make on
this deal.
That's from underwriting it topurchasing it, to getting their
cleaner and their painter inthere, to listing it and going
through that process A total of10 hours.
(01:28):
So if you're looking for dealslike that and you're not on our
buyers list, go towisconsindiscountpropertiescom,
plug your information in thereand you'll start getting these
deals sent to your inbox everyMonday morning and hopefully we
can help you accelerate yourreal estate investing goals With
that.
Let me introduce the man of thehour, mr Aaron Kramer.
Aaron, how are you doing, sir?
Speaker 2 (01:49):
I'm good, Corey.
Thanks for having me, man.
Speaker 1 (01:51):
Yeah, excited to have you, man.
I've known you for quite awhile now and tell everybody a
little bit about your background.
You're a mortgage broker.
How'd you get into thismortgage game and how long
you've been at this thing?
Speaker 2 (02:01):
Yeah, I've been in the mortgage business since 2018
.
Prior to that, I spent most ofmy professional career in the
corporate world intransportation, and I was
looking for to get out and dosomething different.
The corporate world had kind ofrun its course and, as most of
hopefully, the listeners know,tony Breuer with Good Faith
(02:22):
Funding and I were mutualfriends.
We'd gone to college togetherand Tony's the one who actually
got me into mortgage lending.
So I've been chasing that dreamever since 2018.
And it's just super satisfying.
There's just nothing likehelping someone get the keys to
their first home or theirvacation home or their first
(02:44):
investment property.
There's just no better feelingthan that.
So I've loved every step of itso far.
Speaker 1 (02:50):
Wow, You're a better man than me, Aaron.
I don't know if you rememberthis, but I was probably Tony's
protege right before you and Iwent through and got got
licensed and did the whole thingand I remember us talking about
that yeah and did the wholething.
And uh, I remember us talkingabout that, yeah, yeah.
And I made it about three hoursin the office with Tony and I
was like this is not for me, I'mout of here, dude.
(03:12):
I went through the whole thing,spent months, get licensed, did
all the training, I startedprocessing the loans and I was
like I can't do this man.
He's like are you serious?
I'm like yeah, dude, I'm sorryI'm out of here.
See you later.
Yeah.
Speaker 2 (03:25):
I'm a numbers guy so it just kind of came natural to
me.
When you mix numbers and sales,it's just it's.
It's what I like to do.
Speaker 1 (03:34):
Well, I'm glad that you're doing it and it's not me,
because you're much better atit than I probably ever would
have been for sure.
Well, I wanted to bring you onhere because, if you listen to
the show, guys, I'm alwaystalking about your two highest
income producing activities inreal estate are finding deals
and finding money.
Okay, aaron, here happens tohave some products and some
(03:56):
ideas around how to get you guyssome money, and I think this is
a really important topicbecause I literally I have this
conversation, aaron, every dayof the week with people who are
wanting to get started in realestate.
How do I do it?
How do I get the money?
Where do I get the money?
And there's lots of options,but you've got a few different
tools that I think would bereally helpful.
Let's start with the house hack.
(04:17):
Let's talk about A what is ahouse hack?
And B.
Let's talk about how doessomeone go about getting into a
property and doing this strategy.
Speaker 2 (04:27):
Yeah house hack really is for initial investors.
If they're looking to getinvolved in real estate
investing, one of the thingsthat they can do is house hack,
which is basically buying aduplex, living in one side as
your primary residence and thenrenting out the other side to
basically pay some to maybe yourmortgage as a result of that.
(04:49):
So house hacking has becomereally popular because, one, it
allows people to get a primaryresidence, but, two, really gets
them some experience in whatreal estate investing is all
about.
How do you work with tenants,how do you do repairs, how do
you do lease agreements, how doyou do repairs, how do you do
lease agreements, things of thatsort.
So what oftentimes what peopledon't realize and understand the
(05:13):
benefit of as well is thatbeing a primary homeowner also
helps you for future financingfor investment properties,
because there's a lot of lendersout there that require you to
be a homeowner in order to getlong-term financing.
So there's a lot of benefits ofhouse hacking that can be
utilized.
Speaker 1 (05:33):
Yeah, when you and I were talking before we started
the episode, we were talkingabout that and I don't know if
I've just not been in thatposition before where I haven't
owned a home Like.
I've owned a home since I wasin my early to mid twenties, so
I've always been a homeowner forthe most part.
I just never.
I didn't know that was a thingwhere you had to be a homeowner
in order to get some of theseloan products, but it makes
(05:54):
total sense.
Speaker 2 (05:56):
Yeah, Most of the lenders want they want mortgage
history.
They want to know that whothey're lending to.
They have the ability to pay amortgage so they're lending to.
They have the ability to pay amortgage, so they're going to
require it.
It doesn't necessarily have tobe a primary home.
It could be an investmentproperty, it could be anything.
But they just want you to haveowned a home and shown some
(06:16):
proof of mortgage paymenthistory, at least within the
last three years.
Speaker 1 (06:19):
Okay.
Is there any reason that ifthey have a proven rental
history, that that doesn't seemto carry the same weight for
these lenders?
Speaker 2 (06:28):
I don't know if I'm following Corey.
Speaker 1 (06:29):
So let's say somebody is renting for a few years and
they've got proven record, theypaid on time to their landlord,
all that sort of stuff.
What's the difference betweenthat versus them owning the home
?
Why do the lenders see a renterversus differently than a
property owner?
Speaker 2 (06:48):
Yeah, I think just more so than the mortgage
history of it.
I mean rent.
Rent obviously is almost like.
I mean you can get rentalhistory and oftentimes if I'm
lending to clients that don'town a primary home, I do need to
prove 12 months worth of rentalhistory.
But it's just.
But it's more so the mortgagehistory that shows up on their
credit because it does help andor hurt their credit score
(07:12):
depending on their mortgagehistory.
So those lenders want a12-month history to know that
people can make their mortgagepayments on time.
It just it's more of a investorrequirement for the lenders to
prove that people can, thatpeople that they're going to
lend to can make their payments.
Speaker 1 (07:31):
Well, and a lot of these are sold on the secondary
market, right.
So they packaged all theseloans up into big bundles and
they sell them off to WallStreet, and so the Wall Street
guys, I imagine, want to have acertain set of standards that
they know the underwriters arefollowing, and that's just one
of the key requirements theymust have identified as being an
important factor for them.
Speaker 2 (07:50):
Yep, I mean there are a few lenders out there that
don't require home ownership butas a result, it's more risk to
the lender investor.
So you're talking higher rates,higher costs as a result, and
oftentimes most people are goingto be homeowners at some point.
(08:12):
So having that in your backpocket, I guess I would say is
beneficial.
Speaker 1 (08:18):
Yeah, for sure.
And I was just at a conferencea few months ago where they had
a mortgage guy come in and hestudies the rates and what's
going to happen and predicts allthe stuff right and looks at
all the data.
And what he was saying wasreally interesting to me that
first-time homebuyers now theaverage age is like 35 years old
for a first-time homebuyer.
I think one of the points thatI'm taking away from this start
(08:39):
of our conversation, aaron, isif you're one of these younger
brackets and you're thinking ofyou, eventually you're going to
want to get into real estate.
You know, maybe it's time toyou know, get off the couch and
get in the game sooner thanlater to just kind of start that
clock of credibility.
Speaker 2 (08:55):
Yeah, for sure I, I.
It's amazing how many clients Isee nowadays that um, young,
younger clients I will see intheir twenties, um, that don't
have credit, that don't havecredit history either, um, which
nothing, nothing, um.
So, in order to kind of, itdoesn't surprise me that that
first time home buyer, you knowmarket is in their thirties,
(09:19):
because oftentimes you gotta,you gotta get that credit built,
that credit history, get yourscores high enough so that you
qualify for some of theseprograms.
Um.
So, starting at a, at a youngerage, credit wise, if you can
get some um, you know, get someownership under your belt, it's
definitely going to help you, um, in the long run.
Speaker 1 (09:37):
Wow, that's crazy.
I didn't realize that.
Again, maybe I just was luckythat my, my parents were like
you need to build credit.
When I was younger and 16 or 17or whatever it was.
Speaker 2 (09:48):
Ditto with you on that one, my mom, working at a
bank definitely helped me fromthat perspective.
Speaker 1 (09:52):
That gives you a little help usually.
Yeah for sure.
Let's go back to the house hackstrategy now.
So what would be the minimumrequirements if somebody was
like man, I really want to doone of these house hacks.
Like, let's talk about whatkind of capital they need to
have.
Where can they get the capitalfrom?
Credit scores, work history,like.
What does that look like?
Speaker 2 (10:13):
I know some of it may be general, but it's going to
follow some of your traditionalfinancing requirements, and when
I say that, I mean it's basedoff of your debt to income
ratios and your credit score,and things of that sort are
going to determine what loanprogram that you qualify for.
(10:34):
We'll talk about some programsfor investors and investment
properties later on that don'thave the traditional financing
requirements, but from a househack perspective, I mean,
there's a lot of programs outthere.
There's, you know, if you're aveteran, you can do.
You could do a VA loan for aduplex.
I've helped a lot of investorsactually use the VA loan for
(10:57):
duplexes.
There's the FHA loan.
Well, let me step back.
Va loan, zero down payment.
If you're a veteran, you can dozero down, which is, which is
super cool.
Speaker 1 (11:07):
Unbelievable, and you're living in it, so now
you've created an income foryourself.
I mean this, is that's correct,wow.
Speaker 2 (11:12):
Yep, fha.
Fha is probably the otherlowest down payment program out
there.
That's three and a half percentdown payment, and then you have
some conventional programs.
There are some out there thatallow you to go as low as five
percent on a two unit.
Wow.
Speaker 1 (11:31):
Let's go to the FHA one.
What are the pros and cons ofthat one?
Who can qualify for that?
Speaker 2 (11:38):
Yeah, fha allows you to have a little bit lower
credit score to qualify and ahigher debt to income ratio.
So for those that might nothave the greatest credit score
you know, you couldtheoretically go as low as 580.
580 to 600 is.
There's some lenders out therethat'll do it.
You got to have some.
You got to have some moneyavailable.
(12:00):
I mean you can still do threeand a half percent down, but
they're going to look at yourreserves and your debt to income
if your credit score is thatlow.
But it certainly can be done.
But again, it allows you tohave a higher debt to income
ratio.
So if you do have a lot of debt, it's another opportunity for
you.
So those are some of the proslower credit score, higher debt
(12:20):
to income ratio, higher debt toincome ratio.
One of the cons is that an FHAloan is a government loan and
the condition of the propertycan come into play for an FHA
loan.
So when an appraisal is done forthat property, the appraiser is
not only determining the valueof that property but they're
also doing you can kind of thinkof it as a mini safety
(12:40):
inspection to make sure that theproperty meets certain FHA
required criteria.
So, is the roof in good order?
Are the mechanicals in order?
Is there any chipping orpeeling paint?
Are there handrails?
If there's any steps, carbonmonoxide detectors, smoke alarm
detectors those things theappraiser is looking for and
(13:04):
basically needs to sign off onthose in order for an FHA loan
to be completed, where in aconventional loan you don't have
that and actually FHA VA kindof follow the same guidelines.
So the safety aspect of theproperty does come into play
quite a bit with those and inthis market, where it's right,
(13:25):
the competition is fierce and alot of the two units are going,
you want to put your best footforward from a financing
perspective.
So if a seller has multipleoffers all at the same purchase
price and one is an FHA and oneis conventional, they're likely
(13:45):
going to select thatconventional because they don't
have to worry about thecondition of the property coming
into play.
So it's a little bit of a confrom that perspective.
Speaker 1 (13:55):
Yeah, I know.
Obviously, if we're flipping aproperty or something, that's
always something we look at.
What's their financingsituation look like?
If it's FHA versus conventional, we're going to go with the
conventional one.
900 times out of you know 900times.
We're going to go conventionalover the fha, just easier for
everybody, you know.
But you only got one offer onthe table.
Let's roll the dice with thefha and see what happens.
Speaker 2 (14:17):
Yeah, for sure yeah, oftentimes with the fha
appraisal too, when, if it comesback needing repairs, they're
gonna they're gonna call theappraisal, subject to those
repairs being completed.
So they will list outspecifically on that appraisal
report what needs to be done sothat you can get those fixed.
And then we have to send the.
Once they're fixed, we send theappraiser back out there to
(14:37):
re-inspect those items and thento ultimately sign off on them.
Okay.
Speaker 1 (14:41):
Got it.
So is it a longer closingprocess typically, or can you
still get it done in about a 45day window?
Speaker 2 (14:48):
It can be, depending on if repairs need to be done
and the extent of the repairsand how quickly how quickly
those need to take place.
So in FHA loans I always try toencourage that we do an, we
order that appraisal as as soonas we possibly can in case there
are repairs that need to bedone.
So we can still try to staywithin our timelines.
(15:08):
Nice.
Speaker 1 (15:12):
The cash down right, the 3.5% and let's say the 5%.
I remember when I was getting ahome loan a while ago I mean
the latest house we didn't havethis, but the previous one they
wanted to know where all themoney came from.
Where were you getting the downpayment from?
Are there certain restrictions?
Are there and are theydifferent for FHA versus a
(15:32):
conventional of where you canget the down payment money from,
like gifts and things like that?
Speaker 2 (15:37):
um, down payment can go.
Yeah, I mean down payment cancome from.
I mean it can come from yourown funds, so you get.
You just got to verify wherethose funds came from savings
accounts, checking accounts,401ks, um, iras, any any
personal accounts you could haveyou can utilize.
Okay, um, most loan programsnowadays also allow you to get
(15:59):
gifts, so as long as you cansource those gifts from a family
member, you can certainly usethem as well.
You just got to source wherethey, where they come from.
Cool, just got to stay awayfrom cash, so large deposits
into your asset accounts thatare documented are no-nos.
Speaker 1 (16:19):
All my drug money, even all my drug money, I can't
shoot.
Speaker 2 (16:21):
I know Right these lenders.
They protect against moneylaundering and fraud, so any
those are great businesses.
Speaker 1 (16:28):
Come on.
Speaker 2 (16:29):
Right, any, any large deposits they're going to ask
you to source that aren't froman employer or that that again
that we don't have a paper trailof.
Speaker 1 (16:41):
I didn't know you could use 401ks or IRAs.
Speaker 2 (16:43):
I guess I don't know why I never thought of that, but
yeah, I have a lot of peoplethat will pull from their 401k
to use that for down payment.
Wow.
Speaker 1 (16:49):
And now, are they typically doing a loan out of
their 401k or are they actuallytaking a withdrawal?
Speaker 2 (16:54):
It depends on how their 401k is structured.
They're all kind of structureddifferently.
I've seen some that are justdoing a withdrawal from it and
some of them that are doing aloan.
So it all really depends on howit's structured and what your
401k company will let you do.
Speaker 1 (17:11):
You can tell I invest in real estate mostly only
right.
I don't know all the ins andouts of those other foreign
things.
Those, those are the.
But what about work history,aaron?
Is there a certain amount oftime somebody needs to be at a
particular job or like?
What does that look like?
Say, somebody just switchedjobs three months ago, what does
that look like?
Speaker 2 (17:26):
Yeah, that's not.
As long as they just switchjobs, it's typically not a big
deal unless there would be a biggap of employment.
Lenders are typically lookingfor a two-year work history
where you could get a where itcould get a little tricky is if
there would be a big gap inemployment or if you're
switching professions forwhatever reason.
going from W-2 to self-employedthat's probably the biggest one
(17:53):
where self-employed peoplepeople that are commissioned
sales-based we typically need atwo-year history of that before
we can use that income.
So from a self-employedperspective, it's typically a
two-year tax return history.
Speaker 1 (18:06):
Oh, so even a little bit longer.
Now.
Are there any loan programsthat you and the mortgage broker
world have that would stillwork for somebody who went that
route?
They left their job.
Now they're self-employed.
Are there ways that?
Do you have any kind ofproducts out there that you know
that somebody could be able toutilize still in that situation,
or what's their?
What are you typically seeingas their best avenue to get some
(18:28):
financing rolling?
Speaker 2 (18:30):
Are you referring to primary home financing, Corey?
Speaker 1 (18:33):
Probably more like house hack, maybe investor too.
We can talk both, you knowprimary.
Speaker 2 (18:40):
I know that's a whole different animal.
But yeah, I mean from a primaryhome perspective.
Yeah, there's there's bankstatement programs.
There's 1099 programs.
There's a variety of programsout there that that don't
necessarily follow thetraditional financing path Okay,
but you have to make sure thatyou qualify for them.
So oftentimes I think the bestexample maybe it would be for
(19:00):
those that are self-employedthat just don't show a lot of
income on paper as part of theirself-employed business.
That's traditionally how weneed to show their income from a
tax return perspective, termperspective.
But what we could do instead ifthey don't show income on paper
, we could potentially do a bankstatement program where we show
(19:22):
the revenue that they havecoming in.
The lenders will typically do acalculation to determine how
much of that income we can useand then we run debt to income
ratios based off of that.
But it's based off either a12-month bank statement history
or potentially a a 24 month bankstatement history as well.
Okay so there's somenon-traditional avenues out
(19:44):
there for for clients that don'tmeet the traditional
requirements.
That's awesome.
Speaker 1 (19:49):
And you, you have some of those products at your
disposal there.
Speaker 2 (19:52):
Yeah, absolutely we have.
We have all of those productsavailable that we utilize.
Speaker 1 (19:57):
I think that's one of the best benefits.
When I was searching for loansfor a home loan anyway I was
working with a broker versusgoing to my local Wells Fargo or
whatever.
You guys have access to a tonof different options where I
felt like my local bank orwhoever I bank with had one or
two and it felt like you kind ofweren't getting the best deal
(20:17):
there.
And sometimes I would go to thebroker Like I think I worked
with your company on a few of myhome loans and you guys would
have better rates from the WellsFargo than Wells Fargo had.
Yeah, some of those are.
Yeah.
Speaker 2 (20:29):
Some of those are really weird because I'm being
on the broker side of things.
We work with multiple lenders,so we shop those lenders on the
behalf of our clients andoftentimes the the some certain
lenders um will will have lowerwhole you can think of it as
wholesale rates versus retailrates that they that they use
internally, um.
(20:50):
So so yeah, it's, it's weird.
I did have a couple of clientsthat that had their loans sold
to, let's just say, wells Fargo,where I use the lender.
They shopped Wells Fargo andultimately the loan got serviced
by Wells Fargo down the road ata lower rate than what they
(21:11):
were hearing from Wells Fargodirectly.
Speaker 1 (21:13):
Yeah, so fascinating to me.
I don't understand the world.
But hey, whatever, I'm justlooking for the lowest rate.
That's why I go to guys likeyou Give me the brokers, baby,
give me the brokers, give me thebest deals, right, let's talk
about.
So that's house hacking, Ithink, and one of the questions
I guess I had for you.
Aaron, I get this sometimes.
I guess I'm going to stay withhouse hacking for a second.
Somebody house hacks.
(21:35):
How long?
How long do they technicallyhave to live in that house
before they can get out of thereand go to the next one, if they
say they did a five percentdown or a three and a half
percent down or a va?
Speaker 2 (21:45):
yeah, the lender's typically going to want them
there to be.
The lender's typically going towant them to be there for at
least a year before before theygo do something different.
And when I say do somethingdifferent, meaning if they're
going to potentially maybe buyanother duplex to house hack
that one.
Now there's some extenuatingcircumstances that can maybe
(22:08):
change that one year requirement.
One of the biggest ones wouldbe if you're moving for your job
and it's a decent distance away.
I have some clients I'm workingwith right now that you're
probably familiar with Corey,that lived in Milwaukee and they
moved to Green Bay for a job.
So they had a duplex that theywere house hacking in Milwaukee.
(22:30):
They got a job here in GreenBay.
They're looking to house hack aproperty here in Green Bay.
Ironically enough, we'reprobably going to meet that year
requirement anyway, but westarted the process at probably
about nine months.
So that was going to be anextenuating circumstance where a
lender was going to be like,yeah, they're moving for a job,
(22:52):
we're not really going to havethat one-year requirement where
if they own that property inGreen Bay and they were looking
to buy another property in GreenBay, that lender is probably
going to want that one-yearrequirement to be in play, okay.
Speaker 1 (23:04):
Now, if they moved out, are they coming back and
saying, hey, do you still livethere?
Or how are they?
What if you just went to adifferent lender for your next
one?
I'm not trying to say youshould do that, I'm just
literally trying to understandthis.
If this is illegal, or if youcan do this and say like hey, I
moved here, I don't like tocommute, I want to move.
(23:25):
Or hey, I moved here.
It's been 30 days, I don't feelsafe here, I'm going to move.
Speaker 2 (23:30):
Yeah, I mean, if you have an extenuating circumstance
and you can express it viawhat's called a letter of
explanation, um, the underwriteris going to use some discretion
, um, in those examples, the new, for the new loan program,
wherever you're going to for thenew loan.
Speaker 1 (23:45):
So if you're trying to do something within a year,
um.
Speaker 2 (23:49):
If it's within a year , um, and it's within the same
geography, there isn't a supercompelling story.
They might stick to that year.
But if, but, if you're worriedabout your safety, if your
family is growing, um, if youwant to get into a particular
school district, um, there thereare some compelling reasons
that can be.
(24:09):
That can be used to get by thatone year rule Cool, but it's
still a lender discretion.
Speaker 1 (24:16):
And is there a limit to how many of these house acts
somebody could do in their life?
Speaker 2 (24:21):
No, but.
But oftentimes the lender.
The lender will think thatmaybe you're playing this game
right.
You're trying to get investmentproperties with primary home
financing because primary homefinancing is better meaning
lower rates, lower down paymentrequirements than investment
property financing.
So there again, there needs tobe compelling arguments.
(24:43):
So often I've worked with a fewclients now where they're on
their third or fourth duplexthat they're house hacking.
But in each instance there'sbeen a compelling reason,
compelling reason being eachtime the duplex went up in value
, value, purchase price, okay,had more bedrooms, more square
footage, was in a better schooldistrict, maybe it was because
(25:06):
they were moving for a job.
There's always been acompelling reason.
So as long as you have acompelling reason, you can
continue doing it as often as asyou want.
I think the max I've seen hasbeen like three or four, three
or four duplexes.
Speaker 1 (25:23):
I thought there was a rule like you could only have
like 10 loan, like conventionalloans, in your name or something
like that in your personal name.
Speaker 2 (25:30):
Yeah, fannie Mae and Freddie Mac are pretty stringent
around you having no more thanthan 10 conventional loans or 10
loans in your personal name.
Once you get to 10, they kindof shut you down.
So clients need to be a littlebit careful about that If
they're doing a lot of financingin their personal name.
Speaker 1 (25:50):
Okay, and you probably want to be flipping
those LLCs anyway and gettingsome asset protection going on
after one or two of those badboys.
Correct, yeah, absolutely yeah,very good.
Yeah, absolutely yeah, verygood.
Well, that's great.
This is.
This is good stuff.
I'm learning a lot here.
Aaron, talk about DSCR loans.
This is like all the rage.
Now Tell us what is a DSCR loanand how does somebody utilize
(26:13):
this thing in the investmentspace.
Speaker 2 (26:15):
Yeah, dscr is the acronym for Debt Service
Coverage Ratio, so it's aninvestment property loan that
basically has three main talkingpoints, at least when I talk
with investors.
I don't need W would like.
You don't have to, you could doit in a personal name.
(27:06):
But it gives you the option totake title in an LLC, which in
today's world most investorswant for tax and liability
benefit reasons.
And thirdly, 30-year fixed ratefinancing.
So most investment propertyloans don't have 30-year fixed
rate financing.
So if you're trying to do acommercial loan in your LLC and
(27:28):
you go to a bank or credit union, they're typically doing some
sort of 5, 7, 10-year arm that'samortized over 20 or 25 years,
where this product has 30 yearfixed rate financing.
So from a cash flow perspective, it should benefit the investor
to have better cash flow as aresult.
Speaker 1 (27:49):
Wow, that's awesome.
Those are great points.
Yeah, and I like a mix of bothin my portfolio, like I like 20
year just because I'm payingdown more debt.
Now I could pay more debt downwith the 30 year if I was
disciplined and just made extrapayments.
But the 30 years are nice too,because you get a better mix of,
like you said, you can makesomething cashflow a little bit
easier and not a lot ofcommunity banks very rare.
(28:09):
I have a couple community banksthat'll offer 30 year, but
there's five-year balloons onall that too.
So you got to think about, like, hey, I'm not paying that much
debt down in this five years,and in five years when that
thing balloons, you know if thisbank just says, sorry, we don't
want any more real estate, Igot to hope I got enough spread
there to go to another lenderand be able to have them take on
that financing.
(28:29):
So it's a riskier propositionversus just locking that baby in
and letting it ride.
Yeah, absolutely, that'sawesome.
So no income verification.
So what are the requirementsthen?
Like, what do they need forthis DSCR loan?
Speaker 2 (28:44):
Yeah.
So the DSCR, the debt servicecoverage ratio itself, is
calculated by what the lendersdetermine as qualified rent and
then, in qualified rent dividedby whatever the all-in monthly
mortgage payment is, createsthat ratio.
So if it's one, let's just sayit's one perfectly.
It's cash flow neutral, meaningyour rent is the same as your
(29:06):
mortgage payment.
So it's a ratio of one.
The lenders typically want itto be above one because it's
cash flow positive, so it's lessrisk to them.
But there are some lenders outthere that will allow you to go
under one and and do a cap.
A cash flow negative propertycomes at a bit higher.
Yeah, it comes at higher ratesand and costs and things of that
(29:27):
sort.
But um, but yeah so and howdoes that work?
Speaker 1 (29:31):
I feel like that's just.
You're just setting somebody upfor failure here.
Speaker 2 (29:34):
I feel like that's like a 2008 product well, yeah,
let me elaborate a little bitbecause I think explaining how
the qualified rent works may getus to where I think you're
going, corey, with your question.
So qualified rent is definedtypically from the lender as the
lower of these two items, thelower of current lease agreement
(29:55):
rent or comparable market rentas defined by an appraiser.
So, for example, if you've gota brand new lease in place and
your lease is for 1500 bucks andwhen the appraisal is done, not
only is the appraiser going todetermine the value of the
property, they're also going todo what's called a comparable
market rent schedule todetermine what market rent is
(30:18):
for a property that has thosetype of characteristics.
Let's just say the comparablemarket rent comes back at $1,200
, but you have actual leases inplace for $1,500.
The lender uses the lower ofthe two for the ratio
calculation.
So they're going to use $1,200instead of $1,500 in the numbers
(30:38):
.
Now there's some exceptions tothat.
If leases have been in placefor a while and you have three
months worth of history and wecan prove that you're getting
$1,500 a month for the lastthree months, the lender is
typically willing to use thehigher amount in that example.
So $1,500 might be used.
But a lot of investors nowadays, if they're using hard or
(31:00):
private money to purchase theproperty and they need to
refinance out of that, theydon't have three months worth of
of new rents yet, um, so sothey're going to use the lower,
um again, they're going to usethe lower of the two numbers.
Okay, where to go back to yourquestion about being under the
cashflow number?
Let's just say you have currentleases in place or have been in
(31:24):
place for a while.
Let's say an investor's buyingan already existing rental and
it's got a 12-month lease outthere and it's at a thousand
bucks and market rent comes backat 1500.
Well, you have to use that$1,000.
And if your mortgage payment is, let's just say, $1,100, your
cashflow negative.
Where the investors areallowing it or the lenders are
(31:48):
allowing it to happen is theyknow that likely down the road
that owner of that property,once that year lease comes up,
they're going to bump that up tomarket rent numbers to $1,500.
Speaker 1 (32:02):
That makes a lot more sense.
That makes a lot more sense.
Speaker 2 (32:05):
Okay, I was very concerned there for a minute.
Speaker 1 (32:07):
I was very concerned.
I'm like what are we doing here?
We're going back to the olddays.
Speaker 2 (32:10):
Okay, yeah, I mean, it's still risky, don't get me
wrong, because you're payingmore monthly on your mortgage
than what you're getting in, andobviously that doesn't include
if you've got propertymanagement fees or vacancies or
anything like that.
So it's just purely qualifiedrent divided by whatever the
(32:31):
all-in monthly mortgage paymentis when you say all-in monthly
mortgage payment, aaron?
Speaker 1 (32:35):
are you talking about principal interest, taxes and
insurance, or just principalinterest payment, aaron?
Are you?
Speaker 2 (32:40):
talking about principal interest taxes and
insurance, or just principalinterests, principal interest
taxes and insurance.
And if, for whatever reason,there would be HOA fees, if it's
a condo or something like that,those fees get included as well
.
Speaker 1 (32:49):
Okay, got it.
Okay, yeah, cool, because I waslike man.
You could scoop up a ton ofproperties with this type of a
loan product and now typicallyare people using these more on
refis out of hard money orprivate money, or people using
these for purchases, or what areyou seeing on your?
Speaker 2 (33:04):
end.
I see a little.
I see a little of everything.
Um, um.
I would say if you're getting ascreaming um, if it's a
screaming deal, um, if, if it'sa turnkey property and it's a
screaming deal deal, most peopleare using hard money and then
refinancing out.
(33:25):
If it's not a screaming dealand it's a turnkey property, a
lot of people are just doing apurchase with their own funds
assets that they have HELOCfunds, something and using their
own funds for the down payment.
Okay, if it's a, if it's aproperty getting a screaming
deal and it needs a lot of work,oftentimes people are using
(33:45):
their own funds, hard money, topurchase it and then we're
refinancing out, whether we'repaying off the hard money lender
or if they're trying to get youknow, using their own money,
they're trying to get their ownfunds back out.
We can do what's called eitherdelayed financing or a cash out
refinance Once.
We can do what's called eitherdelayed financing or a cash out
refinance Um, once.
Once it's, you know it's a,it's that.
(34:06):
It's that BRRRR process.
Um, people are familiar withthe BRRRR process right, buy,
buy, uh, rehab, rent, refinance,repeat, um.
So oftentimes a lot of clientsare following that process, um,
so it's typically more of arefinance.
Um got it.
It just depends on what fundsthey're using if they're using
her money or if they're usingtheir own.
Speaker 1 (34:25):
Okay.
Is a DSCR product a little moreexpensive than, say, if they
just did a conventional cash outrefi or what's the benefit of?
Is the benefit of doing theDSCR just so you don't have that
income verification for more ofthose folks that are
self-employed or switch jobs, orwho's the main avatar for that
product?
Speaker 2 (34:43):
Yeah, I think it's more so those that want to take
title in an LLC.
Speaker 1 (34:48):
Oh yeah, that's right Sure.
Speaker 2 (34:49):
Those that are unemployed, those that want to
take title in an LLC.
Yeah, the spread betweentraditional financing and DSCR
rates is becoming less.
Oh yeah, I just talked withsome clients where the actual
DSCR financing the rates werebetter than the traditional
(35:11):
financing.
Wow yeah, so there was a biggerspread, but it's shrinking.
Speaker 1 (35:18):
Okay, it's shrinking.
Good to know, good to know theother thing with a.
Speaker 2 (35:21):
DSCR loan where, a little bit different than your
traditional financing, dscrloans typically will have a
prepayment penalty.
Okay, you don't have to select aprepayment penalty, but if you
don't, it comes at a higher ratethan, say, if you selected a
one, two, three, four to up asmuch as five year prepayment
penalty.
So the lenders, the lenders areputting those prepayment
(35:48):
penalties on there becausethey're looking to make at least
a certain amount of money onthem and if, if someone is going
to pay off that loan early,refinance early, they want to
make sure that they're securinga certain spread.
Speaker 1 (35:55):
I guess I'll call it so they got their margin baked
in, then Correct, correct, sothey can.
They margin baked in thenCorrect, correct, so they can.
They can be more competitive onthe front end on the rate Right
.
It makes sense.
Speaker 2 (36:04):
So it's, it's.
It's.
One of the cons of a DSCR loan,I would say, is the fact that
they have a prepayment penaltyand that rates are a little bit
higher.
But but the pro is, in my mindthe pros definitely outweigh
outweigh the cons of being ableto get it into an LLC name and
the fact that, depending on whatyour income is, if you can't
(36:25):
qualify traditional financing,it gives you an opportunity to
do it without having to proveincome on paper.
Speaker 1 (36:34):
For sure, for sure.
Well, and a lot of the hardmoney lenders or at least I know
good faith funding is going torequire somebody to be able to
get at least a DSCR loan.
So they know that if things golong or projected to go long,
they know they can get theirmoney back in that six month
timeframe, Correct?
Speaker 2 (36:49):
Yeah, you know, working with Tony and Jairus and
the good faith funding team,I'm fortunate enough to be on
one of their their long-termfinancing list of lenders out on
their website.
So they want an additional exitstrategy.
They want to know that even ifyou flip the property, that if
the flip doesn't happen and youcan't sell that property, that
(37:11):
you can secure long-termfinancing and keep it as a
rental.
So they're looking for thatexit strategy.
So oftentimes good faithfundings clients are coming to
me saying hey, can I getlong-term, can I get
pre-approved for long-termfinancing utilizing a DSCR loan,
should I absolutely need it?
Speaker 1 (37:31):
Yeah, yeah.
And then going back to the, thequalified rent thing, it sounds
like very similar to why weburr properties, right, Like if
you're just trying to go outthere, if you're an investor.
I remember when I got startedI'm like why does somebody need
to do private money or hardmoney or whatever?
And then refi later after it'sfixed up?
And it's similar Like when yougo out and you're going to
purchase a property, that lenderis going to take either the
(37:55):
purchase price or the appraisedvalue, whichever is lower.
So even if you got a screamingdeal and you're like, oh, I've
got 20% equity in this suckerright, the bank's like well, I
want to be even more secure, soI'm going to take the lower
value and lend off of that, andnow you pay your down payment
off of that and so now you'vegot all this dead money sitting
(38:15):
there, which is why we love thebird Sounds very similar on the
qualified rent thing.
They're gonna protect theirbutts and take the lower number
to make sure that they're beingconservative on their
underwriting.
Speaker 2 (38:27):
So we don't have another 2008.
Speaker 1 (38:30):
which is a good.
Yes, which is a good, yeah, yescorrect, for sure.
What else is?
What else have you seen outthere in the lending world right
now, aaron?
What are some other things forinvestors that you're seeing, or
then conversations you'rehaving, maybe some some stories
of some folks that you've workedwith that you know, maybe
combine some of these productsand had some success.
You know what are some.
Give us some ideas on any ofthat stuff, if any of that comes
(38:52):
to mind.
Speaker 2 (38:52):
Yeah, I think I mean the cool things out.
There are cash out refinances.
I'm seeing a lot of investorstake advantage of that, even if
it means going to a little bithigher rate.
If it allows them to get cash,is king right.
So if they can get their, ifthey can get funds to use them
(39:14):
to purchase more properties, alot of investors are doing that.
So I've been seeing that trendquite a bit, especially if
someone's at an investmentproperty rate of 2%, 3%, 4%
years back you know, years back.
(39:36):
I'm not seeing it so much inthose instances, but if it's
within the last couple of yearsand they got a screaming deal
initially on the purchase andthey can refinance now to pull
some of that equity out, I'mseeing a lot of investors do
that and again, maybe taking alittle bit higher rates as a
result, but then utilizing thosefunds to buy more properties to
improve cashflow for them.
Speaker 1 (39:52):
That's awesome, man, I love that I did a bunch of
HELOCs on my investmentproperties.
There was a commercial bank fora while and I don't think
they're doing this anymore butthey were taking second position
on HELOCs on investmentproperties, so they didn't.
Most of these community banksare gonna wanna have first
position.
If they're gonna do a HELOC,they'll want the original loan.
(40:13):
But again, if you got loans,like I got loans in the threes,
I'm not refinancing that suckerright, I'm going to keep that
thing.
So instead, a way to tap thatsame equity is like well, I'll
get a HELOC on it and then I canstill utilize that equity
without messing up my underlyingrate.
So-.
Speaker 2 (40:31):
Yeah, that's just been a challenge there's.
There's that many lenders outthere nowadays that will do a
HELOC um a HELOC on aninvestment property and
especially, like you said ifthey're not in first position.
Um it's.
It's something they they won'treally look at.
Speaker 1 (40:46):
Yeah, it's tough.
It's tough.
There's they got to.
I found with the communitybanks their appetites come and
go right.
So you, uh, you got to strikewhile the errand's hot.
If they got a hot product, youknow we built our almost our
entire portfolio, over a hundredunits, when banks were handing
out money in the in the late 20,you know, 2018, 2017, up to
2021, ish, and it was like theywere.
(41:08):
They were giving it away Like itwas candy at a parade and you
could.
They were doing ARV loans whereyou could go in and they were
coming in with the appraisalopposite side of this.
Now they were appraising themas completed on the purchase.
So you would go there and say,hey, this is my vision, this is
my rehab budget, here's what I'mgoing to do to it.
They say, oh, okay, well, ifthat's what you're going to do
to it, then the value of it'sgoing to be here.
(41:30):
We'll lend you 80% of that.
And I was like this is great.
I'd walk out of closings withchecks for like tens of
thousands of dollars.
I'm like this is amazing.
I just bought a property andgot paid to do it.
This is great.
There's still a few out there.
If you've got a longstandingrelationship, that'll still go
that route.
But it's a lot tougher thesedays to find that.
Especially if you're startingout, it's a little bit more of a
(41:52):
grind.
Yeah, you were talking aboutthe cash out refi, something
else.
Going back to that, aaron, whenyou talk about stepping up a
little bit in rate, I find thisreally fascinating.
I'm really into rentals forequity and wealth.
The cashflow is awesome, love.
Cashflow is king as well.
But if you're doing the BRRRRmethod, I've just found it's
(42:13):
tougher to.
Cashflow is king as well, right, um.
But if you're doing the burrmethod, I've just found it's
tougher to cashflow Anythingthat's really going to change
your life.
If you're, if you're trying toget into it no money, you know
it's like too good to be true.
If you're like, oh, I'm goingto make all this cashflow and I
got into it no money, thosedeals are pretty, pretty hard to
come by, right, you'll get oneor the other, right.
(42:34):
But I ran a little scenariothrough my good friends at
ChatGPT and I did a podcast onthis, I don't know, maybe eight
episodes or so ago.
And what was interesting to meis I looked at that same guy I
was talking about that waspredicting the market.
He was predicting by the end ofthis year, rates are going to
be down around that five andseven, eighths or whatever you
(42:55):
guys call it 5.85 is what I callit and where we're sitting in
this day and age, commercialloans were probably in that 7%,
maybe seven and a quarter range.
So I just ran this littlescenario for a house hacker.
I think this is reallyinteresting.
If you're going for a househack and let's say you're in a
(43:16):
VA loan and you've got no equity, you bought it for $300,000.
Today the market, let's just sayaverage appreciation is 4% a
year.
It's pretty conservative.
It's been higher than that inthe last two decades, but let's
just say four.
And you're on a 20-year AMschedule.
So now you're saying VAs aregoing to be 30 years, so it's
going to be a little bit less.
Right, you're going to haveless of this.
But in five years, at a 7% rate, you have about $106,000 of
(43:41):
equity in that property becauseyou're getting the appreciation
and you're getting your debt paydown right Now.
If your tenants are paying itdown, it's even better.
Right?
They just created $106,000 foryou.
If I change that to a 5.85% rate, you're only at about $110,000
of equity, so your equitydifference is not that big of a
(44:04):
difference.
In the grand scheme of things,you'll cashflow about 200 bucks
more a month on that, on the5.85.
So your cashflow changes, butthe equity building does not
change hardly at all.
It's nominal.
So it's better to get thatclock started earlier.
With that higher rate you'regoing to have less competition
if rates are high than when theydrop.
You're getting a better deal onthe property, your purchase
price could be lower and withsome of the products you're
(44:24):
talking about, you can lockthese things in for 30 years and
not have to worry about whatthe rate's doing.
You just let the clock work inyour favor.
So I found that reallyinteresting.
When I ran those numbers, Ithought that was fascinating.
Speaker 2 (44:41):
It's super interesting around some of those
numbers and how rates canimpact it, how the market can
impact it, how values.
Once you loop it all together,it certainly has some impacts.
Speaker 1 (44:55):
Yeah, for sure.
All right, Aaron, we always, wealways wrap with a fun question
here.
So I know I kind of I promptedyou before we started and you
weren't really sure.
So let's see if over the last35 minutes or so or whatever,
we've been talking, let's see ifthis has helped.
So, favorite Wisconsintradition or favorite place to
visit in Wisconsin.
Speaker 2 (45:14):
Favorite Wisconsin tradition or favorite place to
visit in Wisconsin.
That's a good one.
I mean Wisconsin traditions.
It's kind of hard not to talkabout eating brats, 4th of July
fires, you know, picnics, thingsof that sort.
Fourth of July fires, picnics,things of that sort.
(45:35):
So I think there's probably toomany of them to maybe outline
one as a favorite Places to go.
I'm a big sports guy, soLambeau Field, brewer Game,
bucks Game, any of the Wisconsinsports teams, I don't know.
(45:57):
I've been fortunate enough to goto some of the other
professional stadiums around thearound the country okay and to
me there is nothing like um,there's nothing like lambeau
field or a brewer game incomparison to some of the other
places I've been.
Speaker 1 (46:11):
So it's that's awesome, man I've only been to
one other nfl stadium for ongame day.
I went to the to the bearspackers nfc championship game
okay dude, it was horrible.
It's like this is like a.
I feel like everybody here wasat a funeral, like everybody was
like kind of walking aroundabout to take a drink out of the
parking ramp.
They're like you can't, ohdon't you dare, take a drink out
(46:32):
of that.
I was like what do you mean?
It's the nfc championship game.
You can't you just walk aroundwith drinks.
They're like no, you'll getticketed.
I was like what isn't this gameday?
I was so.
I was so culture shockedtotally different.
Speaker 2 (46:45):
I was out in denver back in the the far years okay
and denver has one of thecraziest.
If you, if you see a denverbronco game and it's in denver
listen very closely.
Whenever the quarterback throwsan incomplete pass, they have
this chant of incomplete.
They chant it every time theopposing quarterback throws an
(47:05):
incomplete pass.
So if you're watching a broncosgame anytime this coming year,
and it's in denver.
Listen for it, it's.
It's in Denver.
Listen for it, it's.
It's super weird Wow.
Speaker 1 (47:13):
So it's kind of lame.
Speaker 2 (47:15):
Yeah.
Speaker 1 (47:16):
I know.
So yeah, we got it.
There's just nothing like.
Speaker 2 (47:19):
Lambo, nothing like Lambo, nothing like a American
family field tailgating for fora brewer game.
Speaker 1 (47:24):
To me, it's just it just doesn't compare.
That's very true.
I love it while you'retailgating for both events.
So combine a couple of thosethings together.
That's fantastic, aaron.
Any final words of advice orany other things you want to
leave the audience here with asit relates to the mortgage
lending loan world, I think it'sjust the fact that there's a
(47:51):
lot of options out there.
Speaker 2 (47:52):
I'm biased to brokers .
I feel like we have the bestprograms out there, best
products, because we're able toshop, able to shop multiple
lenders on a client's behalf.
So even before I got intomortgage lending, when I was
buying my you know, my firsthome and financing, I used a
broker as well, just because I,because I did shop it around, I
(48:19):
shopped it with my local bankand the broker was able to get
me a better deal.
So again, I'm biased becauseit's my profession and what I do
.
But more often than not we'reable to meet and beat rates of
our competitors and the brokerside of things.
So that's awesome, definitelygive us an opportunity for, you
know, fits your primaryresidence, second home,
(48:42):
investment property, dscr loansfor an investment property.
Certainly, look me up atexecutivemortgagecom.
All our you know all the loanofficers have links out there.
Um, all of our you know all theloan officers have have links
out there.
Um, obviously I do primary homeloans as well, but my, my
specialty in the office and I'mI'm I think one other loan
(49:06):
officer has done a DSCR loan,but I'm the only other loan
officer here at the office thatthat that focuses and has
knowledge and expertise in thein the DSCR loan field.
So happy to.
Uh, you know, if anyone wantsto reach out, just look me up
out on executive mortgagecom andand reach out and happy to talk
through any opportunities youmay have.
Speaker 1 (49:22):
Love that.
Hey, last little nugget herebefore we go.
One question I was going to askyou earlier and I want to go
back to before we wrap.
Sure, If somebody is going tocome and do a loan application
with you, my advice to them allthe time is get pre-approved
from a bunch of people rightaway.
If you're going to do it,they're all going to ask you for
the same crap anyway, so youmight as well just take all your
stuff and go get with communitybanks, go get with hard money
(49:45):
lenders, go get with guys likeyou in the broker world.
Get as many lines in the water.
One of the concerns people have, though, is their credit pulls.
Can you just clarify for peopleCause I know this has been a
conversation I've had with a lotof people just put it out there
how does getting a bunch ofdifferent lenders all in the
same period of time affect theircredit?
Speaker 2 (50:02):
Well, if, if a credit poll needs to be done, some
lenders will do it, some somedon't For example, when, when
it's a DSCR loan, I oftentimeswon't pull credit, I'm going to
take them for their word on whattheir credit score is, just
prefacing it with the fact thatthe rates and numbers could
(50:26):
change depending on what theircredit score actually is,
because I will have to pull itat some point.
But for traditional loanfinancing to get pre-approved, I
need that credit report becauseI need to do some debt to
income ratio calculations whereI don't with a DSCR loan.
So, other than the score for aDSCR loan, that's all I really
care about.
But for traditional financingneeds, I need that credit report
(50:50):
, not only for the score butalso for what shows up as debts
on there so I can do somecalculations.
So if that's the case, I alwaysencourage people to try to get
your credit pulled within.
It varies a little bit.
I would say a seven day period.
If you get it pulled within a,it could be a little bit longer,
maybe seven to 10 days, but aseven to 10 day period.
(51:13):
If you have multiple creditpulls, to the bureaus it only
looks as like it's one creditpull so it doesn't impact your
score as much.
Now, if you're going to waitand have it pulled monthly by
seven different lenders overseven months, then, yeah, it's
going to impact your score andit's going to look to the
bureaus that you've had multiplepulls done versus versus one.
Speaker 1 (51:36):
Yeah, Now, I'm glad you clarified that.
I actually always thought itwas 30 days, so I'm glad you
said seven to 10.
Speaker 2 (51:41):
Yeah, I, I would, I would do it, I would do it more
in that seven day period, justto be safe.
Speaker 1 (51:49):
Okay, seven to 10 day period Good good rap there.
And period Good good wrap there.
And yeah, like I said, I thinkguys that are listening to this,
my advice, if you ask me, isget, get as many buckets of
money available to you aspossible.
Helox private money brokers,because they're all little chess
pieces you heard Aaron talktoday about.
He works with really closely,with good faith funding.
Those are two chess pieces thatyou're using together and
(52:10):
you're just using the twoproducts that they have to
create a really awesome wealthbuilding vehicle for yourself.
And that's an example of twoproducts.
You've got a house hacking toolthat Aaron talked about.
You've got conventional cashout refis.
You've got community banks.
There's so many options outthere.
There's national lenders whoare kind of a mix between a hard
money lender and a traditionallender.
(52:32):
So, get as many buckets ofmoney.
Definitely reach out to Aaron atExecutive Mortgage, and we can
put a link or something likethat in the show notes too,
Aaron.
So if people just want to gothere and check it out and get
ahold of you, don't talk toanybody else at Executive
Mortgage, just talk to Aaron.
He knows the investment world.
No, I'm just kidding.
You guys have a lot of great,great folks over there, but talk
(52:54):
to Aaron.
The investment world no, I'mjust kidding.
You guys have a lot of great,great folks over there, but talk
to Aaron.
So, with that guys, if you gotsome value out of this, creating
wealth in real estate creates aripple effect in your.
You guys can be a spark forjust one other person.
Share this episode with somebodyelse out there.
Share on your social media.
You could be the cause ofsomebody creating generational
wealth for their family bytuning into one of these
episodes, and we reallyappreciate it as well.
(53:15):
And, like we said earlier, ifyou're not ready to get on the
buyer's list yet at WisconsinDiscount Properties and you just
want to have a conversationabout your current situation, no
obligation.
Just go on our website, hit thecontact us form.
You don't have to fill out yourinformation and join the list.
Just hit the contact us formand we'd love to have myself or
Reese or Connor or somebody fromour team hop on a call with you
and help understand yoursituation and point you in the
(53:36):
right direction and get youconnected to great folks like
Aaron or a bunch of these otherlenders that we talked about as
well, if you're in that pointand ready to get going.
So, aaron, appreciate you again, man, being on here, and for
all of you guys, thanks fortuning in.
We'll see you on the nextepisode.
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