November 12, 2024 • 34 mins
Discover the world of commercial lending and the unique opportunities available for investors in this insightful conversation with Alex Wallace, Vice President at Cornerstone Commercial Capital. Alex shares the inside scoop on various commercial lending options, from bank loans and SBA loans to private money lending and DSCR programs. Understand how commercial loans differ from residential loans, why some properties face lending challenges, and the strategies investors can use to secure financing. Whether you're an experienced investor or new to commercial real estate, this episode is packed with valuable insights, actionable tips, and real-life examples. Don’t miss out on learning how to finance your next investment property with Alex’s expert guidance!
Whether you're a seasoned agent looking to stay ahead, a newcomer eager to learn, or a client seeking reliable real estate advice, "Just 2 Minutes" offers a wealth of information in a convenient and enjoyable format. Join us as we explore tips, tricks, and insights from industry leaders and professionals that can help you navigate the dynamic world of real estate.
Join Us:
Tune in to "Just 2 Minutes" and elevate your real estate knowledge. Subscribe now and never miss an episode of quick, insightful conversations that make a big impact. https://kamil.buzzsprout.com
Stay Connected:
- YouTube: @realtorkamil
- Instagram: @realtorkamil
- TikTok: @realtorkamil
- Facebook: Kamil Sarji
- Website: Gold Door Realty
For more information on joining our team or how we can assist you with your real estate needs, reach out to us today!
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Kamil Sarji (00:00):
Welcome everybody, I am Kamil Sarji, your
host of Just Two Minutes.
And today I have Alex here.
Alex, you want totell us about you?
Alex Wallace (00:07):
Yeah, so, uh, my name is Alex Wallace.
I work at CornerstoneCommercial Capital.
I am the vice president.
The company was started bymy father, Bill Wallace.
We've been in business nowfor 10 years and we handle
commercial financing.
Kamil Sarji (00:20):
Awesome.
Thank you very muchfor being on my show.
Alex Wallace (00:23):
Thank you for having me.
Kamil Sarji (00:23):
So yes, I'm excited to talk to you
about commercial lending.
But first, as you know, we haveour Just Two Minutes questions.
So are you ready for action?
Sure.
All right.
And go.
All right.
If scientists got togetherand said, Hey, water
(00:45):
is actually bad for us.
What would you drink?
Alex Wallace (00:52):
Mango juice.
Kamil Sarji (00:56):
How come mango juice, not any other fruit?
Alex Wallace (00:58):
It's real sweet.
Or maybe watermelon.
I suppose watermelon wouldbe the second closest.
I still got water in there, but
Kamil Sarji (01:06):
I am with you on the watermelon.
Um, do you believe in ESP?
Alex Wallace (01:11):
Mind reading?
Kamil Sarji (01:15):
Don't stop! Are you reading my mind?
Do you?
Alex Wallace (01:21):
Maybe.
Kamil Sarji (01:22):
Maybe.
Okay, if it was true, howdo you think it would work?
Like,
Alex Wallace (01:28):
if it was true, I think you would
have just heard me say yes.
Kamil Sarji (01:31):
Okay, I shouldn't have asked then.
Um, alright, so, uh, if you wereto pick any job, the whole post
office organization, what, whatwould, what job would you have?
Alex Wallace (01:48):
Postman.
Delivering mail.
Kamil Sarji (01:50):
Hmm.
Where would youdeliver mail, mail to?
Like, what city?
In Rhode Island?
Alex Wallace (01:55):
In Rhode Island?
Probably Newport.
Kamil Sarji (02:00):
Newport.
Cool.
Would you wear the shorts?
Awesome.
Um, if you had to pickbetween two best friends
to live in a home with,uh, a crocodile or a tiger,
which one would you choose?
Alex Wallace (02:17):
Crocodile.
Kamil Sarji (02:21):
And, um, uh, like what room would you give
and dedicate to that, uh?
Alex Wallace (02:27):
to the crocodile, bathroom
Kamil Sarji (02:29):
The bathroom?
If you need touse it, it's okay.
Alex Wallace (02:32):
It's okay.
I have a very big bathtub.
Kamil Sarji (02:35):
Okay.
Um, alright.
Awesome.
And then, uh, last thing.
Oh.
Alright.
That was it.
No, last thing.
What did you think?
Alex Wallace (02:48):
It was great.
Kamil Sarji (02:50):
Cool.
So, commercial lending.
Let's talk about that.
I know, as a realtor, weget into the territory of
like over five family, nowit's a commercial, now I
can't lend money to you.
Let's start off with that,with that kind of scenario.
What do you have for someonewho wants to live in the
(03:10):
property, or is it not possible?
Alex Wallace (03:12):
So if it was a five family, and they wanted to
live in the property, Then, likewe do have programs for that.
Like we would, as long as theyqualified, I mean, we would
place them into a bank loan.
It's basically, I mean,it's pretty similar to an
investment property loan.
It's just a lower downpayment because they
would be living there.
So they would actually,they'd be able to take
advantage of 20 percent downopposed to 25 percent down.
That's the, really thebiggest difference.
(03:32):
I mean, they would still,you know, we'd have to make
sure that their personalincome would be able to pay
for their contribution to thetotal income of the property.
Cause generally if somebodywasn't going to live in the
property, I would say whenlooking for like an approval
on a loan, their personalincome is maybe like 20
percent of the total pie.
Really banks look at theproperty itself as, as
(03:54):
like an independent entity.
And the income generated bythat property is what's going
to support the mortgage.
When you are one of the tenantsin there yourself, or, you know,
you're the owner, you're oneof the occupants, you know, the
bank is going to want to makesure that you can afford your
portion of the contribution.
Kamil Sarji (04:09):
Okay, interesting.
So in a regular residentialloan, you know, you get your
loan through whatever companyand the next thing you know, you
get a letter saying, Oh, thisis your new mortgage company.
So Freddie Mac, doesthat scenario happen with
those types of loans?
Alex Wallace (04:23):
It really depends on the bank.
Some banks like toservice their own loan.
Some banks will sell the loan toa servicer, to another entity.
I would say, I believe allof the banks that we work
with service their own loans.
I can't say for surebecause there are a
lot that we work with.
Kamil Sarji (04:37):
Yeah.
Alex Wallace (04:37):
But I would say the majority of them
service their own loans.
Kamil Sarji (04:40):
Hmm.
Yeah, it's tricky when theyservice their own loan because
they have a pool of moneyand then now it's like, you
know, that's taken and so Iguess they have to, eventually
they, if they need more money,they just sell it and, right?
Is that how that works?
Alex Wallace (04:53):
Yeah, or, I mean, that's more of a question
for the bank themselves.
But I think usually whenit comes to banks, like
especially on the commercialside, a lot of times they do
hold on to the commercial,the commercial loans.
The term of a commercialloan is also shorter.
I mean, generally you're lookingat 25 years opposed to 30.
Some banks will do a 10 yearterm, but they always give an
option to, or almost alwaysgive an option to renew.
(05:15):
As long as you have a goodrelationship with the bank.
Kamil Sarji (05:16):
Does Freddie and Fannie think that
those loans are too riskyfor them to, uh, use?
Take or
Alex Wallace (05:22):
it's a question for a residential loan officer.
So I don't dealwith either of them.
Kamil Sarji (05:26):
Okay.
Yeah with commercial There's somany different programs, right?
There's so many differentsituations and scenarios.
How do you keepup with all that?
Alex Wallace (05:33):
I realistically it's just every so often
I'll speak with the lendersand see you know, do they
have any updated programs?
Do they have any newprograms when I first get in
touch with a newer lender?
One of my questions is you know,what are their oddball loans?
You know, what do theylend that's different?
You know, some banks,especially because we're in
Rhode Island and Massachusetts,you know, or I'd say probably
in New England in general,some banks will offer loans
(05:54):
specifically for fishing boats.
You know, that might not besomething that you think of
off the top of your head,but we are coastal states,
and that's something thatcan get taken advantage of.
And it really comes down to,I mean, it's just like with
each lender, you know, theyall have their own preference.
Some lenders aremore preferential to
apartment buildings.
Others may want likeindustrial properties.
(06:15):
So that's one of the otherreasons why we work with so
many different lenders is justso that we know that our client
and the bank makes a good fit.
You know, we know what theclient is looking for, we
know what the bank is lookingfor, and that's why we try
to bring the two together.
Kamil Sarji (06:28):
Okay, so my mind is like logical thinking so
now you're dealing with like10 15 different banks and 10 15
different scenarios and you'remeeting with a new client.
How can you pick which programis gonna work for them?
Is it do you have like ina spreadsheet or how do you
Alex Wallace (06:45):
know?
I mean really what it comes downto is, you know So we'll have
a conversation with a clientto start to figure out, you
know, what are they picturing?
What's their plan?
We get their ducks in a rowYou know, we kind of have
a little strategy section,sit down and we figure out,
all right, what's your goal,what are you trying to do,
and what are your resources?
So that's when we collect alltheir documents for pre approval
and we see, you know, all right,these are their strengths, what
(07:07):
are their strengths, what aretheir weaknesses, and we just
see what lines up, really.
You know, we take it onestep at a time and we
try not to, you know, wedon't rush into anything.
Put the feelers out, see who'sinterested and what the person
is trying to do, and that'show we figure it out, really.
Kamil Sarji (07:22):
Okay.
Alex Wallace (07:23):
It's just a lot of communication, that's really
what it comes down to, is wejust make sure everybody's
on the same page and, youknow, we try to make sure
everybody gets what they want.
Kamil Sarji (07:30):
And you kind of remember, like, one
of those 15 offers, andyou're like, oh yeah, this
scenario would definitelywork with that, right?
Alex Wallace (07:37):
Absolutely, when somebody first calls
in before I even get anydocuments or anything, you
know, I'll start thinking.
All right, where willthis person be a good fit?
And then, you know, it may beall right Maybe the first one
that I thought of is the rightfit or maybe, you know We'll
we'll be going through theinformation and all right This
isn't quite the fit for them,but I know that this person
would love to get involvedSo that's I mean, it's also
(07:59):
just from experience too, youknow, you do it long enough
You know which shape willfit into which place and you
know You just fit it there.
And yeah, it's alot of practice.
Kamil Sarji (08:09):
So now you get this client and you've already
select or already envisioned whowould be a perfect fit for them.
So, I mean, it's completelydifferent from residential,
like your situation, your life,and the way you do things.
Do you create, like a realtor,an offer package that you
send over to the lender?
Alex Wallace (08:30):
Yeah, I mean basically, so it's
not like an offer, but itis a preliminary package.
So I'll get, you know, thepertinent information together,
let them know, all right,here, this is the property.
So I mean, a lot of it alsocomes down to the property
too, and making sure thatthe property is gonna be
profitable and be ableto support its mortgage.
So I get the informationabout the property, I get the
(08:50):
information about the borrower.
Present it to the lenderas a preliminary package.
They say, all right, yeah,we're interested in this.
And then we get all of theother information together
and get sent over there,goes through, like we always
work with, you know, at thesenior vice president level,
junior vice president, thevice president level of the
lender, and they're the ones,if they're interested, goes
(09:11):
into underwriting and we makesure we get the underwriters
everything that they need.
Kamil Sarji (09:15):
Awesome.
Nice.
So it is literally like,Hey, here's this packet.
Look how awesome this person is.
And look how awesomethis property is.
Like it's prettygreat deal for you.
And you know,
Alex Wallace (09:29):
yeah.
If there is any issues,say a borrower had like a
bankruptcy or if they had saythat they didn't have great
credit, their credit's okay.
They haven't had anyleaks in a while.
We try to bring upany issues that could
come up down the line.
We try to bring it up fromthe very beginning so that
everybody's on the samepage from the beginning
and there are no surprises.
It's also why it's veryimportant for clients to
(09:49):
be clear and let us knowif there's anything that
we should be aware of.
Because if we're up front aboutit with the lender, well that's
all, that's all well and fineand we can get through it.
If it comes up, if the lenderfinds out on their own or
it seems like, you know,the borrower's trying to
withhold information, thenthere's issues down the line.
Kamil Sarji (10:07):
Yeah.
Yeah, and that's how youguys get your good reputation
because you're getting all thisinformation in the beginning
So there's no surprises exactlyand mess up the whole loan Now
you have someone pissed offthat they can't get what they
thought they were gonna get.
Alex Wallace (10:20):
Exactly.
Kamil Sarji (10:21):
Awesome.
that's really great So oncethey get through that once
the bank picks them and I meanis this process similar With
all the loans that you offer
Alex Wallace (10:32):
for the most part.
I mean if it's not like acookie cutter pretty simple
I know when somebody willsay, alright, this is a great
deal, let's run with it.
Even then, stuffwill still come up.
You never know, you know,you're dealing with people.
So, um, everybody's different.
But, you know, no matterthe program, I would
say it's pretty similar.
It's just, you know, themore documentation, the
(10:53):
more paperwork needed,there's more information
needed from the client.
You know, if we're doingsomething with private
money that can close in twoweeks, a lot less is needed
than if we were doing, say,an SBA loan, which takes,
you know, you're lookingat 90 days, if not longer.
And you're dealing with thefederal government so that
they require substantiallymore information.
(11:13):
But you're also getting betterterms and a better rate than
you would with private money.
So it really depends on theprogram and the borrower.
It's all, it'smulti faceted, yeah.
Kamil Sarji (11:21):
Oh man, okay.
All right, so onceyou've connected them,
what's your next steps?
Alex Wallace (11:27):
So I'm always the intermediary.
We're working with boththe lender and the client
every step of the way.
We're there from pre approvalto the closing table.
So we coordinatewith the lender.
We will coordinate.
So say, you know, makes itthrough underwriting, borrower
gets their commitment letter.
So the bank says, allright, we've committed
to lending you money.
We need to make sure thatthe property appraises.
(11:49):
If it was something where wewere going off of projections,
those projections need to beverified with the appraisal.
And from there, you know,say everything's going fine.
Well, then we work withthe insurance agent.
We work with theborrower's attorney.
We work with thebank's attorney.
Really, if anything is needed,you know, I'm on the phone
finding what needs to bedone and making sure that it
(12:10):
gets to where it needs to be.
So it's not just working withthe lender that we do, it's
really helping the borrowerevery step of the way.
Kamil Sarji (12:17):
Awesome
Alex Wallace (12:18):
you know, if somebody needs a referral,
we give them a referral.
We just try to makethe transaction as
smooth as possible.
Kamil Sarji (12:24):
Yeah, it sounds like a realtor like holding
their hand through the wholeprocess to the closing table.
That's pretty cool So oncethey do get to the closing,
I mean, that's the last step.
Anything I missed in between?
Alex Wallace (12:36):
No, I mean realistically if it was a
construction loan Then, youknow, the borrower would have
drawers after the fact, sothey'd have to have inspections
to get their drawers released.
But yeah, other than that,then they just, you know,
they have to make surethey make their payments.
And, you know, after a year,we're kind of distant memory
and they're happy to be intheir property or have their
(12:58):
business in a property orwhatever their plan was.
Kamil Sarji (13:01):
Awesome.
What's the craziestthing that you loaned
to, or helped loan to?
What's the wildest, uh,
Alex Wallace (13:11):
We did an adult bookstore in the south once,
because no one else, that'snot something that a bank
would really like to lend on.
So we were able to get thema lender and that was fine.
But nothing like, I didn'teven know, that's not like,
that's not that outlandish,you know, it's the person that
Kamil Sarji (13:26):
So why is that tough to get?
Alex Wallace (13:27):
Cause it's like, so, banks don't like to lend
on things that they would,so it was also a smoke shop.
Kamil Sarji (13:33):
Okay.
Alex Wallace (13:33):
Now banks are, like around here,
because marijuana's legal.
You know, some banks are moreopen to lending on anything
that has to do with cannabis.
It wasn't the case a fewyears ago, but I don't know.
I guess it's anything thatthey don't see as just
like a vanilla product,like a vanilla business.
And it kind of comes down,I don't know, it comes
(13:54):
down to, I don't want tosay it comes down to the
character of the business.
But, like, for instance, like,we can't do strip clubs, you
know, we always say we can lendto just about any business,
well, strip clubs, it's reallyanything in the vice industry.
So we can't lend to stripclubs, can't do casinos, and
if somebody, I don't remember,has 40 or 51 percent of income
(14:15):
is derived from gambling,those are really the big ones.
It's like, you know, we can dobars, we could do breweries.
Kamil Sarji (14:22):
Sounds like, you think religion plays a
factor in those decisions?
Alex Wallace (14:26):
I don't know if it's religion, but I think
it might be something to dowith like, public perception.
They're a bank, you know,you don't really think
of progressive banks.
Kamil Sarji (14:34):
Yeah, these are the normal banks.
These are the dirty banks.
Would you use a dirtybank if like, it's like,
oh, this is a dirty bank.
Would you go, would you use it?
Alex Wallace (14:44):
I mean, I don't know if I'd go
with the term dirty bank.
Then it sounds likethey're using stolen
money or dirty money.
Kamil Sarji (14:52):
They're just lending to non, like, you
know, like frowned uponplaces like strip clubs or,
Alex Wallace (14:58):
you know, I mean, I wouldn't care about that, but,
I think they, you know, we'rein Rhode Island and sometimes
it hasn't always been banksthat are lending money to strip
clubs, you know, I don't know.
Kamil Sarji (15:12):
All right, cool.
Well, thanks for takingus down that road.
Okay, so going backto the different
products that you have.
What's the fastest?
Alex Wallace (15:24):
Fastest product?
Kamil Sarji (15:25):
No, fastest closing that you've done.
Like, oh, I wantthis, want to buy it.
Alex Wallace (15:29):
Private money.
I mean, it's probably alittle less than two weeks.
Kamil Sarji (15:31):
Okay.
Alex Wallace (15:32):
I mean, realistically, it just
comes down to how longa title can get done.
that's really the determiner.
You have to have a cleantitle to buy a property.
Kamil Sarji (15:39):
Even refinance, they have to pull title.
Alex Wallace (15:41):
You never know what kind of lien.
Kamil Sarji (15:43):
Lender.
Oh, okay.
Okay.
Alex Wallace (15:44):
You know what?
If you have a million dollarmechanic lien on a property
or what, if there's any, alot of different kinds of
ways a lien could get puton there, you know, or just
like a second position.
So they have to makesure those aren't there.
They need to know, you know,what's, what's actually
going on with that property?
Kamil Sarji (15:59):
Because the trick is they buy the place
and then they get a loan onit, or second mortgage, and
they're like, oh, hey, Iwanna refinance my small loan.
But the title search pulls thatup and is like, wait a second,
you have other things thatare hanging on this property.
Alex Wallace (16:16):
Exactly, because you know, sometimes
people won't be very honestabout, you know, the money
that they owe on a property.
And that's like, gettingthe title, that's, that's
how you know, you knowexactly what they have.
So it really comes down to asquickly as a title can get done.
Yeah, I'd say I think there'smaybe like a week and a half.
We might have, it's beena long time, I don't
know, about a week.
Kamil Sarji (16:35):
What about the longest?
Alex Wallace (16:36):
I don't know.
The longest that,uh, over a year.
That's, I mean, thatkind of comes down to
the scope of a project.
You know, I did an SBAloan out of state and
it was just a big loan.
They had big plans and youknow, that's really, that's
kind of a barometer is howlarge is the scope of this work?
Cause you know, we haveto make sure all of
the bases are covered.
(16:56):
And SBA specifically, I mean,that is you're having the
federal government involved.
So, you know, they're gonnago through that with a fine
tooth comb and they could comeup with questions that, you
know, you are on, I would say.
Why are you askingthis right now?
But, you know, you gotta answerfederal government, and when
they ask you, gotta give theman answer, because that would be
something that they, you know,push the scale of yes or no.
Kamil Sarji (17:18):
So why, I mean, is that one of the big reasons why
SBA loans take so long to get?
Alex Wallace (17:24):
Because of working with them, yeah.
Kamil Sarji (17:25):
Yeah, because there's so many layers and so
many people that look at it andhave to approve it and sign and
they might not be working on aFriday, now you have to wait.
Alex Wallace (17:34):
And you have, there's a lot of, a lot
of cooks in the kitchen.
You know, you're not just havingone or two people sign off,
you have many people sign off.
Like this was amulti million dollar.
Project, you know, it's not likeit was a little one, but even
smaller ones, it's, you know,it depends on what your plan is.
It depends on the property, youknow, are there environmental
issues with the property?
Because then once there'senvironmental issues, that
(17:54):
can make it take a lotlonger because you need to
have multiple tests done.
What kind of remediationneeds to get done?
If it's construction, youknow, are the permits in place?
Are the quotes correct?
You know, they have a lotof boxes to check off and
that's what makes it takelonger is just making sure
that everything is correct.
Everything is approved.
But I say a lot of times, youknow, even when a product, like
when, when it does take a longtime to get a loan done, when
(18:17):
you're in the middle of it, itseems like it's, you know, a lot
longer, but once you get donewith it and it's successful and
it's in the rear view mirror,you know, it's in the past
and now you reap the benefits.
Kamil Sarji (18:29):
Awesome.
So that's the SBA loan.
So let's talk aboutbank commercial lending.
Alex Wallace (18:35):
Well, something with the SBA loan too.
Kamil Sarji (18:37):
Yeah.
Alex Wallace (18:37):
And it's always worth mentioning is, you know,
one of the advantages, like yes,an SBA loan does take a long
time, but, and sometimes theycan get done in 90 days, but
with an SBA loan, it also givesone, you know, I kind of look
at an SBA loan, the kind of thesame way as like a first time
home buyer and FHA loan wherethey're getting a better deal.
Yeah.
So an established businesscould get into a property
for 10 percent down payment.
(18:58):
With bank financing, like we'reabout to talk about, they would
be looking at 20 percent down.
Now an SBA loan is a littlebit more expensive to close
because there's more attorneysinvolved, but they're
getting a lower down payment.
The rate is a little bitlower because the SBA rate
is lower than the commercialbank rate, so you're kind
of looking at it as like twoloans almost, but it really is.
It's like you're buyinga home for your business.
(19:20):
And a lot of times it's thefirst time that they're buying
a brick and mortar location.
Yeah, so it can be a verypowerful tool for for
business owners Because itdoes allows them to have a
property for the business.
Kamil Sarji (19:30):
So you're saying SBA loan lower down payment
Versus a commercial which isalmost double or even more But
the thing is like the closingcost for the SBA loan is more
compared to the commercialBut wouldn't the closing costs
also be or might be as closeto the 20 percent that they're
gonna have to pay anyways
Alex Wallace (19:50):
Not really, especially not if they're
looking at a larger property.
So, you know, if you're buyinga property for 200, 000, maybe
you shouldn't get an SBA loan.
You know, it would be moreadvantageous to get a bank
loan because yes, your downpayment would be a little
higher, but you would beable to close quicker.
There wouldn't be as many hoopsthat you need to jump through.
More times than not, thereisn't as much paperwork.
(20:10):
But if you're looking ata larger property, that
10 percent difference indown payment is just going
to get larger and larger.
So even those moreexpensive closing costs
wouldn't be as big.
You know, comparatively.
So the larger the numberyou're working with,
those closing costs don'tplay as much of a role.
Kamil Sarji (20:25):
Mm hmm.
And that's why it's good havingyou because you can look at
their situation and be like,yeah It's probably cheaper if
you did the commercial or it'scheaper if you do the SBA.
Alex Wallace (20:34):
Mm hmm,
Kamil Sarji (20:34):
depending on the situation.
That's great It's good to know.
So yeah, let's talkabout the commercial one.
What's, uh,
Alex Wallace (20:40):
It's basically, if you were to look at a
commercial loan, you know, bankfinancing, generally speaking,
you're looking at a 25 yearterm, 25 year amortization,
two months to close, 60days, and the majority of the
approval is based off of thedebt service of the property.
So it's looking at the incomeof the property versus the
expenses and mortgage payment.
And we would just want tomake sure that the property
(21:02):
is able to make those.
You know, pay all those expensesand then have money, you
know, to go in your pocket,go in the bank as reserves.
Kamil Sarji (21:09):
The rate, how's the rate on those types?
Alex Wallace (21:11):
So as of earlier this week, I believe
it was right around 6.
8.
Could even have been 6.
7 or 6.
68.
Somewhere right around there.
It's pretty close.
The rates have beencoming down lately.
Kamil Sarji (21:22):
Wow, okay.
Like, SBA loan is
Alex Wallace (21:25):
SBA, so I haven't checked the SBA rate,
but if the bank rate was 6.
8, my guess would be it's atleast 6.2 if not six percent.
Kamil Sarji (21:35):
Oh, just a little tiny bit lower.
Alex Wallace (21:36):
Yeah.
Kamil Sarji (21:37):
Okay,
Alex Wallace (21:37):
generally, I mean in the past it's been like a one
percent difference So whereasif you know if the bank rate
was six the SBA could be fiveYeah, the SBA rate is always a
little bit cheaper, but with anSBA loan you do have both So if
you're buying a property for ahundred thousand dollars just
for ease of numbers And you'regetting an SBA loan and you were
putting ten percent down you'dhave a loan the bank portion
(21:58):
would be fifty thousand YouSBA's portion would be 40, 000.
So you'd have, you know, ifthe rate was 6%, the bank rate
6%, you'd have 6 percent onthe 50 and 5 percent on the 40.
Kamil Sarji (22:10):
Wow, okay.
I guess that alsodepends, right?
So that's the commercialloan and anything between
that and the hard money?
Like, uh,
Alex Wallace (22:20):
so there is, you know, we work with lenders, like
light dock lenders, where therate is higher, but you don't
need to supply tax returns.
Kamil Sarji (22:28):
Who are these people?
Alex Wallace (22:29):
Just a lot of different lenders.
They're not quite, I mean,I wouldn't call them, you
know, private lenders.
Kamil Sarji (22:33):
Not dirty banks.
Alex Wallace (22:36):
But it's basically corporations that lend money.
So where you would see So
Kamil Sarji (22:39):
legit, like, let's say, I'm not
saying CVS, but CVS, like
Alex Wallace (22:44):
No, no, no, no, no.
So it's still like, it'sstill a, you know, private
Kamil Sarji (22:46):
So their job is to
Alex Wallace (22:47):
Is lend money.
Yeah, they're lenders.
Kamil Sarji (22:49):
Okay.
Alex Wallace (22:50):
so essentially, I mean, essentially you're
looking at like DSCR lenders.
Kamil Sarji (22:53):
what's it stand for?
Alex Wallace (22:54):
Debt Service Coverage Ratio.
Kamil Sarji (22:56):
Okay.
Alex Wallace (22:57):
Which is a hot topic now with a lot of people.
Kamil Sarji (22:59):
How come?
Alex Wallace (23:00):
Because a lot more residential loan officers
have can say you wanted to buy afour unit property but you don't
show much income on your taxes.
Then they have the DSCRlenders where they don't
look at your tax returns.
We'd never use them as afirst, like a first pick.
Because the rate is higher.
And there are betterprograms out there.
Kamil Sarji (23:19):
Mm-Hmm.
. Alex Wallace (23:20):
You know, if the taxes aren't that
bad, then we will try toplace 'em with a bank.
If they are really just notpaying taxes, then you gotta
pay somebody and you're gonnapay it with a higher rate.
Kamil Sarji (23:29):
Mm.
Alex Wallace (23:30):
So that's the way that we look at it.
But that's kind of, I wouldsay that's a middle ground
between private lending.
'cause you can still get, Imean, I haven't checked the
rates on that this week, butyou know, I'd say decent credit,
you're probably looking at arate in the nines opposed to
12% with a private lender.
Kamil Sarji (23:44):
Wow.
Alex Wallace (23:45):
Some private lenders charge
even more than that.
Kamil Sarji (23:48):
If they're not looking at income, what do they
Alex Wallace (23:50):
They look at the income of the property,
opposed to personal income.
Kamil Sarji (23:53):
Oh, okay.
Um And that should be whatpercent of the income, the
payment, versus how they lookand see the income of this
place, versus your monthlypayments, are gonna be, like
Alex Wallace (24:04):
So they'd want to look at the debt service ratio.
I mean, this isn't theminimum, but say it was 1.
5.
So 1.
5 would be the incomeof the property.
And they would be lookingat an adjusted income.
So they take some expensesoff standard in the industry.
Everybody takes 5 percent offof the income for vacancy,
even if it's a single unit.
Kamil Sarji (24:24):
Yeah,
Alex Wallace (24:25):
but they're going to look at to make sure.
So say if it was adebt service of 1.
5, which would be a strongdebt service, that means
that the income of theproperty, the adjusted
income of the property is 1.
5 times the expenses.
Kamil Sarji (24:37):
Okay.
So let's say it's 1500a month just to make it
easy for the audience.
So if it's a 1500 a monththat it's bringing in this
property, you're saying
Alex Wallace (24:46):
if it's adjusted income was 1, 500.
Kamil Sarji (24:48):
Adjusted, after you remove the vacancy.
Alex Wallace (24:51):
And there's a couple others
that they take off.
But if it was if the adjustedincome was 1, 500, and all of
the expenses, mortgage payments,everything was 1, 000, that
would be a debt ratio of 1.
Kamil Sarji (25:02):
So 1, 500 income, but the loan is going to be 1,
000, that situation would work.
Alex Wallace (25:08):
The loan, so the principal, interest,
taxes, insurance, utilities,All of the expenses.
That's how they lookat everything, correct.
Kamil Sarji (25:16):
Okay.
Okay, cool.
That's an easy way to, uh,for people to think about it.
That's good.
But the rate is high, so.
Alex Wallace (25:24):
Exactly, because they don't want to show that
their income on their taxes.
So you gotta, you know,everybody's got to pay somebody.
And
Kamil Sarji (25:30):
so the 1, 000 here, you know, could be
like 700 somewhere else.
Alex Wallace (25:35):
Yeah,
Kamil Sarji (25:36):
payment of a thousand could
be 700 another place.
Okay, cool.
Wow.
Awesome.
DSLR.
Camera.
Is that what it's?
Alex Wallace (25:45):
DSCR.
Kamil Sarji (25:48):
DSCR.
Okay, cool.
Not the camera, the other one.
Alright, and then anythingelse between hard money?
Alex Wallace (25:54):
In between those, no.
Then you got private money.
Kamil Sarji (25:57):
Private money, yeah, let's talk about that.
Alex Wallace (25:59):
So private money, hard money, same thing.
Kamil Sarji (26:01):
Uh huh.
Alex Wallace (26:02):
short term loan, secured by the real estate.
Want to make sure youhave an exit strategy.
That's really what it comesdown to, is with short term
finance and you have to have aplan on how to get out of it.
Kamil Sarji (26:12):
So if I had 500, 000, right, I go to
you and I say, Hey, couldyou add me to your list?
Is that what happens?
Alex Wallace (26:18):
Generally not.
I mean, we have, potentially,we can entertain it.
But, it's that, you know,we meet lenders, or we have
pools of hard money lenders.
It's just like with thebank, or any other lender.
You know, we puttogether a package.
We say, hey, theseare the strengths.
If there's any weaknesses,these are the weaknesses.
This is what the clientis trying to do, and this
is what our plan is toget them out of the loan.
(26:39):
The exit strategy.
Whether that is, you know,if it was a flip, you
know, they're going to sellthe property afterwards.
If they wanted to hold it.
You know, we'd figureout how it's the best
way to refinance them.
So then they'd be able torefinance the hard money loan.
Kamil Sarji (26:52):
So they all like you have to make sure like
each one has their own rulesor set of rules how they want.
Alex Wallace (26:59):
Yeah, because I mean there are some may
have no prepayment period.
Others may have aprepayment period.
Some have, you know, higherpoints, no matter what, like
a hard money lender is goingto want points up front.
Those are really the bigones with the private money.
Private money lenders,a lot, will still want
to see an environmental,an environmental report.
Make sure that there are noenvironmental issues, because
(27:19):
once a borrower buys theproperty, any environmental
issues then becomes theirenvironmental issues.
Kamil Sarji (27:25):
So, for the audience, like, if someone's
buying a property, the bankis lending them money, this
property could have a leakof some kind that's toxic,
where a DEM comes in andsays, oh my gosh, there's
toxic stuff being leaked.
And they're like, itwasn't, it's not my fault.
Well, it's your fault now.
Alex Wallace (27:47):
Because you own the property.
Kamil Sarji (27:48):
Yeah.
And then they're like, allright, you owe a million dollars
to get all this stuff cleaned.
And now the lender'slike, oh my God.
So that's why
Alex Wallace (27:56):
That's why environmentalists are
down there to prevent.
Or, say somebodybought a property cash.
You know, they were like,Alright, I got the money,
I'm just gonna buy it.
I don't wanna have to waste mytime getting environmental done.
If they go to sell thatproperty and somebody has an
environmental done, you know,part of their due diligence and
something is found, then they,that's their responsibility.
And in an environmental company,you know, they need to report
(28:16):
what they find to the DEM sothey know what's going on.
And that's why it's importantwhen somebody buys a
property, you know, that couldpotentially have environmental
issues to get it done.
You know, a phase oneenvironmental is maybe somewhere
in a ballpark of 2, 800.
But in the grand schemeof things, it's not
much compared to it.
So a phase one you'relooking at around 2, 800.
Could be a little lower,could be a little higher.
(28:36):
A phase two environmental,then you're starting to get
into five digit numbers.
You know, it could be 10, 000.
Maybe it's 8, 500.
Kamil Sarji (28:44):
Where they dig deeper.
Alex Wallace (28:46):
Where they try to see exactly, you
know, what could be here.
And then if they findthings and there needs to
be remediations, that couldbe, you know, say 20, 000.
We've seen it be 100, 000.
Makes a deal fall apart.
But those are all that100, 000 of remediation.
If you own that property,that is your responsibility.
Kamil Sarji (29:04):
You have to pay.
Okay, so let's say Iwant to buy a property.
Okay, and the seller's like,oh yeah, great, you can buy it.
Alright, yeah, letme get the lender.
Oh, I need a phaseone, environmental.
Okay, I do that.
They find an issue, theperson doing the phase one.
They're required to reportthis immediately to DEM.
Alex Wallace (29:26):
I don't know if it's immediately.
Kamil Sarji (29:28):
Well, okay.
But, they are
Alex Wallace (29:30):
they are, they, that, eventually, like, what
gets found gets reported to DEM.
Kamil Sarji (29:33):
And I pull out of the deal, and this
old owner is screwed.
Right?
Heh.
Alex Wallace (29:37):
Yeah, they gotta fix it.
Or they gotta find outwhat, you know, maybe
a phase two is going.
Kamil Sarji (29:41):
They just have to go bankrupt.
They can't, they can't,you know, like, wow,
that's interesting.
Okay, so back to the hardmoney lenders, because you said
something interesting, you saidthe pool of hard money lenders.
I'm envisioning all thesebig sweaty guys with
like hairy in one pooltogether, swimming pool.
But that's not what's happening.
It's these hard money lendersthat have, let's say, 500,
(30:03):
000 each and someone's like,I need to borrow 10 million.
These guys get together andput their money together?
Is that what you're saying?
Alex Wallace (30:09):
There are some lenders will put
their money together.
Kamil Sarji (30:11):
Okay.
Realistically, three guys.
Like could you guys putpeople like that together?
Alex Wallace (30:15):
Possibly.
Have we had to yet?
I don't think so.
Maybe.
Kamil Sarji (30:20):
Hmm.
What if someone isn't that rich?
They don't have 500,000.
What if someone has like5,000 or 10,000, but there's
like a hundred of these?
5, 000 10, 000 people.
Alex Wallace (30:31):
I mean, that's not something that we would touch.
Um, that's a lot of,that's a lot of people
Kamil Sarji (30:36):
to manage.
Alex Wallace (30:37):
Yeah.
I mean, that's something foran attorney, realistically,
or somebody, because, youknow, then you have to figure
the corporate structure.
Yeah.
Because they're all, thatwould be a hundred people
all in one corporation.
Kamil Sarji (30:47):
Yeah.
Alex Wallace (30:48):
They'd have 1 percent interest
in that corporation.
Yeah.
Because that's really what itcomes down to with the private
money with things like that isor anything You know, you hear
about people having investmentsyndicates where multiple people
partner up to invest in propertyMaybe that would be something
somebody needed to raise allthat money, you know, they
take on some partners I mean,that's you know, that's that
(31:08):
it comes down to I mean, it'ssomebody's personal corporation.
That's lending the moneySometimes people will end
it in their own name It'sa corporation lending
it, you know, an LLC.
Yeah, sometimes a couplelenders will combine
forces to lend money.
Some private money lenders arejust larger and, you know, they
have the ability to lend it.
But also, I mean, if you werelooking at, you know, ten
million dollars I don't thinkyou'd want to have a 10 million
(31:30):
dollar hard money loan becausethat's you know, if you look at
Kamil Sarji (31:35):
Because banks, I mean dirty banks, they'd
be down to lend to you but
Alex Wallace (31:39):
Well, no, I mean if it was a regular bank
will lend 10 million dollars.
It just depends on whatyou're trying to do.
I mean something else you gotto think of with private money
is when you approach it, yougot to ask yourself, would you
lend this person that money?
That's, you know, oneof the first questions.
Is this a deal that'sgoing to work or not?
Kamil Sarji (31:56):
Okay,
Alex Wallace (31:56):
would you lend a person the money?
You know, why do they needprivate lenders to lend
them 10 million dollars?
Opposed to why can'tthey go to a bank?
You know, what is it?
Do they not have enoughmoney to have, you
know, skin in the game?
If that's the case, aprivate money lender is not
going to lend it to them.
You know, it's allof their money that's
gonna be on the line.
(32:16):
This guy's not gonna haveany money on the line.
Kamil Sarji (32:18):
Yeah.
Alex Wallace (32:18):
So that's something to think about
too, regardless of whetherit's private money, if
it's bank financing.
Kamil Sarji (32:24):
Yeah, you gotta get a good feeling
about what you're doing.
If something seems suspicious,and I'm sure you've had
suspicious stuff thatyou tiptoed away from, or
said, we can't do this.
Alex Wallace (32:33):
Yeah, there's, I mean, there's definitely
been times where we've said,you know, we can't, we can't.
Do something like this.
Kamil Sarji (32:38):
I know you can't say it on camera about,
Alex Wallace (32:40):
well, no, nothing.
Nothing ridiculous.
But yeah.
You know, you gotta pickand choose sometimes.
I mean, one thing to thinkabout too is, you know, a lot of
times if somebody has a felonyand they won't lend to them.
Kamil Sarji (32:50):
Mm.
Alex Wallace (32:51):
Even, I mean, sometimes if you look at
that though, that's like awhole nother conversation.
'cause it's.
You know, if somebody has afelony from 20 years ago, that
shouldn't make it so that abank won't lend them money.
You know, there'ssupposed to be reform.
Kamil Sarji (33:03):
Yeah.
Alex Wallace (33:04):
But especially, you know, if it's a felony
for something that was sofar in the past or something
that was nonviolent,
Kamil Sarji (33:10):
Hmm.
Alex Wallace (33:10):
Somebody shouldn't be continuing
to have to pay that debt.
So far afterwards.
Kamil Sarji (33:15):
That's awesome.
Yeah, we covered a lot of thingsthat I wanted to talk about.
How do people find you guys?
Alex Wallace (33:22):
They can find us online at
cornerstonecommercialcapital.
com.
We are on Facebook underCornerstone Commercial Capital.
Or I would also have,maybe at the bottom of the
screen, our phone number.
Or just in thecomments, something.
Kamil Sarji (33:36):
We don't have the technology to do that yet.
Alex Wallace (33:39):
All right.
But our phone number, ifsomebody wants to call
in, is 401 603 3732,that is an office number.
So it will not get texts.
Kamil Sarji (33:49):
Okay.
Alex Wallace (33:49):
But there is always somebody in to answer
questions, and most likely theywould either be speaking to
myself Or to my father, Bill
Kamil Sarji (33:56):
who's an awesome guy.
Bill is really cool.
Yeah, and I heard that you'regonna be out there more,
you're gonna be the the face.
Alex Wallace (34:03):
Yep.
Yep.
Be out there, out and aboutwhen I am not behind my desk.
Kamil Sarji (34:07):
That's exciting.
Alex Wallace (34:08):
So I'm always there.
I don't, you know, peopleask me all the time, oh,
can we, can we get lunch?
Can I meet you for lunch?
And it's, nope.
I ate lunch at my deskwhile I'm working on
paperwork or answeringquestions on the phone.
Kamil Sarji (34:19):
Yeah, that's awesome.
Yeah, definitelygood as a realtor.
Having you guys as partnersis super important, because
you make us look good.
Like, someone wants to buysomething that's, you know,
they're like, oh, I can't putthe money together to get this.
And it's like, well, yeah,I get you, connection.
That's what I've done foryou, like, since stuff over.
But yeah, definitelygood real estate partner.
(34:41):
And thanks very much for comingdown and being interviewed.
Alex Wallace (34:44):
Thank you for having me.
Welcome everybody, I am Kamil Sarji, your
host of Just Two Minutes.
And today I have Alex here.
Alex, you want totell us about you?
Alex Wallace (00:07):
Yeah, so, uh, my name is Alex Wallace.
I work at CornerstoneCommercial Capital.
I am the vice president.
The company was started bymy father, Bill Wallace.
We've been in business nowfor 10 years and we handle
commercial financing.
Kamil Sarji (00:20):
Awesome.
Thank you very muchfor being on my show.
Alex Wallace (00:23):
Thank you for having me.
Kamil Sarji (00:23):
So yes, I'm excited to talk to you
about commercial lending.
But first, as you know, we haveour Just Two Minutes questions.
So are you ready for action?
Sure.
All right.
And go.
All right.
If scientists got togetherand said, Hey, water
(00:45):
is actually bad for us.
What would you drink?
Alex Wallace (00:52):
Mango juice.
Kamil Sarji (00:56):
How come mango juice, not any other fruit?
Alex Wallace (00:58):
It's real sweet.
Or maybe watermelon.
I suppose watermelon wouldbe the second closest.
I still got water in there, but
Kamil Sarji (01:06):
I am with you on the watermelon.
Um, do you believe in ESP?
Alex Wallace (01:11):
Mind reading?
Kamil Sarji (01:15):
Don't stop! Are you reading my mind?
Do you?
Alex Wallace (01:21):
Maybe.
Kamil Sarji (01:22):
Maybe.
Okay, if it was true, howdo you think it would work?
Like,
Alex Wallace (01:28):
if it was true, I think you would
have just heard me say yes.
Kamil Sarji (01:31):
Okay, I shouldn't have asked then.
Um, alright, so, uh, if you wereto pick any job, the whole post
office organization, what, whatwould, what job would you have?
Alex Wallace (01:48):
Postman.
Delivering mail.
Kamil Sarji (01:50):
Hmm.
Where would youdeliver mail, mail to?
Like, what city?
In Rhode Island?
Alex Wallace (01:55):
In Rhode Island?
Probably Newport.
Kamil Sarji (02:00):
Newport.
Cool.
Would you wear the shorts?
Awesome.
Um, if you had to pickbetween two best friends
to live in a home with,uh, a crocodile or a tiger,
which one would you choose?
Alex Wallace (02:17):
Crocodile.
Kamil Sarji (02:21):
And, um, uh, like what room would you give
and dedicate to that, uh?
Alex Wallace (02:27):
to the crocodile, bathroom
Kamil Sarji (02:29):
The bathroom?
If you need touse it, it's okay.
Alex Wallace (02:32):
It's okay.
I have a very big bathtub.
Kamil Sarji (02:35):
Okay.
Um, alright.
Awesome.
And then, uh, last thing.
Oh.
Alright.
That was it.
No, last thing.
What did you think?
Alex Wallace (02:48):
It was great.
Kamil Sarji (02:50):
Cool.
So, commercial lending.
Let's talk about that.
I know, as a realtor, weget into the territory of
like over five family, nowit's a commercial, now I
can't lend money to you.
Let's start off with that,with that kind of scenario.
What do you have for someonewho wants to live in the
(03:10):
property, or is it not possible?
Alex Wallace (03:12):
So if it was a five family, and they wanted to
live in the property, Then, likewe do have programs for that.
Like we would, as long as theyqualified, I mean, we would
place them into a bank loan.
It's basically, I mean,it's pretty similar to an
investment property loan.
It's just a lower downpayment because they
would be living there.
So they would actually,they'd be able to take
advantage of 20 percent downopposed to 25 percent down.
That's the, really thebiggest difference.
(03:32):
I mean, they would still,you know, we'd have to make
sure that their personalincome would be able to pay
for their contribution to thetotal income of the property.
Cause generally if somebodywasn't going to live in the
property, I would say whenlooking for like an approval
on a loan, their personalincome is maybe like 20
percent of the total pie.
Really banks look at theproperty itself as, as
(03:54):
like an independent entity.
And the income generated bythat property is what's going
to support the mortgage.
When you are one of the tenantsin there yourself, or, you know,
you're the owner, you're oneof the occupants, you know, the
bank is going to want to makesure that you can afford your
portion of the contribution.
Kamil Sarji (04:09):
Okay, interesting.
So in a regular residentialloan, you know, you get your
loan through whatever companyand the next thing you know, you
get a letter saying, Oh, thisis your new mortgage company.
So Freddie Mac, doesthat scenario happen with
those types of loans?
Alex Wallace (04:23):
It really depends on the bank.
Some banks like toservice their own loan.
Some banks will sell the loan toa servicer, to another entity.
I would say, I believe allof the banks that we work
with service their own loans.
I can't say for surebecause there are a
lot that we work with.
Kamil Sarji (04:37):
Yeah.
Alex Wallace (04:37):
But I would say the majority of them
service their own loans.
Kamil Sarji (04:40):
Hmm.
Yeah, it's tricky when theyservice their own loan because
they have a pool of moneyand then now it's like, you
know, that's taken and so Iguess they have to, eventually
they, if they need more money,they just sell it and, right?
Is that how that works?
Alex Wallace (04:53):
Yeah, or, I mean, that's more of a question
for the bank themselves.
But I think usually whenit comes to banks, like
especially on the commercialside, a lot of times they do
hold on to the commercial,the commercial loans.
The term of a commercialloan is also shorter.
I mean, generally you're lookingat 25 years opposed to 30.
Some banks will do a 10 yearterm, but they always give an
option to, or almost alwaysgive an option to renew.
(05:15):
As long as you have a goodrelationship with the bank.
Kamil Sarji (05:16):
Does Freddie and Fannie think that
those loans are too riskyfor them to, uh, use?
Take or
Alex Wallace (05:22):
it's a question for a residential loan officer.
So I don't dealwith either of them.
Kamil Sarji (05:26):
Okay.
Yeah with commercial There's somany different programs, right?
There's so many differentsituations and scenarios.
How do you keepup with all that?
Alex Wallace (05:33):
I realistically it's just every so often
I'll speak with the lendersand see you know, do they
have any updated programs?
Do they have any newprograms when I first get in
touch with a newer lender?
One of my questions is you know,what are their oddball loans?
You know, what do theylend that's different?
You know, some banks,especially because we're in
Rhode Island and Massachusetts,you know, or I'd say probably
in New England in general,some banks will offer loans
(05:54):
specifically for fishing boats.
You know, that might not besomething that you think of
off the top of your head,but we are coastal states,
and that's something thatcan get taken advantage of.
And it really comes down to,I mean, it's just like with
each lender, you know, theyall have their own preference.
Some lenders aremore preferential to
apartment buildings.
Others may want likeindustrial properties.
(06:15):
So that's one of the otherreasons why we work with so
many different lenders is justso that we know that our client
and the bank makes a good fit.
You know, we know what theclient is looking for, we
know what the bank is lookingfor, and that's why we try
to bring the two together.
Kamil Sarji (06:28):
Okay, so my mind is like logical thinking so
now you're dealing with like10 15 different banks and 10 15
different scenarios and you'remeeting with a new client.
How can you pick which programis gonna work for them?
Is it do you have like ina spreadsheet or how do you
Alex Wallace (06:45):
know?
I mean really what it comes downto is, you know So we'll have
a conversation with a clientto start to figure out, you
know, what are they picturing?
What's their plan?
We get their ducks in a rowYou know, we kind of have
a little strategy section,sit down and we figure out,
all right, what's your goal,what are you trying to do,
and what are your resources?
So that's when we collect alltheir documents for pre approval
and we see, you know, all right,these are their strengths, what
(07:07):
are their strengths, what aretheir weaknesses, and we just
see what lines up, really.
You know, we take it onestep at a time and we
try not to, you know, wedon't rush into anything.
Put the feelers out, see who'sinterested and what the person
is trying to do, and that'show we figure it out, really.
Kamil Sarji (07:22):
Okay.
Alex Wallace (07:23):
It's just a lot of communication, that's really
what it comes down to, is wejust make sure everybody's
on the same page and, youknow, we try to make sure
everybody gets what they want.
Kamil Sarji (07:30):
And you kind of remember, like, one
of those 15 offers, andyou're like, oh yeah, this
scenario would definitelywork with that, right?
Alex Wallace (07:37):
Absolutely, when somebody first calls
in before I even get anydocuments or anything, you
know, I'll start thinking.
All right, where willthis person be a good fit?
And then, you know, it may beall right Maybe the first one
that I thought of is the rightfit or maybe, you know We'll
we'll be going through theinformation and all right This
isn't quite the fit for them,but I know that this person
would love to get involvedSo that's I mean, it's also
(07:59):
just from experience too, youknow, you do it long enough
You know which shape willfit into which place and you
know You just fit it there.
And yeah, it's alot of practice.
Kamil Sarji (08:09):
So now you get this client and you've already
select or already envisioned whowould be a perfect fit for them.
So, I mean, it's completelydifferent from residential,
like your situation, your life,and the way you do things.
Do you create, like a realtor,an offer package that you
send over to the lender?
Alex Wallace (08:30):
Yeah, I mean basically, so it's
not like an offer, but itis a preliminary package.
So I'll get, you know, thepertinent information together,
let them know, all right,here, this is the property.
So I mean, a lot of it alsocomes down to the property
too, and making sure thatthe property is gonna be
profitable and be ableto support its mortgage.
So I get the informationabout the property, I get the
(08:50):
information about the borrower.
Present it to the lenderas a preliminary package.
They say, all right, yeah,we're interested in this.
And then we get all of theother information together
and get sent over there,goes through, like we always
work with, you know, at thesenior vice president level,
junior vice president, thevice president level of the
lender, and they're the ones,if they're interested, goes
(09:11):
into underwriting and we makesure we get the underwriters
everything that they need.
Kamil Sarji (09:15):
Awesome.
Nice.
So it is literally like,Hey, here's this packet.
Look how awesome this person is.
And look how awesomethis property is.
Like it's prettygreat deal for you.
And you know,
Alex Wallace (09:29):
yeah.
If there is any issues,say a borrower had like a
bankruptcy or if they had saythat they didn't have great
credit, their credit's okay.
They haven't had anyleaks in a while.
We try to bring upany issues that could
come up down the line.
We try to bring it up fromthe very beginning so that
everybody's on the samepage from the beginning
and there are no surprises.
It's also why it's veryimportant for clients to
(09:49):
be clear and let us knowif there's anything that
we should be aware of.
Because if we're up front aboutit with the lender, well that's
all, that's all well and fineand we can get through it.
If it comes up, if the lenderfinds out on their own or
it seems like, you know,the borrower's trying to
withhold information, thenthere's issues down the line.
Kamil Sarji (10:07):
Yeah.
Yeah, and that's how youguys get your good reputation
because you're getting all thisinformation in the beginning
So there's no surprises exactlyand mess up the whole loan Now
you have someone pissed offthat they can't get what they
thought they were gonna get.
Alex Wallace (10:20):
Exactly.
Kamil Sarji (10:21):
Awesome.
that's really great So oncethey get through that once
the bank picks them and I meanis this process similar With
all the loans that you offer
Alex Wallace (10:32):
for the most part.
I mean if it's not like acookie cutter pretty simple
I know when somebody willsay, alright, this is a great
deal, let's run with it.
Even then, stuffwill still come up.
You never know, you know,you're dealing with people.
So, um, everybody's different.
But, you know, no matterthe program, I would
say it's pretty similar.
It's just, you know, themore documentation, the
(10:53):
more paperwork needed,there's more information
needed from the client.
You know, if we're doingsomething with private
money that can close in twoweeks, a lot less is needed
than if we were doing, say,an SBA loan, which takes,
you know, you're lookingat 90 days, if not longer.
And you're dealing with thefederal government so that
they require substantiallymore information.
(11:13):
But you're also getting betterterms and a better rate than
you would with private money.
So it really depends on theprogram and the borrower.
It's all, it'smulti faceted, yeah.
Kamil Sarji (11:21):
Oh man, okay.
All right, so onceyou've connected them,
what's your next steps?
Alex Wallace (11:27):
So I'm always the intermediary.
We're working with boththe lender and the client
every step of the way.
We're there from pre approvalto the closing table.
So we coordinatewith the lender.
We will coordinate.
So say, you know, makes itthrough underwriting, borrower
gets their commitment letter.
So the bank says, allright, we've committed
to lending you money.
We need to make sure thatthe property appraises.
(11:49):
If it was something where wewere going off of projections,
those projections need to beverified with the appraisal.
And from there, you know,say everything's going fine.
Well, then we work withthe insurance agent.
We work with theborrower's attorney.
We work with thebank's attorney.
Really, if anything is needed,you know, I'm on the phone
finding what needs to bedone and making sure that it
(12:10):
gets to where it needs to be.
So it's not just working withthe lender that we do, it's
really helping the borrowerevery step of the way.
Kamil Sarji (12:17):
Awesome
Alex Wallace (12:18):
you know, if somebody needs a referral,
we give them a referral.
We just try to makethe transaction as
smooth as possible.
Kamil Sarji (12:24):
Yeah, it sounds like a realtor like holding
their hand through the wholeprocess to the closing table.
That's pretty cool So oncethey do get to the closing,
I mean, that's the last step.
Anything I missed in between?
Alex Wallace (12:36):
No, I mean realistically if it was a
construction loan Then, youknow, the borrower would have
drawers after the fact, sothey'd have to have inspections
to get their drawers released.
But yeah, other than that,then they just, you know,
they have to make surethey make their payments.
And, you know, after a year,we're kind of distant memory
and they're happy to be intheir property or have their
(12:58):
business in a property orwhatever their plan was.
Kamil Sarji (13:01):
Awesome.
What's the craziestthing that you loaned
to, or helped loan to?
What's the wildest, uh,
Alex Wallace (13:11):
We did an adult bookstore in the south once,
because no one else, that'snot something that a bank
would really like to lend on.
So we were able to get thema lender and that was fine.
But nothing like, I didn'teven know, that's not like,
that's not that outlandish,you know, it's the person that
Kamil Sarji (13:26):
So why is that tough to get?
Alex Wallace (13:27):
Cause it's like, so, banks don't like to lend
on things that they would,so it was also a smoke shop.
Kamil Sarji (13:33):
Okay.
Alex Wallace (13:33):
Now banks are, like around here,
because marijuana's legal.
You know, some banks are moreopen to lending on anything
that has to do with cannabis.
It wasn't the case a fewyears ago, but I don't know.
I guess it's anything thatthey don't see as just
like a vanilla product,like a vanilla business.
And it kind of comes down,I don't know, it comes
(13:54):
down to, I don't want tosay it comes down to the
character of the business.
But, like, for instance, like,we can't do strip clubs, you
know, we always say we can lendto just about any business,
well, strip clubs, it's reallyanything in the vice industry.
So we can't lend to stripclubs, can't do casinos, and
if somebody, I don't remember,has 40 or 51 percent of income
(14:15):
is derived from gambling,those are really the big ones.
It's like, you know, we can dobars, we could do breweries.
Kamil Sarji (14:22):
Sounds like, you think religion plays a
factor in those decisions?
Alex Wallace (14:26):
I don't know if it's religion, but I think
it might be something to dowith like, public perception.
They're a bank, you know,you don't really think
of progressive banks.
Kamil Sarji (14:34):
Yeah, these are the normal banks.
These are the dirty banks.
Would you use a dirtybank if like, it's like,
oh, this is a dirty bank.
Would you go, would you use it?
Alex Wallace (14:44):
I mean, I don't know if I'd go
with the term dirty bank.
Then it sounds likethey're using stolen
money or dirty money.
Kamil Sarji (14:52):
They're just lending to non, like, you
know, like frowned uponplaces like strip clubs or,
Alex Wallace (14:58):
you know, I mean, I wouldn't care about that, but,
I think they, you know, we'rein Rhode Island and sometimes
it hasn't always been banksthat are lending money to strip
clubs, you know, I don't know.
Kamil Sarji (15:12):
All right, cool.
Well, thanks for takingus down that road.
Okay, so going backto the different
products that you have.
What's the fastest?
Alex Wallace (15:24):
Fastest product?
Kamil Sarji (15:25):
No, fastest closing that you've done.
Like, oh, I wantthis, want to buy it.
Alex Wallace (15:29):
Private money.
I mean, it's probably alittle less than two weeks.
Kamil Sarji (15:31):
Okay.
Alex Wallace (15:32):
I mean, realistically, it just
comes down to how longa title can get done.
that's really the determiner.
You have to have a cleantitle to buy a property.
Kamil Sarji (15:39):
Even refinance, they have to pull title.
Alex Wallace (15:41):
You never know what kind of lien.
Kamil Sarji (15:43):
Lender.
Oh, okay.
Okay.
Alex Wallace (15:44):
You know what?
If you have a million dollarmechanic lien on a property
or what, if there's any, alot of different kinds of
ways a lien could get puton there, you know, or just
like a second position.
So they have to makesure those aren't there.
They need to know, you know,what's, what's actually
going on with that property?
Kamil Sarji (15:59):
Because the trick is they buy the place
and then they get a loan onit, or second mortgage, and
they're like, oh, hey, Iwanna refinance my small loan.
But the title search pulls thatup and is like, wait a second,
you have other things thatare hanging on this property.
Alex Wallace (16:16):
Exactly, because you know, sometimes
people won't be very honestabout, you know, the money
that they owe on a property.
And that's like, gettingthe title, that's, that's
how you know, you knowexactly what they have.
So it really comes down to asquickly as a title can get done.
Yeah, I'd say I think there'smaybe like a week and a half.
We might have, it's beena long time, I don't
know, about a week.
Kamil Sarji (16:35):
What about the longest?
Alex Wallace (16:36):
I don't know.
The longest that,uh, over a year.
That's, I mean, thatkind of comes down to
the scope of a project.
You know, I did an SBAloan out of state and
it was just a big loan.
They had big plans and youknow, that's really, that's
kind of a barometer is howlarge is the scope of this work?
Cause you know, we haveto make sure all of
the bases are covered.
(16:56):
And SBA specifically, I mean,that is you're having the
federal government involved.
So, you know, they're gonnago through that with a fine
tooth comb and they could comeup with questions that, you
know, you are on, I would say.
Why are you askingthis right now?
But, you know, you gotta answerfederal government, and when
they ask you, gotta give theman answer, because that would be
something that they, you know,push the scale of yes or no.
Kamil Sarji (17:18):
So why, I mean, is that one of the big reasons why
SBA loans take so long to get?
Alex Wallace (17:24):
Because of working with them, yeah.
Kamil Sarji (17:25):
Yeah, because there's so many layers and so
many people that look at it andhave to approve it and sign and
they might not be working on aFriday, now you have to wait.
Alex Wallace (17:34):
And you have, there's a lot of, a lot
of cooks in the kitchen.
You know, you're not just havingone or two people sign off,
you have many people sign off.
Like this was amulti million dollar.
Project, you know, it's not likeit was a little one, but even
smaller ones, it's, you know,it depends on what your plan is.
It depends on the property, youknow, are there environmental
issues with the property?
Because then once there'senvironmental issues, that
(17:54):
can make it take a lotlonger because you need to
have multiple tests done.
What kind of remediationneeds to get done?
If it's construction, youknow, are the permits in place?
Are the quotes correct?
You know, they have a lotof boxes to check off and
that's what makes it takelonger is just making sure
that everything is correct.
Everything is approved.
But I say a lot of times, youknow, even when a product, like
when, when it does take a longtime to get a loan done, when
(18:17):
you're in the middle of it, itseems like it's, you know, a lot
longer, but once you get donewith it and it's successful and
it's in the rear view mirror,you know, it's in the past
and now you reap the benefits.
Kamil Sarji (18:29):
Awesome.
So that's the SBA loan.
So let's talk aboutbank commercial lending.
Alex Wallace (18:35):
Well, something with the SBA loan too.
Kamil Sarji (18:37):
Yeah.
Alex Wallace (18:37):
And it's always worth mentioning is, you know,
one of the advantages, like yes,an SBA loan does take a long
time, but, and sometimes theycan get done in 90 days, but
with an SBA loan, it also givesone, you know, I kind of look
at an SBA loan, the kind of thesame way as like a first time
home buyer and FHA loan wherethey're getting a better deal.
Yeah.
So an established businesscould get into a property
for 10 percent down payment.
(18:58):
With bank financing, like we'reabout to talk about, they would
be looking at 20 percent down.
Now an SBA loan is a littlebit more expensive to close
because there's more attorneysinvolved, but they're
getting a lower down payment.
The rate is a little bitlower because the SBA rate
is lower than the commercialbank rate, so you're kind
of looking at it as like twoloans almost, but it really is.
It's like you're buyinga home for your business.
(19:20):
And a lot of times it's thefirst time that they're buying
a brick and mortar location.
Yeah, so it can be a verypowerful tool for for
business owners Because itdoes allows them to have a
property for the business.
Kamil Sarji (19:30):
So you're saying SBA loan lower down payment
Versus a commercial which isalmost double or even more But
the thing is like the closingcost for the SBA loan is more
compared to the commercialBut wouldn't the closing costs
also be or might be as closeto the 20 percent that they're
gonna have to pay anyways
Alex Wallace (19:50):
Not really, especially not if they're
looking at a larger property.
So, you know, if you're buyinga property for 200, 000, maybe
you shouldn't get an SBA loan.
You know, it would be moreadvantageous to get a bank
loan because yes, your downpayment would be a little
higher, but you would beable to close quicker.
There wouldn't be as many hoopsthat you need to jump through.
More times than not, thereisn't as much paperwork.
(20:10):
But if you're looking ata larger property, that
10 percent difference indown payment is just going
to get larger and larger.
So even those moreexpensive closing costs
wouldn't be as big.
You know, comparatively.
So the larger the numberyou're working with,
those closing costs don'tplay as much of a role.
Kamil Sarji (20:25):
Mm hmm.
And that's why it's good havingyou because you can look at
their situation and be like,yeah It's probably cheaper if
you did the commercial or it'scheaper if you do the SBA.
Alex Wallace (20:34):
Mm hmm,
Kamil Sarji (20:34):
depending on the situation.
That's great It's good to know.
So yeah, let's talkabout the commercial one.
What's, uh,
Alex Wallace (20:40):
It's basically, if you were to look at a
commercial loan, you know, bankfinancing, generally speaking,
you're looking at a 25 yearterm, 25 year amortization,
two months to close, 60days, and the majority of the
approval is based off of thedebt service of the property.
So it's looking at the incomeof the property versus the
expenses and mortgage payment.
And we would just want tomake sure that the property
(21:02):
is able to make those.
You know, pay all those expensesand then have money, you
know, to go in your pocket,go in the bank as reserves.
Kamil Sarji (21:09):
The rate, how's the rate on those types?
Alex Wallace (21:11):
So as of earlier this week, I believe
it was right around 6.
8.
Could even have been 6.
7 or 6.
68.
Somewhere right around there.
It's pretty close.
The rates have beencoming down lately.
Kamil Sarji (21:22):
Wow, okay.
Like, SBA loan is
Alex Wallace (21:25):
SBA, so I haven't checked the SBA rate,
but if the bank rate was 6.
8, my guess would be it's atleast 6.2 if not six percent.
Kamil Sarji (21:35):
Oh, just a little tiny bit lower.
Alex Wallace (21:36):
Yeah.
Kamil Sarji (21:37):
Okay,
Alex Wallace (21:37):
generally, I mean in the past it's been like a one
percent difference So whereasif you know if the bank rate
was six the SBA could be fiveYeah, the SBA rate is always a
little bit cheaper, but with anSBA loan you do have both So if
you're buying a property for ahundred thousand dollars just
for ease of numbers And you'regetting an SBA loan and you were
putting ten percent down you'dhave a loan the bank portion
(21:58):
would be fifty thousand YouSBA's portion would be 40, 000.
So you'd have, you know, ifthe rate was 6%, the bank rate
6%, you'd have 6 percent onthe 50 and 5 percent on the 40.
Kamil Sarji (22:10):
Wow, okay.
I guess that alsodepends, right?
So that's the commercialloan and anything between
that and the hard money?
Like, uh,
Alex Wallace (22:20):
so there is, you know, we work with lenders, like
light dock lenders, where therate is higher, but you don't
need to supply tax returns.
Kamil Sarji (22:28):
Who are these people?
Alex Wallace (22:29):
Just a lot of different lenders.
They're not quite, I mean,I wouldn't call them, you
know, private lenders.
Kamil Sarji (22:33):
Not dirty banks.
Alex Wallace (22:36):
But it's basically corporations that lend money.
So where you would see So
Kamil Sarji (22:39):
legit, like, let's say, I'm not
saying CVS, but CVS, like
Alex Wallace (22:44):
No, no, no, no, no.
So it's still like, it'sstill a, you know, private
Kamil Sarji (22:46):
So their job is to
Alex Wallace (22:47):
Is lend money.
Yeah, they're lenders.
Kamil Sarji (22:49):
Okay.
Alex Wallace (22:50):
so essentially, I mean, essentially you're
looking at like DSCR lenders.
Kamil Sarji (22:53):
what's it stand for?
Alex Wallace (22:54):
Debt Service Coverage Ratio.
Kamil Sarji (22:56):
Okay.
Alex Wallace (22:57):
Which is a hot topic now with a lot of people.
Kamil Sarji (22:59):
How come?
Alex Wallace (23:00):
Because a lot more residential loan officers
have can say you wanted to buy afour unit property but you don't
show much income on your taxes.
Then they have the DSCRlenders where they don't
look at your tax returns.
We'd never use them as afirst, like a first pick.
Because the rate is higher.
And there are betterprograms out there.
Kamil Sarji (23:19):
Mm-Hmm.
. Alex Wallace (23:20):
You know, if the taxes aren't that
bad, then we will try toplace 'em with a bank.
If they are really just notpaying taxes, then you gotta
pay somebody and you're gonnapay it with a higher rate.
Kamil Sarji (23:29):
Mm.
Alex Wallace (23:30):
So that's the way that we look at it.
But that's kind of, I wouldsay that's a middle ground
between private lending.
'cause you can still get, Imean, I haven't checked the
rates on that this week, butyou know, I'd say decent credit,
you're probably looking at arate in the nines opposed to
12% with a private lender.
Kamil Sarji (23:44):
Wow.
Alex Wallace (23:45):
Some private lenders charge
even more than that.
Kamil Sarji (23:48):
If they're not looking at income, what do they
Alex Wallace (23:50):
They look at the income of the property,
opposed to personal income.
Kamil Sarji (23:53):
Oh, okay.
Um And that should be whatpercent of the income, the
payment, versus how they lookand see the income of this
place, versus your monthlypayments, are gonna be, like
Alex Wallace (24:04):
So they'd want to look at the debt service ratio.
I mean, this isn't theminimum, but say it was 1.
5.
So 1.
5 would be the incomeof the property.
And they would be lookingat an adjusted income.
So they take some expensesoff standard in the industry.
Everybody takes 5 percent offof the income for vacancy,
even if it's a single unit.
Kamil Sarji (24:24):
Yeah,
Alex Wallace (24:25):
but they're going to look at to make sure.
So say if it was adebt service of 1.
5, which would be a strongdebt service, that means
that the income of theproperty, the adjusted
income of the property is 1.
5 times the expenses.
Kamil Sarji (24:37):
Okay.
So let's say it's 1500a month just to make it
easy for the audience.
So if it's a 1500 a monththat it's bringing in this
property, you're saying
Alex Wallace (24:46):
if it's adjusted income was 1, 500.
Kamil Sarji (24:48):
Adjusted, after you remove the vacancy.
Alex Wallace (24:51):
And there's a couple others
that they take off.
But if it was if the adjustedincome was 1, 500, and all of
the expenses, mortgage payments,everything was 1, 000, that
would be a debt ratio of 1.
Kamil Sarji (25:02):
So 1, 500 income, but the loan is going to be 1,
000, that situation would work.
Alex Wallace (25:08):
The loan, so the principal, interest,
taxes, insurance, utilities,All of the expenses.
That's how they lookat everything, correct.
Kamil Sarji (25:16):
Okay.
Okay, cool.
That's an easy way to, uh,for people to think about it.
That's good.
But the rate is high, so.
Alex Wallace (25:24):
Exactly, because they don't want to show that
their income on their taxes.
So you gotta, you know,everybody's got to pay somebody.
And
Kamil Sarji (25:30):
so the 1, 000 here, you know, could be
like 700 somewhere else.
Alex Wallace (25:35):
Yeah,
Kamil Sarji (25:36):
payment of a thousand could
be 700 another place.
Okay, cool.
Wow.
Awesome.
DSLR.
Camera.
Is that what it's?
Alex Wallace (25:45):
DSCR.
Kamil Sarji (25:48):
DSCR.
Okay, cool.
Not the camera, the other one.
Alright, and then anythingelse between hard money?
Alex Wallace (25:54):
In between those, no.
Then you got private money.
Kamil Sarji (25:57):
Private money, yeah, let's talk about that.
Alex Wallace (25:59):
So private money, hard money, same thing.
Kamil Sarji (26:01):
Uh huh.
Alex Wallace (26:02):
short term loan, secured by the real estate.
Want to make sure youhave an exit strategy.
That's really what it comesdown to, is with short term
finance and you have to have aplan on how to get out of it.
Kamil Sarji (26:12):
So if I had 500, 000, right, I go to
you and I say, Hey, couldyou add me to your list?
Is that what happens?
Alex Wallace (26:18):
Generally not.
I mean, we have, potentially,we can entertain it.
But, it's that, you know,we meet lenders, or we have
pools of hard money lenders.
It's just like with thebank, or any other lender.
You know, we puttogether a package.
We say, hey, theseare the strengths.
If there's any weaknesses,these are the weaknesses.
This is what the clientis trying to do, and this
is what our plan is toget them out of the loan.
(26:39):
The exit strategy.
Whether that is, you know,if it was a flip, you
know, they're going to sellthe property afterwards.
If they wanted to hold it.
You know, we'd figureout how it's the best
way to refinance them.
So then they'd be able torefinance the hard money loan.
Kamil Sarji (26:52):
So they all like you have to make sure like
each one has their own rulesor set of rules how they want.
Alex Wallace (26:59):
Yeah, because I mean there are some may
have no prepayment period.
Others may have aprepayment period.
Some have, you know, higherpoints, no matter what, like
a hard money lender is goingto want points up front.
Those are really the bigones with the private money.
Private money lenders,a lot, will still want
to see an environmental,an environmental report.
Make sure that there are noenvironmental issues, because
(27:19):
once a borrower buys theproperty, any environmental
issues then becomes theirenvironmental issues.
Kamil Sarji (27:25):
So, for the audience, like, if someone's
buying a property, the bankis lending them money, this
property could have a leakof some kind that's toxic,
where a DEM comes in andsays, oh my gosh, there's
toxic stuff being leaked.
And they're like, itwasn't, it's not my fault.
Well, it's your fault now.
Alex Wallace (27:47):
Because you own the property.
Kamil Sarji (27:48):
Yeah.
And then they're like, allright, you owe a million dollars
to get all this stuff cleaned.
And now the lender'slike, oh my God.
So that's why
Alex Wallace (27:56):
That's why environmentalists are
down there to prevent.
Or, say somebodybought a property cash.
You know, they were like,Alright, I got the money,
I'm just gonna buy it.
I don't wanna have to waste mytime getting environmental done.
If they go to sell thatproperty and somebody has an
environmental done, you know,part of their due diligence and
something is found, then they,that's their responsibility.
And in an environmental company,you know, they need to report
(28:16):
what they find to the DEM sothey know what's going on.
And that's why it's importantwhen somebody buys a
property, you know, that couldpotentially have environmental
issues to get it done.
You know, a phase oneenvironmental is maybe somewhere
in a ballpark of 2, 800.
But in the grand schemeof things, it's not
much compared to it.
So a phase one you'relooking at around 2, 800.
Could be a little lower,could be a little higher.
(28:36):
A phase two environmental,then you're starting to get
into five digit numbers.
You know, it could be 10, 000.
Maybe it's 8, 500.
Kamil Sarji (28:44):
Where they dig deeper.
Alex Wallace (28:46):
Where they try to see exactly, you
know, what could be here.
And then if they findthings and there needs to
be remediations, that couldbe, you know, say 20, 000.
We've seen it be 100, 000.
Makes a deal fall apart.
But those are all that100, 000 of remediation.
If you own that property,that is your responsibility.
Kamil Sarji (29:04):
You have to pay.
Okay, so let's say Iwant to buy a property.
Okay, and the seller's like,oh yeah, great, you can buy it.
Alright, yeah, letme get the lender.
Oh, I need a phaseone, environmental.
Okay, I do that.
They find an issue, theperson doing the phase one.
They're required to reportthis immediately to DEM.
Alex Wallace (29:26):
I don't know if it's immediately.
Kamil Sarji (29:28):
Well, okay.
But, they are
Alex Wallace (29:30):
they are, they, that, eventually, like, what
gets found gets reported to DEM.
Kamil Sarji (29:33):
And I pull out of the deal, and this
old owner is screwed.
Right?
Heh.
Alex Wallace (29:37):
Yeah, they gotta fix it.
Or they gotta find outwhat, you know, maybe
a phase two is going.
Kamil Sarji (29:41):
They just have to go bankrupt.
They can't, they can't,you know, like, wow,
that's interesting.
Okay, so back to the hardmoney lenders, because you said
something interesting, you saidthe pool of hard money lenders.
I'm envisioning all thesebig sweaty guys with
like hairy in one pooltogether, swimming pool.
But that's not what's happening.
It's these hard money lendersthat have, let's say, 500,
(30:03):
000 each and someone's like,I need to borrow 10 million.
These guys get together andput their money together?
Is that what you're saying?
Alex Wallace (30:09):
There are some lenders will put
their money together.
Kamil Sarji (30:11):
Okay.
Realistically, three guys.
Like could you guys putpeople like that together?
Alex Wallace (30:15):
Possibly.
Have we had to yet?
I don't think so.
Maybe.
Kamil Sarji (30:20):
Hmm.
What if someone isn't that rich?
They don't have 500,000.
What if someone has like5,000 or 10,000, but there's
like a hundred of these?
5, 000 10, 000 people.
Alex Wallace (30:31):
I mean, that's not something that we would touch.
Um, that's a lot of,that's a lot of people
Kamil Sarji (30:36):
to manage.
Alex Wallace (30:37):
Yeah.
I mean, that's something foran attorney, realistically,
or somebody, because, youknow, then you have to figure
the corporate structure.
Yeah.
Because they're all, thatwould be a hundred people
all in one corporation.
Kamil Sarji (30:47):
Yeah.
Alex Wallace (30:48):
They'd have 1 percent interest
in that corporation.
Yeah.
Because that's really what itcomes down to with the private
money with things like that isor anything You know, you hear
about people having investmentsyndicates where multiple people
partner up to invest in propertyMaybe that would be something
somebody needed to raise allthat money, you know, they
take on some partners I mean,that's you know, that's that
(31:08):
it comes down to I mean, it'ssomebody's personal corporation.
That's lending the moneySometimes people will end
it in their own name It'sa corporation lending
it, you know, an LLC.
Yeah, sometimes a couplelenders will combine
forces to lend money.
Some private money lenders arejust larger and, you know, they
have the ability to lend it.
But also, I mean, if you werelooking at, you know, ten
million dollars I don't thinkyou'd want to have a 10 million
(31:30):
dollar hard money loan becausethat's you know, if you look at
Kamil Sarji (31:35):
Because banks, I mean dirty banks, they'd
be down to lend to you but
Alex Wallace (31:39):
Well, no, I mean if it was a regular bank
will lend 10 million dollars.
It just depends on whatyou're trying to do.
I mean something else you gotto think of with private money
is when you approach it, yougot to ask yourself, would you
lend this person that money?
That's, you know, oneof the first questions.
Is this a deal that'sgoing to work or not?
Kamil Sarji (31:56):
Okay,
Alex Wallace (31:56):
would you lend a person the money?
You know, why do they needprivate lenders to lend
them 10 million dollars?
Opposed to why can'tthey go to a bank?
You know, what is it?
Do they not have enoughmoney to have, you
know, skin in the game?
If that's the case, aprivate money lender is not
going to lend it to them.
You know, it's allof their money that's
gonna be on the line.
(32:16):
This guy's not gonna haveany money on the line.
Kamil Sarji (32:18):
Yeah.
Alex Wallace (32:18):
So that's something to think about
too, regardless of whetherit's private money, if
it's bank financing.
Kamil Sarji (32:24):
Yeah, you gotta get a good feeling
about what you're doing.
If something seems suspicious,and I'm sure you've had
suspicious stuff thatyou tiptoed away from, or
said, we can't do this.
Alex Wallace (32:33):
Yeah, there's, I mean, there's definitely
been times where we've said,you know, we can't, we can't.
Do something like this.
Kamil Sarji (32:38):
I know you can't say it on camera about,
Alex Wallace (32:40):
well, no, nothing.
Nothing ridiculous.
But yeah.
You know, you gotta pickand choose sometimes.
I mean, one thing to thinkabout too is, you know, a lot of
times if somebody has a felonyand they won't lend to them.
Kamil Sarji (32:50):
Mm.
Alex Wallace (32:51):
Even, I mean, sometimes if you look at
that though, that's like awhole nother conversation.
'cause it's.
You know, if somebody has afelony from 20 years ago, that
shouldn't make it so that abank won't lend them money.
You know, there'ssupposed to be reform.
Kamil Sarji (33:03):
Yeah.
Alex Wallace (33:04):
But especially, you know, if it's a felony
for something that was sofar in the past or something
that was nonviolent,
Kamil Sarji (33:10):
Hmm.
Alex Wallace (33:10):
Somebody shouldn't be continuing
to have to pay that debt.
So far afterwards.
Kamil Sarji (33:15):
That's awesome.
Yeah, we covered a lot of thingsthat I wanted to talk about.
How do people find you guys?
Alex Wallace (33:22):
They can find us online at
cornerstonecommercialcapital.
com.
We are on Facebook underCornerstone Commercial Capital.
Or I would also have,maybe at the bottom of the
screen, our phone number.
Or just in thecomments, something.
Kamil Sarji (33:36):
We don't have the technology to do that yet.
Alex Wallace (33:39):
All right.
But our phone number, ifsomebody wants to call
in, is 401 603 3732,that is an office number.
So it will not get texts.
Kamil Sarji (33:49):
Okay.
Alex Wallace (33:49):
But there is always somebody in to answer
questions, and most likely theywould either be speaking to
myself Or to my father, Bill
Kamil Sarji (33:56):
who's an awesome guy.
Bill is really cool.
Yeah, and I heard that you'regonna be out there more,
you're gonna be the the face.
Alex Wallace (34:03):
Yep.
Yep.
Be out there, out and aboutwhen I am not behind my desk.
Kamil Sarji (34:07):
That's exciting.
Alex Wallace (34:08):
So I'm always there.
I don't, you know, peopleask me all the time, oh,
can we, can we get lunch?
Can I meet you for lunch?
And it's, nope.
I ate lunch at my deskwhile I'm working on
paperwork or answeringquestions on the phone.
Kamil Sarji (34:19):
Yeah, that's awesome.
Yeah, definitelygood as a realtor.
Having you guys as partnersis super important, because
you make us look good.
Like, someone wants to buysomething that's, you know,
they're like, oh, I can't putthe money together to get this.
And it's like, well, yeah,I get you, connection.
That's what I've done foryou, like, since stuff over.
But yeah, definitelygood real estate partner.
(34:41):
And thanks very much for comingdown and being interviewed.
Alex Wallace (34:44):
Thank you for having me.
Popular Podcasts
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.