November 17, 2025 • 46 mins
In this episode of The Rent-ish Podcast, Zach and Patrick sit down with Alex Bekeza — the most highly reviewed loan officer on BiggerPockets, to break down DSCR loans (Debt Service Coverage Ratio), how beginners can get started, and what you need to know about the lending market heading into 2026.
Whether you're trying to scale your rental portfolio, BRRRR your way to freedom, or lock in financing that actually works, this episode is loaded with strategies you can act on.
We cover:
- How DSCR loans actually work (in plain English)
- Market outlook and what investors should expect
- Common mistakes and how to avoid them
- Tips for first-timers getting into creative financing
Alex has personally originated over $100M in loans via BiggerPockets, is a seasoned BRRRR investor in Missouri and Texas, and a full-time dad of 3 who coaches baseball and trains Jiu Jitsu when he’s not helping investors scale.
If you’re serious about real estate, this one’s a must-listen.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_02 (00:35):
What's going on everybody?
Welcome to season two of theRent-Ish Podcast.
I'm Zach here with my co-hostPatrick.
SPEAKER_03 (00:41):
We're two rookies chasing the dream of real estate
investing.
In this podcast, we'll talkabout property management, wild
stories, and everything inbetween.
We don't know it all yet.
SPEAKER_02 (00:51):
But that's the point.
We're learning as we go, justlike you.
We'll bring in the experts toeducate and inform us and we'll
figure it out together.
So let's laugh, learn, and diveinto real estate side by side.
SPEAKER_03 (01:02):
Zach, how are you doing on this beautiful Monday?
SPEAKER_02 (01:04):
Whoa, it's changing it up.
I like that.
Yeah, that's cool.
That's really fun.
I don't know how to answer thequestion because I'm so taken
aback by you asking about mycurrent status instead of me
flipping it around the idea.
That's really sweet of you.
I'm tired.
How are you today?
I'm also pretty tired, but umYou said you had to get you were
forced awake an hour and a halfearly because of your your
(01:26):
girlfriend's mother.
Yeah, so she's um You want toelaborate on that?
SPEAKER_03 (01:30):
Yeah, she was going to the airport um and then
wanted to see our apartmentbecause my girlfriend moved in
with me, and so she was checkingout the apartment at 7 45 a.m.
So I had to be up and dressedbefore then.
Um yeah, so that's like askedcrack of dawn for me.
SPEAKER_02 (01:44):
That's uh Yeah, I want all of our listeners to
email questions attherentichpod.com if you think
7.45 is the crack of dawn.
I I have a feeling like a lot ofpeople are gonna disagree with
that sentiment.
But I was from the stay, what'sthe crack of dawn?
For me, it's when light crestsover the the the hill for the
first time.
SPEAKER_03 (02:02):
It's like 5 a.m.
like 5.30.
That's late at night.
So that's still the night, dude.
That's not the morning.
SPEAKER_02 (02:12):
That's a late night right there.
Okay.
SPEAKER_03 (02:14):
That's crazy.
SPEAKER_02 (02:15):
This is the Rentage Podcast, a podcast about
property management and realestate.
SPEAKER_03 (02:20):
Yeah, wait, don't we have an expert on today?
SPEAKER_02 (02:22):
Yeah, we do have an expert, so uh it's gonna be
quite the change of pace.
No, thank you for listening toanother episode of the Rentage
Podcast.
Today we have a great guestwho's going to teach us all
about loans, investing, andbrrrrr.
Because it's cold.
You know what I mean?
But that's also an acronym.
So I'm told.
Or you might hear about it inthe interview coming up that we
(02:43):
have with uh Alex Bakiza.
Uh so stay tuned for that.
Uh, and remember to follow thepodcast online, the Rent-Ish
Podcast on basically any podcastplatform where you get your
shows.
Uh email questions at therentish pod.com, follow us at
the rent-ish pod on socialmedia.
And uh, Patrick, what do yousay?
We just kick it over to theinterview.
Let's do it.
(03:07):
Welcome back to the Rent-Ishpodcast.
Today we've got a really, reallyexciting guest who's going to be
joining us, someone who's beenmaking serious waves in the real
estate investing world.
SPEAKER_03 (03:16):
That's right.
We're talking with Alex Bakiza,the most highly reviewed loan
officer on BiggerPockets.com.
So really bringing in the bigdogs this time.
Alex specializes in DSCR-basedfinancing, which I'm excited to
learn about what that is.
Uh, and purchased and rehab loanproducts.
He's originated over a hundredmillion dollars in loans for
(03:39):
investors.
Yep, that's right, Patrick.
SPEAKER_02 (03:41):
Not only that, he's also an investor himself, a
BRRRR guy with a portfolio ofrentals in Missouri and Texas.
So Alex really gets both sidesof the table.
Alex, welcome to the show.
All right, yeah, appreciate theintro, guys.
We really rehearsed thatmultiple times as you can't
tell.
We were in this.
We'll unpack a few of thoseacronyms.
(04:02):
Yeah, exactly.
Yeah, we're gonna unpack theacronyms.
We're gonna talk about a lot ofstuff.
We're gonna really get to knowAlex here.
He's we an awesome guest.
We're very, very happy to haveyou on board the Rentish pod.
Come and hang out with us.
Um, at the top of the hour,though, I gotta, I gotta tell
you a shout-out.
I know we know how we have audiolisteners, we have video
listeners now.
I gotta give you shout out toyour fish tank back there.
SPEAKER_00 (04:22):
Oh man, yeah.
This was, you know what, thiswas my COVID era uh gift to
self, stay sane, having to workfrom home uh investment, if you
will.
That's nice.
It's a good backdrop.
SPEAKER_02 (04:33):
It's like, are is he in an office?
Is he in the ocean?
I can't tell.
It's pretty crazy.
SPEAKER_00 (04:37):
Yeah, this is this is the home office today.
Yeah.
Cool.
And I it honestly is a nicerelaxing thing.
You actually find a lot of likehigh-stress jobs, keep one in
nearby, like uh attorneys anddoctors and things like that.
SPEAKER_02 (04:50):
Amazing.
Well, uh you've definitelyencouraged me to maybe invest in
the fish tank market.
So talking about your market,real estate, we're we're gonna
we we want to kind of get toknow you a little bit.
Tell us who you are, what likekind of where you've come from,
what made you interested in thereal estate industry, what got
you into the industry?
Just kind of tell us a littlebit about your backstory and
your your story leading up tonow.
SPEAKER_00 (05:11):
Yeah, I think it's probably really relatable for a
lot of your audience who's justtrying to break into it because
uh, I mean, I really came out ofnowhere, right?
I was um a restaurant generalmanager down here in SoCal and
Malibu and Santa Barbara,Calabasas areas, and I just
really hustled my way in up intothat spot in my early 20s, going
from the the busboy to the foodrunner to the server to the
(05:33):
system manager to the GM.
And then I think it was a greatexperience to you know spin a
lot of plates at once and andhave a lot of people working
under you and working through alot of like uh day-to-day
situations, people problems.
And then I just got lucky reallyand had some people who were
killing it in real estate whohad known me from when we were
young, had seen me hustling inthe restaurants and and said to
me one day, hey Alex, you reallygotta stop doing what you're
(05:56):
doing, especially as I had myfirst child and they knew I was
barely seeing him, right?
I was going dawn to dusk in therestaurants.
SPEAKER_01 (06:02):
Sure.
SPEAKER_00 (06:03):
And uh they said, Come in and learn how to do
mortgages.
This is about a decade ago.
And I kind of blew them off, youknow.
I I said, uh, you know, that'stoo intimidating.
I don't know what LTV means, Idon't know what APR, none of
that stuff is, you know, it'snot really for me.
And uh I think I was working onChristmas Day, missing it with
my little ones, and called themback and said, Hey, let me come
(06:23):
learn what you guys do overthere, you know?
So gives you a little bit ofcontext for why I was so
motivated to get on biggerpockets and start learning about
real estate from scratch.
And within the first few months,what I realized a lot of people
all over the country werelooking for were these certain
products and for certainstrategies, like DSCR loans, uh
hard money loans.
And these weren't necessarilyniches that a lot of my
(06:45):
colleagues were focused on, butit's really a way that I carved
my own lane, right?
And I found it the mostinteresting because it's it's so
different from conventionalfinancing, right?
I'm not calling your employer,I'm not calculating your
debt-to-income ratio and workingthrough your pay stubs or
anything like that.
It's really more about businesspurpose and and deal making.
And does this deal make sense?
SPEAKER_02 (07:05):
Okay.
Yeah.
So at what point in the process,like low so loan officer, you
were you work with all thisdifferent stuff.
What when did that officiallyget you?
When did you get that stamp?
When when did that happen foryou officially?
SPEAKER_00 (07:18):
Yeah, so for a little while I was like just
getting my uh cutting my teeth,if you will, processing loans
for experienced brokers, doingsome kind of like initial lead
gen type stuff, but during thattime I'm getting my licensing
and whatnot.
So I'd say like sometime in2017, I I officially got
licensed as a loan originatorand started getting very active
in the forums, you know, becauseI come across stuff on bigger
(07:40):
pockets all the time.
People would say things like,Oh, my loan officer says my
debt-to-income ratio is uhdoesn't work for this purchase
or this refi.
But I have the cash, I have theincome.
You know, it's just the way thatthey're calculating it on their
end.
Or they'd say stuff like, I wantto vest title in my LLC, but my
loan officer says I can't do it.
Or maybe most crucially was thisone, my I I I just renovated
(08:04):
this house, but my loan officersays I need to wait six or
twelve months before they canuse the new appraised value to
do a cash out refi.
And that's where I that questionright there, which to this day
is gonna come up on BP everysingle day, is where I started
injecting myself, just givingadvice.
Because you can't really besalesy in the forums there.
They don't want you to peoplekind of do it, but you're not
(08:25):
really supposed to be solicitingbusiness, you're supposed to be
like giving information.
Um, but I found that if you justconsistently do that every day,
you know, people are gonna comeacross you and you're you're an
authority on the topic, andthey'll reach out to you.
And and I that's the approach Itook because I really hated cold
calling.
I was like, I I need I need likea good way for people to want to
call me.
Yeah, and that's how I found it.
SPEAKER_02 (08:46):
Yeah.
Did you have a good uh openingline to break the ice when you
were doing the cold callingdays?
SPEAKER_00 (08:51):
Oh, yeah, I mean sort of because like it it
really, and this is why I hatecold calling, because you could
have a rock solid, like shootingfish in a barrel type of offer
to somebody, but like nine outof ten people just aren't don't
have their ears open to it if ifit's a cold call, right?
Like in our case, we reallywere, we had a huge list of of
borrowers who had rates thatwere in like this at the time
(09:13):
sevens and eights and nines, andwe were very familiar with who
wrote those notes, what theprepayment penalties were.
So we knew almost every personwe called we could provide a
tremendous benefit to, right?
We here we have a program withthe identical terms to the or
identical guidelines to the oneyou have, but with rates three,
four percent lower, you know.
So, you know, but even withthat, I just I I did I didn't
(09:33):
enjoy it.
What I what I enjoyed was peoplewant what I am offering and they
are trying to get in touch withme.
Or, I mean, and then as timegoes on, it just gets better and
better because it becomes moreof like a word of mouth
business.
Now I rely much less on being inthe bigger pockets forums and
much more on nurturing therelationships I already do have,
which uh naturally, you know,bring in a lot of people because
(09:56):
these are people who are part oftheir local meetups and they're
in Cincinnati or New Orleans orLA, all over the country.
SPEAKER_02 (10:02):
I mean, it sounds like Bigger Pocket, like Bigger
Pockets obviously has you'vebuilt this great reputation, but
Bigger Pockets, Bigger Pocketsalso has a reputation of being
like this great resource for somany people.
I mean, the community has been,I'm sure, a big uplifting force
in like driving your careerforward.
Um, I mean, you recommend thatas a tool for basically any new
property manager or landlord oranything like that, right?
SPEAKER_00 (10:25):
100%.
It's it's actually the most easyanswer I ever give someone.
Like, because all the time,people who know me or meet me
(10:54):
from outside of real estate,they are curious, right?
Like, oh, I've always wanted todo that.
Right.
It's been on my back burner fora while.
Like, you know, best advice Ican give you is to get on bigger
pockets because I mean, justabout any question you could
possibly have has been askedthere, right?
Hey, I'm looking for a plumberin Cincinnati, or hey, I know
any good property managers inthis town, or hey, I'm
self-managing.
(11:15):
What do I do when my tenant saysthis?
Like a lot of that has beenanswered and it's it's pretty
sortable.
And yeah, you just gotta throwyourself in and start start
listening to podcasts like thisand and other ones like like BP,
you know?
SPEAKER_02 (11:27):
Yeah, if you want to listen to this podcast, you're
gonna really learn somethingbecause we're starting we
started at zero.
So well, think back.
Think think all the way back.
And I'm sorry, Patrick, I don'tmean to steal every question out
of the out of the ether here,but I'll give you a chance to
chime in in a minute.
Yeah, think back all the wayback to like your very first
deal.
Like you are like when you'regetting when you're getting into
(11:49):
the industry, your your firstproperty or deal, like what was
it like?
What do you remember?
Any any like mistakes that youmade that you still hold on,
like that you you thought was agreat learning experience, like
that first time out the gate outthe gate.
Do you do you remember it veryclearly at all?
SPEAKER_00 (12:03):
Yeah, I do.
And I and I I always felt veryum self-conscious of perhaps
saying the wrong thing becauseyou don't there's so many things
in this world that you justdon't know until you come across
it, right?
And so it's kind of a hardindustry to break into in that
sense because there's a lotgoing on, right?
So the biggest mantra I kind ofkept telling myself was the
obvious one all the salespeoplekind of you know have, which is
(12:25):
you know, underpromise andoverdeliver.
But another one that's great forme that always seemed to work
because as long as you'reshowing good faith in everything
else you do with that person,they're never gonna get mad at I
don't know, but I'll find out.
Right?
So I I find that people who endup like torturing your
reputation are the ones thatdon't do that, and they'll
they'll confidently saysomething that they're not
really sure about and then throwoff the whole experience and
(12:48):
possibly a deal, possibly money,right?
This is um in many cases, thisis the I'm I'm involved with
maybe the largest transaction,largest financial transaction of
this person's life, you know.
SPEAKER_02 (12:57):
That is power.
That is that is uh that is a lotof response.
It's like the old Spider-Manquote.
What with great power comesgreat responsibility, needing to
make sure that you're on top ofthings.
SPEAKER_00 (13:06):
And to that, to that topic too, like part of how I
never get out over my skis onthat type of thing now and can
manage a pipeline of 40, 50deals at a time in process is um
by not being a master of none,right?
I I really try to stay in mylane with these DSCR loans or
these fix and flip products.
They're a great one-two punch toeach other, they complement each
other for certain strategies.
(13:27):
And um good news is our companyhas a bunch of other loan
officers who love to specializein different stuff, you know.
So if you got VA scenarios,conventional scenarios, you
know, agency commercialscenarios, odds are I have
someone within arm's reach whouh would take great care of you.
But by staying in my lane, ithelps me become an expert and um
practicing the same kick athousand times kind of thing,
(13:48):
you know?
SPEAKER_03 (13:48):
Okay.
You you explained earlier thatyou shifted gears from the
restaurant business to become aloan officer, but you also own
properties of your own, likerental properties of your own.
SPEAKER_00 (13:58):
Is that right?
Yeah, that's right.
So again, wouldn't happenwithout bigger pockets because
they it kind of simultaneouslyfostered and fueled my loan
officer position while alsoreally like, you know, I was
just like every other usertrying to learn for my own sake,
right?
Especially when I would I startdoing all these deals, and I'm
like, man, this guy has 10houses, you know, how did he do
(14:19):
this?
And let me reverse engineer thisa little bit for my own sake,
you know?
And so how I cracked into myown, my first deal as an
investor was after a coupleyears of being a mortgage loan
officer, I guess I'd been doingit for like maybe two, three
years, finally started makingsome great income, and I had two
borrowers, they didn't even knoweach other, but I was speaking
(14:40):
to both of them like every otherday, it felt like because they
were both doing burr and flip inSt.
Louis, Missouri, like once ortwice a month with me.
One or two deals a month each.
So after after like a year or soof doing that, you know, I sit
back and I have dozens of uhappraisals in my Google Drive in
the same zip code, and they'reall very similar deals, right?
(15:02):
You can kind of narrow it downto okay, here's uh a 3-2, he
bought it for this, he put thisinto it, and it was worth this
much after.
And so I just tried to kind ofmimic deals that I saw working
out really well that werescalable, but my first deal was
not like most people's firstdeal at all.
So, you know, I took a I took ahuge risk, uh, but it all worked
(15:23):
out.
I so one of these clients, um,great guy, I'm still friends
with him to this day, became theseller in this situation because
he was a very active flipper inSt.
Louis, but he lived here in LosAngeles, um, working in the
music industry.
And I had met him at a localmeetup.
And what you might rememberaround that time is that
Hollywood shut down.
So uh one of the most lockeddown elements of the country was
(15:46):
all that film production stuff.
So a lot of people, a lot ofpeople who were, you know,
working on shows, the shows werecanceled until further notice.
So um, if you can imagine this,this guy has several you know
hard money loans out, his greatincome just vanished overnight.
He can't even send workers to alot of these job sites.
If you recall, it was hard toget even plumbers or
(16:07):
electricians or anyone to goout.
SPEAKER_01 (16:09):
Right.
SPEAKER_00 (16:10):
And he had a one ballooning note.
Um, and for those that don'tthat don't know what that means,
it means that the um short-termloan, like a one-year hard money
loan, was coming to an end.
And it was at probably like theworst possible like dark hour
where like you couldn't gettoilet paper, nobody knew what
was going on with this thing.
Banks weren't really willing todo extensions.
(16:30):
They're like, look, I think theworld might be over right now.
Like, we're gonna call them thisthing, do.
And um he didn't want to.
He had finished the rehab onthis, he had it listed for sale
because nobody was refining atthat time.
Like a small small period oftime, but like for like three
months, he really couldn't getone of these type of loans.
I saw him struggling and kind ofsquirming and feeling the
(16:52):
pressure, and you know, aforeclosure or default would
have really affected his abilityto do other investments, right?
So by by any means necessary, heneeded to get rid of this one,
even if that meant kind ofbreaking even on it and taking a
loss.
So after kind of like justhaving like friendly consult
calls, I really I never I wasn'treally ready to buy a property.
I've been thinking about it alot, you know, like a lot of
your listeners probably, soakingup podcasts and thinking about
(17:13):
it a whole lot.
But um, you know, I had about ahundred thousand to my name,
like all sources, um, you know,retirement stuff that was
untapped and savings andeverything else.
He owed like$85,000 on thisfreshly renovated duplex.
And I had seen the quality ofthe the rehab because I was CC'd
on all the rehab draws and Iknow him as a person.
Sure.
Um and so long story short, Iworked up the courage to say to
(17:36):
him, hey man, um my relationshipwith you is much more important
than this deal.
But if you got into the 11thhour and this you'd consider
this like a win-win, like a sighof relief for you, I would pay
all cash what you owe thelender.
No appraisal, no nothing.
Um, just as fast as the titlecompany can move.
So somewhat reluctantly, like aday or two later, he said, Hey
(17:58):
man, like I it sucks to losethis one, but I'm happy to see
you get your first deal.
Like, let's do it.
And so I was like, now I gottago explain to my wife that we're
gonna completely exhaust thetank, you know, in in the middle
of COVID with little kids athome and and like really not
sure what was going on next.
But you know, we we pulledtrigger on it, and then um, you
(18:20):
know, things kind of normalized.
Not they didn't reallynormalize, but like banking kind
of came back to normal somewhatover the course of the next few
months.
So I was only completely tied upfor like three months, and I
didn't do one penny of rehab.
He did.
I just got it for much less thanit was worth under the pr the
lender's previous you knowunderwriting of it.
Yeah, and uh it ended upappraising right about where I
(18:42):
needed to get a loan for about$85,000, where I'd still cash
flow several hundred bucks amonth.
It was rented for twelve fifty.
I think my P ITI was like lessthan 700 bucks, and I I left
almost nothing in it.
I left like two or three grandin the deal.
Wow.
Okay.
SPEAKER_02 (18:57):
That is a big gamble.
So you uh what correct me if I'mwrong, but you may not suggest
that level of risk for all newproperty people looking to get
into investing in this.
SPEAKER_00 (19:06):
No, no, there's way there's way less uh like
heart-wrenching ways to go aboutthis, you know.
Sure.
But but it was one of thosethings where like I had already
worked on this specific deal asthe origin the originating
purchase loan officer.
I had a ton of due diligence onit.
In many ways, I had a lot moredocumentation than like a
typical buyer would have in anyscenario.
Sure.
(19:27):
You know?
I had all the invoices from allof his rehab and well, that's
cool.
SPEAKER_02 (19:31):
I mean, it's awesome that it paid that it paid off
for you.
And I mean that that must havebeen quite the feeling of just
like, well, here we go, youknow?
SPEAKER_00 (19:37):
It's like Yeah, and technically I've I got like paid
to buy that property because Iuh a couple years later ended up
pulling some more cash out of itas things kind of values crept
up after the uh part of thepandemic.
So yeah, I have definitelynegative uh cash in that, and it
does cash flow, and I get thedepreciation and everything
else.
And from there, I really just uhto simplify things, I just tried
(20:00):
to go after the same type ofproperty in the same
neighborhood.
Um because it's like we can kindof understand the everything
about that building and and whatit's worth and what it'll rent
for, and cool.
SPEAKER_03 (20:14):
Did your experience buying this property and your
other properties after that hasthat influenced any aspects of
your loan officer position?
Like in terms of how you thinkabout loans and helping others?
SPEAKER_00 (20:27):
Yeah, I mean it gave me a real like inside look at
the psyche of somebody who'slike really backed into a
corner, uh, almost no fault oftheir own.
You know?
So from like interacting withseller, and I guess interacting
with client respect too, you youkind of gotta think of things
this way is like, hey, what'sthe heartbeat of this deal?
(20:48):
You know, it's not always likethe price, it's not always the
rate down to the eighth, the theorigination fee down to the
eighth.
A lot of times it's it'ssomething else, it might be
something more emotional, itcould be timing, it could just
be responsiveness.
Um, so I guess what I learned islike figure out you know the
heartbeat of the deal.
Gotcha.
(21:08):
Let's get informative.
SPEAKER_02 (21:10):
Okay, so we've got a lot of people out there, and
that was a bad segue, but let'sgot a lot of people out there
that are listening to the showthat you know we might have had
it in the description or maybewe'll put it on social media.
Um, but one thing specificallythat is a big part of a part of
your role is D DSCR loans.
So getting really like basicwith it.
(21:31):
I for listeners who might benew, people you know what
exactly is a DSCR loan and whydo you think that it's become so
popular with with investorsright now?
SPEAKER_00 (21:40):
So it's in the name, you know, DSCR stands for debt
service coverage ratio.
In other words, like what's theratio at which uh you know
you're covering the debt on thisproperty every month?
The easiest way to think aboutit would be a 1.0 is break-even.
It means that the rent, in ourcase, it means the rent is equal
(22:01):
to the P I T I, the principalinterest, taxes, and insurance
on the loan.
So you don't really want to beat a 1.0, right?
But it but it is a very helpfulqualifying tool.
And perhaps that's because inthe real world it's not a 1.0.
In the real world, you'll gethigher rents in the near future
or something like that, right?
But these are an absolutelycrucial tool for anyone who
(22:22):
expects to actually scale arental portfolio because Fannie
and Freddie or conventionalloans just have uh guardrails at
a certain point that are gonnareally limit your ability to do
that.
So the big thing about DSCRloans and why they're even
looking at the subjectproperty's DSCR is that they're
not looking at your DTI.
(22:43):
So we're not looking at taxreturns, we're not looking at
pay stubs, um, or even trying toquantify your debt-to-income
ratio at all.
Uh we're just concerned that thesubject property can cover its
own debt.
We rely on FICO, uh, you know,that's that's still very
important.
Uh these do allow LLC vesting.
In some states, they'll evenrequire it, but we still require
(23:03):
one guarantor, someone who'sgonna have their at least one
guarantor, whose credit is gonnabe relied upon, who owns at
least 20% of said LLC.
But uh the reason I say it's socrucial to scaling is is for a
couple reasons.
One, most people's DTI can'tsupport, you know, more than
like maybe a couple mortgages,you know?
Two, Fannie and Freddie actuallycap you at 10 investment pro 10
(23:26):
financed properties uh no matterwhat, and most lenders have
overlays to cap you beneaththat.
And then the other thing wouldbe like speed of scale.
And I'd say this this might belike the number one use or or
marketable factor about DSCRloans is doing cash out refines
with little to no titleseasoning.
(23:47):
So sometime in like May 2023 orso, um conventional lenders
change their guidelines torequire now 12 months of title
seasoning when there's a firstposition lien on the property,
which is most deals, unless youbought it cash, right?
Most deals are doing some kindof hard money loan or fix and
flip style loan on the front endto buy the distressed property,
(24:07):
fix it up, and then they'recoming in for a DSCR loan to
refi because we'll use that newappraised value to calculate
your loan amount without title Csaying.
Oh, we would we do want to see,like, hey, why did it appraise
for so much more than you boughtit 90 days ago?
And that's as simple as yousubmitting your scope of work to
us and allowing us to justconnect the dots there that you
(24:28):
made physical improvements.
SPEAKER_02 (24:30):
So do you think that it is basically that
flexibility, that that kind ofyou know, the way that maybe
that you might be able to drivethings a little bit higher, like
maybe do a little bit more withwhat you have being what why
it's becoming so popular withyou know with investors these
days.
SPEAKER_00 (24:46):
Yeah, it's it's definitely the easy button,
right?
Yeah, I mean, even even me, likeI actually got a lot of flack
from um people in my cohort inthe mortgage industry, and that
when they didn't quiteunderstand it at first why I was
using DSCR lens on my ownpersonal investments, they're
like, You you qualify for thethe bank rate, let's go get you
a full dock.
I'm like, dude, I'm trying toget this thing closed like
(25:08):
without any question now, youknow?
And so it's a much simplerprocess.
And what's crazy is that theindustry has become so
competitive, there's so muchcapital chasing too few of deals
that nowadays the delta betweenconventional rate and DSCR rate
is small if if at all.
There are some scenarios inwhich um the top DSCR lenders
(25:31):
might even price inside ofFannie and Freddie on certain
scenarios, namely like max LTVcash outs on two to four units
or stuff like that.
SPEAKER_02 (25:40):
Okay.
Patrick, I don't know about you,but I've heard the name Fannie
and Freddie a few times, and I'mwondering, I'm like, they sound
like they're good bigger pocketsusers too.
I was like, we have to get theircontact information.
SPEAKER_00 (25:50):
Yeah, so Fannie and Freddie are the uh or Fannie Mae
and and and Freddie Mac.
unknown (25:55):
Okay.
SPEAKER_00 (25:56):
They are uh government-sponsored entities,
the GSEs, basically the federalgovernment backstopping
mortgages.
And this came um into placeafter the financial crisis, you
know, as a way to uh stabilizethe mortgage industry and and
create very strict rules ofunderwriting to prove that the
(26:17):
borrowers have the personalability to repay the loan.
SPEAKER_01 (26:20):
Okay.
SPEAKER_00 (26:20):
On in my world, DSCR loans, we are not trying to
prove that the borrower has apersonal ability to repay the
loan.
We're trying to, you know, sellas many loans as possible, and
and the underwriting is muchbetter than back then, right?
Because we have much more strictrequirements on FICO, reserves,
um, in some cases, experience,and and namely just you know, we
kind of work hard throughmultiple sources to prove that
(26:42):
the DSCR really is strong onthis property.
SPEAKER_02 (26:45):
Okay.
Patrick, you gave me a we aweird look when I asked that
question.
Did you know what that was?
SPEAKER_00 (26:50):
Or it wasn't I was trying to use context clues.
Okay, when I say Fanny andFreddie, what I mean is
conventional.
What I mean is that's the firstone.
SPEAKER_03 (26:59):
That's kind of what I figured.
SPEAKER_00 (27:00):
Yeah.
What what I mean is they havecertain federal guidelines that
you cannot get around.
Whereas with this, that we arenot supported by the federal
government, GSCs, or anythinglike that.
We're supported by hedge funds,life insurance companies, large
private investors, entities thatwould want to purchase this
paper on the secondary market.
SPEAKER_01 (27:20):
Yeah, very good.
SPEAKER_03 (27:21):
And so for like let's say for the average for
the average home buyer, let'ssay, do you pretty much in most
cases do you recommend DSCRloans?
Uh like do you do you feel thatit's beneficial, you know, let's
say nine nine times out of tenor something like that?
Or like what what specificinstances would you uh would you
say that one is better than theother?
SPEAKER_00 (27:43):
Yeah, I mean, it's hard to say.
Like I'm I'm leaning moretowards saying, yeah, there are
scenarios on a turnkey rentalproperty, cookie cutter deal
when you have a great W-2borrower who's not interested in
investing title in an entity,just using their personal name.
Yeah, you I'd encourage you toshop a conventional lender and
see what they're coming backwith.
(28:04):
There's a chance you stand youstand to benefit a couple basis
points on your rate.
Might not be as much as youexpect compared to the DSCR
loan, but but surely.
Yeah.
Okay.
unknown (28:13):
Yeah.
SPEAKER_00 (28:14):
Cool.
SPEAKER_02 (28:14):
We're I've got a couple not necessarily
rapid-fired questions, but I dowant to touch on you as an
investor.
So, like from your from yourexperience, I mean, what's the
number one thing that investorscan do to make themselves more
attractive to lenders?
SPEAKER_00 (28:27):
Yeah, great question.
You know, being easier to workwith on my end means like you
don't have to know everything.
I'm here to answer yourquestions, you know.
But but strong communicationskills.
Like, I highly recommend thatinvestors start kind of setting
up some type of work drivefolder if you use Google Drive
or or whatever you like to useand store certain documents in
there that are like ready to go.
(28:47):
Like driver's license, um, ifyou have if you already own
properties, like schedule ofreal estate.
You're if you're using an LLC,have the entity docs ready to
go, the basics, like yourarticles of organization,
operating agreement, EIN letter.
And then if it was a recent,like if you're coming to me for
a refi, which is most people,like I'd say like the lion's
(29:08):
share of my deals are refines onrecently renovated properties.
Okay.
And people like that, I say youshould really have your scope of
work dialed in.
Like whatever you did to thisproperty recently, have a
beautiful one pager that justlays it all out.
Not just for me and theunderwriter, we're kind of
barely gonna look at it, butreally for the appraiser.
Right?
(29:29):
I really want you to have thebest chance of success.
So I I make the more I loan you,the more money that I make, you
know.
So it's it's never like I'm likeuh wanting that to come in low,
but to one thing you can do toset yourself up for success is
have a one pager put together ofyour recently completed
renovations and perhaps maybesome before and after photos.
Another thing to avoid appraisalsurprises would be just really
(29:51):
having a good grip on your compsto begin with.
You know, I a lot of investors Iask them, okay, great, what what
do you expect this appraisal tocome back with?
So we can you know size up theinitial quotes and they go,
well, Zillow's got this andRedfin's got that.
And hey, sometimes is thatreasonable?
Yeah, most of the time, no.
You know what I what I'd muchrather you do is contact a local
(30:12):
agent or broker and request acomparative market analysis or a
CMA.
It takes them all five minutesto set some filters and run a
search and print you out a nicePDF that says, hey, here's the
most similar comps that soldwithin a half a mile in the last
six months.
Sure.
SPEAKER_02 (30:26):
I love the practicality of your first tip
being organize yourselfbasically, like get your like
Google Drive or like your onlike your all of your stuff in
the right format.
You speak that as if you've runinto situations where
disorganization can cause chaos.
SPEAKER_00 (30:40):
Yeah, it it I mean it does.
You know, there's there's a bigdifference between the client
who has everything kind ofsigned, still, and deliver and
the one who's got no subjectline and just says something
like, What are your rates interms?
Well, there you should see howcomplicated this rate sheet is,
right?
There's adjustments foreverything, right?
Every 20 points in FICO or so,the LTV, this the specific DSCR
(31:02):
ratio, the loan amount, thislocation, the unit count, all
types of things that can affectthe rate.
And actually, we built out apretty cool pricing engine for
this product.
We can maybe plug in the shownotes or something, but I
created a really cool tool andwe're spending a lot of time on
it every week to make it biggerand better and eventually become
(31:23):
something I think is likeindustry leading.
But right now it's it's a verysimple widget where you can go
in there and punch a few detailsin on your scenario, like
whether it's a purchase or arefi, what's the value, what's
the rent, what's your estimatedFICO score, annual taxes, annual
insurance, so that I cancalculate the DSCR.
And as soon as you've enteredthose figures, boom, instantly
(31:44):
you're gonna get dialed in ratesand terms, fees, loan amount,
monthly payments.
And even if you're not trying tostart a loan application with
me, I highly encourage you toplay with it because I think it
will actually really help yousize up your deals.
Like when I was first analyzingdeals to purchase on my end, the
cheat code that I had was likeall these wholesale broker
portals where I kind of workedit from the angle of the loan to
(32:08):
begin with.
It was kind of like, okay, howwill this loan work?
So I kind of what I intended todo was really like give that to
the borrower in a reallydigestible way that's easy on
the eyes and comprehensible.
And the other thing is like alot of our industry is so
archaic where this this kind ofthis whole conversation is like,
you know, kind of whining anddining you on the phone and
asking for documents and tellingyou we'll get we'll get back to
(32:29):
you later.
Whereas this is like, hey, thisis exactly what it is based on
what you're telling us.
And if you'd like to proceed,you know, click the next button
and we'll start working onreaching out to you and
collecting some stuff.
SPEAKER_02 (32:40):
Yeah, that is cool.
We'll definitely have to link tosome stuff.
So it's like a website that youbuilt or a wit like a widget on
the website.
SPEAKER_00 (32:46):
Yeah, it's actually just like a it's like a widget
on our website.
Yeah.
So it's it'sinvestorpropertyloan.com slash
DSCR.
SPEAKER_02 (32:53):
Okay.
Sounds like a super useful tool.
I I'm definitely gonna messaround with it because I'm in
the I'm in the market to startlooking at homes in the next
year, so whatever, but it'slike, you know, you kind of play
around with those kind of tools.
It's always cool to see what youcan find online and see.
Yeah, if nothing else, it justgives you like some flavor for
like where rates are at too.
Sure.
So in terms of rates and andlike the the condition of the
market right now, but we've youknow, we've asked a couple
(33:15):
people that we've had on asguests, but I'm curious to hear
your perspective.
How have lending conditionsshifted in the last year and
what should investors expectgoing into 2026?
SPEAKER_00 (33:24):
I mean, I'd say in in general this year we had a
lot of rate improvement.
You know, we had very goodvolume on this side of things.
I think um, you know, as a smallcompany, we uh originated more
than$100 billion worth of loansthis year already.
Much more than$100.
Um, probably a little bit morethan$150, uh, which is a lot of
for a group of like six or sevenloan officers, right?
(33:45):
Um right now, the average ratefor a DSCR loan, and I'm gonna
assume a few things here, likeaverage FICO range and maximum
LT and maximum LTV, somewhere inthe mid-sixes.
And uh that's up a little bitfrom a few weeks ago pre-Fed
rate announcement.
These Federate announcementsreally throw the average person
(34:05):
through a loop with with what toexpect with mortgage rates
because largely theseannouncements are telegraphed,
right?
Wall Street and the secondarymarket knows exactly what Jerome
Powell's about to say.
Well, they know they know howwhat he's gonna reduce the rate
by.
And that's largely baked intothe pricing pre-announcement in
the lead up.
Um, but in this specific case,you know, he lowered the
(34:28):
interest rate a little bit, thefederal funds rate a little bit,
which does not control mortgagerates.
It's the overnight lending ratefrom one bank to another.
But in his speech, you know, hehas he was kind of had some
damning words about the economy,really questioned his decision
to lower rates, basically saidthat the next announce the next
uh meeting, it's it's notpromised that there'll be
another drop.
(34:48):
And all of this kind of likenegative language caused the
five and ten year treasuries toactually go up a little bit.
So, contrary to what everyonewas ex the average person was
expecting, right, um after thatFed rate cut, most recently,
mortgage rates actually went up.
They're more in line withmortgage rates are more in line
(35:10):
with the five and ten year uhtreasury yields.
Okay.
unknown (35:14):
Yeah.
SPEAKER_00 (35:14):
So some signs of positivity.
Some signs of positivity, butwhat I would actually uh the my
my main point here is to notworry about it too much, to be
honest with you.
I I really I really think Ireally think that things are
gonna be sticky for a long time.
I expect 2026 to be a fairlyflat, you know, lake water type
(35:35):
of year for rates.
Are things gonna go up a littlebit and down a little bit and up
a little bit and down a littlebit?
Sure.
But if you're really likestopping yourself from doing a
deal over like an eighth or aquarter in rate, um I think it's
largely wasted time.
I think that when you'reunderwriting these deals, as a
matter of fact, you ought tojust try to make all of these
work at a hundred bips higherthan what you think the rate's
(35:56):
gonna be, you know, rather thanrelying on uh it needing to be
lower, right?
Because here's the thing realestate, it's really all about
like time in the saddle or liketime, you know, I think I'm
thinking like workout, uhpuntering out, like time and
retention, you know, like youyou can you can make moves as
rates fluctuate over time, but Ijust wouldn't I wouldn't stop
(36:18):
yourself from getting into adeal that works today at the
current rate or at a rate that'sslightly higher than the current
rate because you think ratesmight come down in six months.
I just been I've been watchingpeople play that game for years
and years, right?
They they were they think ratesare coming down in six months,
and maybe they are, maybethey're not, but yeah.
SPEAKER_02 (36:35):
Yeah, one of the one of the most interesting things
uh, and you know, we've beendoing the podcast for like
probably around a year, maybe alittle less then.
But every almost everyinterviewee we've ever had on
the show, when we've asked aboutlike basic advice for people
like looking to jump into thereal estate industry, everyone
kind of just says like thewaiting for the right time thing
(36:55):
is just kind of like not the waythat it works.
Like you kind of just have totake that plunge and jump.
SPEAKER_00 (36:59):
You heard my story.
Sure.
Yeah, I mean, I I I jumped inlike not just I mean, I jumped
head first.
That's putting it mildly, right?
Yeah, exactly.
unknown (37:11):
Yeah, exactly.
SPEAKER_02 (37:12):
That's cool.
But so I do want to ask acouple, like some quick fires.
Again, I've got a couple morequestions.
What is some of your favoritereal estate books or podcasts,
like uh, you know, obviouslybesides our show that that you
might recommend to people, likebesides like, you know, we
talked a lot about biggerpockets, but are there any other
great real estate resources thatyou would recommend to people?
SPEAKER_00 (37:33):
Yeah, I mean, you know, one that I listen to how
as often as they put it out,which is a couple times a week,
is an offshoot of the BiggerPockets podcast.
It's a lot of like the coreguys, but uh it's called On the
Market with Dave Meyer.
And uh usually they run kind ofa panel where Dave is like the
big data guy and can run youthrough a lot of like local and
nationwide data in terms of likewhat's going on in the housing
(37:55):
market.
And then the other bit of theround table are investors, um,
one of which is a friend andclient of mine, Henry.
Yeah, that's a great showbecause they're very short
episodes, usually they're lessthan an hour, like 30 to 40
minutes, and they're very uhtopical.
So a lot of times it's aboutwhat's been going on in the last
few days that may move theneedle for investors.
SPEAKER_01 (38:16):
Okay, cool.
SPEAKER_03 (38:17):
Patrick, you got anything else?
My one question, circling back alittle bit, but I'm just kind of
curious because uh Zach and Iare both in a position, we're
like learning about real estate.
We still have yet to to buy ourfirst property.
And so I think a lot of our uhour angles at things are about
buying that first property.
From a loan perspective, what'sthe biggest difference between
(38:41):
getting that first property andthen getting that second
property?
Because that's something that wehaven't talked a ton about in
the past.
Because, like, from my point ofview, it's like, yeah, you save
up, you save up, you get thedown payment on the first
property, you got a loan.
But like the second propertyseems kind of like a like
science fiction at this point tous because we don't even have
the first one, but it might begood to like know about that and
(39:01):
plan ahead a little bit.
So, just any any thoughts onthat?
SPEAKER_00 (39:05):
Yeah, I mean, short of you guys just having like
bucko crazy income, you know,it's gonna be very hard to like
buy one turnkey rental propertywith 20% down and then save up
another 20% and do it again.
Like, that's kind of crazy.
So, like what I've done with mylimited amount of cash on hand
is employ a strategy which isgoing to limit my amount of cash
(39:26):
in every deal, thereby allowingme to do more deals.
And that's really the Burrstrategy or the fix and hold
strategy.
Burr stands for you know buy,renovate, rent out, refinance.
And in doing this, you'reusually dealing with lower down
payment because like on our end,we can do this with you know 10%
down, where we're funding 90% ofthe purchase price and 100% of
(39:49):
the rehab with no prepaymentpenalty.
You force the value up throughyour renovations, and hopefully
you're able to do a cash outrefire where you get all or most
of that initial cash to closeback.
That way, hey, now you have acash-flowing rental property,
you have almost you know, youhave the same or almost the
amount of cash you started with,and go do it again.
(40:10):
You know, it that's a veryoversimplified view of it, but
and then once you developexperience, like I really don't
recommend this to first-timeinvestors, but what I will say
is that once you've built atrack record of doing that a few
times, like I have, you would besurprised how many people would
be interested in private lendingrelationships.
So, like after I did that, youknow, seven, eight times or
(40:31):
whatever, I was able to do thethe next few deals with true
private money, where you know,I'm going to an individual with
a large self-directed retirementaccount and I'm explaining the
deal and where their loan amountwould be relative to the after
repair value.
And hey, here's why it's sosimilar to the other deals I've
done.
And yeah, now I can get like100% financing on the front end.
SPEAKER_02 (40:53):
Got it.
So smart strategies, Patrick.
It sounds like that's smartstrategies.
Strategy.
Learning the acronyms.
SPEAKER_00 (41:00):
Yeah, learning the acronyms, yeah.
Yeah.
LTV, DSCR, and Burr are a couplegood ones.
SPEAKER_03 (41:06):
So it is called Burr because we've talked about that
term like way in the past.
And we didn't, or like B R likewe weren't sure how to put that.
It's kind of a mouthful, yes.
SPEAKER_00 (41:19):
Yeah, and I'm actually I'm on if you're if you
um if anyone's on Instagram, I'mactually it's just my name, Alex
Bakiza, the Burr Lender.
Okay.
Yeah, because I I can kind ofhelp on both sides of that,
right?
I can I can help with the hardmoney loan to buy the distressed
property.
Um, and then of course the DSCRrefi.
SPEAKER_02 (41:38):
Did you check and see if at Burlender just that
was available?
SPEAKER_00 (41:42):
The Burrlender?
I don't remember it.
I've had that tag for a longtime now, like probably almost a
decade, but like, yeah, I thinkuh there were there were a
couple domains that I was upsupset about being taken already,
but I doubt they're even stillbeing used because I don't know
who they are.
Like Berlones or Burlender orsomething more simple.
SPEAKER_01 (41:57):
Yeah.
SPEAKER_00 (41:58):
Here's the other thing.
Loan officers kind of likeunfortunately carry this uh
stigma sort of of being like inthe same vein as like used car
salesmen, I feel like sometimes.
So like I just feel like a lotof times people have their guard
up already, and it's nice tohave the ability to have one
unique name.
So like they they Google itquickly, the Instagram comes up.
Yeah, it's a lot of loan stuff,but it's mainly actually just
(42:19):
personal stuff.
So it kind of like I just wantedto reflect hey, this is an
actual human, right?
Not some kind of shady guy.
SPEAKER_02 (42:27):
Yeah, the loan officer of the people.
Yeah, exactly.
SPEAKER_00 (42:30):
The people's loan officer.
There you go.
Then I have to change the nameto that.
SPEAKER_02 (42:35):
No, you should absolutely check and see if at
the Burrlander is availablebecause that's a that's a sweet
tag.
But uh no.
All right, well, tell the peoplewhere they can find you.
I mean, you've already given outyour Instagram handle.
We've we've heard a coupleresources here, but like tell
the tell the listeners, youknow, what you know, your
resources online, where to findyou.
Basically, this is your chanceto kind of just plug away for a
(42:55):
second.
SPEAKER_00 (42:55):
Uh yeah, so uh easiest place to find me would
be uh either Instagram or biggerpockets.
Um very simple, just my name andInstagram, the Burlender, and
then our website,investorpropertyloan.com slash
DSCR.
I kind of run point guard on allthose submissions that come
through.
So if you simply use that tool,uh it will ping me and I'll be
reaching out to you.
SPEAKER_01 (43:15):
Okay.
SPEAKER_00 (43:16):
That's awesome.
SPEAKER_02 (43:17):
Well, thank you, Alex, for being on the show.
It was enlightening.
It was a pleasure to get to hearabout your story and to listen
to you talk.
And uh, you've educated Patrickand I Patrick.
Do you feel educated?
SPEAKER_03 (43:28):
I feel so educated.
I know so much now.
Well, it's been insightful.
SPEAKER_00 (43:34):
Yeah, and and for your own investing sake, if you
forgot to ask something, youguys have my cell phone, you let
me know.
Sure.
SPEAKER_02 (43:40):
And we'd love to have you back on the podcast
anytime you feel like it.
And uh yeah, I'm sure one ofthese days we'll have you on to
kind of pick your brain a littlebit more about what's going on
in the world.
SPEAKER_00 (43:48):
All right, that sounds great, guys.
Thank you.
SPEAKER_02 (43:50):
Okay, cool, awesome, Alex.
So thanks all again.
All right, thank you, Alex, forjoining us.
That was a great interview.
Patrick, did you learn a lot?
I learned so much.
Yeah, you look it.
And uh, we've been uh excellentuh having a oh damn it, that was
really funny too.
(44:10):
Shit.
All right.
All right, and we're back.
Alex again, thank you so muchfor speaking with us today.
It was awesome to hear from him.
And uh I think on this beautifulMonday, we both learned a lot,
wouldn't you say?
SPEAKER_03 (44:23):
I learned a lot, yes.
It's cool.
I know all about Burr now.
And I'm a lone expert, somemight say.
SPEAKER_02 (44:30):
Well, let's not get carried away.
You still should consult withthe experts, but thank you for
listening to this episode of theRentish Pod.
Uh remember to follow us on allof your podcast platforms of
choice out there, Spotify, ApplePodcasts, Overcast, wherever you
get your shows, check us out andgive us a rating, thumbs up,
five-star review, leave us acomment, tell us how much you
like the show, share it with afriend of yours that may be
(44:52):
interested in real estate orproperty management, or it's
just someone that wants tolisten to a couple guys having a
good time.
And uh email your questions toquestions at the rentichpod.com.
And uh yeah, that I think that'sabout it.
So until the next time that wesee you guys, I've been Zach,
that's been Patrick, and we'llsee you next week.
The Rentich Podcast is recordedin Cincinnati, Ohio, hosted by
(45:15):
Patrick Giro and me, ZachRotello.
Produced by Mousse Gabri Mesqueland Charlene Mulchendani, edited
by Elliot Mongenist.
Theme song by me, Zach Rotello.
What's going on everybody?
Welcome to season two of theRent-Ish Podcast.
I'm Zach here with my co-hostPatrick.
SPEAKER_03 (00:41):
We're two rookies chasing the dream of real estate
investing.
In this podcast, we'll talkabout property management, wild
stories, and everything inbetween.
We don't know it all yet.
SPEAKER_02 (00:51):
But that's the point.
We're learning as we go, justlike you.
We'll bring in the experts toeducate and inform us and we'll
figure it out together.
So let's laugh, learn, and diveinto real estate side by side.
SPEAKER_03 (01:02):
Zach, how are you doing on this beautiful Monday?
SPEAKER_02 (01:04):
Whoa, it's changing it up.
I like that.
Yeah, that's cool.
That's really fun.
I don't know how to answer thequestion because I'm so taken
aback by you asking about mycurrent status instead of me
flipping it around the idea.
That's really sweet of you.
I'm tired.
How are you today?
I'm also pretty tired, but umYou said you had to get you were
forced awake an hour and a halfearly because of your your
(01:26):
girlfriend's mother.
Yeah, so she's um You want toelaborate on that?
SPEAKER_03 (01:30):
Yeah, she was going to the airport um and then
wanted to see our apartmentbecause my girlfriend moved in
with me, and so she was checkingout the apartment at 7 45 a.m.
So I had to be up and dressedbefore then.
Um yeah, so that's like askedcrack of dawn for me.
SPEAKER_02 (01:44):
That's uh Yeah, I want all of our listeners to
email questions attherentichpod.com if you think
7.45 is the crack of dawn.
I I have a feeling like a lot ofpeople are gonna disagree with
that sentiment.
But I was from the stay, what'sthe crack of dawn?
For me, it's when light crestsover the the the hill for the
first time.
SPEAKER_03 (02:02):
It's like 5 a.m.
like 5.30.
That's late at night.
So that's still the night, dude.
That's not the morning.
SPEAKER_02 (02:12):
That's a late night right there.
Okay.
SPEAKER_03 (02:14):
That's crazy.
SPEAKER_02 (02:15):
This is the Rentage Podcast, a podcast about
property management and realestate.
SPEAKER_03 (02:20):
Yeah, wait, don't we have an expert on today?
SPEAKER_02 (02:22):
Yeah, we do have an expert, so uh it's gonna be
quite the change of pace.
No, thank you for listening toanother episode of the Rentage
Podcast.
Today we have a great guestwho's going to teach us all
about loans, investing, andbrrrrr.
Because it's cold.
You know what I mean?
But that's also an acronym.
So I'm told.
Or you might hear about it inthe interview coming up that we
(02:43):
have with uh Alex Bakiza.
Uh so stay tuned for that.
Uh, and remember to follow thepodcast online, the Rent-Ish
Podcast on basically any podcastplatform where you get your
shows.
Uh email questions at therentish pod.com, follow us at
the rent-ish pod on socialmedia.
And uh, Patrick, what do yousay?
We just kick it over to theinterview.
Let's do it.
(03:07):
Welcome back to the Rent-Ishpodcast.
Today we've got a really, reallyexciting guest who's going to be
joining us, someone who's beenmaking serious waves in the real
estate investing world.
SPEAKER_03 (03:16):
That's right.
We're talking with Alex Bakiza,the most highly reviewed loan
officer on BiggerPockets.com.
So really bringing in the bigdogs this time.
Alex specializes in DSCR-basedfinancing, which I'm excited to
learn about what that is.
Uh, and purchased and rehab loanproducts.
He's originated over a hundredmillion dollars in loans for
(03:39):
investors.
Yep, that's right, Patrick.
SPEAKER_02 (03:41):
Not only that, he's also an investor himself, a
BRRRR guy with a portfolio ofrentals in Missouri and Texas.
So Alex really gets both sidesof the table.
Alex, welcome to the show.
All right, yeah, appreciate theintro, guys.
We really rehearsed thatmultiple times as you can't
tell.
We were in this.
We'll unpack a few of thoseacronyms.
(04:02):
Yeah, exactly.
Yeah, we're gonna unpack theacronyms.
We're gonna talk about a lot ofstuff.
We're gonna really get to knowAlex here.
He's we an awesome guest.
We're very, very happy to haveyou on board the Rentish pod.
Come and hang out with us.
Um, at the top of the hour,though, I gotta, I gotta tell
you a shout-out.
I know we know how we have audiolisteners, we have video
listeners now.
I gotta give you shout out toyour fish tank back there.
SPEAKER_00 (04:22):
Oh man, yeah.
This was, you know what, thiswas my COVID era uh gift to
self, stay sane, having to workfrom home uh investment, if you
will.
That's nice.
It's a good backdrop.
SPEAKER_02 (04:33):
It's like, are is he in an office?
Is he in the ocean?
I can't tell.
It's pretty crazy.
SPEAKER_00 (04:37):
Yeah, this is this is the home office today.
Yeah.
Cool.
And I it honestly is a nicerelaxing thing.
You actually find a lot of likehigh-stress jobs, keep one in
nearby, like uh attorneys anddoctors and things like that.
SPEAKER_02 (04:50):
Amazing.
Well, uh you've definitelyencouraged me to maybe invest in
the fish tank market.
So talking about your market,real estate, we're we're gonna
we we want to kind of get toknow you a little bit.
Tell us who you are, what likekind of where you've come from,
what made you interested in thereal estate industry, what got
you into the industry?
Just kind of tell us a littlebit about your backstory and
your your story leading up tonow.
SPEAKER_00 (05:11):
Yeah, I think it's probably really relatable for a
lot of your audience who's justtrying to break into it because
uh, I mean, I really came out ofnowhere, right?
I was um a restaurant generalmanager down here in SoCal and
Malibu and Santa Barbara,Calabasas areas, and I just
really hustled my way in up intothat spot in my early 20s, going
from the the busboy to the foodrunner to the server to the
(05:33):
system manager to the GM.
And then I think it was a greatexperience to you know spin a
lot of plates at once and andhave a lot of people working
under you and working through alot of like uh day-to-day
situations, people problems.
And then I just got lucky reallyand had some people who were
killing it in real estate whohad known me from when we were
young, had seen me hustling inthe restaurants and and said to
me one day, hey Alex, you reallygotta stop doing what you're
(05:56):
doing, especially as I had myfirst child and they knew I was
barely seeing him, right?
I was going dawn to dusk in therestaurants.
SPEAKER_01 (06:02):
Sure.
SPEAKER_00 (06:03):
And uh they said, Come in and learn how to do
mortgages.
This is about a decade ago.
And I kind of blew them off, youknow.
I I said, uh, you know, that'stoo intimidating.
I don't know what LTV means, Idon't know what APR, none of
that stuff is, you know, it'snot really for me.
And uh I think I was working onChristmas Day, missing it with
my little ones, and called themback and said, Hey, let me come
(06:23):
learn what you guys do overthere, you know?
So gives you a little bit ofcontext for why I was so
motivated to get on biggerpockets and start learning about
real estate from scratch.
And within the first few months,what I realized a lot of people
all over the country werelooking for were these certain
products and for certainstrategies, like DSCR loans, uh
hard money loans.
And these weren't necessarilyniches that a lot of my
(06:45):
colleagues were focused on, butit's really a way that I carved
my own lane, right?
And I found it the mostinteresting because it's it's so
different from conventionalfinancing, right?
I'm not calling your employer,I'm not calculating your
debt-to-income ratio and workingthrough your pay stubs or
anything like that.
It's really more about businesspurpose and and deal making.
And does this deal make sense?
SPEAKER_02 (07:05):
Okay.
Yeah.
So at what point in the process,like low so loan officer, you
were you work with all thisdifferent stuff.
What when did that officiallyget you?
When did you get that stamp?
When when did that happen foryou officially?
SPEAKER_00 (07:18):
Yeah, so for a little while I was like just
getting my uh cutting my teeth,if you will, processing loans
for experienced brokers, doingsome kind of like initial lead
gen type stuff, but during thattime I'm getting my licensing
and whatnot.
So I'd say like sometime in2017, I I officially got
licensed as a loan originatorand started getting very active
in the forums, you know, becauseI come across stuff on bigger
(07:40):
pockets all the time.
People would say things like,Oh, my loan officer says my
debt-to-income ratio is uhdoesn't work for this purchase
or this refi.
But I have the cash, I have theincome.
You know, it's just the way thatthey're calculating it on their
end.
Or they'd say stuff like, I wantto vest title in my LLC, but my
loan officer says I can't do it.
Or maybe most crucially was thisone, my I I I just renovated
(08:04):
this house, but my loan officersays I need to wait six or
twelve months before they canuse the new appraised value to
do a cash out refi.
And that's where I that questionright there, which to this day
is gonna come up on BP everysingle day, is where I started
injecting myself, just givingadvice.
Because you can't really besalesy in the forums there.
They don't want you to peoplekind of do it, but you're not
(08:25):
really supposed to be solicitingbusiness, you're supposed to be
like giving information.
Um, but I found that if you justconsistently do that every day,
you know, people are gonna comeacross you and you're you're an
authority on the topic, andthey'll reach out to you.
And and I that's the approach Itook because I really hated cold
calling.
I was like, I I need I need likea good way for people to want to
call me.
Yeah, and that's how I found it.
SPEAKER_02 (08:46):
Yeah.
Did you have a good uh openingline to break the ice when you
were doing the cold callingdays?
SPEAKER_00 (08:51):
Oh, yeah, I mean sort of because like it it
really, and this is why I hatecold calling, because you could
have a rock solid, like shootingfish in a barrel type of offer
to somebody, but like nine outof ten people just aren't don't
have their ears open to it if ifit's a cold call, right?
Like in our case, we reallywere, we had a huge list of of
borrowers who had rates thatwere in like this at the time
(09:13):
sevens and eights and nines, andwe were very familiar with who
wrote those notes, what theprepayment penalties were.
So we knew almost every personwe called we could provide a
tremendous benefit to, right?
We here we have a program withthe identical terms to the or
identical guidelines to the oneyou have, but with rates three,
four percent lower, you know.
So, you know, but even withthat, I just I I did I didn't
(09:33):
enjoy it.
What I what I enjoyed was peoplewant what I am offering and they
are trying to get in touch withme.
Or, I mean, and then as timegoes on, it just gets better and
better because it becomes moreof like a word of mouth
business.
Now I rely much less on being inthe bigger pockets forums and
much more on nurturing therelationships I already do have,
which uh naturally, you know,bring in a lot of people because
(09:56):
these are people who are part oftheir local meetups and they're
in Cincinnati or New Orleans orLA, all over the country.
SPEAKER_02 (10:02):
I mean, it sounds like Bigger Pocket, like Bigger
Pockets obviously has you'vebuilt this great reputation, but
Bigger Pockets, Bigger Pocketsalso has a reputation of being
like this great resource for somany people.
I mean, the community has been,I'm sure, a big uplifting force
in like driving your careerforward.
Um, I mean, you recommend thatas a tool for basically any new
property manager or landlord oranything like that, right?
SPEAKER_00 (10:25):
100%.
It's it's actually the most easyanswer I ever give someone.
Like, because all the time,people who know me or meet me
(10:54):
from outside of real estate,they are curious, right?
Like, oh, I've always wanted todo that.
Right.
It's been on my back burner fora while.
Like, you know, best advice Ican give you is to get on bigger
pockets because I mean, justabout any question you could
possibly have has been askedthere, right?
Hey, I'm looking for a plumberin Cincinnati, or hey, I know
any good property managers inthis town, or hey, I'm
self-managing.
(11:15):
What do I do when my tenant saysthis?
Like a lot of that has beenanswered and it's it's pretty
sortable.
And yeah, you just gotta throwyourself in and start start
listening to podcasts like thisand and other ones like like BP,
you know?
SPEAKER_02 (11:27):
Yeah, if you want to listen to this podcast, you're
gonna really learn somethingbecause we're starting we
started at zero.
So well, think back.
Think think all the way back.
And I'm sorry, Patrick, I don'tmean to steal every question out
of the out of the ether here,but I'll give you a chance to
chime in in a minute.
Yeah, think back all the wayback to like your very first
deal.
Like you are like when you'regetting when you're getting into
(11:49):
the industry, your your firstproperty or deal, like what was
it like?
What do you remember?
Any any like mistakes that youmade that you still hold on,
like that you you thought was agreat learning experience, like
that first time out the gate outthe gate.
Do you do you remember it veryclearly at all?
SPEAKER_00 (12:03):
Yeah, I do.
And I and I I always felt veryum self-conscious of perhaps
saying the wrong thing becauseyou don't there's so many things
in this world that you justdon't know until you come across
it, right?
And so it's kind of a hardindustry to break into in that
sense because there's a lotgoing on, right?
So the biggest mantra I kind ofkept telling myself was the
obvious one all the salespeoplekind of you know have, which is
(12:25):
you know, underpromise andoverdeliver.
But another one that's great forme that always seemed to work
because as long as you'reshowing good faith in everything
else you do with that person,they're never gonna get mad at I
don't know, but I'll find out.
Right?
So I I find that people who endup like torturing your
reputation are the ones thatdon't do that, and they'll
they'll confidently saysomething that they're not
really sure about and then throwoff the whole experience and
(12:48):
possibly a deal, possibly money,right?
This is um in many cases, thisis the I'm I'm involved with
maybe the largest transaction,largest financial transaction of
this person's life, you know.
SPEAKER_02 (12:57):
That is power.
That is that is uh that is a lotof response.
It's like the old Spider-Manquote.
What with great power comesgreat responsibility, needing to
make sure that you're on top ofthings.
SPEAKER_00 (13:06):
And to that, to that topic too, like part of how I
never get out over my skis onthat type of thing now and can
manage a pipeline of 40, 50deals at a time in process is um
by not being a master of none,right?
I I really try to stay in mylane with these DSCR loans or
these fix and flip products.
They're a great one-two punch toeach other, they complement each
other for certain strategies.
(13:27):
And um good news is our companyhas a bunch of other loan
officers who love to specializein different stuff, you know.
So if you got VA scenarios,conventional scenarios, you
know, agency commercialscenarios, odds are I have
someone within arm's reach whouh would take great care of you.
But by staying in my lane, ithelps me become an expert and um
practicing the same kick athousand times kind of thing,
(13:48):
you know?
SPEAKER_03 (13:48):
Okay.
You you explained earlier thatyou shifted gears from the
restaurant business to become aloan officer, but you also own
properties of your own, likerental properties of your own.
SPEAKER_00 (13:58):
Is that right?
Yeah, that's right.
So again, wouldn't happenwithout bigger pockets because
they it kind of simultaneouslyfostered and fueled my loan
officer position while alsoreally like, you know, I was
just like every other usertrying to learn for my own sake,
right?
Especially when I would I startdoing all these deals, and I'm
like, man, this guy has 10houses, you know, how did he do
(14:19):
this?
And let me reverse engineer thisa little bit for my own sake,
you know?
And so how I cracked into myown, my first deal as an
investor was after a coupleyears of being a mortgage loan
officer, I guess I'd been doingit for like maybe two, three
years, finally started makingsome great income, and I had two
borrowers, they didn't even knoweach other, but I was speaking
(14:40):
to both of them like every otherday, it felt like because they
were both doing burr and flip inSt.
Louis, Missouri, like once ortwice a month with me.
One or two deals a month each.
So after after like a year or soof doing that, you know, I sit
back and I have dozens of uhappraisals in my Google Drive in
the same zip code, and they'reall very similar deals, right?
(15:02):
You can kind of narrow it downto okay, here's uh a 3-2, he
bought it for this, he put thisinto it, and it was worth this
much after.
And so I just tried to kind ofmimic deals that I saw working
out really well that werescalable, but my first deal was
not like most people's firstdeal at all.
So, you know, I took a I took ahuge risk, uh, but it all worked
(15:23):
out.
I so one of these clients, um,great guy, I'm still friends
with him to this day, became theseller in this situation because
he was a very active flipper inSt.
Louis, but he lived here in LosAngeles, um, working in the
music industry.
And I had met him at a localmeetup.
And what you might rememberaround that time is that
Hollywood shut down.
So uh one of the most lockeddown elements of the country was
(15:46):
all that film production stuff.
So a lot of people, a lot ofpeople who were, you know,
working on shows, the shows werecanceled until further notice.
So um, if you can imagine this,this guy has several you know
hard money loans out, his greatincome just vanished overnight.
He can't even send workers to alot of these job sites.
If you recall, it was hard toget even plumbers or
(16:07):
electricians or anyone to goout.
SPEAKER_01 (16:09):
Right.
SPEAKER_00 (16:10):
And he had a one ballooning note.
Um, and for those that don'tthat don't know what that means,
it means that the um short-termloan, like a one-year hard money
loan, was coming to an end.
And it was at probably like theworst possible like dark hour
where like you couldn't gettoilet paper, nobody knew what
was going on with this thing.
Banks weren't really willing todo extensions.
(16:30):
They're like, look, I think theworld might be over right now.
Like, we're gonna call them thisthing, do.
And um he didn't want to.
He had finished the rehab onthis, he had it listed for sale
because nobody was refining atthat time.
Like a small small period oftime, but like for like three
months, he really couldn't getone of these type of loans.
I saw him struggling and kind ofsquirming and feeling the
(16:52):
pressure, and you know, aforeclosure or default would
have really affected his abilityto do other investments, right?
So by by any means necessary, heneeded to get rid of this one,
even if that meant kind ofbreaking even on it and taking a
loss.
So after kind of like justhaving like friendly consult
calls, I really I never I wasn'treally ready to buy a property.
I've been thinking about it alot, you know, like a lot of
your listeners probably, soakingup podcasts and thinking about
(17:13):
it a whole lot.
But um, you know, I had about ahundred thousand to my name,
like all sources, um, you know,retirement stuff that was
untapped and savings andeverything else.
He owed like$85,000 on thisfreshly renovated duplex.
And I had seen the quality ofthe the rehab because I was CC'd
on all the rehab draws and Iknow him as a person.
Sure.
Um and so long story short, Iworked up the courage to say to
(17:36):
him, hey man, um my relationshipwith you is much more important
than this deal.
But if you got into the 11thhour and this you'd consider
this like a win-win, like a sighof relief for you, I would pay
all cash what you owe thelender.
No appraisal, no nothing.
Um, just as fast as the titlecompany can move.
So somewhat reluctantly, like aday or two later, he said, Hey
(17:58):
man, like I it sucks to losethis one, but I'm happy to see
you get your first deal.
Like, let's do it.
And so I was like, now I gottago explain to my wife that we're
gonna completely exhaust thetank, you know, in in the middle
of COVID with little kids athome and and like really not
sure what was going on next.
But you know, we we pulledtrigger on it, and then um, you
(18:20):
know, things kind of normalized.
Not they didn't reallynormalize, but like banking kind
of came back to normal somewhatover the course of the next few
months.
So I was only completely tied upfor like three months, and I
didn't do one penny of rehab.
He did.
I just got it for much less thanit was worth under the pr the
lender's previous you knowunderwriting of it.
Yeah, and uh it ended upappraising right about where I
(18:42):
needed to get a loan for about$85,000, where I'd still cash
flow several hundred bucks amonth.
It was rented for twelve fifty.
I think my P ITI was like lessthan 700 bucks, and I I left
almost nothing in it.
I left like two or three grandin the deal.
Wow.
Okay.
SPEAKER_02 (18:57):
That is a big gamble.
So you uh what correct me if I'mwrong, but you may not suggest
that level of risk for all newproperty people looking to get
into investing in this.
SPEAKER_00 (19:06):
No, no, there's way there's way less uh like
heart-wrenching ways to go aboutthis, you know.
Sure.
But but it was one of thosethings where like I had already
worked on this specific deal asthe origin the originating
purchase loan officer.
I had a ton of due diligence onit.
In many ways, I had a lot moredocumentation than like a
typical buyer would have in anyscenario.
Sure.
(19:27):
You know?
I had all the invoices from allof his rehab and well, that's
cool.
SPEAKER_02 (19:31):
I mean, it's awesome that it paid that it paid off
for you.
And I mean that that must havebeen quite the feeling of just
like, well, here we go, youknow?
SPEAKER_00 (19:37):
It's like Yeah, and technically I've I got like paid
to buy that property because Iuh a couple years later ended up
pulling some more cash out of itas things kind of values crept
up after the uh part of thepandemic.
So yeah, I have definitelynegative uh cash in that, and it
does cash flow, and I get thedepreciation and everything
else.
And from there, I really just uhto simplify things, I just tried
(20:00):
to go after the same type ofproperty in the same
neighborhood.
Um because it's like we can kindof understand the everything
about that building and and whatit's worth and what it'll rent
for, and cool.
SPEAKER_03 (20:14):
Did your experience buying this property and your
other properties after that hasthat influenced any aspects of
your loan officer position?
Like in terms of how you thinkabout loans and helping others?
SPEAKER_00 (20:27):
Yeah, I mean it gave me a real like inside look at
the psyche of somebody who'slike really backed into a
corner, uh, almost no fault oftheir own.
You know?
So from like interacting withseller, and I guess interacting
with client respect too, you youkind of gotta think of things
this way is like, hey, what'sthe heartbeat of this deal?
(20:48):
You know, it's not always likethe price, it's not always the
rate down to the eighth, the theorigination fee down to the
eighth.
A lot of times it's it'ssomething else, it might be
something more emotional, itcould be timing, it could just
be responsiveness.
Um, so I guess what I learned islike figure out you know the
heartbeat of the deal.
Gotcha.
(21:08):
Let's get informative.
SPEAKER_02 (21:10):
Okay, so we've got a lot of people out there, and
that was a bad segue, but let'sgot a lot of people out there
that are listening to the showthat you know we might have had
it in the description or maybewe'll put it on social media.
Um, but one thing specificallythat is a big part of a part of
your role is D DSCR loans.
So getting really like basicwith it.
(21:31):
I for listeners who might benew, people you know what
exactly is a DSCR loan and whydo you think that it's become so
popular with with investorsright now?
SPEAKER_00 (21:40):
So it's in the name, you know, DSCR stands for debt
service coverage ratio.
In other words, like what's theratio at which uh you know
you're covering the debt on thisproperty every month?
The easiest way to think aboutit would be a 1.0 is break-even.
It means that the rent, in ourcase, it means the rent is equal
(22:01):
to the P I T I, the principalinterest, taxes, and insurance
on the loan.
So you don't really want to beat a 1.0, right?
But it but it is a very helpfulqualifying tool.
And perhaps that's because inthe real world it's not a 1.0.
In the real world, you'll gethigher rents in the near future
or something like that, right?
But these are an absolutelycrucial tool for anyone who
(22:22):
expects to actually scale arental portfolio because Fannie
and Freddie or conventionalloans just have uh guardrails at
a certain point that are gonnareally limit your ability to do
that.
So the big thing about DSCRloans and why they're even
looking at the subjectproperty's DSCR is that they're
not looking at your DTI.
(22:43):
So we're not looking at taxreturns, we're not looking at
pay stubs, um, or even trying toquantify your debt-to-income
ratio at all.
Uh we're just concerned that thesubject property can cover its
own debt.
We rely on FICO, uh, you know,that's that's still very
important.
Uh these do allow LLC vesting.
In some states, they'll evenrequire it, but we still require
(23:03):
one guarantor, someone who'sgonna have their at least one
guarantor, whose credit is gonnabe relied upon, who owns at
least 20% of said LLC.
But uh the reason I say it's socrucial to scaling is is for a
couple reasons.
One, most people's DTI can'tsupport, you know, more than
like maybe a couple mortgages,you know?
Two, Fannie and Freddie actuallycap you at 10 investment pro 10
(23:26):
financed properties uh no matterwhat, and most lenders have
overlays to cap you beneaththat.
And then the other thing wouldbe like speed of scale.
And I'd say this this might belike the number one use or or
marketable factor about DSCRloans is doing cash out refines
with little to no titleseasoning.
(23:47):
So sometime in like May 2023 orso, um conventional lenders
change their guidelines torequire now 12 months of title
seasoning when there's a firstposition lien on the property,
which is most deals, unless youbought it cash, right?
Most deals are doing some kindof hard money loan or fix and
flip style loan on the front endto buy the distressed property,
(24:07):
fix it up, and then they'recoming in for a DSCR loan to
refi because we'll use that newappraised value to calculate
your loan amount without title Csaying.
Oh, we would we do want to see,like, hey, why did it appraise
for so much more than you boughtit 90 days ago?
And that's as simple as yousubmitting your scope of work to
us and allowing us to justconnect the dots there that you
(24:28):
made physical improvements.
SPEAKER_02 (24:30):
So do you think that it is basically that
flexibility, that that kind ofyou know, the way that maybe
that you might be able to drivethings a little bit higher, like
maybe do a little bit more withwhat you have being what why
it's becoming so popular withyou know with investors these
days.
SPEAKER_00 (24:46):
Yeah, it's it's definitely the easy button,
right?
Yeah, I mean, even even me, likeI actually got a lot of flack
from um people in my cohort inthe mortgage industry, and that
when they didn't quiteunderstand it at first why I was
using DSCR lens on my ownpersonal investments, they're
like, You you qualify for thethe bank rate, let's go get you
a full dock.
I'm like, dude, I'm trying toget this thing closed like
(25:08):
without any question now, youknow?
And so it's a much simplerprocess.
And what's crazy is that theindustry has become so
competitive, there's so muchcapital chasing too few of deals
that nowadays the delta betweenconventional rate and DSCR rate
is small if if at all.
There are some scenarios inwhich um the top DSCR lenders
(25:31):
might even price inside ofFannie and Freddie on certain
scenarios, namely like max LTVcash outs on two to four units
or stuff like that.
SPEAKER_02 (25:40):
Okay.
Patrick, I don't know about you,but I've heard the name Fannie
and Freddie a few times, and I'mwondering, I'm like, they sound
like they're good bigger pocketsusers too.
I was like, we have to get theircontact information.
SPEAKER_00 (25:50):
Yeah, so Fannie and Freddie are the uh or Fannie Mae
and and and Freddie Mac.
unknown (25:55):
Okay.
SPEAKER_00 (25:56):
They are uh government-sponsored entities,
the GSEs, basically the federalgovernment backstopping
mortgages.
And this came um into placeafter the financial crisis, you
know, as a way to uh stabilizethe mortgage industry and and
create very strict rules ofunderwriting to prove that the
(26:17):
borrowers have the personalability to repay the loan.
SPEAKER_01 (26:20):
Okay.
SPEAKER_00 (26:20):
On in my world, DSCR loans, we are not trying to
prove that the borrower has apersonal ability to repay the
loan.
We're trying to, you know, sellas many loans as possible, and
and the underwriting is muchbetter than back then, right?
Because we have much more strictrequirements on FICO, reserves,
um, in some cases, experience,and and namely just you know, we
kind of work hard throughmultiple sources to prove that
(26:42):
the DSCR really is strong onthis property.
SPEAKER_02 (26:45):
Okay.
Patrick, you gave me a we aweird look when I asked that
question.
Did you know what that was?
SPEAKER_00 (26:50):
Or it wasn't I was trying to use context clues.
Okay, when I say Fanny andFreddie, what I mean is
conventional.
What I mean is that's the firstone.
SPEAKER_03 (26:59):
That's kind of what I figured.
SPEAKER_00 (27:00):
Yeah.
What what I mean is they havecertain federal guidelines that
you cannot get around.
Whereas with this, that we arenot supported by the federal
government, GSCs, or anythinglike that.
We're supported by hedge funds,life insurance companies, large
private investors, entities thatwould want to purchase this
paper on the secondary market.
SPEAKER_01 (27:20):
Yeah, very good.
SPEAKER_03 (27:21):
And so for like let's say for the average for
the average home buyer, let'ssay, do you pretty much in most
cases do you recommend DSCRloans?
Uh like do you do you feel thatit's beneficial, you know, let's
say nine nine times out of tenor something like that?
Or like what what specificinstances would you uh would you
say that one is better than theother?
SPEAKER_00 (27:43):
Yeah, I mean, it's hard to say.
Like I'm I'm leaning moretowards saying, yeah, there are
scenarios on a turnkey rentalproperty, cookie cutter deal
when you have a great W-2borrower who's not interested in
investing title in an entity,just using their personal name.
Yeah, you I'd encourage you toshop a conventional lender and
see what they're coming backwith.
(28:04):
There's a chance you stand youstand to benefit a couple basis
points on your rate.
Might not be as much as youexpect compared to the DSCR
loan, but but surely.
Yeah.
Okay.
unknown (28:13):
Yeah.
SPEAKER_00 (28:14):
Cool.
SPEAKER_02 (28:14):
We're I've got a couple not necessarily
rapid-fired questions, but I dowant to touch on you as an
investor.
So, like from your from yourexperience, I mean, what's the
number one thing that investorscan do to make themselves more
attractive to lenders?
SPEAKER_00 (28:27):
Yeah, great question.
You know, being easier to workwith on my end means like you
don't have to know everything.
I'm here to answer yourquestions, you know.
But but strong communicationskills.
Like, I highly recommend thatinvestors start kind of setting
up some type of work drivefolder if you use Google Drive
or or whatever you like to useand store certain documents in
there that are like ready to go.
(28:47):
Like driver's license, um, ifyou have if you already own
properties, like schedule ofreal estate.
You're if you're using an LLC,have the entity docs ready to
go, the basics, like yourarticles of organization,
operating agreement, EIN letter.
And then if it was a recent,like if you're coming to me for
a refi, which is most people,like I'd say like the lion's
(29:08):
share of my deals are refines onrecently renovated properties.
Okay.
And people like that, I say youshould really have your scope of
work dialed in.
Like whatever you did to thisproperty recently, have a
beautiful one pager that justlays it all out.
Not just for me and theunderwriter, we're kind of
barely gonna look at it, butreally for the appraiser.
Right?
(29:29):
I really want you to have thebest chance of success.
So I I make the more I loan you,the more money that I make, you
know.
So it's it's never like I'm likeuh wanting that to come in low,
but to one thing you can do toset yourself up for success is
have a one pager put together ofyour recently completed
renovations and perhaps maybesome before and after photos.
Another thing to avoid appraisalsurprises would be just really
(29:51):
having a good grip on your compsto begin with.
You know, I a lot of investors Iask them, okay, great, what what
do you expect this appraisal tocome back with?
So we can you know size up theinitial quotes and they go,
well, Zillow's got this andRedfin's got that.
And hey, sometimes is thatreasonable?
Yeah, most of the time, no.
You know what I what I'd muchrather you do is contact a local
(30:12):
agent or broker and request acomparative market analysis or a
CMA.
It takes them all five minutesto set some filters and run a
search and print you out a nicePDF that says, hey, here's the
most similar comps that soldwithin a half a mile in the last
six months.
Sure.
SPEAKER_02 (30:26):
I love the practicality of your first tip
being organize yourselfbasically, like get your like
Google Drive or like your onlike your all of your stuff in
the right format.
You speak that as if you've runinto situations where
disorganization can cause chaos.
SPEAKER_00 (30:40):
Yeah, it it I mean it does.
You know, there's there's a bigdifference between the client
who has everything kind ofsigned, still, and deliver and
the one who's got no subjectline and just says something
like, What are your rates interms?
Well, there you should see howcomplicated this rate sheet is,
right?
There's adjustments foreverything, right?
Every 20 points in FICO or so,the LTV, this the specific DSCR
(31:02):
ratio, the loan amount, thislocation, the unit count, all
types of things that can affectthe rate.
And actually, we built out apretty cool pricing engine for
this product.
We can maybe plug in the shownotes or something, but I
created a really cool tool andwe're spending a lot of time on
it every week to make it biggerand better and eventually become
(31:23):
something I think is likeindustry leading.
But right now it's it's a verysimple widget where you can go
in there and punch a few detailsin on your scenario, like
whether it's a purchase or arefi, what's the value, what's
the rent, what's your estimatedFICO score, annual taxes, annual
insurance, so that I cancalculate the DSCR.
And as soon as you've enteredthose figures, boom, instantly
(31:44):
you're gonna get dialed in ratesand terms, fees, loan amount,
monthly payments.
And even if you're not trying tostart a loan application with
me, I highly encourage you toplay with it because I think it
will actually really help yousize up your deals.
Like when I was first analyzingdeals to purchase on my end, the
cheat code that I had was likeall these wholesale broker
portals where I kind of workedit from the angle of the loan to
(32:08):
begin with.
It was kind of like, okay, howwill this loan work?
So I kind of what I intended todo was really like give that to
the borrower in a reallydigestible way that's easy on
the eyes and comprehensible.
And the other thing is like alot of our industry is so
archaic where this this kind ofthis whole conversation is like,
you know, kind of whining anddining you on the phone and
asking for documents and tellingyou we'll get we'll get back to
(32:29):
you later.
Whereas this is like, hey, thisis exactly what it is based on
what you're telling us.
And if you'd like to proceed,you know, click the next button
and we'll start working onreaching out to you and
collecting some stuff.
SPEAKER_02 (32:40):
Yeah, that is cool.
We'll definitely have to link tosome stuff.
So it's like a website that youbuilt or a wit like a widget on
the website.
SPEAKER_00 (32:46):
Yeah, it's actually just like a it's like a widget
on our website.
Yeah.
So it's it'sinvestorpropertyloan.com slash
DSCR.
SPEAKER_02 (32:53):
Okay.
Sounds like a super useful tool.
I I'm definitely gonna messaround with it because I'm in
the I'm in the market to startlooking at homes in the next
year, so whatever, but it'slike, you know, you kind of play
around with those kind of tools.
It's always cool to see what youcan find online and see.
Yeah, if nothing else, it justgives you like some flavor for
like where rates are at too.
Sure.
So in terms of rates and andlike the the condition of the
market right now, but we've youknow, we've asked a couple
(33:15):
people that we've had on asguests, but I'm curious to hear
your perspective.
How have lending conditionsshifted in the last year and
what should investors expectgoing into 2026?
SPEAKER_00 (33:24):
I mean, I'd say in in general this year we had a
lot of rate improvement.
You know, we had very goodvolume on this side of things.
I think um, you know, as a smallcompany, we uh originated more
than$100 billion worth of loansthis year already.
Much more than$100.
Um, probably a little bit morethan$150, uh, which is a lot of
for a group of like six or sevenloan officers, right?
(33:45):
Um right now, the average ratefor a DSCR loan, and I'm gonna
assume a few things here, likeaverage FICO range and maximum
LT and maximum LTV, somewhere inthe mid-sixes.
And uh that's up a little bitfrom a few weeks ago pre-Fed
rate announcement.
These Federate announcementsreally throw the average person
(34:05):
through a loop with with what toexpect with mortgage rates
because largely theseannouncements are telegraphed,
right?
Wall Street and the secondarymarket knows exactly what Jerome
Powell's about to say.
Well, they know they know howwhat he's gonna reduce the rate
by.
And that's largely baked intothe pricing pre-announcement in
the lead up.
Um, but in this specific case,you know, he lowered the
(34:28):
interest rate a little bit, thefederal funds rate a little bit,
which does not control mortgagerates.
It's the overnight lending ratefrom one bank to another.
But in his speech, you know, hehas he was kind of had some
damning words about the economy,really questioned his decision
to lower rates, basically saidthat the next announce the next
uh meeting, it's it's notpromised that there'll be
another drop.
(34:48):
And all of this kind of likenegative language caused the
five and ten year treasuries toactually go up a little bit.
So, contrary to what everyonewas ex the average person was
expecting, right, um after thatFed rate cut, most recently,
mortgage rates actually went up.
They're more in line withmortgage rates are more in line
(35:10):
with the five and ten year uhtreasury yields.
Okay.
unknown (35:14):
Yeah.
SPEAKER_00 (35:14):
So some signs of positivity.
Some signs of positivity, butwhat I would actually uh the my
my main point here is to notworry about it too much, to be
honest with you.
I I really I really think Ireally think that things are
gonna be sticky for a long time.
I expect 2026 to be a fairlyflat, you know, lake water type
(35:35):
of year for rates.
Are things gonna go up a littlebit and down a little bit and up
a little bit and down a littlebit?
Sure.
But if you're really likestopping yourself from doing a
deal over like an eighth or aquarter in rate, um I think it's
largely wasted time.
I think that when you'reunderwriting these deals, as a
matter of fact, you ought tojust try to make all of these
work at a hundred bips higherthan what you think the rate's
(35:56):
gonna be, you know, rather thanrelying on uh it needing to be
lower, right?
Because here's the thing realestate, it's really all about
like time in the saddle or liketime, you know, I think I'm
thinking like workout, uhpuntering out, like time and
retention, you know, like youyou can you can make moves as
rates fluctuate over time, but Ijust wouldn't I wouldn't stop
(36:18):
yourself from getting into adeal that works today at the
current rate or at a rate that'sslightly higher than the current
rate because you think ratesmight come down in six months.
I just been I've been watchingpeople play that game for years
and years, right?
They they were they think ratesare coming down in six months,
and maybe they are, maybethey're not, but yeah.
SPEAKER_02 (36:35):
Yeah, one of the one of the most interesting things
uh, and you know, we've beendoing the podcast for like
probably around a year, maybe alittle less then.
But every almost everyinterviewee we've ever had on
the show, when we've asked aboutlike basic advice for people
like looking to jump into thereal estate industry, everyone
kind of just says like thewaiting for the right time thing
(36:55):
is just kind of like not the waythat it works.
Like you kind of just have totake that plunge and jump.
SPEAKER_00 (36:59):
You heard my story.
Sure.
Yeah, I mean, I I I jumped inlike not just I mean, I jumped
head first.
That's putting it mildly, right?
Yeah, exactly.
unknown (37:11):
Yeah, exactly.
SPEAKER_02 (37:12):
That's cool.
But so I do want to ask acouple, like some quick fires.
Again, I've got a couple morequestions.
What is some of your favoritereal estate books or podcasts,
like uh, you know, obviouslybesides our show that that you
might recommend to people, likebesides like, you know, we
talked a lot about biggerpockets, but are there any other
great real estate resources thatyou would recommend to people?
SPEAKER_00 (37:33):
Yeah, I mean, you know, one that I listen to how
as often as they put it out,which is a couple times a week,
is an offshoot of the BiggerPockets podcast.
It's a lot of like the coreguys, but uh it's called On the
Market with Dave Meyer.
And uh usually they run kind ofa panel where Dave is like the
big data guy and can run youthrough a lot of like local and
nationwide data in terms of likewhat's going on in the housing
(37:55):
market.
And then the other bit of theround table are investors, um,
one of which is a friend andclient of mine, Henry.
Yeah, that's a great showbecause they're very short
episodes, usually they're lessthan an hour, like 30 to 40
minutes, and they're very uhtopical.
So a lot of times it's aboutwhat's been going on in the last
few days that may move theneedle for investors.
SPEAKER_01 (38:16):
Okay, cool.
SPEAKER_03 (38:17):
Patrick, you got anything else?
My one question, circling back alittle bit, but I'm just kind of
curious because uh Zach and Iare both in a position, we're
like learning about real estate.
We still have yet to to buy ourfirst property.
And so I think a lot of our uhour angles at things are about
buying that first property.
From a loan perspective, what'sthe biggest difference between
(38:41):
getting that first property andthen getting that second
property?
Because that's something that wehaven't talked a ton about in
the past.
Because, like, from my point ofview, it's like, yeah, you save
up, you save up, you get thedown payment on the first
property, you got a loan.
But like the second propertyseems kind of like a like
science fiction at this point tous because we don't even have
the first one, but it might begood to like know about that and
(39:01):
plan ahead a little bit.
So, just any any thoughts onthat?
SPEAKER_00 (39:05):
Yeah, I mean, short of you guys just having like
bucko crazy income, you know,it's gonna be very hard to like
buy one turnkey rental propertywith 20% down and then save up
another 20% and do it again.
Like, that's kind of crazy.
So, like what I've done with mylimited amount of cash on hand
is employ a strategy which isgoing to limit my amount of cash
(39:26):
in every deal, thereby allowingme to do more deals.
And that's really the Burrstrategy or the fix and hold
strategy.
Burr stands for you know buy,renovate, rent out, refinance.
And in doing this, you'reusually dealing with lower down
payment because like on our end,we can do this with you know 10%
down, where we're funding 90% ofthe purchase price and 100% of
(39:49):
the rehab with no prepaymentpenalty.
You force the value up throughyour renovations, and hopefully
you're able to do a cash outrefire where you get all or most
of that initial cash to closeback.
That way, hey, now you have acash-flowing rental property,
you have almost you know, youhave the same or almost the
amount of cash you started with,and go do it again.
(40:10):
You know, it that's a veryoversimplified view of it, but
and then once you developexperience, like I really don't
recommend this to first-timeinvestors, but what I will say
is that once you've built atrack record of doing that a few
times, like I have, you would besurprised how many people would
be interested in private lendingrelationships.
So, like after I did that, youknow, seven, eight times or
(40:31):
whatever, I was able to do thethe next few deals with true
private money, where you know,I'm going to an individual with
a large self-directed retirementaccount and I'm explaining the
deal and where their loan amountwould be relative to the after
repair value.
And hey, here's why it's sosimilar to the other deals I've
done.
And yeah, now I can get like100% financing on the front end.
SPEAKER_02 (40:53):
Got it.
So smart strategies, Patrick.
It sounds like that's smartstrategies.
Strategy.
Learning the acronyms.
SPEAKER_00 (41:00):
Yeah, learning the acronyms, yeah.
Yeah.
LTV, DSCR, and Burr are a couplegood ones.
SPEAKER_03 (41:06):
So it is called Burr because we've talked about that
term like way in the past.
And we didn't, or like B R likewe weren't sure how to put that.
It's kind of a mouthful, yes.
SPEAKER_00 (41:19):
Yeah, and I'm actually I'm on if you're if you
um if anyone's on Instagram, I'mactually it's just my name, Alex
Bakiza, the Burr Lender.
Okay.
Yeah, because I I can kind ofhelp on both sides of that,
right?
I can I can help with the hardmoney loan to buy the distressed
property.
Um, and then of course the DSCRrefi.
SPEAKER_02 (41:38):
Did you check and see if at Burlender just that
was available?
SPEAKER_00 (41:42):
The Burrlender?
I don't remember it.
I've had that tag for a longtime now, like probably almost a
decade, but like, yeah, I thinkuh there were there were a
couple domains that I was upsupset about being taken already,
but I doubt they're even stillbeing used because I don't know
who they are.
Like Berlones or Burlender orsomething more simple.
SPEAKER_01 (41:57):
Yeah.
SPEAKER_00 (41:58):
Here's the other thing.
Loan officers kind of likeunfortunately carry this uh
stigma sort of of being like inthe same vein as like used car
salesmen, I feel like sometimes.
So like I just feel like a lotof times people have their guard
up already, and it's nice tohave the ability to have one
unique name.
So like they they Google itquickly, the Instagram comes up.
Yeah, it's a lot of loan stuff,but it's mainly actually just
(42:19):
personal stuff.
So it kind of like I just wantedto reflect hey, this is an
actual human, right?
Not some kind of shady guy.
SPEAKER_02 (42:27):
Yeah, the loan officer of the people.
Yeah, exactly.
SPEAKER_00 (42:30):
The people's loan officer.
There you go.
Then I have to change the nameto that.
SPEAKER_02 (42:35):
No, you should absolutely check and see if at
the Burrlander is availablebecause that's a that's a sweet
tag.
But uh no.
All right, well, tell the peoplewhere they can find you.
I mean, you've already given outyour Instagram handle.
We've we've heard a coupleresources here, but like tell
the tell the listeners, youknow, what you know, your
resources online, where to findyou.
Basically, this is your chanceto kind of just plug away for a
(42:55):
second.
SPEAKER_00 (42:55):
Uh yeah, so uh easiest place to find me would
be uh either Instagram or biggerpockets.
Um very simple, just my name andInstagram, the Burlender, and
then our website,investorpropertyloan.com slash
DSCR.
I kind of run point guard on allthose submissions that come
through.
So if you simply use that tool,uh it will ping me and I'll be
reaching out to you.
SPEAKER_01 (43:15):
Okay.
SPEAKER_00 (43:16):
That's awesome.
SPEAKER_02 (43:17):
Well, thank you, Alex, for being on the show.
It was enlightening.
It was a pleasure to get to hearabout your story and to listen
to you talk.
And uh, you've educated Patrickand I Patrick.
Do you feel educated?
SPEAKER_03 (43:28):
I feel so educated.
I know so much now.
Well, it's been insightful.
SPEAKER_00 (43:34):
Yeah, and and for your own investing sake, if you
forgot to ask something, youguys have my cell phone, you let
me know.
Sure.
SPEAKER_02 (43:40):
And we'd love to have you back on the podcast
anytime you feel like it.
And uh yeah, I'm sure one ofthese days we'll have you on to
kind of pick your brain a littlebit more about what's going on
in the world.
SPEAKER_00 (43:48):
All right, that sounds great, guys.
Thank you.
SPEAKER_02 (43:50):
Okay, cool, awesome, Alex.
So thanks all again.
All right, thank you, Alex, forjoining us.
That was a great interview.
Patrick, did you learn a lot?
I learned so much.
Yeah, you look it.
And uh, we've been uh excellentuh having a oh damn it, that was
really funny too.
(44:10):
Shit.
All right.
All right, and we're back.
Alex again, thank you so muchfor speaking with us today.
It was awesome to hear from him.
And uh I think on this beautifulMonday, we both learned a lot,
wouldn't you say?
SPEAKER_03 (44:23):
I learned a lot, yes.
It's cool.
I know all about Burr now.
And I'm a lone expert, somemight say.
SPEAKER_02 (44:30):
Well, let's not get carried away.
You still should consult withthe experts, but thank you for
listening to this episode of theRentish Pod.
Uh remember to follow us on allof your podcast platforms of
choice out there, Spotify, ApplePodcasts, Overcast, wherever you
get your shows, check us out andgive us a rating, thumbs up,
five-star review, leave us acomment, tell us how much you
like the show, share it with afriend of yours that may be
(44:52):
interested in real estate orproperty management, or it's
just someone that wants tolisten to a couple guys having a
good time.
And uh email your questions toquestions at the rentichpod.com.
And uh yeah, that I think that'sabout it.
So until the next time that wesee you guys, I've been Zach,
that's been Patrick, and we'llsee you next week.
The Rentich Podcast is recordedin Cincinnati, Ohio, hosted by
(45:15):
Patrick Giro and me, ZachRotello.
Produced by Mousse Gabri Mesqueland Charlene Mulchendani, edited
by Elliot Mongenist.
Theme song by me, Zach Rotello.
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