All Forum Posts by: Doug Smith

Google and Bookmark the selling guides for Fannie Mae, Freddie Mac, and FHA. The broker or lender you are working should also have guidelines for you to review and learn. If they don't, find another group to hang your license with.

That's actually how our business started. I was working for banks as a commercial lender and move to "Special Assets", where we worked out the severely delinquent commercial real estate loans in 2005-2007. I quickly realized that this could be done on one's own, so I raised some $ and started buying the loans on retail centers and limited-service hotels out of banks. A year or so later, we started buying residential mortgage loans. We were holding anywhere from 50-100 notes at a time back then, but in June of 2014, Lone Star out of TX bought all 16 of the HUD traunches WAY overpaying for the assets. As the big funds figure it out, we slowly liquidated those holdings and went back to our lending roots, but added some direct real estate investment. For us, it was always about buying notes on abandoned, severely delinquent property in deed theory states. Unlike others, it was never about getting them to reperform and holding them for a longer-term payment stream. If they did reperform, we sold them. We always targeted a cash on cash return of 18%+, but pricing started to climb in 2014, other business revenue streams made more sense for us, so we moved out of it. Keep in mind, we had my long-time bank special assets experience and we owned a national title company at the time. We really knew our poo and had the resources to scale. I don't think it's something that you can pay a guru $10K for mentoring and learn it in a weekend in a Holiday Inn ballroom. We were a lot more than dabblers, but at some point they were selling at prices that didn't make sense for us. Happy to discuss it further with you as a sounding board.

Hey Adam, I just saw this (5 days after you posted it). I've been a commercial and residential lender and investor in the Tampa Bay area for 30 years now. I don't know of commercial meet ups other than CCIM socials, but would love to grab coffee. Let me know what works for you. Either off of Gandy on the Tampa side or North 4th St on the Pinellas side?

First, are you using a lender. Have them provide you with the specific specs for the policy. Grab your quotes and, if you've got a good lender, hook them up with the agents. Insurance has been blowing more deals lately than interest rate or taxes. The lender is going to tell you what policy limits you need to have and what deductible they will allow. 

@Upen Patel asked the question I had. Is this for you to own personally as a primary or 2nd home or this this an investment deal? That answer will take us in two totally different directions. If it's an investment, you're better off putting it in the LLC name right now. Can you please elaborate on why the builder is pushing you to do it personally? They honestly might not know much about investor lending. That could be why they are pushing you that way. Please provide us more info so we can answer your question in more detail.

I'm a lender and investor from the Tampa market. You just described three very different markets that, particularly in the Tampa Bay area, can go neighborhood by neighborhood...street by street even. You mentioned Fort Myers. It's a nice town, but SW FL has historically been the first to go down in a crash and that area, when it goes, crashes hard. As lenders, we're seeing less flips, but more ground-up spec construction deals. Just be careful with your math and I would avoid building appreciation in your modeling when you set a buy price. If you're in Tampa, let's grab coffee. I would love to talk through it with you. 

Hi @Jiacheng Liu. I'm a Principal Broker in Florida. It is very rare to find good bi-lingual loan officers in any language. You have a massive advantage over other MLOs. I try to really get to know our MLOs so I can understand where their business is going to come from. For instance, we have one newer MLO that is married to a very active realtor that does speak a 2nd language. If he even gets a portion of his wife's buyers, he'll do quite well. I have another MLO that just came on board on Friday, but she's working on a team that's closing 25ish loans/mo. The team lead is great at driving in business, but needs help in doing preapprovals and clearing underwriting conditions. This new MLO is going to learn on the job by taking on simple tasks while she learns in exchange for a portion of the revenue. Both of those situations came to mind when I read your post. To answer your bullet points:

* For leads, try unconventional sources, not just social media and realtors. With your physics background, do you know civil engineers or architects? Perhaps you can work with them on financing small builders with the construction loans and then, when they get the CO, be the "preferred lender" on the takeout loan. How about financial advisors? Attorneys? Don't just rely on the same thing that everyone else does. 

* For Community Connections, I've found REIAs and RE Meet Ups to be somewhat of a waste of time. Look for industry meet ups outside of real estate or lending. Again, architects, builders, divorce attorneys, and financial advisors provide a different lead set. How about banker meet ups? There are a lot of things bankers can't/won't do that you can.

* A huge part of trust is simply answering the phone, doing what you say your going to do, and know your guidelines inside and out. Few MLOs take the time to study guidelines. Know where to look things up that you don't know. Be available. Finally, find a great mentor. If you don't have someone that will answer their cell on the weekends...get a different mentor/broker. 

I could go on all day long, but welcome to the Florida Lending Club!

The yields between conventional and non-qm (including DSCR) have compressed and I'm seeing that DSCR is, in a lot of cases, more attractive than conventional financing. We just closed a DSCR purchase in FL this week at 70% LTV (customer put a bit more down) at 6.75% with 0.6% in points. For an investment deal, I thought that was pretty solid. DSCR isn't necessarily higher. As a matter of fact, I'm seeing the opposite right now.

You bet. Happy to talk through it sometime, but definitely watch a realforeclose auction a few times. Pay special attention to those smaller liens that look too good to be true. Those are usually HOA liens subject to a first mortgage. It's really interesting. If you want to chat this week, let me know.

 Good points. I agree. In FL, the "courthouse steps" are an online auction through "realforeclose". It's actually kinda neat the way they do it, but it also lends itself to newbies that bid on things they don't fully understand...and overbid at that. I've seen so many newer investors get completely burned to the point of financial ruin by investing in things they don't fully have a grasp of. Great advice, Travis.