All Forum Posts by: Timothy Hero

I'm an independent broker with a full time assistant, so I'm not considered a broker shop, but in 36 months I've closed 248 DSCR loans totaling just under $59 million. So I'm not sure it compares to your shop, but I'll take a stab at assisting.

Teach your team to work on a strict, but productive schedule. Those 45-minute phone calls with an investor? Not important. Cut it down to 10, or at most 15 minutes. There's tens of thousands of mortgages closing each month. You can't get a big slice if you're talking small talk.

Leads... every day. Every time someone reaches out to me for financing needs, I put them on a leads list and if they haven't requested a quote after 72 hours on my site, I contact them for an update. Don't let leads slip through. So many investors are serious about needing financing but get busy with life and just need a reminder from you.

Marketing... always be marketing. I have at least one ad running at all times. A $200 FB ad done right can generate 100 real leads. The ROI with FB ads is insane.

Don't hire too many people too fast. In the beginning, you need enough profit to scale. I know with every new hire you feel like you're that much closer to building an empire, but it's very costly if the value is returned.

Relationships - cliche, yes. But appearing on podcast and having others market you is key. It's like you have a network or army of marketers. We can only post and message so many people per day to get our brand out there. Why not have 30 additional people assist?

Embrace the wins, learn from the losses. This is a motto I created after inflation put a huge dent in my business. I lost the largest deal of my career ($6 million) 48 hours before closing due to inflation causing higher rates last minute. I've lost many deals. I've closed 248 in 36 months, but that number would be closer to 325-350 if life was perfect, but it's not. Embrace your closings, but learn from the deals that fall through so you limit that being a factor again.

Prioritize scheduling. My most product hours are from 5:30 am - 9 am. So I put the most impactful things for my business on the schedule during these hours. Contact leads, reach out to lenders for updates on files, etc. Your team needs to learn when you're at your highest level of energy and put the most important things on the schedule for that time so you/they crush it.

I hope this helps!

Rates were supposed to come down a lot this year, but swaps have been remaining flat or increase, which is what DSCR lenders determine rates on.

With it being election year, anything can happen. Anyone selling you a crystal ball would be too rich and elite to be here on BP.

They were expected to decreases, but most of my long list of DSCR lenders have either remained flat, or some have even gone up 15 bps.

Swaps haven't been doing too well in the market.

We have to be careful posting here, since this isn't the marketing section, but I know a guy lol

The buy down is where it's coming from. I can only speak on the DSCR industry, but I always tell clients "if the loan is over $250k, expect closing costs to range from 2-3% of the loan amount if a broker is included".

The question comes down to is the rate you're buying down worth the costs? I see all the time people spending $10k to buy down the rate and it only lowers the payment by $70/month.

Quote from @Erik Estrada:

Never heard of them. What terms are they offering? If it's too good to be true it probably is. 

I've seen it time and time again where an investor rate shops only to get a horrible experience and the deal fall out, only to go back to square one and find another lender that can perform. 

I would recommend working with a solid mortgage broker. This will eliminate the room for error and the uncertainty of a lender's performance. 

It's me -- I'm the solid mortgage broker, lol.

In all seriousness, if it's too good to be true, it definitely is in this industry. Not sure on the terms they offered, but I see people fall victim to the bs all the time. If there were a lender offering terms a mile ahead of the industry, the rest of the industry would have no business, unless said company was horrible at marketing.

But I haven't heard of them, but that should hold much weight, as it seems a new DSCR lender hits the scene weekly at this point.

Quote from @Eliott Elias:

90% of lenders are going to want to see at least a six-month seasoning before giving you this loan. Some may be able to do it sooner, but the loan to value will be terrible.

I wouldn't say 90%. I'm about to close my 250th DSCR mortgage as a broker in 36 months, and of the 20 or so lenders I work with, I'd say 10-12 only require 3 months.

If you purchase the property in cash, then yeah. Most require 180-day seasoning.

My lowest rate lender offers the following if it's not seasoned: 100% of the purchase price + 100% of the reno amount.

Quote from @Jake Baker:

@Gabe Callaway

I tried to do a cash-out refinance on a duplex recently with DSCR. There seem to be more strict rules around the DSCR ratio and LTV compared to single families. However, this was 6 months ago and things may have changed. Something to watch out for.

Usually 1-4 units are the same. Sometimes a DSCR lender who requires a 1.1 for a single family may require a 1.2 for a 2-4 unit. But that's rare.

I'm a DSCR broker, so of course I'm biased, but the DSCR space has come a long way. Sure, some lenders are incredibly high on rates, but overall, rates aren't much higher for an investment property than going conventional.

I've quoted investors 20 bps higher than conventional and they end up going with me, simply because the loan is low doc, not reported on credit, and they can close in an entity.

It's a case-by-case thing, of course.

But they aren't looked down upon. Some of my highest net worth clients only do DSCR.

Expect terms to change with 5+ units compared to the 1-4 unit loans.

Quote from @Bryan Hartlen:

Quote from @Timothy Hero:

I've brokered nearly 250 DSCR loans in the last 3 years. When it comes to AZ, I'd say 70-75% of the industry doesn't lend there. The ones that do usually base rates on the 10-year swaps and 5-year swaps, and those have been trending up for the last 3 weeks.

I'd expect rates for AZ to be around 8.5% right now, which hurts, knowing so many DSCR lenders are 7.5% right now.

Thanks Timothy. I appreciate the info.  I live in AZ but invest primarily in Birmingham, AL.  Have you brokered non-recourse loans:  DSCR or other long term notes?

I have two lenders that offer non recourse options as well. I don't remember the difference in rates, but it wasn't a huge increase.

From my understanding, it's important to note, lenders can only take what is owed. If you owe $300k and they take $400k worth of properties from you defaulting, they can only take the $300k + attorney and court fees and you get the rest.

So ultimately, it shouldn't make a difference between non recourse or recourse anyways. However, I'm not an attorney, so I can't fully say. I just know one of my non recourse lenders stated this.