Coffeez with Joe Shalaby - What is Private Money Lending? ft. Chris L. Boulter | Coffeez for Closers with Joe Shalaby Ep. 44

Starting point is 00:00:00 What's up everybody? Welcome to another episode of Coffee's Foreclosers, the podcast where industry giants reveal how they built their empires from scratch all over a cup of coffee. In this episode, we feature the president and visionary behind Valchrist's investments. Since 1975, Chris has transformed a modest family business into a leading name in the private money lending sector. Join us today as we discover how Chris's blend of expertise and innovation has redefined success in the financial world. Without further ado, we welcome Mr. Chris Volter. Hey, good morning, Joe.

Starting point is 00:00:44 Thank you for the invite. I look forward to talking about the business and what we've done in private money lending over a cup of coffee. I appreciate you. And thanks, Chris. You know, I feel like you've been kind of like private. You know, a lot of people don't know who you are. So it's good to be out in the general public because for years, I personally had wanted to meet you.

Starting point is 00:01:03 So I'm glad I got to meet you today. And I'm glad that the public now gets to also meet you because, you know, Valfrice is doing some great things. And I'm blessed to partner with them. And I'm blessed to be at the forefront of all the things that you guys are doing. And now that we have this additional relationship, I think that there's a lot of big things coming between our partnership and our synergies. So I'm going to just jump right into it. Now,

Starting point is 00:01:29 Fire away. Hard money, it's pretty niche. Now, of all the sectors in the financial space, you know, regular, you know, conventional mortgages, Fannie Mae mortgages, why did you select private money? What was it that inspired you to get into the private money space? And not only that, but to dominate that space. Well, I don't think I pick private money, actually, Joe. I think private money picked me.

Starting point is 00:01:52 Back in my youth, after I got out of college, graduating from USC, I was working in the wine business. I was selling wine. And my father-in-law had started this company a few years prior to that, and his partner was retiring. And he said, I've got a private money lending business. What do you think about getting into this industry? And he convinced me to quit my corporate job and go to work as his partner. And that's how he started out. It was just myself, my father-in-law, my mother-in-law, in a small 800-square-foot office.

Starting point is 00:02:24 This was before fax machines, cell phones, or any. modern technology. There was just the three of us. And at the time, I think we were on loan number 59 or 60, and my father-in-law started with loan number one. And now we're in the 15,000, 16,000 range, or possibly even higher than that. So it kind of found me, I guess. And I fell in love with it. It didn't take long before it kind of overwhelmed me. And I enjoyed it. I found it passionate. I found every day a challenge and it gave me a lot of flexibility because private money has, doesn't have quite the boundaries that conventional lending has. Yeah, so what are the some of things that drew you to private money, you think?

Starting point is 00:03:09 Well, I think what I liked about it is that I could make decisions every day about whether a loan was approved or not approved. And the underwriting criteria was incredibly flexible. In private money, we're focused primarily on, at that time, we were only focused on loan to value. So we could make a loan to virtually any borrower, regardless of their credit, regardless of their ability to document their income, regardless of whether they were employed or unemployed, if they had sufficient equity. So I like that freedom of being able to help virtually anybody. I like the ability of not having to tell somebody no because they couldn't fit one of the 30 boxes possibly they were required to fit when they did a conventional loan or a subprime loan. if they had the right loan to value, again, we could approve them, and we could close the loan

Starting point is 00:03:57 quickly, too. And then that was nice because most loans only took maybe five to 10 days to underwrite before they funded. Wow. Now, you know, Valcrest has just exploded recently, and obviously you've been doing this almost five decades now. Like, what are some of the key strategies that, you know, you've implemented to really scale Valcrest? Well, when we first started out, because again, we were so small. We didn't have much in the way of marketing. Back in those days, Joe, I used to hop in my car with some printed flyers, and I would just drive to offices, real estate offices and mortgage companies, and I would walk in unannounced, and I would just say, hey, here I am, I'm your private money lender, and I would hand out flyers, because there was no, there was no such thing

Starting point is 00:04:43 as, you know, the Internet or other marketing tools. And again, I just started to learn more about the business and as technology changed, we again began to use some of the other avenues to make ourselves more exposed to more and more people. We also found that by focusing our business primarily on brokers, A paper lenders and real estate brokers, we started putting on small seminars at their offices. We would get ourselves invited to their sales meetings, kind of like talking over coffee. I started out going to offices with a, box of donuts and getting invited to sales meetings and spreading the word. And then we then decided we needed to start attending some of the trade shows, the mortgage

Starting point is 00:05:29 trade shows, the real estate trade shows to get ourselves more exposed. And we continually focus on the fact that we're kind of your lender of, in some cases, your lender of last resort, but we're somebody you can rely upon on virtually any loan transaction as long as there's equity. And I think that the word of mouth kind of got around. And then we've again, over the years I've now brought in some younger people, people who are much more savvy than I am as far as marketing, and they've helped blow up our volume and our exposure to help our company grow even further. Yeah, you guys are doing a fantastic job, but are you guys still attending all the trade shows every year? We're attending more and more.

Starting point is 00:06:06 I mean, I think like everybody else, we came to a screeching halt with COVID, but since then we started to make ourselves more and more exposed. We're now attending some of the realtor expos, and we're attending more of the mortgage conferences. so that we have more exposures. And we've invested the money from a marketing perspective to have a nice presence to make sure that we're in an area. We can share our product with many of the experts like yourself who dominate the conventional lending market to at least let you know that when your client doesn't fit your particular lending criteria, there might be an alternative.

Starting point is 00:06:40 And we want to be that alternative lender. And you guys are that alternative lender. Now, I know that things have shifted now because interest rates are so high. and I know that you guys are starting to gain a lot of market share in the second space. Now, tell the audience now who's listening about private money second mortgages, because a lot of people who are actually listening, whether they're loan officers or borrowers themselves, they don't even know that private money seconds exist. So tell me about that and tell me like the qualifying parameters for attaining a private money second mortgage.

Starting point is 00:07:15 Well, I think that is probably one of the biggest reasons why our business, has grown so dramatically in the last few years is that as we all know over the last few years, prior to maybe 20-22, when rates were incredibly low and many homeowners out there refinance their properties or were able to buy a property at all-time low interest rates in the twos and the threes, things have changed a bit. Interest rates are much higher than they were two or three years ago. And there were still lots of people out there who'd like to pull equity out of their property. But they have a reluctance to pay off that low rate loan. I know myself, I have a mortgage on my property, and I'm at two and a half percent. If I wanted working capital for some reason,

Starting point is 00:08:00 or I wanted to buy something else for an investment purpose, I would be hard-pressed to pay off that two-and-a-half, two-and-three quarters if I had to pull out a new first mortgage, say... That's below free, two-and-half. It's almost. I mean, it's incredible. But if I came to you and you had to say, well, geez, the current market's six and a half, six-nine-nine. Six-nine. or 7% in some cases higher, you know, that would be a hard pill for me and a lot of borrowers to swallow. So what we did is we changed our marketing emphasis and we said, hey, what if we focus more on second trustees that are at higher rates, but when you get to keep your first, and in many cases that's the bigger portion of the financing at this very low and credible

Starting point is 00:08:39 rate, while our rate is higher, let's look at the blended rate. So if you've got a million dollars at two and a half percent and you want 200,000 extra, And let's say that's a 12%. If you go a million at two and a half and 200 at 12, your blended rate is probably three and a half, maybe four percent. So we've marketed our efforts to A paper lenders like eMortgage, and we said, hey, if you can't get that client to take out a new first, here's an alternative. Our rate's going to be higher, but let's, again, let's focus on the blended rate. And if the blended rate is considerably lower than what can be offered by getting a new first, that that might be. marketing approach has taken off. That's awesome. We found that a lot of a lot of A paper lenders have

Starting point is 00:09:23 said, hey, you're right. And the upside is our loans are short-term loans. When rates readjust and they come back down and you know that's going to happen. Rates are going to come back down. Well, great, you can pay our loan off. Most of our loans either have no prepayment penalty or there's no prepayment penalty after six months, which means you only got to keep the loan for six months. Now you can pay it off when rates get better. And it works out great for A paper lenders like yourself because you get them this loan now, you get them what they need. You're going to get a refinance when rates get better and you're going to get them into a better product.

Starting point is 00:09:57 That's right. Everybody wins. Yeah. So you're saying that your private money seconds are only 11 or 12 percent. That's in line with the regular home equity line of credits. They are. I mean, they do go higher. There are instances where they're in the 13s and even sometimes maybe as high as 14 percent.

Starting point is 00:10:10 But a vast majority of our seconds are 11-9. to 1299. And again, the great part about private money is we don't require bank statements. We don't require tax returns. We don't require a minimum credit score. We make loans to foreign nationals, people who don't even have citizenship here. What we primarily require is that you have equity. So if you meet our loan to value requirement, you're 90% to the finish line. What is the LTV requirement for a second? Right now, and our loan to value is also fluctuate depending on the economy. me. So when people have more confidence in real estate and values, our loan to values will go up.

Starting point is 00:10:50 There have been times when we've been as high as 80% loan to value. Right now we're at about 65% loan to value. So if the loan to value, if you add up the debt on the property right now and the additional loan you want, add those together. If they're not more than 65% of the appraised value, there's a good chance we can help you. That's really fascinating to me because I personally don't understand too much about the dynamic as to why you're willing to go up to 80% when the economy is booming and why you're only willing to go up to 65% because the economy consumer confidence, I mean, it's pretty good right now. Well, I think consumer confidence is the name of the game because what we do in our business is we fund all of our loans with our own capital

Starting point is 00:11:32 and our own lines of credit. But what we do after funding them is we sell them off to private investors. People like you and me, people who want to buy mortgages as part of their investment maybe in their 401k or their IRA or their own personal funds as a way of diversifying their estate. A lot of people have money in stocks and bonds and other investment vehicles. Trustees are quite popular, but we do find right now we are trying to get our investors who are somewhat conservative because most of them are my age, old guys, old ladies. We're trying to get them to become more confident that values are starting to come back. values are going up, and you know this probably be better than me. They are actually going up in a lot of markets,

Starting point is 00:12:17 but we're still, we're pushing our investors to build their confidence back in that any adjustments in the market have taken place and they have nothing to fear. But that's a little bit of an uphill climb for us at the moment. As we build that confidence, our loan to values will go up. So was that confidence at 80% pre-COVID? Yes, absolutely. I think, I think COVID, you know, while the economy's recovered quite, quite well since then. I think a lot of people still have some fears that there may be some underlying adjustments that may affect the market, that maybe things aren't back to normal, that maybe we can't count on that study appreciation we've seen over the last, you know, for the history of real estate. I mean, like you said, I've been doing this for almost five decades.

Starting point is 00:13:06 I always tell people, well, I can't promise you real estate's going to go up every year, but I certainly can tell you that, historically speaking, it always does. So, you know, that's what we deal with. Wow. I mean, listen, I can't imagine the things that you've seen in the last five decades, but that does leave me to my next question. Like, how has the landscape of private money really changed over the last five decades? Well, it's changed in a lot of ways.

Starting point is 00:13:31 I'm pretty old, Joe, so I'm going to go back to my roots here. When we first started out, where I first started out back in the 80s, a typical interest rate on a private money loan would be 15%. That would be a first trustee. And the typical loan origination fee would be anywhere from 10 to 20 points. That's 10 to 20% of the loan amount. That's why they called it hard money back then. So the market has changed dramatically

Starting point is 00:13:56 because now the loan origination fees have come down dramatically. Now a typical loan origination fee could be anywhere from 2 to 2.5 points, which is 2 to 2.5% of the loan amount. So the fees have become significantly lower than they used to be. And the interest rates, as we were talking about, what are the rates on seconds? Interest rates have come down dramatically as well. So the market's changed in that particular manner, and it's become more acceptable. Back when I started, again, hard money was truly hard money.

Starting point is 00:14:28 We dealt primarily only with borrowers who had financial challenges, mostly people with terrible credit. Possibly they were in foreclosure. That was our primary clientele. Today we deal with a lot of people with outstanding credit. It's not uncommon for me to have borrowers with credit scores in the 800s, doctors, engineers, school teachers, people who are, you know, pillars of their community but need capital and are unable to obtain it due to some of the underwriting criteria that today's borrowers have to be able to meet.

Starting point is 00:15:02 So because of that, I think private money has become more acceptable. It's a more acceptable alternative. Our rates are lower. Our fees are lower. And we now cater to a broader spectrum of borrowers because now we're not just dealing with people with financial challenges, which is what hard money used to be. Now I'm dealing with people all the time who say, for instance, I'm doing a loan for a dentist right now.

Starting point is 00:15:26 He wants to borrow an extra half a million because he wants to expand his dental practice. And it's far easier for him to take a loan for me than it would be for him to get an SBA loan, for instance, which is a small business administrative loan. He could get a better rate there, but it might take him three to six months to get the loan done. My rate's going to be slightly higher, my cost will be slightly higher, but I can underwrite him in a few weeks and get his loan closed. So we become more acceptable for borrowers. We become more acceptable with real estate professionals.

Starting point is 00:15:56 And I think that's where the markets change. We're more, we're not in that main lane yet for conventional financing, and we never will be, but we're more acceptable. You know, that's funny that you say acceptable, because I feel like the stigma of hard money has, like, disappeared. There's not a big stigma because I think there's been a, you know, a blend now of hard money and private money, and now private money is used for, like, one-time construction loans

Starting point is 00:16:26 or various business purpose loans. So it's kind of like, you know, intertwine now. Private money, hard money, it's almost, it's synonymous. You're absolutely correct. I mean, we deal with a lot of very sophisticated investors out there who, like you said, they need to get something, they want to buy a property, they want to fix and flip a property, and they need cash quickly. And the benefit of private money is we get things done quickly. Typical turnaround is two weeks. And if they need cash quickly to possibly negotiate a better deal, maybe they can buy a property, there's an opportunity from a seller who says, hey, if I can get cash in two weeks, I'll give you a better price.

Starting point is 00:17:03 Well, if that price is such a good discount that it overcomes the additional cost of private money, well, why wouldn't they do it? So, again, you get a lot of sophisticated investors, and you get very sophisticated borrowers in a lot of cases as well, like I was talking about that dentist, who just said, hey, his broker says I can get the money, I can get the money from you in two weeks. I got to pay a little bit more, but I want to get my expansion going. I don't want to wait three months. So that's, again, why we become more mainstream, I think.

Starting point is 00:17:33 Now, let me ask you this, because I'm sure you know about all the artificial intelligence happening now in the mortgage sector. How does Valchris intend to continue to adapt in this, like, you know, very technological, fintech-centric mortgage marketplace that we're entering into? Well, that's something that's probably better asked of my son-in-law, who's my vice president. He's in charge of all of our marketing efforts. I'm a little bit old school. And while I'm trying to become more reverse in the social media and the marketing avenues that are out there and becoming more knowledgeable about artificial intelligence, it's certainly not my strength. And I'm somewhat embarrassed about that, Joe. And I'm leaving that to the younger bucks in my office.

Starting point is 00:18:21 It is. They are getting me up to speed. I've got a staff now of two people who focus entirely on our marketing efforts. excuse me, who were getting me up to date on other alternatives like how are we going to use AI in our business? How is that going to make us more competitive? How is that going to get us more exposure? How was that going to help us do our job better? So I'm just kind of listening.

Starting point is 00:18:45 And then we're also using consulting firms also. We have people who monitor our website, who monitor our social media platforms and our exposure through other marketing and advertising media. So I listen to them because I'm not the expert. there. Ask me about underwriting. Ask me about funding loans. And that's where you're the pro. I do that all day long. So I focus on that and I hire people and have people on my staff who can do that better than I can. Yeah, that's good. You know, I know there's this, again, another stigma in hard money that it tends to be like old school and not adapting to change. And I know that

Starting point is 00:19:21 that's, you know, you guys want to remain on the forefront because you're dominating and you're expanding. Are there any big expansion plans, state expansion plans? I know you guys are in eight states right now. So do you guys want to dominate more of the West, the East, or what's the plans there? Yeah, we are looking at some other states. What's important to us is because keeping in mind that all of the loans we fund, we sell off to private lenders, we look for states that are friendly to private money lending operations like ours. And every state in the union has different state laws and regulations. And some of those states are averse, for instance, the second mortgages. Let's take the state of

Starting point is 00:19:59 Texas, for instance. And I'm not going to pick on Texas, but there's a lot of states like that. It's very difficult to do a second mortgage in those states. And in California, we call them trustees. In some states, their mortgage is the same thing. It's an instrument that shows evidence of the loan. We're trying to get more exposure in those states that are going to be private money lender-friendly. And what that means is that the regulations aren't overwhelming to become licensed in those states. And because we're We're not prepared to have a brick-and-mortar office in every one of the states we want to get approved in. We're looking to states that don't require that physical presence.

Starting point is 00:20:38 So we do have our target right now on three or four states, primarily more western, on the western part of the United States, generally because their laws are also more familiar and they're more similar to California laws as far as real estate is concerned. And we want to make sure any states we go into, we understand the laws, we understand the regulation, so we do things right. And some states, particularly some of the states on the East Coast, are pretty complicated. Yeah. So that would probably be our last horizon before we consider those. But I do see some expansions into three, maybe four Western states. We got our eye on one more East Coast state that's very private money-friendly.

Starting point is 00:21:22 So I do see that happening in the next 12 to 24 months. but we're keeping ourselves pretty busy in the eight steeds we're in right now. Yeah, you guys are doing really, really well. Let me ask you this. What are some of the biggest challenges that you think private money has faced over the last five decades? Now, you don't have to go into the ones from the 70s or early 80s, but, you know. I won't go back that far. Well, I think a part of it is what you said.

Starting point is 00:21:45 It's the stigma. Everybody who talked about, we call it private money now. It's certainly, it's a better description than what it used to be called, which is hard money. And the stigma is always been something that's taken time to overcome. Because when people think of hard money, they almost think of the guy on the street corner, loaning your money at, you know, at 2% a day, 60% a month. And thinking like loan sharking. Exactly, like loan sharking.

Starting point is 00:22:11 I've certainly been called that on more than one occasion. And I try to remind people, hey, listen, we're not a loan shark here. We're not going to come knock on a borrower's door and, you know, and ask where their payment is. We don't have an enforcement agency. We're nothing like that. We're a family business. We don't run our business much different than a financial institution. We make loans to people who may not choose to go to a bank

Starting point is 00:22:37 or to another conventional financial institution or just can't meet their underwriting guidelines. But the way we structure our loan is almost identical. It's a note that explains the payments and the rate, and it's a deed of trust, which is the same thing you would get at a bank. So overcoming, I think, that stigma over the years has been one of our biggest challenges. Another big challenge is that oftentimes the laws change. And when the laws change, you have to be able to adapt. You've got to be a chameleon.

Starting point is 00:23:10 When you change colors, you've got to adapt to your environment. And the laws have become more and more difficult, probably for yourself as well in a paper lending. Compliance is always a battle. It's always a battle. It's always a battle. I know like the CFPB doesn't like private money, right? And the regulators don't like private money. Because what happens is every once in a while there's a bad apple.

Starting point is 00:23:32 And when that bad apple occurs, they think the entire industry is that way. The bottom line is a company like ours has been around since 1975. We're under incredible scrutiny. And part of it is because we use private money to fund our loan. So we're using mom and pop investors to buy our deals. And because of that, they have some additional. regulations and requirements because they're trying to protect the consumer. But some of the laws, they get over the top.

Starting point is 00:23:59 And that's probably something you see it. You see in conventional finance, you kind of scratch your head and you go, well, why do I, what's that, who is that regulation really protecting? Is it protecting the borrower? Is it protecting the lender? Why? So dealing with the rules, the regulations, the new compliance is always a challenge. We have to keep attorneys almost on contingency.

Starting point is 00:24:22 to ask them, well, we understand the state of California Assembly's looking at a new bill. What does that mean to our business? Because we have to be incredibly sensitive to make sure we cross every T and dot every I. Because as a private money lender, too, we're still a target. People do consider us, well, why did you make a loan to somebody who had poor credit? And we're kind of like, well, because why shouldn't they have every opportunity to borrow on their asset that somebody with good credit? Why should they be punished because they had an unfortunate circumstance in their life that may have been unforeseen, maybe a medical emergency, maybe a loss of a family member, maybe unemployment? That caused them a tremendous speed bump in their financial section.

Starting point is 00:25:07 Why should they be punished? Why shouldn't we make them a loan? If they've turned over a new leaf, life has changed, why shouldn't they be given a second chance? But we get challenged on that all the time. So dealing with compliance, dealing with regulators is a big part of our time. challenge and again educating A paper lenders and the consumers that we're not we're not a loan chart you know we're an alternative and like I said earlier our rates are so much lower than what they used to be in fact for a time there when we were doing first mortgages at seven and a half

Starting point is 00:25:38 seven nine nine there was a time when non QM rates were higher than our rates wow so we're not always out of line with non QM loans and A paper loans we're typically going to be higher but there are times where we're almost battling neck and neck. You are neck and neck for sure on the seconds, and then on first, you're neck and neck and neck with non-QM as well. We do find right now, we hear that same thing on the streets, and that's why we're out promoting ourselves more and more with large lending operations like e-mortgage. We're trying to tell people, hey, listen, you know, if you can't get your client into that product for whatever reason, if they've got equity, don't put them in the trash can, don't give up on that yet. Give me a call. The great thing

Starting point is 00:26:20 about working with myself and our company is I can get you an answer in a few hours. And when I give you an answer, it's something you can rely upon. And we're trying, again, to educate the lending industry out there and consumers as well that you've got, there's no cost. There's no financial commitment for me to be able to give you a quote. And I can work with very little information. You give me a property address. You tell me what you want the money for and how much you want. And I can pretty much tell you in a couple of hours whether I can do the loan and what the terms are going to be. That's awesome.

Starting point is 00:26:51 Now, with all that said, like, what do you think is in store for private money in the next 10 years? That's going to make it 60 years in business. I don't know that I'm going to be around that long. But I do like what I do. So that's a tough one to answer because it just changes so quickly. My goodness, I joke, and I mentioned to you before we went on air that when I first started, we didn't even have a fax machine. And I had to fight tooth and nail to get a fax machine in my office.

Starting point is 00:27:20 against people who thought, why do you need a fax machine? Now, our viewers probably don't. Most of them don't even know what a fax machine is. I was just going to say that. I don't think a lot of these people know what a fax is. I know what the heck is a fax machine. Yeah, so, you know, trying to forecast the future. I'm leaving a lot of that up to my younger people, and I'm asking them, what do they visualize?

Starting point is 00:27:40 I mean, I've been blessed. I feel like I've accomplished many of my goals in this business. In fact, I never thought private money would grow to where we are. a day. When I started, I've already exceeded my goals. So now I've got younger people in my office who are pushing me, and I'm letting them take the lead, and I'm asking them, where do you want to go? Where do you want to go in private money? But I think, again, it's educating the people out there, educating the community and educating the lenders what private money is and how it can be utilized for their benefit, the borrower's benefits, and for the lender's benefits. And again,

Starting point is 00:28:18 utilizing some of the tools like this great interview this morning, artificial intelligence and other media is out there in getting people more and more aware that private money isn't the stigma that it used to be. It's private money. It's an alternative. And it needs to be more and more accepted. So I think that, with that, Joe, I see our business continuing to expand. And I'm going to let the younger people in my office bring me along on that ride. That's awesome. So I love that, you know, you went to USC. You're a Trojan alumni. Right on. And I'm sure you're still like an adamant Trojan.

Starting point is 00:28:53 It's in my blood, yes. So what do you, you know, that network, that good old boys network you had from Scy, how is that network and attending that school, how does that impact your leadership style and your business as a whole? Well, I've got to say, I mean, I'm a first generation college graduate in my family. So we don't have a history in my family of even attending college. I was the first one. And I grew up in Southern California when I was a young man.

Starting point is 00:29:21 Oh, young man. I was a boy. Eight or nine years old, I attended my first USC football game. And I went out, I went to a game with the boys club, my local boys club. They took a bunch of us little rowdy, eight, nine, ten-year-old boys to a USC football game. And I was just awed by being on the campus, seeing all the big buildings. And it inspired me at that young age. I said, I want to go to school here one day.

Starting point is 00:29:44 And eventually when I went through high school, I knew when I was in high school, this is where I want to be. I fell in love with the school. I fell in love with the sports program. I fell in love with everything about the university. And then I was so blessed to be accepted there and graduate there. And while I didn't have a USC network of family members or friends, and frankly, when I enrolled there, I didn't even know anybody who was a USC graduate. So I was kind of out of the know, but I got involved in the fraternity life and I got involved with the men's basketball team.

Starting point is 00:30:21 I started to become more of the USC family. And what that did for me, too, is it my first three jobs, I was hired all by USC graduates. My first job was when I was a junior at USC, I got an internship with Eastman Kodak. And I was interviewed by a USC graduate. My second job, I went to work for IBM. I was hired by a USC graduate. My third job, I went to work for Ernest and Giulio Gallo. I was hired by a USC graduate.

Starting point is 00:30:49 So that networking, and I'm sure it's true with a lot of other universities, it certainly helped me get to where I am now. It got me into career jobs when my youth that gave me a strong foundation as to what's important, particularly Ernest and Giulio Gallo. They taught me probably more than any other company about hard work. They had a work ethic there that has instilled a lot of values for me when I went into the mortgage

Starting point is 00:31:16 business about being focused on your work. Don't look at your watch. You don't work eight hours days. Eight hour days. You work until the job's done. That's right. And they helped me with that. I mean, it wasn't unusual.

Starting point is 00:31:29 I was a young man back then. I was in my early 20s. I would work 10, 12 hours a day. And sometimes I would get a call from my manager saying, you need to go out to a store. and you need to fix something on a Saturday. And those values were instilled in me, and I carried that into the mortgage business, and I carried that passion,

Starting point is 00:31:46 that whatever you do, whatever you want to be successful for, whatever you want to be successful with in your life, you need to be passionate about it. And I'm sure you feel the same way about what you do. They instilled passion with me, and they instilled the values of hard work, and those have carried through my entire life.

Starting point is 00:32:04 So I don't even look at going to work as work. It's not a four-letter word for me. It's more of a three-letter word, fun. I like what I do. I get up every day, and I get asked sometimes. Well, you've been doing this now for 38, 39 years. Do you want to retire? And I know, what else would I do that I have so much passion for?

Starting point is 00:32:23 And I haven't found anything. So I think my UFC roots really instilled a lot of value, a lot of hard work, and those traits have continued through my mortgage career. That's awesome. And, you know, it's good to see that, you know, you've had that grit, that mindset since your early, what, teens, 20s? Yeah, I mean, part of it, I think, is it kind of gets into your blood. And, you know, and I don't know your childhood, Joe.

Starting point is 00:32:49 I knew when I was a kid, my parents were very blue-collar. And they said, well, if you want something in life, you've got to earn it. And they taught me at a young age to save my allowances. And if I wanted to earn extra money, if I wanted to buy something, I, you know, I recall there was a bike I wanted. And my parents said, well, we're not going to buy that bike for you. You got to earn it. Well, I got a job as a paper boy.

Starting point is 00:33:09 I was 12 years old. Somebody back in those days, they actually, young kids could deliver newspapers. And I think I was making $30 a month delivering papers every day. And I bought my first bike. And it instilled the importance of if you want something that's important to you. You got to work for it. So some of those values, I think, were just instilled by my parents. And some of that, I think, just kind of just was there.

Starting point is 00:33:33 You know, it's funny that you say that because nowadays, you know, and I personally struggle, like, I come from a very blue collar, if not, is there something lower than blue collar? Because that would be my color. I understand. And, you know, because I grew up, because I'm from a third world country, and I'm not just from a third world country, I'm from Egypt, but I'm from the poor part of a third world country. I joke, and I say, I'm actually from a sixth world country, if that was a thing. and because I grew up with such a poverty-stricken mindset, like, I don't need money.

Starting point is 00:34:07 And God gave me all this money now that I can use for doing good and doing things to help others. And, you know, I think that that's been a big part of my success is because I have that mindset, that grit mindset, that poor mindset. But how do you – you've got some successful kids. How did you instill a grip mindset, a hardworking mindset in your children growing up in Newport Beach? I mean, it's something I'm personally struggling with and it's something that I'm always seeking counsel on. Yeah, it's a tough one. It certainly is a challenge because as a parent,

Starting point is 00:34:40 and I'm sure you're dealing with this as well, one of our goals as a parent is we want our kids to have a better life than we had. And like yourself, I don't think I had it anywhere near as challenging as you did, but my dad was a Marine. And as a kid, we moved every couple of years. My dad would get reassigned to a new military, base, and we moved. And my dad was an enlisted man, which meant he made on the lower grade of salary. So we lived a very modest lifestyle. I never went without, but that's part of what

Starting point is 00:35:09 instilled in me the values of hard work. And so passing those on to your kids, when I became a parent, the first time, I'm thinking, well, I want things to be a little bit easier for my kids. I don't want them to have to work as hard as I did. I want to make things easier for them. So there is kind of a line, and maybe that's a line that you and your wife are dealing with, too. You have to figure out, well, when do you get to a point where you don't make it too easy? They have to earn certain things. So, you know, my wife and I, we did establish a lot of ground rules with our kids about what things we would do to make their life more comfortable, and certain things that were just, they're going to have to earn it themselves.

Starting point is 00:35:47 So we would set those rules and guidelines and said, hey, we also taught them about our business. And I taught them about my business. And I told them about my background and said, listen, when I first started in the mortgage business, there were times when we first, in their early years, when I didn't get a paycheck. It was a bad month. So we had to tighten up our belts at home and be a little bit more modest than our spending. And, you know, I shared some of those challenges with my kids when they were old enough to understand that, not when they were, you know, a child.

Starting point is 00:36:17 You don't want to burden your kids with your financial challenges. But when they saw the successes, I said, well, part of those. successes is because your mother and I worked hard. We instilled the value of saving. We didn't overspend and we didn't buy you everything that you wanted. And we taught them as well. If you want certain things in life, you've got to earn them. And there's nothing that will stop you from earning them. We'll encourage you to go out there and do what you need to do to be successful. And again, if you want to go to a higher school, higher school of education, this is what you need to do. You need to get certain grades. You need to do, you need to take certain steps.

Starting point is 00:36:52 These need to be important to you. And we did the best we could to keep them focused on those. That's awesome. Now, I like to end every show with this question. I ask everybody this question. And it's actually a three-part question, okay? What's a personal goal that you have for yourself? What's a family goal that you have for your family?

Starting point is 00:37:10 And what's a goal that you have for Valcrest? Oh, boy. Okay. Personal goal. I think as I've been in this business for a long time, One of my personal goals is I need to become more of a rounded person. I need to find a way of taking my experiences and my knowledge and finding some exterior things that I can do with my career.

Starting point is 00:37:35 For instance, I mean, your broadcast here today is educating so many more people. So from a personal perspective, and this kind of overlaps into my professional goals as well, as I want to spend time away from work. I need to find some hobbies as well. I don't have any hobbies, Joe. I work all the time. My wife and I do travel a bit, but if I'm not traveling and I'm not working on a personal level, I need to find something that I'm passionate about.

Starting point is 00:38:00 Get back into basketball. Well, you know, when you get to this age, it's amazing. I love basketball, but my goodness, my knees get a little sore, my ankles get a little sore, the recovery time. I used to play at lunch. Yeah, we're playing tonight. We have a team. My office always knew what day I was playing, because when I would get back from lunch,

Starting point is 00:38:17 they kind of see me walking in a little slower or grabbing my back. So I get a little bit concerned about that because since I stopped playing basketball and I took up other exercises, I've been in fantastic health. So I think I have to kick that around, Joe. I understand you have a passion for basketball. But finding some getting some personal hobbies, that's a big part of my goals and objectives. From a family perspective, spending more time with my kids. I've been spending less time than I should, particularly now that I've got grandchildren.

Starting point is 00:38:52 I've got two beautiful grandkids with my daughter and her husband. So I think I've got to get more focused on that. I haven't spent the time that I need to. It's difficult, too, for us to plan family vacations, which is what I would like. I'd like to be able to take my family places and spend time with them. But when they all work in the business, you kind of feel like, well, if you take a family vacation, too many things come to a screeching haul. I can't take all four of my family members who were key parts all off the office, you know, emails all at the same time.

Starting point is 00:39:24 But we're going to find ways to spend more time with my kids. That's a big part of it. And also my extended family. I've got a lovely mom who's 85 years old who lives in Texas and a sister who lives in Texas, and I want to spend more time with them. And my wife's family, they live in Boston. I want to spend more time with them. From a professional perspective, I think I touch a little.

Starting point is 00:39:45 little bit on that. I want to be able to share what I've learned over the years, and I do want to see our industry grow. I want to see private money become more of a mainstay in the business, and I think that's going to take a lot of educating and getting an opportunity like today to be able to speak with you, Joe, and speak with your audience. I hope that is just one of many opportunities I'll have to educate people about what private money really is, not what it was like back in the 70s or 80s or the 90s, not back in the Stone Age. What is it today? And how is it changed and how is it evolved and how is it more of a mainstream product? So I think getting the industry more exposure and more acceptance is probably my biggest professional goal

Starting point is 00:40:27 because I'd like to be able to wake up one day and realize that, hey, this is common. I want to turn on the TV set and see a commercial for private money lending. Then I'll know what's become mainstream. Yeah. Well, it might not be TV. It might be like YouTube, but when I see a commercial on YouTube or I see other, other media's advertising private money in a more accepted mainstream manner. I think that will make me feel great about the industry and the career path that I've taken.

Starting point is 00:40:55 That's awesome. That's awesome. And I can do some things to help you guys with your exposure to the different associations and things like that. So I'll try to help you guys as well. It's been an absolute pleasure to have you, Chris. You've been a blessing to have. And we look forward to having you back. And we're going to be inviting you the EMC Connect 2024 this year as well. Thank you so much. Thank you very much, Joe. I appreciate everything. God bless you. Thank you. Hey, thank you.

Starting point is 00:41:18 All right.

Coffeez with Joe Shalaby - What is Private Money Lending? ft. Chris L. Boulter | Coffeez for Closers with Joe Shalaby Ep. 44

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