Epic Real Estate Investing - 4 Legal Loopholes Banks Hope YOU Never Learn | Convoy Bros!

Episode Date: September 20, 2025

Your lender is hiding four secrets in plain sight. And if you’re a W-2 worker or first-time investor, these secrets are the difference between paying 7% and paying 5%. I’ll walk you through each one—moves they hope you never learn. Contact today's guests at https://convoyhomeloans.com/ 🎙 This channel = longer, laid-back podcast conversations. ▶️ My main channel = fast, straight-to-the-point breakdowns → https://YouTube.com/@EpicRealEstate 🤝 Community: https://TheEscape.club 👉 Newsletter: https://ShadowCapitalBrief.com #podcast #RealEstateInvesting #MortgageLoopholes #BeatTheBank Learn more about your ad choices. Visit megaphone.fm/adchoices

So we're going to get tactical on structure. We're going to go through the approval math. And we'll go over how to talk to sellers so your offer wins without you overpaying. This is the epic real estate podcast. Contrarian takes on money, housing, and policy without the guru nonsense. Let's go. Let's go. Let's go. Let's go. Let's go. Let's go. Mortgage rates right now are approximately at 6.65% as of the recording of this video.

The DSCR loans, however, are at 6.6. 0.25%. So if you're still begging big banks for investor loans, you're playing the wrong game. Banks have one box. Real estate investors use a toolbox. And if you're a W-2 earner, a small landlord, or a first-time investor stuck at 7%, this is for you. In the next few minutes, I'm going to show you four legal moves to beat today's rates and make deals pencil in 30 days. Quick reality check, though. Today's market, it's not last year's. The average 30-year fixed sits at right around 6.65% actually higher than a year ago. Inventory has surged the levels that we haven't seen since before 2008, yet prices are still near record highs. And heads up, 84% of investors expect a 25 basis point

Fed cut on September 17th. It's all but guaranteed. That number has hit up to 100% here in the last few weeks, but we're sitting right around 85, 90%. But here's the paradox. Mortgage rates could rise when that happens. You see the Fed cuts the overnight rate. Mortgages trade on bonds. So the Fed cut equals cheaper mortgage myth. That burns people almost every single cycle. So if cuts don't lower mortgages, what does? Well, there's four moves that you can make to make this happen. You can force it. So first move, stop letting banks decide your future. Conventional lenders want your W-2s. They want your tax returns. They want a perfect little story. But investors, we don't live in that story. So use the D-A-S.

SCR loan. This is debt service coverage ratio. It's a big giant blessing to a lot of investors because the lender will look more at the property's performance as opposed to directly at your credit score like a banquet. So essentially, if the rent covers the payment, you qualify. No explain your side hustle nonsense. And then there's this. The DSCR loan is booming approximately 35% over year growth and rates are now cheaper than conventional, which is crazy. I don't think I've ever seen that. We're seeing six and a quarter percent DSCR versus six and a half conventional on live files right now. And yesterday's thinking said non-qualified mortgages, those are expensive. Today's thinking says, qualify like an investor, right? Move number two, blend your financing. Make your own rate.

Quit arguing with 7%. Just blend it down if you're limited to 7%. Ask the seller to carry a small second at a friendly rate. Then stack a bank first on top. example, seller carries 10% at approximately 3%. The bank gives you 70% at 6.7%. So your blended cost drops to about 5.4%. Anna and Phoenix just did exactly this. Her blended cost fell from 7% to 5.4% and the deal, all of a sudden it's a winner at pencils. And sellers are suddenly cooperative.

First time in years that you can push price cuts. You can ask for credits. You can ask for a seller carryback. The supply is up. Days on market, it's stretching. So use this to your advantage. Sellers are not going to be this pleasant in a frenzy. If mortgage rates do drop significantly, then all the buyers rush back,

and then all the sellers start giving you the palm all over again. So it's your turn right now. Take advantage of it. But lowering the rate is not enough. There's more that you can do. The pros, we lower the payments on purpose. So that brings us to move number three. You want to control your payment with interest only.

Most investors get this backwards. The 30-year fix, pay it down, be a hero type thing. The pros run interest only for the first 10 years on a 30 year or a 40 year with a long interest only window. To lower the monthly payment and aim that surplus at what's left over, point that where it's better used, like for repairs or turns, your tenant turnovers, or the next down payment. If interest only saves you $300 a month, that's $3,600 a year that you can aim like a laser beam at your next favorite investment.

The control beats the virtue signaling. Last quarter, we closed the DSCR loan plus the 10-year interest only in Tampa. And that freed $312 a month, enough to fund the turn that raised the rents. So we got to take that extra money and make it a nicer unit so we were able to raise the rent and get a premium for it. And we can refi later if the math improves. But the point is, use the tool that's to your disposal and the one that's going to help you win right now. Move number four, qualify like an investor, not a tourist. Retail banks, they got one line of credit.

Good brokers got many and can blend them. So this is where the $2 trillion private money alternative lending wave is opening lanes. You got the DSCRs to qualify on rents. You got the cross collateralization of the equity. You can pledge stock or crypto as collateral without selling. You can mix the bridge loans. You can do a DSCR takeout when a property needs work. I mean, we've closed files just like this.

The DSCR plus seller carry plus interest only. It saves clients thousands. Quick warnings though, because risk hasn't left the room. There's a lot of cool and exciting things that you can do right now that you haven't been able to do for a while, but there's still risk involved. Understand that the Fed cut does not necessarily equal cheaper mortgages. September odds are about 84% as of right this very second. It changes all the time. But if bonds don't like the data, the 30-year rates can actually rise on cut day. Then short-term rentals. Joshua Tree and Palm Springs in California saw documented crashes.

A bunch of short sales out there right now. In Vegas and Los Angeles are tightening permits. So if you're a short-term rental only pencils at last year's peak nightly rate, that's not a plan. You want to buy so that the long-term rent still covers debt. You want your properties to still perform if you had a traditional long-term tenant in place. The short-term rental upside, that's the bonus. It's no longer the plan. Be careful. And then the influence filter.

It's really funny how this is circulating through the lender ethos. Nothing I've ever really experienced until recently, but now it's kind of commonplace. roughly one and four real estate investing videos online carries misleading advice and it's driving lenders nuts. California is already warning about the fin influencers, as they call it. So be careful who you're listening to. I mean, at the very least, you can trust them if you like them and you know them. I'm not condemning your favorite influencer, but certainly confirm what you hear, all right? So, all right, here's your plan.

30 days to get dangerous. Week number one, define your buy box and your lender. So your target here, you want to look for properties that are built after 19, 78. That's kind of the cutoff point for us now. You can look for long-term or mid-term capable properties with really light rehabs. You don't want to do it. Get involved in a bunch of work right now. And then just call a creative broker and ask for two quotes. Ask for a DSCR 30-year fixed quote and then your 10-year interest-only variant. Know your DSCR loans. Know the max loan to value and know how much cash you're going to need to close. It's going to help you formulate

the right offer for yourself. And then often you're going to see then week two, go for the seller leverage, make three offers. This is the name of the game. You just got to make offers, offers, offers, but start making those with blended loan requests. So your seller second at three to four percent, your bank first at market, or seller credit to reduce the cash to close. You're not begging, you're solving. They're not selling their properties. They're staying on days on market much longer. They're not in a position of power right now. Now, it's going to very much be determined by what's their motivation to sell. If they're just testing the waters, you're probably not going to get a lot of fluctuation there. But if there is some sort of

stress there and have been on the market for a while and they got to get moving, then you're probably going to encounter some sort of flexibility. So start going for it because if this market shifts, you're not going to have that opportunity anymore. So take advantage of why that window's open. So week number three, as you're submitting an offer, put your paperwork in place to make it very easy for the broker and the seller to accept. Go and ask for the rent rolls, get your DSCR calculations in place, get your insurance quotes, your taxes, get that all tuned up. And plus, you need one paragraph as to why this pencils. In the fast, yes, yes, or no in 40 hours makes brokers fight for you.

All right. Week four, scale your surplus. If your interest only free you up for 300 bucks a month, then pick one. Fund the turnover that raises the rent. So go ahead and maybe pimp out the unit so you can ask for more rent because you've saved the money on the interest-only payment. Or stock your capital expenditure account, get your reserves in check, or C, save it as for your next down payment and repeat the whole process on your next door and door three

and so on. Now, your bonus lane here, where the money really is. Luxury cash is back. In Los Angeles, approximately 25.4% of luxury homes are being sold for all cash. That means sellers no terms matter. Use carrybacks. Use credits. Private capital, it's everywhere.

Private alternative lending sprinting toward $2 trillion in 2025. Your deal doesn't have to fit one bank's box. Get creative out there. Get outside the box. Start making offers. So here's what you want to avoid, though, right now. buying a short-term rental that only works at last year's peak rates. If it is a short-term rental, you want to be really careful and probably even avoid that.

You don't want to get hit upside to head with any sort of regulations or restrictions in your market. The second one, assuming the next Fed meeting is going to lower your mortgage rate. Those typically don't go hand-in-hand, contrary to popular belief. A lot of times the mortgage rates have already adjusted anticipating the Fed cut. And then if the Fed doesn't cut or it goes the other direction, you see those mortgages spike. But you typically don't see them drop on. cut day. And then the third one will be paying full price with a small down payment because some guru said don't put anything more down than 10%. So if you're not under market, then you're playing

a really dangerous game. So either negotiate a discount or make sure you got enough cash down to give you a little bit of room there. Okay. Bottom line, don't beg a bank. Build the deal. Create it. Engineer it. Banks sell one lane. Investors build highways. Use the DSCR loans. Take advantage of those. They're cheaper right now. I've never seen that before. blend your rate, run interest only with intent, and qualify like a pro, like a real investor. That's how you beat the bank's box and still sleep at night. So how do you pull all of this off yourself, right? Easier said than done, Matt.

Well, after the break, I'm going to bring on two lenders who live this daily. Their team is known for these DSCR files where rates rival conventional loans. They've got the 10-year interest-only builds. They've got the seller's second-friendly first, and even pledging stock as support on Jumbo deals without selling a single share. We're going to get tactical on structure. We're going to go through the approval math. And we'll go over how to talk to sellers so your offer wins without you overpaying.

By the time mainstream media reports the truth, it's already too late. That's why we built the Shadow Capital Brief to decode money, housing, and policy before everyone else. Subscribe today, Shadow Capital Brief.com. All right, back to the show. All right, our guest today is the co-founder and COO of Convoy Home. loans, a mortgage broker specializing in creative financing for real estate investors. So please help me welcome to the show, Mr. Jonathan. You, welcome to the epic real estate investing show. Hey, Justin, who's the other owner and founder of Convoy. Very good. Well, yep. Awesome. I didn't

have your notes here, Dustin. So nice to meet you. No worries. No worries. What do you do there, Dustin? Me and John started Convoy Home loans, you know, five years ago. And together we've, you know, made a nice company grow from basically the two of us to 50 now and, like you Neil, specializing in creative financing, mainly investor or investment property financing solely in like luxury real estate here and lost interest. That's awesome. Congratulations on helping everybody get the, I think you've done over a billion dollars in deals and earning recognition as one of the top investors in the whole country.

They're talking about lenders to investors. Yeah, I certainly. That's awesome. In just five years, congrats. You know, I work with a lot of investors and money is always like the big mystery to them. Like, where am I going to get the money to invest in real estate? I don't have any money. How am I do this?

They think they have got to go into Bank of America. They got to go to Wells Fargo and apply and go through. that old thing. But, you know, what's the big misconception or rather, rather, what's the number one thing most people get wrong about how real estate financing works for investors? I think the biggest lie at the banks have told us forever is that there's only one way to do it, right? And that way that has been described has been the typical conventional way where it's a Fick bank or Fannie Mae or Freddie Mac or if you go to a local bank and then they finance you, they'll finance you on like a 20-year M and then your cash flow sucks or they'll finance you on a five-year fix and you have to

refinance every five years, right? So I think there's a lot of limited. and in the archaic industry of mortgages. And where we really came in and stepped up when we first started the company five years ago, we were actually one of the first brokers to bring the SDRA market to the residential world. And that has been since been, you know, growing into other types of non-QM financing, whether it be cross-collateralizations or assetizations, all those different things, to be able to finance real estate better. Got it.

So you being brokers that you have got multiple sources for money then, right? Is that how that works? Yeah, yeah. We do a lot of brokraine, but we also do a lot of own correspondent. We'll fund it off our own warehouse line and can obviously pass on less to the consumer, aka cheaper rates and cheaper costs when we fund it off of our own warehouse lines. So depending where it is, the property type, you know, the loan amount size, like we got answers for everything. Oh, cool.

Maybe you can give me an answer for this. What's the warehouse line? What is that? So basically, it's the, it's a big credit line that a lot of lenders have that allow you to package up loans and sell it on the secondary market. and fund the loans. So a lot of our loans, whether we work at it, you know, on the broker side or the correspondent side, because we're kind of a hybrid model, depending on the risk of the loan, right? So if it's a seemingly more risky loan, we probably won't fund it on our line because we don't want to be held left with bag. But if it's a less risky deal, we will fund it on our

line and then kind of hold out so that we have a little more control of the closing. And then we package it up and then be able to present it out to Wall Street. Got it. So you kind of make the loan and maybe kind of flip it before you ever actually fund it. Is that kind of how it works? In a way, to put it simply. Yeah, that's the simplest way to put it. Got it. All right. I think I get that now. So you and Destin, you launched convoy home loans to serve investors when most lenders, as we've been discussing, are just too busy chasing first-time homebuyers. So one gap in the market, did you see that others were overlooking? So, I mean, in 2021 is when we started. And if you recall, like, that was still the tail end of when rates were still at two and a quarter, 2.5.2.2. FHA, VA,

just refi everybody in the United States, right? And John and I saw the writing on the wall and put that in together with the fact that every single real estate investor with a net worth over $2 million, right? Even a million dollars was impossible to get done on the conventional fanny side. So we said, you know, why don't we try and find a niche in the market, something that we could be, let's say, a bigger fish in a small pond rather than trying to compete with the rocket, Lum Depot, you know, entities that have football stadiums after them, right? Because, you know, if you're self-employed or you own 100 properties, you're not getting a deal done going the traditional way. And that's what we wanted to, you know, solve and fill the gap with starting convoy.

I've noticed over the last couple years, most recently, that the sentiment around real estate is kind of pulling back a little bit. It kind of always does when, when crypto takes off and everyone kind of gets real estate goes out of fashion. But a lot of people will cite, hey, it's, it's unaffordable. It's the high rates. When someone comes to you with that, I mean, for some people that, they think this is like the worst time to buy, some people think it's the best time. What's your advice to people that come to you with that? Well, we actually practice what we preach. I think a big part of why we are successful is we literally go out to market. We're investors ourselves.

And we do exactly what we tell clients, right? Whether it be a bridge loan, whether it be purchasing on DSR or whatnot, right? So is it the best time to buy. It depends on what market you're in, right, is what I would respond with. But in most markets, if you can get a great deal, 20, 30 percent below the market value, you can buy something with a margin knowing that call it five years from now. You just can't look at it in like a one year, one and a half year window. You need to look at it from a five year, 10 year window.

If you bake that in, like, some might say, right, and myself included and dust included, this is a great opportunity to amass a lot of real estate at a discount while everyone else is going the other way, right? You can't follow the herd mentality is what happens, right? If everyone's rushing one way, you got to kind of turn the other way. You got to be brave enough to do that. And if you are that brave person, think back in 2020 when COVID first hit and the market just stopped entirely. All the people that went out and bought real estate at that point in time are now sitting pretty with that. everything. So it's the same kind of method I think that we've seen Tita Tar back and forth. But now I think

different from back then is there's so many more opportunities available for investors in real estate to be able to purchase that are more accepted. So like for example, people that are telling us that rates are too high. We're like, well, conventional investment rates and our DSCR rates are actually not that much different. On average, conventional sitting at like six and a half or so, DSCR right now is sitting for us probably six and a quarter six point three as low as five three. So we're writing loans in that space. And if that fills the gap between the clients that are like, I can't afford it, right, in terms of on paper, because their tax return says you can't do it to, okay, let's find a way to make it work

so that the property can actually work for you versus you working for the property. And that's kind of where we step in and try to change people's mindset a little bit on how to best structure deals so that it's good for the client. And we have actually, we're actually famous for turning away deals. If we don't think it's a good deal, like there's been so many times where we've lost deals by just telling clients, hey, I don't think it's a good deal. I don't think you should get into it. So I totally agree with everything you're saying.

We're kind of preaching to the choir here. Trying to play devil's advocate the best I can, but when I believe everything that you're saying, it's tough. But when you're lending and you tell people to hold long term, which I think is the best way to invest in real estate. And you factor in the more of the five-year window rather than the one-year window. When you are lending, do you look at that same five-year window? So we're going to, I mean, depending on the term and depending on the loan product that the

client's getting, right? We're always going to underwrite it, though, on the full 30 year because most of our notes that we're writing are 30 years. Obviously, none of the bridge, ground-up construction stuff is 30 years. Those are normally, you know, 12 or 24 months. But what's nice in the residential DSCR space being mainly 30-year fix is we know exactly what your payment's going to be. Sure, we don't know what the property taxes will increase to in year 10 or what the homeowners insurance will increase to in year 10. But that's what makes it nice for a real estate investor is you know day one and then year 30, the payment's going to be the exact same. You have the brand.

You know that rent most likely when you buy, you're going to be able to increase yearly as well, right? So you're able to plug it into your spreadsheet and really gauge not just the cash flow, but then, all right, how much is this property going to appreciate over the next 30 years, right? So that's what we love about it, probably a lot, right? A lot, a lot. Because you can't create more land, right, at the end of the day, right? There's not new islands popping up where you can all of a sudden go build and do an infrastructure on. So I think that's our biggest, biggest play.

Oh, it's such a huge supply demand imbalance, right? Correct. So you talked about your DSCR loan, a debt service coverage ratio, if you don't know. But you've also got some other creative stuff, like 40-year mortgages and no-income DSCR loans. So for someone that's listening right now, what's one tool or strategy that you're using that really is like a game changer for you guys? I think a lot of people underutilize interest only as an investment, you know, strategy in terms of real estate because they're so used to the 30-year fixed period, right?

I have to pay off my mortgage in 30 years. you know, in most times the common investor will say, I need to pay it off because they want to make their loan amount smaller, right? But they're not taken into fact that if they are actually looking at a long term basis, right, there should also be a little bit of appreciation that comes into play. And then also, if you have cash flow, let's say on a property and you have a net extra $300 a month, right? If you go interest only versus call it a 30 year fix fully amortizing, you get to control where that $300 goes, right? And if you're in avidavit, investor and you have a portfolio, control over your money is the best power that you can have, right?

So we tell clients, like, if you have something that needs repairs or you need to plug a hole here, you can take the surplus from this property and put in this, you know, another property. So, you know, we have the 40 year fixed program, which is a, it's 10 year interest only, 30 year fully amortizing for someone that really wants to go all the way or a 40 year fixed fully amortizing. But the most popular program to this day has probably been our 10 year interest only with 20 year fully amortizing. So a 30 year fixed total because that gives you a 10 year window where if you want to let's say you're getting into a deal at 6.375, your interest only payment on that 6.375, let's say is smaller than your principal in interest payment if you did a fully amortizing payment

by like 300 bucks, like I said, right? Then you can take the $3,600 per year and plug that into another property that might need a little bit of touch up or a little bit of help. Or you can even leave that $300 for any extra surplus that you can, you know, you might need on the property. while riding off your interest, right? Because people always forget that one of the biggest line item writeoffs that they have when you own real estate is mortgage interest writeoffs, plus your depreciation. You add those two together and you're able to offset the income you're making. So that's kind of, I think, the biggest misconception and pull that a lot of investors have

thinking that they have to go 30-year fixed, and that's the best way. When in reality, a lot of times if your loan amount is a sizable, loan amount by sizable, I mean, at least $250,000 or higher, $250,000 or higher on the loan amount. Like you're going to save a few hundred dollars going interest only and you can move that around wherever you need, right? And that, again, control over your dollar is probably the most important thing. Got it. So at the end of that 10 year interest only period or the next is in the rest amortized over the 20 years? Correct.

In that program, yes. Exactly. But here's the reason. Yeah, exactly. But here's the reason why we recommend that over the 40 year fixed right this minute is because most people in the next call it five years or 10 years probably going to refinance when. rates are trending a little down, right? So this allows you to control what your surplus is during that time period, that interest only period. And then afterwards, if you want to let it go by that point, hopefully in 10 years, you're cash flowing enough where a 20 year fully am won't really hurt you.

Or you're in a position where in that 10 year window, whether it's past five years, seven years or eight years, you want to refinance to take advantage of the equity that you've built up, right, through appreciation. And also, maybe you want to just refinance into a 30-year, get yourself a longer loan again to retack on that mortgage interest right off and then be able to actually pay it on your loan at that point in time at a lower rate because rates are trending down it's flat right now but it's trending down and that's kind of the idea across the board and that will allow you again more power over your dollar the Fed just came out and pretty much gave thumbs up that we're going to have at least a couple cuts this year and it'll probably drive all the way through 2006 as I'm thinking and then the whole

money printer turns on and all that stuff and assets are just going to go through the roof and real estate being one of those assets. You see it the same way? Yeah, there's two sides that we always address and we get asked this question 20 times a day from all the different clients we speak to. But ultimately, the two points I want to touch on is, yes, that's best believe the markets know that already built into the rate sheets for mortgages, right? So what I keep in John keeps explaining is that look, when September comes, there's a lot of people on the sidelines that are waiting till September rate cut, right? There's more risk for mortgage rates in September during the Fed meeting. there's more risk for mortgage rates to go up than to go down.

Because if the feds cut rates, mortgage rates will stay the exact same. If they don't cut, mortgage rates are going to go up half a percent. What's nice to know about the fact that you brought up is going into 2026, right? If we continue this trend, then we'll continue to see rates go down. But for right now, we're in like a one, two-month snapshot to see by the end of the year, is Powell going to say something new? Is Trump going to kick another Fed share out? What's going to happen?

That's still uncertain. but it's nice to finally see some action that's going towards, all right, rates should be mortgage rates and the federal fund rates should be lower in 2026. Yeah, I mean, I'm clear on how the Fed rate will impact mortgages and everything. I was looking really might more of like the interest only thing. There's probably so much appreciation anticipated that it wouldn't matter really at all is what I was thinking. I just saw an interesting stat yesterday that it said anytime that they've made a Fed rate cut when S&P was within 2% of an all-time, high, there's a 100% chance within 12 months, you'll have at least a 14% increase. Do you follow me there? On assets. On assets, yeah. And I was like, a hundred percent of the time. Like, it's never been an

exception. Now, there's always like you can say this time will be different. Who knows? But it's like, I'm kind of in the mindset when I saw it's like, wow, I guess we have to get as many assets as we possibly can. And real estate certainly being one of the super. So, you know, when you look at today's headline speaking of that. What's the biggest market risk out there that real estate investors seem to be ignoring? Or is there one? I think the biggest risk is following the news, right? And getting your data from the news in terms of rates fell, right? Because there was a bunch of news articles written last week about how rates fell, right? After the feds talked and whatnot. But actually, rates got a little worse last week, right? And people were very confused at the fact that why did rates fall or supposedly

they're supposed to fall, but why did mortgage rates go up? So, we always try to paint the picture that and give the understanding that the federal funds rate, which is overnight bank to bank lending is not the mortgage rates, right? And I think a lot of investors get so lost in the sauce of following the media, following the news and all these social media influencers that you've probably seen to go online, always saying that rates are going to be three and a half percent by the end of the year. I promise you that, right? And all these investors obviously, like, they follow these people too. And if you're seen as an icon, they're going to want to kind of listen to them and follow suit. Same thing with the media. I think that's the biggest

risk that a lot of investors take of not doing the work today and waiting till, let's say, waiting till rates fall. They ain't going to three and a half percent. You guys think that? No. No. Okay. I haven't heard a number that low in a while. Well, on the flip side, what's the big opportunity in real estate or lending that you feel, you know, the smart investors should be chasing right now, but most aren't. Well, kind of what John spoke about at the beginning is that there's a lot, and I would say majority of the people are saying that right now is not the best time buy. So if you can take that advantage and obviously have less competition right now and really turn into when you go to negotiate for a property, having the seller cover, you know, some of the closing costs, maybe dropping the price to 30,000 less, or even doing a

seller carry back, seller finance deal where you can mix in, the seller is going to carry, you know, let's say a five-year note at 3%, and you'll get a bank note at 7%, and then your blended rate is now four and a half or something, right? seller won't do that in two years when it turns into a seller's market, right? So taking advantage of those deals and being able to scoop that up while you can is, you know, what I would say is the smarter or more experienced investors are for sure taking advantage that the new investors aren't right now. Yeah, sellers will be assholes again, right? Right now they're, I've had some of the most pleasant phone calls I've had in a very long time

with sellers now. It's funny how that changes, especially real estate agents, they get nasty too. So when we're talking about the difference between broker and in bank, What is the reason that someone like yourself can lend when a bank will say no? Why does that happen? Yeah, because the bank has one line to fund off of, right? It has to fit in their box. If it doesn't fit in their little box in line, then they can't get creative enough because

they are restricted by the institution to lend beyond that box. For us, we have imagine a million lines. So now, if it doesn't fit this little line within the lines here, then we can move it to this line. But if it blends between two lines, we can mix the two together and make it work, right? So I think that's kind of the biggest differentiator of why we can lend when banks can't is because we have so many different options. And on top of that, a lot of our buyers, and this is no secret for non-conventional type loans, our insurance companies, Wall Street hedge funds, just Wall Street in general. And those are the buyers for these loans. And they are able and wanting to take a little

more risk for a little bit of higher return. And they offer the option for us to be able to lend on, let's say a blend of you want to use you know your 20 million in bitcoin as an asset to be used to count as income not really taking out the bitcoin but using that as income to buy let's say a piece of real estate right so you divide the 20 million by however many months use that as the income or you just went crazy on stocks you know everything's at an all-time high they have 50 million in stocks you take that 50 million you don't need to sell anything touch anything pledge anything you can use that as the income to qualify for a loan or what we've done recently that was kind of crazy is a client just they were buying a $15 million house to

live in. They brought in 10% cash. And then they pledged, you know, X amount of dollars in, you know, Tesla stock, put it in the house and then only had to bring in 10% cash and they were never going to sell the Tesla. So they said, okay, we're just going to put that in there and leave that as a, as a little bit of a buffer to allow the lender to write on the loan. So stuff like that, where beyond just the SCR loans and just the bank lines, we can blend multiple things together to make deals work. So like in that Tesla stock example, is that attached to the house some way or is that just a qualification mechanism? Yeah, it's not attached to the house that deal that we did. It was essentially moving the Tesla stock.

It was pledged from his current brokerage to the, you know, lender's brokerage account, right? So it was used as collateral and that's what offset the, you know, down payment required because it was like a $15 million purchase. And most of the times on a $15 million deal, you're putting minimum $40 down, 40%, right, which is going to be six, million. But instead of the client needing to put $6 million down because he didn't want to liquidate the Tesla, he's like, here, I'll pledge four and a half million worth of Tesla. I'll let you sit it in your brokerage account and I'll put $1.5 million in cash down. Like, no bank's ever going to do that, right? That's not in their guidelines. So that's the type of stuff that we can deal that sets us apart from this year typical Chase bank, you know, mortgage product. That's really cool. I never

heard that before. When you say pledge, where's the benefit for by that money being in or those stock being in the lender's brokerage? Do they get? get the interest from it or they get the interest fees or they have no interest from it it's just the collateral now because right they they now have if something went south or if something went wrong it's technically that four and a half million that we're talking about pledged from tesla they could take that right if he wasn't making the payments if he wasn't able to service the loan obviously this guy hasn't had a problem this was but it just allows for a different type of collateral rather than just saying give me some cash and we're never going to see that cash again understood another thing you've mentioned was um you know if you had to sell

to carry back a portion. So this is something that I do a lot. It's like almost my whole portfolio was on seller financing sub two or private lending. And one of the more creative things that allowed me to do a lot of loans has been able if I can convince the seller to take a second position.

So if you guys, if someone brought that scenario to you, would you loan on the first position if the seller was carrying the second? Yeah, absolutely. That's a lot of, I think the best way for investors that want to maximize the dollar for dollar,

obviously, to really invest in. As long as the same, the seller on the second is willing to transfer everything over and obviously be lower than the market rate because you don't want to do a seller carried second at like a 9% or 10% doesn't make sense, right? You might as well just put your money in at that point. But as long as they're coming and being like like Dustin gave the example of like 3%, right, then you can have a blended rate average. It's a lot better.

Cool. Another resource. Everybody write that down, convoy home loans because they'll do it. I talk about it all the time. I've got a couple people that'll do it for me and they'll know it'll do it for me, blah, but you can call you guys, right? Very good. So what's a piece of advice?

that you hear in the real estate or lending world that you just think is flat out wrong. That's flat out wrong. That's a good one. You have one off the top of your head from influencers? I think a big one is like that you should be putting as little down as possible on a leverage sets that you should maximize as much loan as possible a lot of times. It's true with a nuance, right? A lot of people take that and say, I want to buy this property at market price with 10 to 15%

down. Can you make it happen? And a lot of times I'm like, I don't really want to, right, for you because it's not a good deal at that point because all you're doing is if there's a little swing in the market, you're just building yourself negative equity. But if you told me, I want to buy this property with 10 to 15% down and the price is actually 20% off of the market, then I'd say, okay, that's interesting. That's a good deal. That's a smart deal, right? I think people, influencers love to like generalize it and say, you should only be able to buy, you should be buying with 10% down or 15% down. And this is how you can

do it. But then you end up with a, and we've seen it before, you end up with a full book of properties in someone's books where they come and they say, hey, can you guys help me refinance? I'm like, this one's a 95% loan to value. This one's a 90% loan to value. This one's at 110% loan to value, right? And at that point, you just really shot yourself in the foot because you just bought a bunch of properties at market. And that hurts you more than helps you.

But I think the nuance that people need to add in, especially the influencers when talking about this, is if you are buying something under market, right, under the market price, because then you build in a margin enough for you to be able to refinance if you need to later. and also building that equity so that you're safe for any market swings. No one wants to pay full price for real estate. Don't do that. That's my piece of bad advice. Cool.

So if you had to bet your own money on one big shift coming in the real estate market or even in the lending space in the next 12 months, what would that be? I mean, this just came off the top of my head. I don't know why or how, but it's always the best. The first thought's the best one. Yeah. So what's also been really Paco over the last four years and five years basically are, you know, short-term rental properties, right?

And this was the hottest thing on the block is the easiest thing five years ago. Everybody that bought them had, you know, a lot less competition, a lot less regulation. And I'm talking about, you know, laws in certain states and cities and big metropolitan areas that ultimately you need to be cautious. And I'll say it right now because on the back end, don't get me wrong, there's still a lot of, a lot of successful short term rental operators, right? But those that are getting into it as their first time because they've seen all of the, you know, success stories from their influencers that they follow. the lending landscape for short-term rentals are changing as well. It used to be a whole lot easier for us to get a deal done three years ago, two years ago, one year ago than it is now. And we'll tell you why Wall Street sees this. Wall Street's are the one, you know, buying these notes. They don't need to,

you know, finance or make the box easy for short-term rental investors. They see all these laws prohibiting from being able to even, you know, compete with, let's say, the Hilton's and the Marriots of the world that are spending hundreds of millions of dollars to kick all of these Airbnb operators out. Because now, if somebody wants to travel, They're going to go stay at a hotel unless you got an Airbnb that's giving you some sort of exclusive, you know, experience where they got a butler. They got, you know, the dot boat and all that. But short term rentals getting financed in the next year or two, I think are going to be very, very difficult to get done. And I would stay, you know, away from that.

You say not buy a short term rental? No. I think with a new eye, if you do buy a short term rental, make sure that you can cover the debt with a long-term rental payment. Like the only reason you're buying that short-term rental is because you know that you can make more. than the long-term rental, but as long as you can cover the long-term rental payment and don't buy a short-term rental that's been operating at a premium because we saw that happen a lot and that's why a lot of like, for example, like Joshua Triaria where a lot of Airbnbs went underwater is because they, everyone started buying with a certain premium on top of it, knowing it as a performing Airbnb and those people are losing out. So just make sure you're doing their due diligence. Buy it, you know, like you would with the normal buy box and make sure that it works on a long-term rental because, if short-term rental falls apart, you can always pivot over and make it a scapabilized long-term rental.

I think that's great advice. So make sure it cash flows under traditional means. Exactly. And then if you can get the short term, then that's a big win. Exactly. So people are losing out in Joshua Tree? Yeah, I mean, big time, Palm Springs, Joshua Tree, like those areas, there was. So the big reason why Dustin brought this up to is because we actually had a lot of, not our personal clients, luckily, but a lot of lenders that were lending in the short-term rental space come to us and ask us to help them buy their loan. just because they were going bad from people not making payments. They were listed on the market because they initially bought it for, let's say, $900,000 to a million dollars. And all of a sudden, the market shifted, rates went up, right? Less people are using Airbnb and whatnot.

And then the valuation, now the market demands a $700,000 valuation. But they bought it for a million. So now they're underwater for the $300,000 and they just can't cover the debt. And so they stopped making payments. A lot of these pitties houses go into foreclosure. And then the debt goes bad. And then you have all these lenders out here. you're going, oh my gosh, I have all the short-term rental business that literally debt went bad,

and they're making calls to anyone they can that'll help them kind of dig them out of that hole. That's why we've seen, you know, and Dustin's saying for the long run. Got it. Great. Well, I feel bad for those people. But it makes me a little happy because I thought I missed out on that boat and I was kind of bummed that I did. It was good while at last.

You got to adapt in any industry. Like you can't, you know, base all of your future success off of what happened in the past because markets change and businesses change. And obviously this short-term rental kind of five-year window, We had opportunity, I think, has passed. Yeah. So is just, is public behavior changed too? Are people just not staying in short-term rentals?

I think so. I think a lot of people, I think hotels especially have, like Dustin said, been lobbying against short-term rentals. And the number of short-term rentals on the market has shrunk a lot, I think. Right? There's, don't get us wrong. There's a lot of markets, pockets of America. Like, don't get mad if you operate a short-term rental and you're listening to this

being like, I make a hundred times over. Like, we are for you. But that's not the majority of America, right? The problems were you got a random house in downtown Los Angeles that wants to do a short-term rental. That L.A. County just came out and said, hey, sorry, no more short-term rentals, right? And then they stopped that. And so those died out. And then, you know, a lot of people just don't have the option now in downtown L.A. to use the short-term rental instead of a long-term, you know, like a hotel. I remember that. L.A. kills all the fun, don't they? Yeah. I mean, but you know what's funny is like

Tennessee, right? They were issuing a lot of permits for them. And they were saying, if you don't have a permit, you can't do a short-term rental there. So a lot of states and cities have followed suit. Now, you know, that's why the adapting has to happen. And that's why we say make sure it works on a long-term rental to that cover instead of depending on the short-term rental to make it work. Got it. You guys have brought up the word influence for a lot.

So I'm imagining that a lot of your customers are younger. Is that accurate? Well, we have a younger crowd, but we also have a lot of like influencer clients as well. Yeah. So because I think creative financing and just being able to provide rates that are better than market, right? what they can find out there and just people that are more knowledgeable, just, you know, not to tutor our own, but just because we funded a lot of volume, see so much, right? I think a lot of people

depend on us for a lot of information. And because of that, you know, we talk about influencers a lot, because there's influence. Like, if you have a blue checkmark now, you can pay for one. Everyone's an influencer these days, right? And everyone claims to be, and there's so many fake ones. There's a lot of good ones, and those ones are the ones that are our clients, but there's a lot of bad ones that give really bad information. I'm sure you've seen it, too, really bad information that have a huge following that just people are just, you know, kind of getting behind. So those are the ones that we are trying to call out and say, hey, don't be in that space. Don't be in that line.

But if you're a good influencer, there's a lot of good influencers out there, especially in the real estate space that I think pushing the right products and helping people get to the right solution. That's so funny. You guys are younger. So you guys are dealing with a different scenario. But, you know, 10 years ago, 20 years ago, that wasn't a part of the landscape. You know what I mean?

That's really funny. Super. So what's the ideal situation for somebody that wants to, to, call you up and ask you for some money. Do they do that in advance before getting the deal? Do they have to get under contract first? Is there any pre-work they do or you guys are not going to top to them until they actually have the deal?

What's your favorite way to go about that? Yeah, well, we'll speak to anybody interested in, you know, trying to invest in real estate, whether it's a purchase or refi or building a new, you know, townhome development, etc. Anybody trying to reach out, you can go to our website, convoyhomeloans.com or you can email us at info at convoyhomeloans.com. Got it. Everyone's got an employee in an info. So what's the thing I was going to say? Is it a smart strategy to call up a lender and maybe to say, okay, what numbers do I have to hit?

And then I'll bring you the deal. Does that make a lot of sense? Or that's so much of a moving target that maybe it's a waste of time? No, I think it's a very smart idea, right? Because if you're asking that question, you already have a bit of a buy box, right? You already kind of know what you're looking at. Most people that ask that question already in the market running numbers. And all they're wanting to find out is what specifically metric-wise do I need to be at?

what that coverage do I want to be at, you know, that kind of thing where they are doing their own numbers. I think if you come and ask, what market should I buy? Then that's going to be more of a question of we probably should, you should probably talk to a real estate agent or someone else prior to getting to us. Yeah. I think that's a really good strategy, I think, because you can kind position the lender as the bad cop, right? You go, Mr. Seller, I love to buy your house, but this is all that they're going to give me. So you can take this or we can get creative with the balance, whatever maybe. Anyway, it's been a pleasure, guys. I really appreciate it. And so if anyone wants to get in touch with you, they go to convoyhomeloans.com. Is that right? Yes, sir. And then

your assistant info at convoyhomeloans.com will answer any emails over there, right? Exactly. Awesome. Well, thanks, Broners. You all be good, and let's stay in touch and do this again. Thank you. Thanks, not that. Take out. Bye. This podcast is a part of the C-suite radio network. For more top business podcasts, visit c-sweetradio.com.