← The David Greene Show
The David Greene Show
Mortgage Monday - Buying a Primary Residence and Saving Money | Episode 48
00:14:47
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- [00:00]
David Green
Welcome to Real Talk Real Estate, the show where we cover how to build wealth in real estate with no fluff, no BS and no sales pitches. I'm David Green and I've been doing this for over 10 years. I've seen the ups, the downs and everything in between. This is the show where we pull back the curtain and show it to you too. So if you want to build wealth through real estate or you just love learning about it, you found your home. What's going on, everyone? Welcome to Real Talk Real Estate. This is Mortgage Monday. I'm David Green, he's Christian Bashelder and we are the one brokerage and today we're going to be talking about a new loan product we have as well as what to do if you have an existing portfolio and you're trying to figure out how to play your cards in today's market. Christian, thanks for joining me today.
- [00:41]
Christian Bashelder
Absolutely.
- [00:42]
David Green
Happy to be here. Yeah. Christian took a break from his chaotic schedule of having tons of introduction calls and putting out fires and looking for loan products and trying to save people as much money as he possibly can. Just join us on the show and before we got started recording, he was telling me about a deal that he's closing in Scottsdale and then a couple in Southern California that are higher end. They're not the cheap typical investment property type loan. And I thought it was interesting because a lot of people don't know that we work with people who are looking to buy a house, just a primary residence. They're not looking to get into investment property. They want an honest loan officer that's not going to rip them off. So if you've ever been in that position, maybe you wanted to buy an expensive short term rental or, or you did really good with a couple live in flips and now you're looking to buy yourself a new primary residence. You may be wondering where do you go to get the loan? Because oftentimes if you go to the big banks for those, they're not going to shop your rate, they're just going to give you a rate and then you feel like you got to go to a bunch of different big banks and it can get confusing. So at a brokerage we look for what we think will be the lowest rate for you that still feels like it can consistently and reliably close and that's what Christian's job is. So Christian, if you don't mind, tell us a little bit about what a super jumbo loan is and what people can expect if that's what they're looking to do.
- [01:56]
Christian Bashelder
Yeah, 100. So just super Jumbo doesn't technically have a defined term, but typically most banks will consider that anything over a two and a half or a $3 million loan amount, this could be for a primary residence, this could be for an expensive short term rental kind of. You know, you're talking about a certain niche of real estate when you, when you get into that purchase price. And remember, if you have a two and a half million dollar loan, you're purchase price is probably, you know, in the threes, maybe even the fours, right. Depending on your down payment. So these are high value real estate. You know, we've gotten kind of a surge of requests for these recently. Whether it's people buying, you know, a new build, fancy primary residence or just a short term rental that's you know, very unique, higher end. And the general consensus is when you get into jumbo territory you have to go to a bank and, and kind of a community believes that brokers aren't really competitive in that space. And I would disagree with that. In a lot of cases if you're in that one to two and a half million dollar space, it is possible that banks have very competitive loan products for you. But once you get into what we're defining on this video as super jumbo, which like I said, is usually that two and a half to three and up loan amount, that's where we kind of re enter the fold, right. And we do things that banks can't. And to speak on the specific example, I know the client's actually a watcher of the show, so I'll just go on first name but Justin, if you're watching this, good to see it. But we just closed a new build for a client of ours in Scottsdale, Arizona is a 5, 5.5 and change million dollar purchase price. And pretty much everywhere that he had spoken to or that we had researched was requiring a minimum of between 30 and 35% down. And we got him one for 25. And you consider when you're buying a $5 million property shaving 5 to 10% off your loan amount, hundreds of thousands of dollars, right? It's a lot of money. So he really liked that, you know, option that we had to keep a lot more of that money in his pocket, you know, and still get him the loan with good solid 30 year fixed interest rates that, that he could get at a bank outside of a primary. We could do the same thing with investments. You know, obviously depending on the loan product you're searching for, we have Unique abilities to do what's called exception based underwriting. And that's where, you know, if the general consensus is like in this example, right. 30 down is the minimum to get in. We can very often go to our funding sources and say, you know, hey, this is a good client, good credit, good reserves in good income, you know, whatever the case is. And we can make an argument to shave off some of those, usually more, you know, strict guidelines, right? Whether that's loan to value, whether that's interest rate, whether that's, you know, prepayment penalties, whatever you find yourself, you know, working with. So really, point of this video is ask your questions, right? Don't assume you're working with the right lender. For you don't assume that you only have one option. If you talk to three lenders and they all tell you 30% down, it doesn't mean there's not a lender out there that'll do 20 or 25, right? Ask the questions if you have them. We do all types of real estate. A lot of people kind of get misconstrued that we only work with investors. That is not true. We will do your primary residence every day of the week.
- [05:02]
David Green
I would probably say we. I don't know if I'd say we're better at primary residences, but I think that we are able to get better service on a premier residence because there's less curveballs. Investment properties tend to be hairy and you got to get a lot of hair off the thing. And so our skill comes into play more just from the sheer volume of deals that we do. We see more stuff so we know how to fix problems. But the experience for the client is going to be a little rougher when they have to continually submit new paperwork. A primary residence, man, it's like we're used to lifting £300 and now we just got to lift a hundred. We could really, really love on that person, give them a great experience, look for every little angle that we can to get the price lower and explain what's going on. I think that's one of the just most frustrating parts of buying real estate. When you don't do it all the time, you don't understand what's happening. Most real estate agents are bad communicators. And then I know Christian, you, like me, often have people saying, can you tell me what the hell is going on? Because I don't understand what he's telling me.
- [06:03]
Christian Bashelder
Yeah, 100%. And it. You also get an advantage, right? Because when you're working with a Broker like us. We do, like David said, we, we just see, we see so much. Right. And because we do, you know, we're a fairly high volume brokerage, when you work with us, you also get the benefit of everybody that came before you guys. Right. Whether that's because we get incentive based pricing. Right. If we do X units a month, we can shave a quarter percent off of interest rate sometimes. Right, Right. And even though those weren't loans that you gave, you can benefit from us as a company being able to do, you know, reach that type of volume and you know, that could be investment properties that help save money on somebody buying a primary. Right. Or in this guy's example, all the business that we have done with this lender in the past allowed us to get a 5 or 10% exception on the down payment requirement. That's something that he couldn't have gotten somewhere else. Right. So, you know, it's, it's, it's like I said, if you have questions, reach out, start a conversation. Consultations are free. We do pre approvals for free. We'll tell you what you qualify for for free. You know, we'll tell you what your credit score is for free. It's not a cost. Right. Outside of 30 minutes of your time to talk with us and you know, 10 to 15 minutes to submit a loan application. The advice and guidance that comes along with our experience and our volume is at no cost to you.
- [07:18]
David Green
Right.
- [07:19]
Christian Bashelder
Which is the best of both worlds.
- [07:21]
David Green
That's right. Now, we also had another couple deals that when we were having our weekly meeting, we thought was interesting. So we have a couple people that came to us with larger portfolios. They have a lot of properties kind of sprinkled across different counties or states. Usually they're in the same area. Let's say that they bird successfully for five to 10 years or so, or they just picked up investment properties prudently and now they've got 5, 10, 15, 20, 30 properties that are not priced super high and they want to either pull money out of them or they want to get a better rate, or they don't want to get 20 letters in the mail from 20 different lenders on these $200,000 properties they've accumulated. I think there's more people listening to this in that dilemma than what our average listener might think. It is a pain in the butt to have to renew your insurance that many times, to have to collect and pay taxes on that many properties. And when you do want to pull money out of one of them on cheaper properties, Your collective total closing cost will be a higher percentage of what the property is worth than on an expensive property. It's just the way that it works. If you're buying a really expensive house like the one in Scottsdale, your closing costs are a much smaller percentage of the overall loan balance and purchase price than when it's a cheaper house. What that means is, in layman's terms, when you're trying to get money out of a cheaper property, it doesn't work as easily, and it's more expensive. So what we've been doing is consolidating all 20 of those properties into one loan, one tax, one insurance impound. Very simple. One letter that comes in the mail every single month. And then we work at getting someone a blended rate that is less than the one they're currently paying, or we help them pull money out of that and make their life easier. So can you explain, Christian, first off, what a blended rate is? And then we'll talk about who should consider doing this.
- [09:09]
Christian Bashelder
Yeah, 100. I mean, what. What David's referencing is, you got, you know, just to put numbers to this. You. You got 40 properties that are all at a bunch of different interest rates, right? Like David said, you have 2, 3, 4, 5, 10 years, whatever, of successfully burring or picking up rental properties, whatever. Whatever your strategy is. Right now, you're sitting here getting 40 mortgage statements in the mail every month. And a lot of times, these borrowers have worked with local credit unions or small community banks, which means you may not have access to a very good portal. There may not be a very consolidated way to make your payment. Maybe you're sending checks in the mail, right, to cover, and you got to worry about, are they getting cash, are they getting received, what if I'm late? Yada, yada. You know, what David's saying is we can take all 40 of those, and we can do something called a portfolio loan, which is putting. You know, some people call it a blanket loan, right? Where you have one loan that encompasses multiple parcels. And this could be. There's not really a cap to these. I just did one recently that had 150 units on it. And those. They were all single family. This isn't the 150 unit, like, apartment complex. Right. This is single family spread all around. I believe this one was in Kentucky.
- [10:15]
David Green
I believe.
- [10:15]
Christian Bashelder
No, Missouri. It was in Missouri. You know, and really good client, did a really good job at building up our portfolio. But he fit into this description exactly what we're explaining that. Man, this is a pain in the Butt. Right. How many payments do I have to make every month? How many insurance policies do I have to track? And you know, the nice thing about consulting that and getting kind of a blended rate, like David said, you're able to reset them all, whether that's leverage or interest rate.
- [10:40]
David Green
Right.
- [10:41]
Christian Bashelder
If we did a 75 refinance for him across all of his properties and you get it onto one note, where you make one payment every month and you avoid all that headache of sending checks in the mail and working with all these different banks, and you get them on one solid loan, you know, he may have gotten higher rates on some of those, lower rates on others. Right. Because he was buying over the course of the last, like, 15 years. He had some rates in there that were 3%, but he had some that were at 9% as well. Right. So getting to reset that into that six and a half to seven and a half range was really beneficial for him. Right. And we also put. Put a decent bit of. Bit of cash in his pocket as well, that he could turn around and reinvest. So if you guys are hearing this and you find yourself or you know, somebody in the situation and they've been piecemealing these one by one, and now they've been fortunate enough to build up a successful portfolio, send them this video. Right. Or call us in if it's you, and ask us, hey, I'm looking for a blanket, a portfolio loan, something where I want to limit the amount of payments that I need to be making per month and kind of re realign my portfolio into something that works better for me, something that we do all the time. We have access to very, very good loan products for these types of projects.
- [11:48]
David Green
Yep. And if you're wondering why we're talking about expensive primary residence loans or larger portfolio loans, there's no real reason other than the fact that if we're just being candid here, there's not a lot of great deals out there. There's still deals out there. We still want people to be acquiring real. We still have clients that are buying properties, but it's harder to do than it was before. Prices are kind of stubbornly high. Expenses just keep creeping up. Rents are not keeping up with that. It's just not an environment where the wind is at your back. The wind's kind of in your face. So if you find yourself in that position where you got a couple properties but in the middle of your scaling, interest rates went up and the market kind of came to this gridlock where not a lot makes sense, don't go pay too much for a property. Don't go make a stupid decision hoping that in five years the property might actually cash flow or make sense. Look at what you got and figure out how do you maximize what you have. And then when the market turns around and it's more favorable for acquiring new stuff, we'll be here talking about strategies that work for that Christian. If people want to get ahold of you, they want to schedule a consultation. They want to learn more about if they should get a primary residence right now and maybe like what type of loan products they can expect, down payments, pmi, stuff like that. Where can they go?
- [12:57]
Christian Bashelder
Yeah, quick way to catch me guys at on Instagram @the1 broker is my handle and then always you can submit a contact request on our website at the One Brokerage Comm, little Contact Us tab in the top right corner of the screen when you get there.
- [13:13]
David Green
Yeah, guys, he is not lying. The person who bought the Scottsdale property heard Mortgage Monday, reached out to Christian via email and next thing you know he's going and he's buying a multimillion dollar property that is going to build him some massive, massive wealth. So if that's someone like you, if you're listening to this and you're like not a big dog, I can't go talk to the David Greens and the Christians of the world. I don't even own that many houses yet. That you are the one that should be talking to us. You are the one that we can explain what the process looks like, how to get you a house just to live in right now. Because I do think that there's some pretty good deals on primary residences right now because the market's not red hot. You could be picky. You're actually seeing prices come down in some of these neighborhoods versus investment properties that need the cash flow in order to be a good deal that can be really hard to find. So in today's market, I like people house hacking and I like people getting the primary residence that they would enjoy, one that they actually like, maybe for years they've been living in a property that they haven't loved or an area they didn't love to focus on the portfolio. Well, if there's not a lot of opportunity to grow your portfolio, see what you can do to get a better primary residence that you can hopefully house hack and make some money off of. So reach out to Christian there and then you can find me@davidgreen24.com There's a chat feature you can get a hold of me with. Or you could go to David Green24 on Instagram and I will be there if you want to send me a message. Kristen, thanks for joining me today. I will see you next week on Mortgage Monday.