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#10 Multi-Family Financing in 2024: Mortgage Broker Insights (Phoebe Tudorof) · Own More Doors

0:00
SPEAKER_00: On today's show, we're going to be discussing getting financing on a multifamily dwelling in 2024.
0:07
SPEAKER_00: And so today we're going to be going two to four units.
0:10
SPEAKER_00: What has changed, what's gotten easier, and why you should be tuning in because what you need to know.
0:16
SPEAKER_00: We think it's a great time to get alone.
0:18
SPEAKER_00: We're going to hop right into it.
0:19
SPEAKER_00: Hey everyone, Juan Weezar here, president of Sage Real Estate, and another podcast, Owner More Doors.
0:24
SPEAKER_00: I'm here with Phoebe Tutoroff, co-owner Sage Trust Mortgage.
0:28
SPEAKER_00: Phoebe, thank you for being here today.
0:30
SPEAKER_01: Thank you.
0:30
SPEAKER_01: Glad to be here.
0:31
SPEAKER_00: Awesome.
0:32
SPEAKER_00: So let's just hop right into it.
0:33
SPEAKER_00: So let's just start from the very top.
0:36
SPEAKER_00: Someone wants to buy their first four-unit building, Phoebe.
0:40
SPEAKER_00: And they want to know what is it that a lender, whether it's you at Sage Trust Mortgage or somebody else, what information is that individual going to need to prepare so that they could find out whether they qualify for a loan or not?
0:54
SPEAKER_01: Um they need to get pre-approved first and foremost, and that's going to entail uh submitting a loan application, providing income and asset documentation, and um having a credit report run to see uh where their credit stands.
1:10
SPEAKER_00: What type of documentation can so like like tell us exactly what documentation they need so that someone could I want someone to be sitting at someone who's been thinking about it.
1:21
SPEAKER_00: And the advice that I've given people for so many years, and it just hasn't changed.
1:25
SPEAKER_00: I tell them, if you've been thinking about investing, why don't we go find out if you qualify?
1:31
SPEAKER_00: Like exactly they really stand at nothing to lose, it's not gonna cost them any money.
1:37
SPEAKER_00: Um, you're the one really the the lenders are the ones that are chasing down all the paperwork and finding out it's really their time, but it's not gonna cost you money.
1:46
SPEAKER_00: And so I tell people, let's go find out.
1:49
SPEAKER_00: You either qualify or you don't.
1:51
SPEAKER_00: And if you don't, we're gonna help you come up with a game plan on how to qualify in the next 12 months.
1:58
SPEAKER_01: With the things you need to know.
1:59
SPEAKER_00: Yeah.
1:59
SPEAKER_00: So what is it that someone could start packaging up today?
2:03
SPEAKER_01: Um, so for standard W-2 wage earner is going to be a month of paycheck stubs, the last two years of W-2 forms, uh, the last two months of bank statements, and a government-issued photo ID.
2:18
SPEAKER_01: Um, additional requirements would be required if you owned other property or you're self-employed or you have commission income, then tax returns for the last two years will also be required.
2:30
SPEAKER_00: Okay.
2:31
SPEAKER_00: And and Phoebe, if someone wanted to go onto our website, can they can they find this information there?
2:36
SPEAKER_00: Meaning like someone could go onto our site and find out exactly what it is that they need.
2:40
SPEAKER_01: Yes, they can um request.
2:43
SPEAKER_01: Well, they can create an account and access our secure portal.
2:47
SPEAKER_01: And uh once they submit the request, an email list of required items will be sent to them.
2:53
SPEAKER_00: Okay, so so folks, this is um our website, sage regroup.com.
2:59
SPEAKER_00: That's Sage, the letters RE for stands for real estate group.
3:03
SPEAKER_00: So SageRegroup.com, go there, go to the mortgage tab.
3:08
SPEAKER_00: They they have to create an account.
3:09
SPEAKER_01: Correct.
3:10
SPEAKER_01: Click on the link to uh become pre-approved, and it's a very simple create an account.
3:15
SPEAKER_01: It'll text you a code which gives you access to the portal and it walks you through about five pages of a very basic loan application input.
3:25
SPEAKER_01: And on the final page, it will um allow you to upload those required documents.
3:32
SPEAKER_00: Okay.
3:33
SPEAKER_00: Yep.
3:33
SPEAKER_00: And Phoebe, if if someone is has all these documents together, how how quick can they be told if they qualify or not?
3:45
SPEAKER_01: Um, once the loan application is complete and the required documents are uploaded within 24 hours.
3:51
SPEAKER_00: Okay, so the process could be quick.
3:53
SPEAKER_01: It's it can be quick.
3:54
SPEAKER_01: And it could be shortered period of time.
3:56
SPEAKER_01: Um, if you're under the gun and you need to write an offer and your offer needs to be in within two hours and I'm on the phone with you, I will take care of it while I'm on the phone with you.
4:06
SPEAKER_00: Okay.
4:07
SPEAKER_00: Is is getting a loan this year easier than last year, or or it or is it has nothing really changed?
4:15
SPEAKER_01: Well, applying and getting approved really hasn't changed.
4:18
SPEAKER_01: No, I mean, there is new loan, newer loan programs that are available now with more opportunities.
4:24
SPEAKER_01: Um, however, the qualifying process of obtaining a mortgage loan has been the same for quite a while.
4:30
SPEAKER_00: Got it.
4:31
SPEAKER_00: Some of the things that I see, Phoebe, and you know, we we have a lot of um viewers on YouTube, listeners on the podcast, and a lot of folks reach out and um they get motivated and they want to go buy something, and then we we say, Hey, go go talk to a lender.
4:48
SPEAKER_00: You know, we'd love to have you here at Sage Trust Mortgage, but no one's pigeonholed into going with us.
4:53
SPEAKER_00: They could use whoever they want to go with.
4:55
SPEAKER_00: And the thought of getting pre-approved brings them to a complete halt.
5:01
SPEAKER_00: Why do you think that is?
5:02
SPEAKER_00: Because I see it time and time again.
5:05
SPEAKER_01: I think they just get overwhelmed with trying to get the paperwork together.
5:10
SPEAKER_01: I'm not really sure.
5:12
SPEAKER_01: Most of those, all of those documents are accessible to most people electronically.
5:17
SPEAKER_01: So I'm not really sure why they stop at that.
5:21
SPEAKER_01: I know a lot of people talk about having their credit run and how that dings their credit.
5:26
SPEAKER_01: Uh, we do have other options to run a soft credit check where no inquiry does go on your credit report.
5:31
SPEAKER_01: However, that's only going to get you really pre-qualified versus pre-approved.
5:36
SPEAKER_01: Um, but I don't know why I think people just think it's very time consuming.
5:42
SPEAKER_01: But once you sit down, the actual input of the loan application should take you no more than 10 minutes.
5:48
SPEAKER_01: And if you do have those documents available electronically, uploading them is instant.
5:54
SPEAKER_01: Um upload your pay stubs, upload your W-2s, upload your bank statements, take a photo of your, you know, your driver's license, your government-issued ID, upload it.
6:04
SPEAKER_01: And if tax returns are needed, you know, request a copy of those from your tax preparer in a PDF format, and you can just upload those.
6:13
SPEAKER_01: Um the whole process in its entirety for anybody that has some you know computer capabilities should take 15 minutes.
6:24
SPEAKER_00: Okay.
6:25
SPEAKER_00: Um it's some people might have apprehension, they don't have the documents, and so then there's some some level of homework.
6:31
SPEAKER_00: Now we got to go get them.
6:33
SPEAKER_00: What I'm gonna recommend to them for for those folks is if you have apprehension deep down inside, you're like, uh, I'm not organized.
6:42
SPEAKER_00: I have someone help you.
6:44
SPEAKER_00: Yes.
6:45
SPEAKER_00: Have someone have a spouse, a family member say, Can can you help me with this?
6:51
SPEAKER_00: Um, pay someone and say, Hey, I'm gonna pay you to help get this stuff for me.
6:55
SPEAKER_00: And someone, someone who is organized has no problem doing that.
6:58
SPEAKER_00: And when Phoebe's saying upload it, if that gives you apprehension, have someone help you with it.
7:03
SPEAKER_01: Have someone help you.
7:03
SPEAKER_01: I mean, and the other opportunity is to come into the office and bring your paper documents and we'll scan them and get them into the portal for you.
7:11
SPEAKER_00: No, and I'm glad you say that, Phoebe, because sometimes people will call us and they'll and they'll say, I don't do that email stuff, Juan.
7:18
SPEAKER_00: And I'm like, come on down, let's meet and and let's do it the way that it used to be done.
7:23
SPEAKER_00: And we're perfectly fine with with doing that.
7:26
SPEAKER_00: You talked about one of the things that I always hear is people are like, hey, Juan, I want to get pre-approved.
7:31
SPEAKER_00: We're gonna reach out to Phoebe.
7:32
SPEAKER_00: I don't want to run my credit.
7:33
SPEAKER_00: And I know you mentioned it.
7:35
SPEAKER_00: Talk to us.
7:36
SPEAKER_00: Why do they not want or they read somewhere that that's a bad thing for someone to run their credit?
7:42
SPEAKER_01: Well, so when you have your credit report run, we run what's called a residential mortgage credit report.
7:48
SPEAKER_01: And it does put an inquiry on each bureau, Experian, Equifax, and TransUn.
7:55
SPEAKER_01: Um, and occasionally that can cause some trigger leads, right?
8:00
SPEAKER_01: So there are companies out there that purchase information from the credit bureaus about someone who recently had their credit run by a mortgage company.
8:10
SPEAKER_01: So, number one, it can cause a lot of phone calls and a lot of hassles from a lot of people that you did not apply with pretending to offer you something better because they got your name and phone number from the credit bureau that you had your credit report run and now they're trying to solicit you for business.
8:28
SPEAKER_01: So that's one.
8:29
SPEAKER_01: Um, when your credit is run, it can slightly dip your credit score.
8:35
SPEAKER_01: And a lot of people are very concerned about that.
8:38
SPEAKER_01: However, if you're not having your credit run by multiple mortgage companies, that really should be a non-issue.
8:46
SPEAKER_01: Um you, I always want a borrower to shop around.
8:51
SPEAKER_01: However, once you know what your credit score is, and especially if you know what kinds of liabilities you have, for instance, car payments or credit cards and what those minimum payments are, I can kind of give you a rough estimate or a pretty good estimate, not even rough.
9:06
SPEAKER_01: I can give you an estimate if you're being honest with about uh what your credit score is based on the last credit report you had run and what liabilities you do have, what you qualify for, always subject to us running our own credit report in-house, but at least you can compare apples to apples without formally applying and having your credit report run by yet another lender.
9:27
SPEAKER_01: And all lenders shouldn't be able to do that.
9:29
SPEAKER_01: So um, you know, and then there's always the option of the soft credit check, which is uh typically just one bureau, and we kind of get an idea of what your credit score is and the liabilities that are reporting on that specific bureau.
9:45
SPEAKER_01: And an acquiry does not go on your credit report when you do a soft credit check.
9:49
SPEAKER_00: What if someone reaches out to you and says, hey, my um, you know, I bank with, you know, whatever, B of A, and they just gave it to me this morning.
9:57
SPEAKER_00: Here you go.
9:58
SPEAKER_00: Is that can you work with that?
9:59
SPEAKER_01: I can work with that, however, to get a final pre-approval.
10:04
SPEAKER_01: So you can use that to shop with, right?
10:06
SPEAKER_01: Or to compare rates, compare quotes.
10:09
SPEAKER_01: However, for me to issue like a final pre-approval letter, uh, I would still need to run my own credit report because I need my own credit report to be able to proceed with your loan to get it closed and funded.
10:22
SPEAKER_01: Um, but I've for sure I can work with anybody else's credit reports.
10:26
SPEAKER_01: You can upload it to the portal, bring it in the office, and we'll make a copy.
10:30
SPEAKER_00: Phoebe, so like when when I think of my situation, I can't think of the last time I ran my credit report.
10:35
SPEAKER_00: I mean, so for someone to run it, so let's just say that I'm curious if I qualify for a new home loan, you know, we do want a bigger house.
10:41
SPEAKER_00: Okay, cool.
10:43
SPEAKER_00: Um, if I'm having you run it and I haven't ran it in the last 12 months, 36 months, I can't imagine that's gonna ding my credit.
10:53
SPEAKER_01: It probably won't.
10:54
SPEAKER_01: No, it's it's when you have it run by multiple lenders.
10:57
SPEAKER_01: So if I run your, if your credit score was, for instance, a 780 today and I ran your credit report, it most likely is going to be a 780 if you haven't had your credit run for a long time.
11:07
SPEAKER_01: Yeah.
11:07
SPEAKER_01: Um, you know, every inquiry, there isn't really an exact number of points that it affects your credit.
11:14
SPEAKER_01: Um, and I've seen clients who have had their credit report run by three different lenders and the credit scores are all within one point of each other.
11:21
SPEAKER_01: I've seen other clients who, you know, in a week's time have had their credit run.
11:26
SPEAKER_01: However, maybe some other things changed in their credit report, not necessarily just the inquiries.
11:32
SPEAKER_01: Um, and their credit score is could be 10, 15, 20 points difference.
11:36
SPEAKER_01: And sometimes that does make a difference in the interest rate you're getting, in the interest rate you're getting quoted when that credit report is run.
11:44
SPEAKER_01: Um, and then the soft credit check is always another great option where uh we can just run one bureau, see where your score is at, and get a soft credit check without an inquiry, and kind of go from there and kind of get a really good estimate on what you are going to qualify for based on that soft credit check.
12:02
SPEAKER_00: Um, two questions on the topic of credit.
12:07
SPEAKER_00: Why does someone want a good credit score?
12:10
SPEAKER_00: That's the first question.
12:11
SPEAKER_00: And what's the minimum for them to be able to qualify for a mortgage?
12:16
SPEAKER_01: So the minimum for a conventional mortgage is going to be 620.
12:20
SPEAKER_01: Um, there are some programs that allow a credit score less than that, but not on the conventional loan level.
12:27
SPEAKER_01: Um, and a credit score affects all aspects of your mortgage.
12:31
SPEAKER_01: So the credit score is going to affect uh your interest rate, it's going to affect your down payment, it's going to affect um, you know, your actual monthly payment.
12:43
SPEAKER_01: And it's going to affect if you do put less than 20% down or you have less than 20% equity, your credit score is also going to affect your PMI factor, which that is paid monthly.
12:57
SPEAKER_01: Private mortgage insurance is paid monthly, and your credit score is part of that factor when applying or taking out a mortgage loan.
13:06
SPEAKER_00: Okay.
13:06
SPEAKER_00: So it's critically important that you have good credit or at least above a 620 to be able to pull this off.
13:11
SPEAKER_00: And if you don't, there are probably programs out there to um help improve your credit score, correct?
13:16
SPEAKER_01: Correct, correct.
13:18
SPEAKER_00: So the average forplex price is 1.4 million in the city of Long Beach.
13:23
SPEAKER_00: Other places could be higher, they could be lower.
13:26
SPEAKER_00: Clearly out of state, they're probably much, much less.
13:31
SPEAKER_00: Someone is gonna have to either own a business or have a job for at least two years, right?
13:37
SPEAKER_00: Correct.
13:38
SPEAKER_00: Okay, correct.
13:39
SPEAKER_00: Um what else what else is it that you're gonna be looking for to see if they qualify, right?
13:44
SPEAKER_00: Like, like what what does what what's the income requirement that they're gonna need to have?
13:50
SPEAKER_01: Well, so the entire housing payment, and that includes or the new housing payment for the mortgage, which includes their principal and interest, their property insurance, their property taxes, and any private mortgage insurance, if applicable, cannot exceed 46% of their gross monthly income.
14:13
SPEAKER_00: Okay.
14:13
SPEAKER_01: Okay, and that's just for the housing payment.
14:16
SPEAKER_01: Then there is another debt to income ratio that is used, which includes the entire housing payment and any other liabilities that they have, such as car payments, minimum credit card payments, child support, alimony, um, negative rental income on other properties or second homes, right?
14:39
SPEAKER_01: Um, those things are all going to be added in on top of their new mortgage payment.
14:45
SPEAKER_01: And that percentage cannot exceed 49.9% for conventional loan.
14:52
SPEAKER_00: Okay.
14:53
SPEAKER_01: Okay.
14:54
SPEAKER_00: How does how well two questions?
14:57
SPEAKER_00: As you're saying all this, is there like a calculator that they could go use and kind of play around?
15:02
SPEAKER_00: Like, okay, before I reach out to a lender, let me go plug some of these numbers into some type of formula or or software, and it's gonna tell me, hey, you're at 60%.
15:15
SPEAKER_00: So then I already know, hey, I need to change something because I don't meet it.
15:19
SPEAKER_01: Right, right.
15:19
SPEAKER_00: Is there anything that they could go like push buttons?
15:22
SPEAKER_01: Yeah, there's, I mean, you can do a basic internet search and and Google or do an internet search um and type in the request, you know, like a home loan calculator.
15:38
SPEAKER_01: Um, what do I qualify for a home loan?
15:41
SPEAKER_01: Obviously, a lot of the links that are gonna come up are gonna take you to a specific lender's website.
15:45
SPEAKER_01: Right.
15:45
SPEAKER_01: So, you know, then they're gonna start asking you more information.
15:48
SPEAKER_01: However, there is, you know, some basic calculators available online that will give you that information.
15:55
SPEAKER_01: Or, you know, they can pick up the phone and give me a call and we can go over those numbers.
15:59
SPEAKER_01: You can tell me what your base, your gross base salary is and any other liabilities that you have, and I can tell you approximately how much of a mortgage you will qualify verbally based on those, you know, factors.
16:13
SPEAKER_00: One of the questions I get is hey, Juan, I'm gonna be living in one of the units, and I and there's the income from the three units.
16:23
SPEAKER_00: Does that income help me?
16:24
SPEAKER_01: It does.
16:25
SPEAKER_01: It does.
16:25
SPEAKER_01: So the income for the other units that you will not be occupying go towards your qualifying income.
16:32
SPEAKER_01: So they get added to your base salary or whatever your other income that you have is, that gets added into there and it gets factored into either your housing ratio max or your debt to income ratio max.
16:46
SPEAKER_01: Um, there is a vacancy factor.
16:48
SPEAKER_01: So if the other three units rent for um$1,000 each, that's$3,000 in gross income.
16:57
SPEAKER_01: However, the lender's going to take 25% off of that$3,000.
17:02
SPEAKER_01: And it's that's what's called a vacancy factor.
17:05
SPEAKER_01: Um, and then that net amount is what gets added into your qualifying income to purchase that multifamily property.
17:12
SPEAKER_00: Okay, so it's definitely going to help someone qualify for more and then help meet those ratios.
17:19
SPEAKER_01: Yes, for sure.
17:22
SPEAKER_00: In October of 2023, you and I did a video, and I was super excited because Fannie Mae came out and they said that someone could buy a two, a three, or a four unit with five percent down so long as they lived in one of the units.
17:42
SPEAKER_00: And I thought that this was gonna make property values explode.
17:47
SPEAKER_00: I thought more fourplexes were gonna sell, more triplexes, more duplexes.
17:52
SPEAKER_00: I thought we're gonna have a larger pool of buyers, sellers are gonna be motivated because now there's a larger pool of buyers, everyone's gonna be happy, and that program hasn't taken off yet.
18:05
SPEAKER_00: Why do you think that is?
18:09
SPEAKER_01: I think the first-time homebuyer that's if they're first-time homebuyers walking into that situation, I think, especially in our area, I think that the payment on that high of a mortgage is a little bit more than they're willing to take on.
18:26
SPEAKER_01: Um, even with the rents helping to offset it, I think the net mortgage payment out of their pocket for a lot of people to move into one of four units is a little bit more than they either can afford or want to pay.
18:43
SPEAKER_00: Yeah.
18:44
SPEAKER_00: And I'll talk to that a little bit is uh uh people want to utilize the program and then to your point, they see how big the payment is, and then they factor in all the rents and then they figure out, well, this is how much I'm comfortable paying.
18:59
SPEAKER_00: And sometimes there's gonna be like a negative, right?
19:03
SPEAKER_00: Or more that they have to make up, and so they they do get scared.
19:07
SPEAKER_00: So where I thought that this program was gonna take off, and I still that I still believe that it can, but I think that interest rates need to drop significantly in order for people to hop on the panwagon.
19:20
SPEAKER_00: Because at this point, we haven't done any of those types of loans yet, right?
19:23
SPEAKER_00: This year, um like actual Fannie Mae multi-dwelling loan.
19:28
SPEAKER_00: No, yeah, so we haven't utilized it yet.
19:31
SPEAKER_01: I have lots of people that are very interested in it, lots of borrowers and clients that are very interested.
19:36
SPEAKER_01: However, they either haven't found the right property or there isn't enough cash flow for them to, you know, jump on board and make the commitment for that property.
19:46
SPEAKER_01: Yeah.
19:47
SPEAKER_00: Yeah, and you know, I like to be brutally honest with people when they call me and they say, hey, I want to do this program and I want to cash flow.
19:55
SPEAKER_00: And I I have to say, hey, we're not gonna cash flow.
19:58
SPEAKER_00: It's you're not putting much money down, properties are still high.
20:02
SPEAKER_00: I don't expect them to drop much, very little, and the interest rates are probably gonna remain the same.
20:08
SPEAKER_00: I think in the near future, for sure, for the next year, they're gonna be like this.
20:13
SPEAKER_00: Now, other people are saying it's gonna be like this much longer, but let's just count on interest rates remaining the same.
20:19
SPEAKER_00: So for the people that are on the fence, I want to buy something, I'm waiting for interest rates to drop.
20:26
SPEAKER_00: If if your timeline is in within the next year, I'm gonna suggest to them do something now.
20:32
SPEAKER_01: Of course.
20:33
SPEAKER_00: Because you're you're gonna wait.
20:35
SPEAKER_00: And there's really no benefit in waiting, is there?
20:38
SPEAKER_01: No, there is no benefit in waiting because all if you just keep waiting and waiting, when the interest rates do come down, if they come down, there's gonna be a million more borrowers in that same pool, buyers in that same pool that you are that now can afford that same property because the payment is a little bit lower.
20:55
SPEAKER_01: Um, it's also going to drive up prices.
20:59
SPEAKER_01: So, you know, if interest rates do come down, more people are eligible, more people qualify for those same mortgages, and properties are gonna possibly start selling, which is going to start increasing property prices and property values.
21:14
SPEAKER_01: So it's great for someone who bought now.
21:17
SPEAKER_01: And another opportunity if you buy now and you can afford it and this works for you, if rates do come down, well, then just refinance and take advantage of the lower interest rate.
21:28
SPEAKER_01: You're gonna have the equity because if that does happen, the only the benefit to you is now your property is even worth more because you know the buying frenzy has started again, interest rates are low, everyone's gonna jump on board, everyone's gonna start wanting to buy because rates came down.
21:42
SPEAKER_01: And it's just going to improve your situation if you already bought and you can just take advantage of the lower interest rates and refinance and get your payment down.
21:53
SPEAKER_00: No, yeah.
21:54
SPEAKER_00: So I so I agree.
21:55
SPEAKER_00: I I was asked to speak for the appraisal institute on Tuesday.
22:00
SPEAKER_00: This week.
22:01
SPEAKER_00: And I started off the presentation with so, like I'm talking to commercial appraisers.
22:06
SPEAKER_00: And I looked at them and I said, Do you believe that we're in a seller's market or a buyer's market?
22:13
SPEAKER_00: And there was a little bit of quiet, and then people thought about it.
22:15
SPEAKER_00: And I was referring to a seller's or buyer's market in the multifamily world, not single family, because that's going to be a different answer.
22:23
SPEAKER_00: In the multifamily world, it is a buyer's market.
22:28
SPEAKER_00: Okay.
22:29
SPEAKER_00: That means that the buyer has more control, more leverage than the seller does, right?
22:34
SPEAKER_00: So the seller could want what they want, but ultimately the buyer is going to dictate the price.
22:40
SPEAKER_00: Multifamily properties are sitting on the market longer.
22:43
SPEAKER_00: I see it, even on our listings.
22:45
SPEAKER_00: So they're sitting on the market longer.
22:47
SPEAKER_00: There's more inventory.
22:49
SPEAKER_00: And I think buyers are being super patient.
22:52
SPEAKER_00: And one of the reasons why they're being patient is that the interest rates are still high and values are still high.
22:59
SPEAKER_00: But given that, so so a buyer, so going back to your point is that a buyer is in a position to, so long as they're working with the right broker, the right agents representing them, they can negotiate the price in terms that are acceptable to them and really tie up by the property that they want now.
23:21
SPEAKER_00: Because as soon as those interest rates drop, the market changes and it goes from it goes from a buyer's market back to a seller's market.
23:30
SPEAKER_00: Now the seller is going to control the situation.
23:32
SPEAKER_00: And that's not the case right now, in what I'm seeing.
23:36
SPEAKER_00: One other thing.
23:43
SPEAKER_00: This year, right now, year to date, June 2024, that's dropped down to like 1.2.
23:48
SPEAKER_00: It's not even 1.2, it's less than 1.2 million.
23:52
SPEAKER_00: And so property values have shifted.
23:57
SPEAKER_00: They have shifted.
23:58
SPEAKER_00: And again, there's more to choose from.
24:01
SPEAKER_00: They're sitting on the market longer.
24:03
SPEAKER_00: So that means that the seller is probably going to be motivated to do something.
24:09
SPEAKER_00: They may or may not be, but I would tell you that if there's more sellers, I would say some of them are going to be more motivated than others.
24:15
SPEAKER_00: And those those are the ones you have to pursue.
24:18
SPEAKER_00: And so although the interest rates are higher, I would say this is the time to go get the property that you want.
24:24
SPEAKER_01: I agree.
24:24
SPEAKER_01: I agree.
24:25
SPEAKER_00: Um when it comes to buying multi-dwelling properties, Phoebe, I feel like one of the things that separates your expertise from others is that I feel like most lenders don't understand multi-unit type loans.
24:44
SPEAKER_00: Why do you think that is?
24:48
SPEAKER_01: I think that for so long they were geared towards single family and condo type of loans that the multifamily type of loan didn't really exist in their realm, possibly, or it required such a large down payment prior to October of 2023 that they didn't do very many of those on the conventional level.
25:14
SPEAKER_01: And, you know, prior to Fannie Mae rolling out that program to buy a three or four unit property, you had to have 25% down, whether you occupied it or not.
25:25
SPEAKER_01: Whether you purchase that as an owner-occupied or an investment property, you had to have a 25% down payment.
25:29
SPEAKER_01: And I think a lot of lenders weren't doing those types of loans because those types of down payments weren't available.
25:37
SPEAKER_01: So I think that all of those lenders that are still in business and still doing loans just didn't work on multifamily loans.
25:47
SPEAKER_00: I feel like people contact us and they're like, yeah, my lender either doesn't understand them or said something that they don't believe is true, and then and then and then you know we we bring Phoebe into the picture, we bring you into the picture, and then you're able to pre-approve them.
26:03
SPEAKER_00: And then they kind of realize.
26:05
SPEAKER_00: So one of the reasons why here at Sage Real Estate, we we partnered up with Sage Trust Mortgage is that we we wanted to be a lot more efficient, get you pre-approved quicker, get the pre-approval from the lender quicker.
26:23
SPEAKER_00: Um, and so because we're under one roof, we are able to get to get someone approved, so long as they're approved, we could get them approved much faster, we could move quicker, and we could even shorten the escrow periods because we're under one roof.
26:38
SPEAKER_00: So there's a lot of benefits, right, Phoebe?
26:40
SPEAKER_00: There is.
26:41
SPEAKER_00: Is there any other benefits that you see that that that our our our our clients on the lending side appreciate with kind of having everything be one one house?
26:49
SPEAKER_01: Yeah, I I mean I think it's the communication directly with the real estate agents and myself and my team.
26:55
SPEAKER_01: Um, you know, instant information, instant updates.
27:00
SPEAKER_01: Um, and you know, our interest rates are very, very competitive.
27:04
SPEAKER_01: Um, you know, we're in the business of of making loans.
27:07
SPEAKER_01: Um and and working with realtors and the lender as one team, it it makes everything go smoother.
27:16
SPEAKER_01: We're not waiting 24 hours for a reply via email.
27:20
SPEAKER_01: We're not, you know, in different time zones where um everything is, you know, located under one roof and you know, completely communicative instantly.
27:31
SPEAKER_00: So yeah, there's when when working with us at Sage Real Estate and Sage Trust Mortgage, there's um there's less time being wasted, right?
27:43
SPEAKER_00: Because everyone's working towards the same goal.
27:45
SPEAKER_00: And there's a lot of communication.
27:47
SPEAKER_00: If anyone has never purchased a property, there's um we're inundated with emails, with texts, and we do need a lot of communication.
27:55
SPEAKER_00: And so kind of working with us, I think um, and that's the reason why we wanted to do that.
27:59
SPEAKER_00: We wanted to put the the buyer in a situation to win, right?
28:06
SPEAKER_00: Correct, correct.
28:06
SPEAKER_00: And sometimes we win because we could work better, work faster, be more efficient.
28:12
SPEAKER_00: Um, if if we're able to communicate to the seller a lot more, then they're more likely to want to work with us again with another client because they're gonna say, you know what, they did a really good job and they followed through with their timelines.
28:25
SPEAKER_00: In the world of real estate, there's there's um everything's on a timeline and there's pressure to meet that.
28:30
SPEAKER_00: And sometimes if you're working with a lender that you've never, as an agent you've never met, and to your point is in a different time zone, it's difficult.
28:38
SPEAKER_01: It is.
28:38
SPEAKER_01: Yeah, it is.
28:39
SPEAKER_00: And with with us being here in the office, we kind of you know, go, go, go next door and say, Hey, I need this to be a priority, and then we're able to navigate that correct fairly quickly.
28:51
SPEAKER_00: When when someone is looking, Phoebe, so when someone's looking to get a multifamily loan, we talked about what they need to do to get to be organized, to be prepared.
29:04
SPEAKER_00: We talked about the the interest rate, we talked about how the income does help them.
29:09
SPEAKER_00: It does the income from the other rentals that they won't be occupying does help them.
29:14
SPEAKER_00: We haven't talked about, and we have clients like this who say it's gonna be me, my brother, my sister, and my dad all along.
29:25
SPEAKER_00: How do you navigate that?
29:27
SPEAKER_01: Um, there's different options.
29:29
SPEAKER_01: If they all live together now, um all of them can move into one unit and still utilize the rent from the other units they're not occupying, as long as the size of the unit makes sense.
29:44
SPEAKER_01: I mean, um, you can have four separate buyers purchase a four-unit property and each person's going to move into one unit.
29:52
SPEAKER_01: So then there is no rental income.
29:54
SPEAKER_01: However, everyone's income that's going on the loan and the purchase is used combined to qualify for the mortgage.
30:02
SPEAKER_01: Um so I mean, it's there's lots of different options.
30:08
SPEAKER_00: It could be done.
30:08
SPEAKER_01: It could be done.
30:09
SPEAKER_01: And if even if they don't live together now, if you know there's family and it makes sense, and you know, the four units is a front house and it's three bedrooms, and four people are moving in, and we're gonna rent the other three units out so that we can make this transaction happen.
30:24
SPEAKER_01: You know, we want to buy a property and you know, we want to live together and we want to rent the other three units out.
30:29
SPEAKER_01: That's something that's totally acceptable.
30:32
SPEAKER_00: Sometimes Phoebe people call us and they'll say, I have a corporation, an LLC.
30:38
SPEAKER_00: I want to get the loan in the LLC.
30:40
SPEAKER_01: So uh fortunately, Fannie Mae and Freddie Mac, which are the conventional loans, Fannie Mae primarily for the multifamily, they do not lend to entities, um, LLCs, corporations.
30:53
SPEAKER_01: Um, however, you can buy it in your personal name.
30:57
SPEAKER_01: And then after escrow closes, you can transfer the title of the property however you wish to transfer it to.
31:04
SPEAKER_01: And if you want to transfer it to your corporation or your LLC, check with your tax preparer.
31:09
SPEAKER_01: But that's something that you can do after closing, however, the loan and the property needs to close in your personal name.
31:17
SPEAKER_01: Um, and then after closing, you can adjust the title as you see fit.
31:24
SPEAKER_00: Um, I want to talk about assumable loans.
31:27
SPEAKER_00: I know we did a full-on podcast specifically on assumable loans, but let's just mention it.
31:31
SPEAKER_00: So an assumable loan, someone got a loan at 3% or a very favorable 2.5, 2.75, 3.25, 3.5, 4%.
31:43
SPEAKER_00: Someone got a loan, and there is a process in which a buyer could take on that loan.
31:51
SPEAKER_00: Yes.
31:51
SPEAKER_00: Tell us who automatically, what types of loans would be assumable?
31:56
SPEAKER_01: Um, government-backed loans, and those are going to be FHA, the Federal Housing Administration loans, um, backed by HUD, the Veterans Administration loans, also known as VA loans, and then USDA, uh, the United States Department of Agriculture does um loans in certain areas.
32:14
SPEAKER_01: And those three types of government-backed loans are uh suable.
32:19
SPEAKER_00: I do encourage you folks to listen to that specific podcast because we go into great depth, uh depth on how you, the buyer, could take advantage of that, but then also how it benefits the seller, also.
32:32
SPEAKER_00: And so I do encourage you to learn more about that because for those people that are on the fence that are waiting for interest rates to drop, well, maybe you don't have to wait.
32:42
SPEAKER_00: Maybe you just have to buy the right type of property that already came with a suable loan, and that's what you're gonna sign up for.
32:48
SPEAKER_00: Yeah.
32:50
SPEAKER_00: Um I'm gonna give you the final word, Phoebe.
32:55
SPEAKER_00: So 2024, someone wants to buy multifamily.
32:59
SPEAKER_00: What advice do you have for them?
33:04
SPEAKER_01: Get pre-approved.
33:06
SPEAKER_01: Number one, first and foremost.
33:07
SPEAKER_01: That step needs to be done so that you know what you qualify for, what your payment is, and what you are looking for in a property as far as rents go for the units you're not going to occupy.
33:18
SPEAKER_01: Number one, all of those three things are the most important.
33:20
SPEAKER_01: Number two is if you're ready and you can afford it, pull the trigger.
33:26
SPEAKER_01: Start, you know, get pre-approved, work with your agent at Sage Real Estate.
33:30
SPEAKER_01: Um, get in Descrow on that property, just like you mentioned before.
33:34
SPEAKER_01: It's kind of a buyer's market, and the buyer may have control and may get the better of the deal in it during this time period now.
33:44
SPEAKER_01: So if it works for you and you can afford it, um, and if rates do come down, well, just refinance and take advantage of the lower rate and the lower payment.
33:53
SPEAKER_00: We uh we wrote an offer this week and on on two units.
33:58
SPEAKER_00: It was uh two homes on a lot.
34:01
SPEAKER_00: And we sent the offer in and we we discounted the price significantly, and we were shocked when it came back yesterday, approved, meaning the seller approved our price.
34:12
SPEAKER_00: So when I'm saying that it's a seller's market, I'm not saying that in every situation we're gonna get the price in terms that we want, but when I called the client and say they've accepted your price, they almost fell off their chair.
34:23
SPEAKER_00: They're like, What?
34:24
SPEAKER_00: We were expecting a counter.
34:25
SPEAKER_00: I'm like, so was I.
34:27
SPEAKER_00: Right.
34:27
SPEAKER_00: So was I.
34:28
SPEAKER_00: But that proves the point that it it's it's a buyer's market and it and it's an excellent time to get in.
34:36
SPEAKER_00: Phoebe, if anyone, what's the best way?
34:38
SPEAKER_00: Listen, sometimes, Phoebe, people will call me and they'll and everyone has a unique situation.
34:42
SPEAKER_00: And sometimes they could be a little sheepish, like they don't want to say something, and they could be openly honest with you.
34:48
SPEAKER_01: Yes.
34:49
SPEAKER_01: I'm on your team.
34:50
SPEAKER_01: I want to work with you.
34:51
SPEAKER_01: I want to figure out the best solution for your situation to get your loan approved.
34:56
SPEAKER_00: And Phoebe, I can't imagine that someone's gonna tell you something that you haven't already heard in the last 20 years.
35:02
SPEAKER_01: Yeah, probably not.
35:03
SPEAKER_00: Right, right, because you've heard it all, right?
35:05
SPEAKER_00: Right.
35:05
SPEAKER_00: Like whatever, whatever situation, like, oh well, my situation is unique.
35:09
SPEAKER_00: I'll tell you.
35:10
SPEAKER_00: Uh, don't tell me.
35:11
SPEAKER_00: You don't have to tell me.
35:12
SPEAKER_00: I'm not on the lending side.
35:14
SPEAKER_00: Tell Phoebe in confidence, tell her she will guide you.
35:19
SPEAKER_00: Okay, that's fine.
35:20
SPEAKER_00: I've heard that before.
35:21
SPEAKER_00: Here's how we handled it.
35:22
SPEAKER_00: Yes.
35:23
SPEAKER_00: And let's get past this um this wall that we put between us and getting a loan.
35:29
unknown: Yeah.
35:29
SPEAKER_00: You right?
35:30
SPEAKER_01: There's there's workarounds for 99.9% of all unique situations.
35:35
SPEAKER_01: So the more information you give me up front, the more honesty you tell me about things that are going on in either your finances or your job or your work, those help me to improve your chances of getting approved for a mortgage loan.
35:52
SPEAKER_00: Phoebe, what's the best way someone could get?
35:54
SPEAKER_00: How do you want to be contacted?
35:56
SPEAKER_01: Um, I mean, there's several ways.
35:58
SPEAKER_01: There, you can call me, and that phone number is 562-343-9998.
36:05
SPEAKER_01: That goes directly to me.
36:07
SPEAKER_01: You can text that same phone number.
36:10
SPEAKER_01: You can email me, and my email is my first name, Phoebe at SageRegroup.com.
36:17
SPEAKER_01: You can also go to our website, SageRegroup.com, click on the mortgage link and access our portal.
36:25
SPEAKER_01: Once you access the portal and you initiate an account, I get an alert when you start working in there and I can follow up with you via email, via text, via telephone, whatever your preferred mode of communication, it whatever works for you, I'm available.
36:42
SPEAKER_00: Awesome.
36:43
SPEAKER_00: Awesome.
36:44
SPEAKER_00: Uh uh just a word of advice.
36:47
SPEAKER_00: If someone is looking or thinking that they're gonna want to get a loan, you probably don't go want to go buy a new car right now, right?
36:53
SPEAKER_01: Correct.
36:53
SPEAKER_01: Yeah, don't incur any new debt.
36:54
SPEAKER_01: Yes.
36:55
SPEAKER_01: Uh new car loan with a$500 a month payment could make or break at the opportunity for you to purchase the property of your dreams.
37:03
SPEAKER_01: Yeah.
37:04
SPEAKER_00: Okay.
37:04
SPEAKER_00: So we want to invest in appreciating assets, which would be re real estate, and we want to hold off on that car.
37:09
SPEAKER_01: Yep, yeah.
37:09
SPEAKER_01: Or any big, large purchases.
37:11
SPEAKER_01: Don't don't go on a big fancy vacation and charge up all those credit cards.
37:16
SPEAKER_01: Yeah.
37:16
SPEAKER_01: So yeah.
37:17
SPEAKER_00: And and folks know that early on, and and um, I'm gonna sound like a broken record.
37:22
SPEAKER_00: Early on, there's not a whole lot of cash flow.
37:24
SPEAKER_00: Okay, that's that's normal, and that's okay.
37:27
SPEAKER_00: There will be, we're gonna own the property in most cases 10, 12, 15, 20 years.
37:34
SPEAKER_00: I promise you, there will be cash flow.
37:37
SPEAKER_00: It may not be in the first 12 months, but it could be 18th, 24 month, 36 month, things turn around, uh, some of the tenants move, you make some improvements, you bring in a market rent.
37:49
SPEAKER_00: I see this over and over again.
37:52
SPEAKER_00: And because I've personally owned a lot of real estate, because I had a mentor who told me, Juan, don't worry so much about cash flow.
38:01
SPEAKER_00: We're doing this for wealth creation, for appreciation.
38:05
SPEAKER_00: That's what that's where you're gonna get wealthy.
38:07
SPEAKER_00: You're not gonna get wealthy off of cash flow.
38:09
SPEAKER_00: Like I had someone tell me that.
38:10
SPEAKER_00: So I feel like it's my job to tell our listeners that because they need to hear it.
38:14
SPEAKER_00: Um, with some of these properties, now that they're like uh cash flowing for me and I get a check every month, um, I forget that the first two years there was no check.
38:24
SPEAKER_00: I forget about that.
38:25
SPEAKER_00: It's like I don't, it doesn't matter anymore.
38:27
SPEAKER_00: But I understand that it's um situations unique with everybody, but I tell people, this is a long game, and the first year will be a little like the rocky waters, a little turbulence, and we'll get through it.
38:42
SPEAKER_00: And we will help you get through it because we're again, we're we're investors first, real estate brokers second.
38:49
SPEAKER_00: Uh, we think like an owner, we act like an owner, uh, we own and manage our own units.
38:54
SPEAKER_00: And so anything that that that an owner that we're telling someone to do is something that we've done ourselves.
39:01
SPEAKER_00: So with that, Phoebe, I want to say thank you so much.
39:04
SPEAKER_00: Folks, please reach out to Phoebe.
39:06
SPEAKER_00: She gave her number, email address, our website.
39:09
SPEAKER_00: Check her out.
39:10
SPEAKER_00: That's where you start.
39:11
SPEAKER_00: Even before calling me.
39:13
SPEAKER_00: Even before calling me, you you start off with Phoebe.
39:16
SPEAKER_00: She will report back to me, hey, so and so, they're ready to go, or so-and-so is gonna be ready in the next 12 months.
39:24
SPEAKER_00: If you're gonna be ready in the next 24 months, we want to start that conversation today.
39:29
SPEAKER_00: So don't think that I shouldn't reach out to Phoebe because I'm not ready.
39:34
SPEAKER_00: I would say reach out to Phoebe.
39:36
SPEAKER_00: Let's, let's, let's put a target.
39:39
SPEAKER_00: Like, uh, you know, Phoebe, I believe in goal setting.
39:42
SPEAKER_00: We're gonna set goals.
39:43
SPEAKER_00: And if the goal is 24 months from now, that's okay.
39:47
SPEAKER_00: Like we we rather know you now and know that 24 months we're gonna be working with you because there's things that we need to correct with your credit, uh, with your debt, whatever that might be.
39:57
SPEAKER_00: I want to know now.
39:58
unknown: Yeah.
39:59
SPEAKER_00: Because there's things that we could do.
40:01
SPEAKER_00: If I know that 24 months from now, you're gonna be ready and I know that someone is gonna be selling a three-unit building that fits the criteria that you want to have, but they're not ready.
40:10
SPEAKER_00: That's where we as the real estate broker start connecting dots.
40:13
SPEAKER_00: That's what we do.
40:14
SPEAKER_00: We we connect buyer and seller opportunities.
40:17
SPEAKER_00: And so um, it's never too early to get started.
40:20
SPEAKER_00: Um, you do need to have a job or own a business, right?
40:24
SPEAKER_01: Because sometimes yes, you need to have income.
40:26
SPEAKER_00: You need to have income.
40:27
SPEAKER_01: I mean, there is other types of loans where you can use alternative sources of income and you can use income that the property generates to qualify for it.
40:40
SPEAKER_01: However, um, you know, those require very large down payments, and the terms of the loan are not the most favorable.
40:46
SPEAKER_00: Got it.
40:47
SPEAKER_01: You know, those are available.
40:48
SPEAKER_01: We do have alternative options to, you know, the regular conventional loans for limited certain buyer.
40:55
SPEAKER_00: Because I know people are gonna be messaging this.
40:57
SPEAKER_00: Uh, yes, we do DSCR loans.
40:59
SPEAKER_00: Okay, so we definitely do those.
41:01
SPEAKER_00: We do non-QM loans.
41:02
SPEAKER_01: Yes.
41:03
SPEAKER_00: We could do hard money loans.
41:04
SPEAKER_01: Yep.
41:05
SPEAKER_00: So uh we're not gonna dive into those three.
41:08
SPEAKER_00: We we have done videos before, so go to our YouTube channel and you'll see anytime that in the thumbnail you'll see Phoebe and I.
41:15
SPEAKER_00: That's a lending video.
41:16
SPEAKER_00: And we're gonna try to bring these more to you.
41:18
SPEAKER_00: The lending component is the, I believe, the second most important part of getting started.
41:26
SPEAKER_00: The first component is how to analyze a property, but that's where we're gonna help you do that.
41:31
SPEAKER_00: And obviously, our past videos have explained a lot of those things that are important to someone.
41:36
SPEAKER_00: And so there you have it.
41:37
SPEAKER_00: Phoebe, thank you so much.
41:38
SPEAKER_00: And that's all for now.
41:40
SPEAKER_01: Thank you.