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Creative Small Balance CRE Hard Money with Gelt Financial · Private Lending Insights

• [00:00:00] Welcome to Private Lending Insights. I'm your host, Rocky Butani, and this episode I interviewed Jack Miller from Gelt Financial. This is one of the most creative, hard money lending companies in our network. They lend mostly on commercial real estate, but smaller deals under $2 million. They could sometimes go up a little higher, but most of their deals are under $2 million. [00:00:22] They can do a lot of loans that other lenders don't, and it's also due to their capital structure, and they have that flexibility to, to get very creative. So in this interview, I asked Jack to, uh, share his thoughts on what's happening in the market right now. Uh, we talked a lot about their loan programs. [00:00:40] He shares a lot of different loan scenarios or, or examples of loans that he's funded, which I appreciate. And he's got a lot of different stories and a lot of different structures that they've done. We talked briefly about their company, their capital structure, their in-house loan servicing, and we finish off by talking about the different markets that they've been lending in in the last year or so. [00:01:02] They do lend in a lot of the eastern states, the Midwest, the South, so basically most of the country except the Western states. We've had a relationship with Gulp Financial for many years. I've visited their office in Boca Raton, Florida. Jack's a good guy. He runs a great shop and they do a lot of good work in our industry. [00:01:21] I hope you find this episode to be insightful. Let's get started. Here's my interview with Jack Miller of Gelt Financial. Alright, Jack, thanks for joining me to talk about Gelt Financial and, uh, how's everything going with Gelt right now in May, 2025. Uh, everything's going great. Uh, thank God, it's, it's always great to see you and to talk to you and to be with you and to talk shop. [00:01:45] I, I, I love what I do. It's one of the passions of my life is talk about the mortgage business and private lending. So, uh, uh, you know, I, I get turned on by this kind of stuff by exchanging ideas and learning, so it's fantastic. Me too. I love talking about it and I love what you guys do. So, um, glad to be talking about it a little bit more. [00:02:03] Uh, so first, let's start off with, with whatever you're hearing in the *industry as far as trends *or what are some of the different things that you're hearing from real estate investors or some of the things that are driving loan requests over to you? [00:02:16] You know, uh, the past, uh. Immediate period of time, we've been saying what I call have to do deals, not want to do deals. [00:02:26] You know, the deals we're seeing you know, foreclosure, bailouts, uh, we just closed, uh, actually today, a million dollar loan on a Walgreens in Staten Island. Uh, the guy needed money for income taxes. So it seems that most of the deals we're doing now are what I call have to do deals, partnership buyouts, divorce buyouts, just all kinds of things or a lot of balloons with other lenders and other banks that are pushing them off the books. [00:02:53] Uh, we're not doing and we're not seeing a lot of, you know, opportunistic deals. And I think to be candid with you, investors are missing the boat with that. Um. So we're seeing a lot of have to do deals. Conversely, what we're seeing is borrowers good quality borrowers are having a hard time getting deals done at banks. [00:03:11] You, you, you know, banks are taking longer, they're being more stringent. Uh, I hear all the time from borrowers, uh, oh, we're gonna pay you off in two weeks. Two weeks comes and they call up, oh, the, the bank, uh, or the lender, you know, forget it. They told us to forget it. So a lot, uh, uh, gyrations in the market. [00:03:31] A lot of nervousness in the market. Um, we've been, you know, doing well because we have the capital and, uh, we're not, we don't sell our loans. We're not dependent on a secondary market to, to fund them. So we've been doing well, but I see a lot of tension in the marketplace right now. And as far as the tension, is that, uh, are you seeing more a lot of maturity defaults or, or are there other types of defaults that you're seeing? [00:03:55] All kinds maturity, payment, technical defaults, just everything. You know, fairly recently, uh, a particular bank in a particular state didn't want any more gas stations, so they put literally, like, I don't know how many gas stations in default. We wound up doing like four or five or six of them, and the bank referred 'em to us. [00:04:17] They were all great, but the bank just made it an internal decision. Their, their allocation for gas stations was too much. They weren't renewing any of them. They terminated a bunch of them. So, you know, it, it, it's just a weird market, but thank God we're able to pick up the pieces when other things happen, when either bars get in trouble, uh, because of a foreclosure. [00:04:38] You know, we just closed the deal. I think yesterday or the day before. Uh, a major city in the south, uh, owned by a high net worth guy. There was a fire in it. He got into a disagreement with his mortgage company over the proceeds. He took a firm position, they put him in default. They started foreclosure and we provided them financing to pay them off. [00:04:58] So all kinds of weird situations. And as far as *banks* go, uh, are you seeing other trends with banks instead of, let's just say it's, it's an allocation to a certain asset class? Are there other things that you're seeing being pulled back with with banks? Yes. A a hundred percent good question. Uh, what we're finding is they're hard. [00:05:18] They're, it's taking them longer to get an approval and it's harder to get an approval in terms of the documentation, in terms of the debt service, in terms of values, in terms of everything across the board. Banks are being harder, and it comes from the federal regulators. It, it, they're being harder and it opens up more people. [00:05:35] They, they can't go to a bank. And your logo, or I'm sorry, your tagline is When banks say no, we say Yes, but Gelt's lending is, is even more flexible than a lot of private lending companies or hard money lenders, uh, that I've known over the years. So, so you're doing a lot of very creative structures and, and you're considering borrowers with unique situations and, and not so great financial situations as well. [00:06:05] Uh, so, so it's, it's, it's interesting how, how it's, you, you, you, you get fallout from the banks, but also from other private lending companies, I'm assuming as well. A hundred percent we do. Yeah. A, a big source of, uh, referrals is other, I don't wanna say competitors. I'm pretty friendly with most of our competitors, or a tremendous amount of them. [00:06:27] We have very, very good relationships with, and they're always referring us deals, um, that they can't do. The reality is most companies are selling their deals on the secondary market or to a warehouse line or something of that nature, that they don't determine the guidelines themselves. It's, it has to be within a box. [00:06:46] Uh, we're not that way. So we have more flexibility. [00:06:50] And I'm gonna come back to your capital structure later on, but, but why don't we start talking about, uh, the, just your *general lending guidelines.* Uh, from what I know, you're lending mainly on commercial real estate or small, smaller commercial real estate deals, even though you do residential deals. [00:07:07] Uh, could you tell us a little bit more about, let's say the, the loan amount ranges and, uh, you know, the loan to value and interest rates and things like that? [00:07:16] Yeah, a hundred percent. So, uh, generally we go from 50,000 to 2 million. Um, we're thinking about upping that and coming up doing what we call a core pl core plus product from 1 million to 5 million. [00:07:29] 'cause we have the capital sources for that. Different underwriting guys. But the Gelt, the average loan in the Gelt portfolio right now is, I think 411,000 that I looked at a couple weeks ago. So it's about that. So we're doing smaller loans, mixed-use properties, a, a good amount of residential investment properties. [00:07:46] Self understood, not owner occupied retail centers. We love retail. Uh, we have a bunch of credit tenant deals in the books. We just closed today on a Walgreens in ama, one of the biggest cities in the country. Very smooth borrower, but he just needed a million too quick. He couldn't wait to go to a bank. So he came to us. [00:08:05] We have a ton of credit tenant deals on the books and we do a lot of 10-31 exchanges, uh, that the people have. Most of the money, but they're a little bit short and because of the 10-31 time limit, they need to close very quickly and a bank's gonna take longer. Mixed-use all kinds of properties. We don't do new construction or land or heavy lifts. [00:08:28] Um, you, you know, in terms of terms, we're generally, you know, um, a year to three years. Sometimes we'll go out five years, but we're generally short term lenders. Uh, having said that, I think I, I don't know the exact number, but I think it's 40 something. Deals have been on, been on our books more than 20 years. [00:08:47] So even though we're doing a year, two and three year terms, we have over 40 loans that have been with us for more than 20 years because we keep extending and we'll put 'em on a five year extension or a three year extension. As long as they're paying us, we're fine with it. Um, you know, in terms of rates today, we're give or take, 12%. [00:09:06] I think probably 90% of the deals are 12%. If it's a real small deal, we'll go higher just because it's so much work. But, you know, a, a, a decent sized deals, that's where we're at today. And what about the, the fees? What's your typical points and, uh, any other typical fees that you charge? Yeah, th good point. [00:09:26] Three points. Uh, we're generally interest only. Uh, we're generally floating rate, but we can do fixed rate. Uh, we have the ability to be very creative with our terms, so we win some deals for our creativity, uh, in structuring deals. Um, and, and we can just do that because a, again, we're not selling the loans. [00:09:50] Most of them are, or all of your loans are first position. Over the years, we've done some MAs and some seconds, to be blunt, we're trying to stay away from that the past year or so. Um, once in a while we'll do it, but we're not doing. High leverage seconds in others. A a lot of people say, oh, you're doing seconds. [00:10:08] Uh, the bank's giving me 75. Will you lend me another 20? No. The seconds we're doing is like, we closed one, uh, a property was worth, let's say 10, 11 million. I forget. It was like a 3, 3 5 first. And at a very low rate, they needed like 500 grand, but they didn't wanna pay off the first 'cause it was a super low rate, but we were super low on the leverage on the capital stack. [00:10:32] So we did that. So YY you know, we're doing low leverage second and Mez, but not the typical high leverage to bridge the gap. [00:10:40] Okay. And speaking of leverage, uh, what's your typical loan to value for most of your deals? [00:10:45] You know, generally it's 65% in some of the high growth states. Uh, the Carolinas, Florida, uh, Texas, um, Atlanta, things of that nature we'll go 70, 75. [00:10:59] And we've actually done some deals up to 80 and 85 under slightly different structures, either JV structures or some sort of partnership structure. We've actually go up to a hundred percent on jv, but on a straight loan, we've, we've been able to get up to 70, 75, 80 on some deals in a high growth state if we get a little creative. [00:11:20] But on your typical deal, let's say it's a purchase bridge loan or a refinance bridge loan, are you 65. 65, okay. Yeah, as a general rule, 65. Okay. Alright, we're gonna, and then a a another thing I, I apologize for, for selfish plugs, but whatever. I, I have to, uh, we don't do appraisals, so it saves, uh, the borrowers a ton of money and a ton of time. [00:11:42] And how does the valuation work? Are you you just looking at, at the data on your end, or do you have to do a site visit or BPO? So what we do is we definitely do, we don't, we, we have an inspection company that I think charges $175 or something like that to do an inspection. Uh, we do what we call an internal evaluation. [00:12:02] I have an analyst here and, um, it, it sounds pompous when I say it, and I don't mean it to be, but I think we can take any property in the United States and come up with rental comps, the expenses, sale comps, all within a half hour an hour. As accurately, I would argue more accurately than most appraisers. [00:12:24] Um, from a lender side. So we do internal evaluations. Okay. And let's talk about geography. Uh, I'm assuming you're lending only in, uh, major metropolitan areas. Um, you mentioned, uh, some of the southern states. What other parts of the country do you lend in? So, uh, we lend in I think it's 36 or 37 states that you don't need a license in or a home state. [00:12:45] Unfortunately, we don't do California, Nevada, Arizona, Alaska, Hawaii, the Oregon, the Dakotas, all the same states as everyone else. Uh, but we're not rural lenders, so we're urban and suburban. And we generally like the cities to have 50,000 people. Once in a while we'll go to 25,000 once in a while, a little smaller if it's close to a big city. [00:13:07] But we, we like population. We like population. Alright, and let's talk about the *property types*. Uh, what, what percentage of the loans you're doing are secured by commercial real estate versus residential investment properties? Uh, last I checked, I, I think about 20, 25% of the deals were residential and the rest were commercial. [00:13:29] I'm taking out, uh, our niche of association loans 'cause they're not secured by any type of real estate, so I'm taking that out. But I would say it's about 75 coer percent commercial and 25% residential. And the commercial's really all, all types of commercial. Can you give us some examples of, of, let's say, the types of commercial properties that you won't consider? [00:13:51] Yep. So yeah, we don't do anything specialty. You know, an ice skating rink, a bowling alley. We're not doing, you know, huge warehouses of hundreds of thousands of square feet. Uh, we want it where if god forbid something happens to a borrower, we could call up a local realtor, rent it out easy, or sell it easy. [00:14:10] So, you know, uh, mixed use stuff, um, you know, flex space, things of that nature. Things that are easy to lease out and or sell. Okay. Well, how do you feel about hotels? We've done some, if it's the leverage is right, uh, for, for whatever reason, we did three in a row in Branson, Missouri like two years ago, sort of all these three got into trouble with COVID and we helped them effectively. [00:14:36] All of them were bailouts, we helped them, they all paid us off. So if it's the right deal, the right leverage, absolutely. And you mentioned gas stations earlier. Is that something that you like and you wanna do more of them? Absolutely. Love gas stations. Again, it's, it's LTV based. You, you know, we have to have a realistic. [00:14:56] Understanding of the value of the real estate, knowing that gas, um, isn't gonna be more po I, I, I don't wanna, I don't wanna get political, but electric cars are making an impact. So the, the going to a gas station is going to be less, I'm assuming it's going to be less in less in years. We like them 'cause they're generally in fantastic locations. [00:15:16] They're corners, you can repurpose them pretty easily. So if it's a good LTV, but like on a gas station, we're generally gonna be a 50 LTV. Okay. And, uh, what are the most common commercial property types that you're funding? Is that retail, industrial, uh, automotive. We, we do a lot of mixed use, you know, apartments upstairs, a pizza place downstairs, you know that we do a ton of those. [00:15:41] Uh, and we do a ton of retail, small strip centers, you know, three stores, 10 stores, 20 stores. Uh, we're very comfortable with a retail strip. I. And how about multifamily? Have you done a lot of multifamily property loans lately? Yeah, sure, sure. Multifamilies are very competitive, but absolutely, we love Multifamilies. [00:15:59] Okay, great. And are most of the loans that you're doing, are they a purchase or are they more refinances? Uh, we do more refinances. I, I, I think, uh, it's probably 70, 70%, 80% refi the past year or so, you know, a couple years ago. It was more of a 50 50, but the past couple years it's been more refinances. Okay. [00:16:21] Let's talk about some of the *unique loan structures* that you've done. Uh, let's start with something a bit more basic. Let's talk about a foreclosure bailout situation. That's obviously a refinance, but let's say there's a borrower that's, uh, received a notice to default, uh, and then they're getting close to, to going into foreclosure and, and auction. [00:16:43] Um, what's, what, what are some of the requirements that you'd have if you're going to do a refinance for one of these properties? Uh, aside from, uh, assuring that there's enough equity in, in the deal where, where the loan to value is no more than 65%, what else are you looking for in that situation? You know, we're, we're, we're hyperfocused on the collateral and not as focused on the borrower. [00:17:06] So most of the, the, the foreclosure bailouts we do, and we're doing a lot of foreclosure bailouts, you know, a a, a good amount of, as our business, the properties are strong, the borrowers, something happened for different reasons. Um, and, uh, we're dealing with the property again, we're not really looking at the borrower's credit, the borrower's income or things like that. [00:17:28] We want, we wanna be hyperfocused on the property. And if, if, let's say it's a payment default, uh, are you, are you doing further checks onto, onto the financial part of the, the equation as far as whether they're gonna be able to pay you if they're not paying the current lender? How do, how do you deal with that? [00:17:46] Yeah. You know, it, it, every case is different. Y you, you know, if it's a payment, we will ask them why. WW we have to get a story feeling comfortable, you know, uh, on rare occasions we've required them to enlist the services of property management. If we think they're bad land, no offense, bad landlords, they just can't deal with it. [00:18:09] We've said, go get a property manager, you know, have them pay us, have them collect the rents, and that's work. So each case is a little different. Put it aside, we tried to, uh, set them up for success. We don't wanna make a loan, setting them up for failure, saying, oh, in a month they're in the same position, or in two months they're in the same position. [00:18:28] So we, we wanna have a path at least we think is plausible. Okay. And let's talk about, uh, *foreign nationals*. Are you okay lending to a non-US citizen? Absolutely. We do it all the time. It's, it's a good percent of the business. Absolutely. Nice. And are there any other, uh, requirements that you have for, for a non-US citizen in order to lend to them? [00:18:50] Not really. Uh, you, you know, obviously they, they can't be on the OFAC list or any of the bad guys list. We don't wanna lend money to terrorists or anything like that. Um, once in a while we've had, uh, them engage an attorney to accept service if we were concerned that, hey, they're gonna disappear to China and we'll never be able to serve them to get it. [00:19:12] We've had them sort of pre-do that, uh, have an attorney represent them. Um, but that's really it. And that's been, we haven't had any resistance to that. And are you a little bit more conservative on the loan to value for, for national versus a US citizen? Not really. It, it really doesn't for us because we're, we're collateral based. [00:19:32] We're putting 95% of the decision in the collateral to begin with. Whether the guy lives next door to me or, you know, he lives in California or New York or anywhere. We're looking at the collateral. We're really not focusing on the borrower's credit or the borrower's income. We look at it, but it's sort of, you know, we don't put that much weight in it. [00:19:53] And speaking of that, uh, let's talk about some of those, uh, requirements or the *underwriting that you do on the borrower themselves*. So, so it sounds like you don't mind if they have a low credit score, if they've had, uh, let's say a bankruptcy. Um, tell us a little bit more about, about what you accept and not accept for as far as a borrower. [00:20:13] Finances. Yeah, all of that is fine. Y you know, we're the. We've done, believe it or not, I've seen credit scores, you know, in the low fives. I think we saw 1 4 85 at one point, something like that. But we're fine with that. We're not focusing on that. It's, it's just an interesting tidbit. You, you, you know, we're not really focusing on the borrower's employment. [00:20:38] Um, you know, we just have to take it into consideration. Like, we'll sometimes get bank statements. If there's, like, everything is an NSF check, we say, oh, you know, what's the problem here? And we'll say to the borrower, Hey, you gotta get a separate bank account just for us. So we're not making decisions based on that. [00:20:59] Again, it's based on the property. It really is. And that's, uh, that's why borrowers generally are coming to us because we're relaxed in that area. And with that, have you had to deal with, uh, a lot of foreclosures or, or defaults from your side? Not really. A lot. You, you know, we, uh, we're a fairly small company. [00:21:18] I think there's 13 or 14 of us in the office, so we're not serving, you know, it, it's not like some bureaucracy where you don't know your borrowers. So if a borrower gets into trouble or something bad happens, if they call us and communicate 99.9% of the time, we can work it out. In fact, I don't remember ever a time a borrower who's in communication, it got ugly. [00:21:40] Where it gets ugly is when they don't. Return your calls, they stop communicating or they, of course, you know, they blame somebody else. It's your fault that I'm behind, or you, you know. But most of the time, um, it, it's pretty smooth. Now, that's not to say borrowers have problems. Tenants leave, properties burn down, people die. [00:22:02] People get laid off. We've had it all happen. But if, if they're responsive, you can work with them. So if the payment's four grand, you know, maybe you have to give 'em a, a two month agreement, a modification ticket to two grand or a grand or whatever it is. And we did a lot of that in COVID. But if, if they're willing to work with us, we're gonna meet them. [00:22:23] We don't have to be 50 50. We'll meet them 90% of the way. We just want them to return the call. If they don't give us the middle finger, excuse my language, it'll be great. We'll work with them. Love it. Uh, let's go into this, uh, *association, loan*, uh, program that you touched on earlier. Um, so tell us about this. [00:22:43] This is for, for multi-family or condominium associations. Uh, can it be for commercial as well? I. A hundred percent So many years ago, probably 20 years ago, we started to do some loans to condo and HOA associations. And it's interesting because there's no real estate collateral and there's no personal guarantee, we're lending the association money usually for capital improvements. [00:23:08] Now, for a long time we didn't do many of them 'cause it wasn't a big market. But unfortunately a couple years ago there was a calamity, a, a terrible tragedy in Florida where I think a lot of people died. And it was terrible. A building just collapsed in the middle of the night and that caused certain states to change their laws where the boards can't kick the can down the road for capital improvements. [00:23:32] The, so the past two or three years we've been doing a ton of association loans all over the country. Uh, you, you, you know, literally Washington State. We just closed one when I say just I think two, three months ago in Arizona. It was a co-op. It was our first co-op. We let 'em, I think $450,000 or a 90 unit co-op. [00:23:51] So we're doing association loans all throughout the country, and I believe were one of the few lenders, non-bank lenders who are doing them. I haven't heard about this myself in our space. Uh, so tell us how, how it's possible. What, what do you, what's your collateral? If, if you're saying that the, the, the property is not the collateral. [00:24:10] Yeah. There's no, yeah, there's no mortgage. There's no mortgage. It's, it's, a promissory note and a UCC from the condo association. So picture a condo association, let's say it has a hundred units. Each unit's worth 300 grand. Maybe they want to borrow, um, you, you, you, you know. Let's say a million dollars just for a round number, $10,000 a unit. [00:24:30] So again, no personal guarantees 'cause the board comes and goes and no real estate. So if, God forbid they went delinquent, what we would do is we would put in a new board, put in a new management company, pass a special assessment, raise the dues, and pay ourselves back. So it's a UCC filing, uh, which is sort of, for people who don't know about that, is, is, is more kind of a lean on, on the business. [00:24:57] Right. That's correct. The company not, that's correct. It's not the real estate, it's a public notice that we're in first position on the association. Got it. And, and for these types of loans, do you have, um, any sort of restrictions as far as the size of the property or the, the types of capital improvements that are being done? [00:25:16] Um, so again, we focus on deals under 3 million bucks. So we're not doing the real stuff on this. We do focus on the financial statements of the associations. We're looking very closely at it opposite of the real estate loans. Um, and there are, you, you, you know the big reasons that most associations aren't being done by banks is banks want a managed association. [00:25:41] Some of them are, are self-managed. Uh, banks want typically 25 units or more. We'll do smaller, uh, banks want a certain percent owner occupancy. Compared to investor, uh, banks want, uh, what would they call payment shock. The payment doesn't go up more than a certain percent. Banks want reserves as well. A lot of condos are on, are not on the, uh, Fannie and Freddie, um, list today. [00:26:07] So they're blackballed from getting, uh, loans. So the, the, the individual as so as condos are, as well as the association. So there's probably eight or nine reasons that a, a bank won't do it, and most of them, uh, we'll do. But there are some that we don't do. Once in a while we'll see some that we don't do, but very rarely. [00:26:27] And let's talk about co-ops versus condos. Are there, is there any issue on your end as far as lending to a co-op versus a condominium? No. We, we, we just, we just don't get that many requests for it. We just closed our first one and it went super smooth. And co-ops are more popular in New York City. [00:26:48] There's a few in, I know of in San Francisco. Are, are they popular in Florida? Not that I know of. I, I, I don't know that we've received the, the one that we just did was in Phoenix. Um, and I, I don't know that I, I don't remember ever seeing a co-op deal come in the door here, so, um, I, I don't, I don't think they're popular in Florida, but I'm not sure. [00:27:09] Whenever I hear a co-op, I always think about New York City. It's just Manhattan. That's what I think of too. That's what I think of too. Yeah. Nice. Okay. Let's talk about *non-recourse*. Uh, are, are all of your loans non-recourse, or in what cases are you non-recourse? No, most of the loans are recourse. We start off from a recourse position. [00:27:27] If a borrower requests non-recourse and, uh, we like the property and the leverage is good, we'll do it. Um, I'm guessing 10% of the loans 20 per, probably less than 20% are non-recourse, but certainly we'll look at it and we have no problem doing it. No problem. Again, we're looking for a better property. [00:27:48] We're looking for better collateral. We're looking for, you know, just a cleaner deal. Um, if it's a foreclosure bailout and the guy says, Hey, I, I didn't pay this guy. I want a non-recourse loan on this. You know, we may find a way to do it, but we'll just look at it a little differently. And with non recourse, typically whenever I see a non-recourse loan request, it's, it's because of the entity structure. [00:28:14] Um, do, do you have any, any thoughts about, let's say like, do you lend to a nonprofit, for example, where it's not really possible to do recourse? Well, we, we really don't lend to nonprofits because, to be honest with you, we don't want to take the reputational risk. But, uh, there are some, uh, where, um, you're right, there's different partners and it's hard to get recourse. [00:28:39] Um, you know, we closed, uh, give an example, a a, a comp, a simple deal, but a complex deal. It was a cannabis retail in New Jersey. It was like literally like a hundred partners. They raised money from all these people and it was no recourse. But we were at such a good leverage position. We didn't care. You know, and there was another guy we did, uh, fairly recently. [00:29:05] When I say recently, six months ago, beautiful office condo, A 30 LTV deal. The guy was a, uh, a doctor, but not a, the guy that see patient, he was like a, a medical researcher who worked for pharmaceutical companies, good guy and beautiful property. He just said, I don't want recourse. I don't want you to ask for anything. [00:29:27] No bank statements, no nothing. We did it because we were like a 30 40 LTV. It was such a nice property, you know, we figured we have nothing to lose. And what LTV would, would you say is kind of the threshold where, hey, if it's, if it's under X percentage, LTV, then we'll, we'll definitely do non-recourse y You know, I, I, I, I, I don't know that you can do that because it's a type of property we've done them. [00:29:52] Believe it or not, it's 70% on credit tenant deals. On 10 30 ones, you, you know, and things of that nature. So it, it's not just the LTV 'cause that's even higher than our 65, but I, I think this was a Burger King. We did it in Kansas City for, there were like five partners doing a deal. It was a gorgeous property and we just, we felt we couldn't lose on it. [00:30:17] We'd be, if they all, I don't wish anyone any harm, but if they would've walked away and said, here are the keys, we would've been thrilled at 70% YY you know, um, so I I, I don't think it's just the LTV 'cause certain properties, we wouldn't do it a, any LTV, you know, more of the, the more challenging properties. [00:30:36] And speaking of entities and, uh, with multiple investors, a few years ago, I remember you told me about some loans that you were doing where you're lending to the borrowers. Interest in, in a particular property. So if they owned, let's say, 25% of, of a property along with a few other investors, you were lending up to, let's say 50% of their interest in that property. [00:31:01] Is that a loan that you're still doing today? Uh, you know, cautiously, but yeah, absolutely. Uh, if a guy or a gal or anyone owns a, a minority in a minority non-con controlling interest, I always say, let's say they invest in a Walgreens or a shopping center, they own 20% or 10% of it. You know, they have no control over what's happening and they need liquidity. [00:31:23] Will either buy it, will, will make them an offer to buy it from them or lend them money on it if it's the right deal, absolutely. We'll do that. Nice. Uh, and let's talk about *JV deals *since you mentioned that earlier. Uh, what types of joint venture deals are you doing? Uh, tell us a little bit more about some of those that you've done. [00:31:41] I love, first of all, I have to tell you I love them. If it was up to me, I would do only JV deals. Uh, so look, we're, do I, I'll give you some examples, but, uh, we see anytime there's a good property and we could add value to it and help out someone, we'll do it. You know, I'll give you an example of a deal we quoted out yesterday. [00:32:00] Guy was buying a small strip center. It was heavy value add. He had very little money, literally not even enough money for closing costs. He called up, I think he wondered, like, and, and, and by the way, the, the, the amount needed for the rehab was probably, uh. 70% of the purchase price. So we, he, but he didn't have any money, but it was a good property. [00:32:23] So we said, I'll tell you what, we'll, we'll put up the money, we'll do it as a jv. We'll lend the entity money, you control it, give us a piece of the ownership and when it's stabilized, take it to a bank and pay us off. So we'll definitely do that. We'll do that where we put up the first money, all the money, or we've done them, where they'll go to a bank, get the first from a bank, and we'll put up the equity money and get a piece of the deal, get a pref and a piece of the deal. [00:32:52] Okay. So that's, that's a really interesting, uh, structure and, and, uh, and obviously that's, that's what a JV is. Uh, but is this something that you're actively seeking out or is it very selective where if someone comes to, to you with a loan request, then you might say, Hey, what, what if we partner on this deal instead? [00:33:12] Yeah, no, we're definitely seeking out the, the pro the challenge is borrowers bring us just everything on LoopNet. You know, they, they see, oh, we want to do JVs and we do want to do JVs. So they literally copy and paste the LoopNet link and say, would you do it in this one? Would you do it in this one? [00:33:28] Would you do it in this one? So if I could buy it on the open market, no offense, I don't need that guy. He, he or she has to add real value to us. Uh, but we're absolutely seeking them out. And if you want, I'll just tell you about three. Very different ones that we've closed all fairly recently. You, you, you know, we, we have a relationship with a few guys in Philadelphia. [00:33:49] They buy row homes fairly cheap. They fix them up. We provide a hundred percent of the money. A hundred percent. They don't put up a penny. We get 50 per, we get 50%. They get 50%. I think we get like a 10% perf on it. And what happens is then when we buy it, we fix it up. They rent it out, wait six months to season it, they'll refinance it. [00:34:12] We're usually getting most of our money back. And they manage it, and we stay in, and obviously when they borrow money from a banker, A-D-S-C-R loan, you know, we're in, so we, we love that we're, we're fine with accumulating these. Uh, a another group, uh, coincidentally a suburb of Philadelphia, again, they found a small, uh, shopping center, kind of a mixed use property, had a bunch of different things, but it was on a corner location coming out of a major mall. [00:34:38] Um, and, uh, they, they put it under agreement of sale. We provided a hundred percent of the down payment. They went to a bank, they got 70% financing. We provided the 30%. We provided the closing costs plus another a hundred, 150 grand for CapEx and reserves. Again, we got a pref and we split the deal. Another deal. [00:35:01] Uh, a guy, uh, long story, he had a tenant. He found the property, he put it together on that one. There was no, first we put up the first and again, pref 50 50. Then ultimately we bought him out. He wanted the cash to buying out. So we're a hundred percent love at JV deals. Call us with them. I want to hear them, but they have to be something more than, oh, I could just look on LoopNet and buy them. [00:35:26] There has to be something there. So it's gotta be an off market deal or they have to have some relationship with the seller? Yeah, or, or something. Y you know, when people call and say, will you do JV on this? Did you make an offer? Did you see the due diligence? And they say, no, you approve it first. You know, the problem is, I, I don't mean to say beru, but if I spent forever, if I have my staff just underwriting deals, although long without the local partner looking at it. [00:35:52] We wouldn't get anything done. Sure. Makes sense. And that's, it sounds like with these JV deals, I mean that this is a big risk that you're taking. How is it possible that you're able to take on that amount of risk? Let's say something goes wrong, the, you know, the, the sponsor or the partner that you have just walks away. [00:36:12] Do you have the ability to easily take over these projects and complete them? Uh, you, you bring up a very good point. So our rule is we assume every borrower, and this is terrible to say, and I don't know how else to say it, but we say, but this is what we say. We say, if the borrower gets hit by a bus, two seconds after closing, what are we gonna do? [00:36:31] And if we're depending on that borrower not getting hit or, or JV partner not getting hit by a bus, we won't do the deal. We need to feel comfortable stepping in their shoes to hire a local realtor or local property manager to fix up the property or sell it or whatever. Um, so yeah, the, the, if, if we're not comfortable with it, we won't do the deal. [00:36:53] All right. Okay. That sounds great. I wanna jump into talking about the company and your capital, uh, but let's take a quick break and we'll be right back. Support for this show comes from Ross Diversified Insurance Services. All real estate investors and all private mortgage lenders need insurance. More specifically, they need the right insurance partner. [00:37:14] For over 35 years, ROS Diversified has been the trusted partner for over 3000 property investors and 500 lenders throughout the United States. If you are a real estate investor, ROS Diversified can help you, whether you're managing a single rental property or a large portfolio of rentals. If you're a lender, RO Diversified can protect you with force place insurance for when a borrowers policy lapses or with REO insurance. [00:37:38] In the case of a foreclosure, they offer competitive rates and hassle-free claims assistance licensed in all 50 states. ROS Diversified understands the unique challenges of real estate investing and provides customized solutions to safeguard your assets, visit their website, ross diviv.com to learn more and request a quote. [00:37:57] That's R-O-S-S-D-I v.com. Please mention that you heard about them from Lender Link and the Private Lending Insights podcast. All right, and we're back with Jack Miller and Gout Financial. So Jack, tell us a little bit *about the company.* I know you guys have been around since 1989, so you've been at this business a long time. [00:38:18] But tell us about the operation, you know, where you're located, how many staff you have, and as, and more, whatever you can tell us about that. Yeah, sure, sure. I started the company February 1st, 1989. Uh, we're in Boca Raton, Florida. Uh, we've been in Florida. I moved to Florida in 06 and we started to move the company down. [00:38:37] So we've really been effectively here since probably about, uh, 2011 12, 13, something like that. I think we have 13, 14 people in the office. Um, we have some remote people and you know, uh, we're an interesting company because we don't have commission loan officers. No one in the company gets commission or bonuses for doing deals. [00:38:58] So we don't really have any sales organization. You know, everyone's sort of, or the frontline people are sort of a combination of loan officers, underwriters, they do a little bit of everything. So it's, the culture's a little different than most companies where you have underwriters, loan officers, processors, wholesale reps. [00:39:14] So we have a little bit of a different culture. Than most companies, but it allows us, why we do it this way is it allows us to close loans quick. Uh, most of the deals we're doing, or a lot of the deals we're doing, they're coming to us for speed. You know, someone else dropped the ball lately, it seems it's all the time. [00:39:31] Someone else dropped the ball. They'll call us on a Friday and say, oh, we were supposed to close Monday and whatever. They're not returning our calls or it was a bait and switch or whatever. And we close the deal and usually, you know, we can get it done. We've done 'em as three or four working days, but it, the average is six, seven days and most of the time we can close quicker. [00:39:52] Um, it's the title that's the hold up or if it's something else that's a hold up. But our structure allows us to move very quick to a closing. Yep. So long as the property has enough equity is, is really the key. Oh, a hundred percent. [00:40:04] Look, one of the, the, the, the things that I have here. We have a, an analyst, uh, who is full-time and all he does all day long is analyze real estate all over the country. [00:40:16] And that's critical. That's one of the first things we do. [00:40:19] And one thing I forgot to mention earlier is, um, is with *cross collateralization*, it sounds like you do a lot of deals where you're crossing multiple properties, uh, to, to make the LTV work or the deal makes sense. A a hundred percent. And a great example of this, and it happened a couple years ago, but it happens all the time. [00:40:35] If someone calls up and they wanted to borrow, I, I forget the exact amount, let's say 400,000. And they, they were buying a property for 400 grand and I think they, I think they were buying a property for 400 grand. They wanted to put like 10% down. So I'm speaking to the mortgage broker and the guy goes, oh, the guy owns like three or four properties unencumbered. [00:40:55] I said, well, he let us pledge it. He goes, yeah, no problem. So the bottom line is we lent this guy like 425 grand or 440 grand for the closing cost. We took the property he was buying and we took an existing property, which was worth about that in our eyes. It was a 50% LTV deal all day long. It was a 50 LTV in the broker and the borrower's eyes, he got a hundred percent LT, v, you know, so we do blankets a lot. [00:41:22] It, it's not, we're not scared of it. It it, you know, if borrowers have equity in a property, they could use it as additional collateral. Is there any case where you're able to take a second position as additional collateral? A hundred percent sure, sure. Again, you have to look at what the first mortgage is. [00:41:40] Is there an inner creditor agreement or not? But absolutely we do that. And does that vary depending on the state as well with according to state laws, if, if you would take a junior lien? Well, you have to be careful because in certain states, like Texas, they don't have to give the first, the second mortgage notice of a foreclosure in a judicial state, New York, New Jersey, Pennsylvania, Ohio, it takes a long time. [00:42:05] So you just have to be a little careful. Absolutely. Un The reality is, and I think unfortunately the state laws and how the state treats lenders from a legal perspective has a lot to do with underwriting today. People may not want to talk about it and maybe ta taboo to talk about it, but it does. And I can tell you when, uh, I speak to peers and in the mortgage business, they're, they're talking about it. [00:42:30] Okay. And, uh, as far as, uh, your company goes, um, you know, you're, you're doing these really creative loans. How is this even possible? *What's your capital structure*? What's the, what's the capital behind Gout Financial? Yeah, so, uh, why we can do it, because we have no debt. We have no bank debt, no debt, period, period on the books, zero. [00:42:53] Um, we are funded either our own, it's a combination of our own capital as well as high net worth, uh, investors and individuals or family offices or, or groups. So, uh, our partners who fund us. You know, they don't, they don't have a a, a manual. Oh, it has to check off this box. It's a common sense thing, you know, so when we look at deals, we try to use a common sense approach, and our capital's very common sense approach. [00:43:23] And that's why we have not a lot of foreclosures. That's why everything, because we're not under pressure from capital. Oh, the loan matures. You, you know, put a gun to the guy's head and if he doesn't pay you, you, you know, put him in foreclosure. We don't operate that way. So it gives us the flexibility. [00:43:42] Now, internally, between me and you, my capital's a lot more expensive than a bank line. So, um, my margins are less than most of my peers. I've made that decision. I'd rather have that flexibility than the additional profit just because of my personal dec personal, uh, situation. And I've lived through bank lines before and I got beaten up by them. [00:44:05] I saw what they could do to you. So I'm happy with paying a little more to private investors and family offices, self understood, accredited investors. But that 'cause that gives me so much flexibility. So do you typically have one loan that's divided up, uh, by a few different investors, uh, or fractionalized with a few different investors? [00:44:24] Uh, it's all different. It, it, it's all different. So, you know, we, we closed the loan today. One investor took it. We closed this, a, a, a much smaller loan yesterday, I think four or five investors, you know, fractionalize, it took little pieces. One guy put up a hundred grand, one guy put up 50 grand. It really all depends on the deal. [00:44:45] At this time, do you tend to have more capital than deals or more deals than capital Y? You asked the $64,000 question, and it's always a hard balance for me. I, I, I probably shouldn't say this, but it's the truth. You know, I'm driving on the street, you're driving on the, the turnpike or whatever expressway it is, and some days my foot's on the gas. [00:45:08] Some days it's on the pedal because I can, if, if I have a thousand great deals that walk in my door tomorrow and I don't have the capital for it, I'm in trouble. So it's always a balance. I'm always juggling that that's the weak, that's the, the problem of the company. To be blunt with you, that it's not an even mesh, but it's always a juggle and a balance. [00:45:31] And what you mentioned about the cost of capital being higher is, is typically when you have these individual high net worth investors, they have a certain re return requirement where it, it's higher than what, what, let's say a bank line would, would charge. That's correct. That's correct. I'm paying up for the, there's a lot of benefits to them, but I, it's costing me a lot of money, no question about it. [00:45:55] And as far as the loan term, typically from, at least what I've seen with, with high net worth investors is they don't. Want the, they don't want the money to stop coming in. They don't, you know, like the, a loan payoff is a bit disruptive because then they stop getting their, uh, their return and then they have to wait for another deal to come along that they could invest in. [00:46:14] So it, it sounds like that's one of the reasons you're able to, to do longer terms and, and let the borrower extend, uh, way beyond the maturity date if, if needed. Right. Yeah. I, I, I, uh, so I, I believe the numbers around 80% of our deals, ex take extensions. And we are, again, as long as they're paying us, we're fine extending 'em. [00:46:35] Three months, a year, three years. I'm looking to keep it going. You know, when we get a payoff, I'm glad for the borrower, but, you know, it's, it, I'm not jumping around of joy 'cause now I gotta put it out again. Sure. And so for, from the borrower's perspective, if, let's say Gelt financial funds their loan, it's uh, the, the capital behind it is a, a combination of Gelt's, fi Gelt's, capital plus some high net worth in investors. [00:47:04] Uh, it, it doesn't really matter to the borrower, right? Because Gelt is fi is servicing the loans and, and dealing with the bar throughout the term, right? That's correct. If, if it, look, I'm telling you, because I know you we're friends, we've known each other a long, long time. Um, you, you're still have your, your hair. [00:47:21] I lost mine and I got gray. But you know, you, you have the good genes. No, because I te it's the truth. But if, if I wouldn't volunteer the information, and by the way, our borrowers and brokers have no idea. It's not their concern. It's all behind the scenes. All behind the scenes. Uh, our, all of our investors are a hundred percent passive. [00:47:42] They're not involved in anything. So yeah, the borrowers doesn't matter to borrowers. It. I guess the reason I ask is typically, you know, people wanna wanna know, Hey, are you a direct lender? And then not that everyone understands what makes a direct lender, but, but that's the only reason I, I bring it up, is just to explain to, to the people who do know about how private Lending Capital works. [00:48:03] Um, you know, they, they wanna know, Hey, where's the capital coming from? Uh, are you, you know, are, are you gonna have enough or, or what's the, what, what's the situation after the loan funds as, as far as dealing with the lender? Yeah. So the way we work is we just, for timing, we generally fund the deals ourselves, and then after it's closed, we'll go to investors and say, Hey, I have this loan. [00:48:27] Do you want a piece of it? So we're not dependent on investor money to close a deal. Got it. That's, uh, that's amazing. So that, that makes it more efficient. You could just make the decision close a loan. You're not trying to raise the capital. Yeah. And, and we don't need to raise the capital. You know, we're very lucky. [00:48:46] Our investors have been with us, not years, but a lot of them decades, literally. And a few of them we're on the second generation. We started out with their fathers, and unfortunately they passed away. So now we're dealing with the kid, this kid, the siblings, the kids. And we have, uh, you know, I, I, I don't remember the number. [00:49:04] I think about 115, 118 active investors. So we're not trying to raise money. Let me back up. We're always looking for new investors, but we're not doing a deal for 400 grand dependent on finding an investor. We're funding it and then we will lay it off, you know, later on. And as far as the servicing goes, for people who don't know much about the servicing, it's, it's essentially where. [00:49:30] You control the, all the dealings of the loan from the funding, uh, until the payoff, right, where you're collecting the payments. If any borrower has any issues, they're contacting you and you deal with workouts, um, as, have you always done the servicing in-house from the beginning? Yes. We fairly recently outsourced some of the mechanics, depositing the checks, paying the taxes, paying the, uh, insurance to a servicing company. [00:50:00] But we still deal with delinquency workouts. We modifications, we deal with everything except, you know, literally the deposit and the payment of the taxes and insurance. Um, just to be candid with, it was cheaper to outsource it than to find people to do it internally. But yeah, we've always done it ourselves. [00:50:21] In fact, we actually service some loans for some other people. Interesting. And I remember a long time ago you were looking at acquiring loans from other lenders. Is that something that you still do? Yeah, uh, absolutely. We're, we're always, uh, looking and we're buying, um, mostly it's non-performing, but fairly recently we bought a performing loan from a company in Connecticut. [00:50:43] It was a nice deal. It was in New York, whatever. They had problems with one of their, their investors, they needed to sell it. We were thrilled to buy it. So absolutely, we're looking to, you know, our situation is we don't have a sales organization, so I need to find alternative ways to deploy capital. We have more capital than we can have the deals for, so buying either performing debt or sub or non-performing debt is a great way to do it. [00:51:08] And as far as non-performing debt, so let's say a, a lender has an issue with one of their loans. They sell to Gelt, uh, because you have the capital and then you have the servicing, you are willing to deal with the, with the workout or go through the foreclosure if needed. Right? A hundred percent. We have a staff that all they do is this, not only this, we have a property management staff. [00:51:30] We, uh, we also own the properties all throughout the country. So we can manage properties very efficiently, all over the place. So we have a, we have a complete staff to do all of this. Um, and it's, it's nothing for us to take a prop, take over a loan. If they're paying, great, but if they're not paying, try to re reperform it. [00:51:50] You know, we do everything we can to reperform it, and once in a while you can't, and you have to deal with it. Interesting. And, and for some of the loans that you've had where they. Uh, like you said, they've, they've extended by five years, times four, so they've, they've been in the loan for 20 years. In, in what situation is someone willing to continue paying, uh, let's say around 12% interest for, for that long? [00:52:16] Or are they just never able to, to qualify for a more conventional loan? You know, it, it's, it's an interesting question. Uh, I, I don't have a scientific answer, but I have an an anecdotal answer. Some people, uh, are scared of banks. You know, I, I can think of one customer, it's been on the books 20 years long, long time, pays us perfectly. [00:52:39] And I've said to the guy, and by the way, we give him like two year extensions at a time, and I say to the guy, why don't I feel bad? Why don't you go to a bank? Hi. His culture. He doesn't want to go to a bank. I'd rather pay you than go to a Mr. Jack. I'd rather pay you than go to a bank. You know, they're scared, they're intimidated, they think all these bad things. [00:53:01] We we're not looking at. His tax returns we're not the IRS, you, you know, if you pay me and don't burn the property down, we're happy. And a lot of people are that way, and then there's some people just can't get their act together. I could think of other people that should be going to a bank or another company, you know, A-D-S-C-R, someone else in between Gelt in the bank, and for whatever reason, they just cannot get their act together. [00:53:26] There's always a different story why they can't do it. I, I don't know. It's, it's, it's psychology. I, I don't know the answer, but, you know, I feel, we feel bad for some of these people or all of them, and tell them, pay us off cheaper. You know, pay us off, but. Well, it's, uh, it, it, it's a rare offering. So, so maybe they're, they're lucky to have you, you know, Rocky, I can tell you this, that, uh, the amount of gratitude we get from our borrowers is overwhelming. [00:53:55] They're so thankful to us and they're so grateful to us. Now, look, they're paying, I don't know what a bank is today. Probably seven, seven and a half percent. They're paying me 12. They're paying 500 basis points higher, but they're so grateful and they're, they're constantly thanking us, reaching out to us. [00:54:12] They feel that they've been dumped on in the world. The banks aren't doing, the banks are breaking their chops. Everyone's giving a hard time. And if they have good real estate, all of a sudden Gelt's closing the loan, even though we're charging 'em. You know, but they're so gracious and they make me feel so good. [00:54:29] Almost every, I don't wanna say every day of the week, but almost every day of the week I'm hearing from a bar, whether it be a review or an email, thank you for what you did. You don't realize how you saved us. You don't realize what you did for us. And it's unbelievable. 'cause people think, oh, you're an expensive lender. [00:54:46] You're like, Tony, surprise. You know, everyone makes all the comments, but they don't get it. They, they shouldn't be in my shoes. Be in this office for just one or two days and you'll feel the love from the borrowers. It's unbelievable. It really is. Love it. Alright, let's switch gears and talk about some of *the different markets that you lend in.* [00:55:05] So, uh, we have access to, for casa, which is a really cool data platform where we could see all the different loans that lenders are closing. And it, and from the data we have, it looks like in the past year, most of your loans have been in Florida, Pennsylvania, New Jersey. New York, and obviously there's a few other states, maybe Texas. [00:55:26] Um, but if we could just do a quick run through of, of each of these different states, um, and tell us about your thoughts on lending in that state. If you're excited to do more lending or, or where, where you'd prefer to do loans or what, what markets you're more excited about, I should say. You, you know, I'm excited about the growth markets, the southern markets, and some of the growth markets. [00:55:48] Uh, and that's where we want to do deals. The reality is there's still a lot of deals in, you know, some of the, the, the, the big city, the Pennsylvanias, the New Jerseys, Penn New, new York's, Illinois. We do a lot in Brooklyn. Just closed one there today. But it, it's a challenge in these big cities. You know, we closed the deal. [00:56:09] Uh, a, a guy owned, I think two or three daycare centers in a suburb of Chicago, and he bought an Aldi's, uh, to convert it to a daycare center. Guy's. Bankable, a guy. Was actually referred to as just dawn by his SBA lender who had pr super strong guy. Uh, this was four years ago. He's still not open. He's on the verge of opening up because he can't get the approvals and they, it, it's unbelievable what these big cities do to people. [00:56:36] So you have to be a little cautious when dealing with some of these cities and states. Their legal system is a mess. The lender's always the bad guy. The real estate taxes are a fortune. And your 65 LTV could turn into 80 or 90 real quick with four or five years of real estate taxes. Um, so you have to be careful in some of these locations, but we still do them. [00:56:57] You just have to structure the deal differently. Have a different LTV. New York especially is, is a state that most lenders won't touch because of the foreclosure process being so long. Or obviously you've been in business so long and done a, a ton of loans there. Um, have you found that it's, it's been, you've been able to navigate it and, and deal with the, you know, the drama of, of New York's foreclosures? [00:57:23] It's a challenge. You, you know, we were involved with a deal in New Jersey. It took us five years to foreclose. Five years. The taxes were, were like 20, 25 grand a year. We were, so what we started out was a great LTV by the end of the day was a total disaster. You know, you have to put on your big boy PO pants. [00:57:46] We underwrite deals tougher and closer in those cities in New York, you know, if you bring a, a situation in New York as opposed to Texas, for example, we're gonna look at it differently. Every lender's doing that, you don't have a choice. Sure. And um, so in, in New Jersey, it sounds like the taxes are, are one of the, the biggest pain points there. [00:58:08] Brutal jersey is brutal. I'm, I have two bro. I have two brother-in-laws and, and a brother lives in Jersey. My mother-in-law lives in Jersey. I spent a lot of time in Jersey, absolutely brutal. From a lender's point of view, court systems are brutal, just brutal. So a lender unfortunately needs to take that into consideration. [00:58:32] How about Pennsylvania? Um, you are from Philadelphia, right? From Philadelphia, yep. Yep. We're a Pennsylvania company. We started an office in the suburbs. It's tough. I, I, I wish I could tell you it was easy. It, it's tough. You, you know, it's, it's brutal. You have to, you have to be very careful in those locations. [00:58:52] Same thing with Illinois. You know, I have friends in the business. They won't lend in Cook County no matter what. It, it, it's totally black folk because the court system and the government made it that way. But in Illinois, outside of Cook County is the rest of Illinois. Okay. To deal with it, it could be a challenge. [00:59:10] It could be a challenge. It's, it's, no, it's no walk in the park. It's, it's no picnic. Alright. And, uh, and let's come back down south to Florida and Florida's had its own challenges, insurance and, uh, you know, uh, hurricanes, uh, what's your take on Florida at this time? Look, it, it, it, it, it's undeniable the growth that's going on throughout Florida. [00:59:32] So we love Florida. Um, even though the court systems can be a challenge sometimes it, high growth states are fantastic because it pushes up values. Y you know, and Florida's had an ex incredible, uh, population explosion really. Um, and I, I don't see any and end in sight to it. Within Florida, uh, are there any parts of the state that you have preferences lending in? [00:59:59] You know, we love in, you know, Orlando and Tampa and South. We have a couple loans, loans in Daytona Beach and the Panhandle, Gainesville, Jacksonville. We just don't know those areas well, and we don't see a lot there. We also have both, uh, east Coast and west coast of Florida. We, you know, we're fine with, so really anywhere. [01:00:20] Again, Florida can have some rural areas, so we once in a while see a deal. You know, you look on the map, there's, there's nothing there. So you have to just watch where you're dealing with. Which states or markets are you excited about doing more loans in in the next year or so? You know, Texas. Texas. We love Texas. [01:00:39] We love the Carolinas, believe it or not. Uh, Idaho, New Mexico, Washington State. Um, you know, we've done very well in Tennessee, Kentucky, Virginia, y you know, Maryland, you know, really, uh, we, we've done well in Kansas City, you know, so it, it, it's a mixture. It's a mixture. And I don't wanna leave out Brooklyn is, is pain in the neck as New York is. [01:01:07] We do very well in Brooklyn. There's so many people, it's so dense. So, you know, you just have to bake it in the deal lower LTV, you have to bake all this nonsense that you'll deal with if the deal goes bad in the deal. And some of these states like New York, New Jersey, Pennsylvania, Illinois, where it's, uh, it's a lot more challenging and riskier as a lender. [01:01:29] Do you, do you typically have a, a maximum 50% LTV, uh, versus a 65 or, um, any, anything in particular that you target? You know, we, we don't have anything official that way, but we, we have, it's absolutely a lower LTV, uh, we have a, a, it's a spreadsheet. You, you, you know, uh, and it's a projection. If the deal goes bad, we plug in how, what, you know, the taxes, how long it'll take, and we come up with what we're comfortable with y you know, um, and, and we use that number. [01:02:04] But yeah, it's definitely lower. You know, again, I, I, I, I, I think we talked about before in some of these states, we'll go up to 70, 75 LTV, but in the other states we want a lower LTV. Alright. Excellent. Well, Jack, that's all I had on my list for today. Uh, unless there's anything you wanted to add or anything I might've missed. [01:02:26] No. Look, I, I, I just want to thank you. You know, uh, you and the, uh, the website, uh, private lender link are an incredible resource for the lending industry. Um, you really are. And, uh, you know, I'm grateful for, uh, the work you do on behalf of the industry and, uh, looking for a lot more years together. YY you know, I, I, um, I'll continue to go gray and lose my hair and you'll stay the same good looking guy. [01:02:53] So appreciate that. And no, I appreciate your time. You know, the only other thing I, I want to add is, you know, it seems to me there's always a lot of mortgage brokers coming in the business for whatever reason we've built. Our platform to educate mortgage brokers and we do a lot of education through our YouTube channel and other ways to mortgage brokers, and that's how we get good graces to mortgage brokers. [01:03:19] You know, they don't know what A-D-S-C-R is. They don't know how to do an LTV, they don't know what a cap rate is. Some do, some don't. So we, we, we educate them. And that helps out a lot. That really does. I also wanna add that I think it, it's a tough time now and a, a lot of people aren't doing deals and I think real estate investors are making a mistake, being scared, staying on the sidelines. [01:03:42] It's sort of like now the stock market came back from two, three weeks ago, or as of guess I don't know what it did today. And people are saying, oh, I wish I would've bought that stock at the price two, three weeks ago. Why didn't you buy it two, three weeks ago? 'cause I was scared, you know? And I think that's happening a lot now. [01:03:58] I think there's a lot of tremendous amount of opportunities now in the marketplace. And I think the smart money's finding those opportunities and the other people are sitting on the sidelines. And I think that's a mistake for some people. Yeah. Appreciate that. And the, as far as the educational content, that's, that's quite valuable because, you know, I've tried to do some educational content myself, but I don't originate loans. [01:04:21] I'm not, uh, in, in the weeds. I don't service loans. I've, I've never originated in my life so. So I can talk about high level how things work in private money or hard money lending. But, but to have that, that really in depth, uh, you know, education about how things work very specifically is, is quite invaluable for brokers. [01:04:40] Yeah. If, if any brokers have any suggestions on different topics, 'cause that's how we've come up with the topics. Someone will come in and say, Hey, what's a cap rate? Or how do I figure, uh, you know, A-D-S-C-R ratio or whatever We've make it how-to videos on that. So let us know. We'll be more than glad to address it. [01:04:58] Sounds great. Alright Jack, thank you for your time and it's been a pleasure doing business with you all these years and looking forward to many more. Thank you my friend. Take care. See you soon. And that's a wrap for this episode. Gelt Financial is listed on private lender link.com. They've been on there for many years. [01:05:16] I put a link to their profile in the description. Check out their profile and learn about their guidelines and find their contact information. When you reach out, please mention that you heard about them from Lender Link and the Private Lending Insights podcast, I also put a link to Gelt Financials YouTube channel, which has lots of educational content for brokers and real estate investors. [01:05:39] I hope you found this episode to be insightful and informative. I've got a stacked schedule for the summer with lots more great interviews coming soon. Thank you for tuning in and listening to Private Lending Insights.