In this episode, I talk with Josh Shein.
Josh is a real estate financing expert and CEO of Trius Lending Partners with over 20 years of lending experience, handling more than $1 billion in transactions.
We will discuss about real estate market and the power of relationships in real estate.
We will also highlight what should new real estate investors consider before doing their first deal.
Whether you’re a seasoned real estate investor or just starting out, this episode is packed with valuable insights that you won’t want to miss.
Don’t forget to like, share, and subscribe to our channel for more inspiring stories and informative content.
Transcript:
Josh Shein 00:00
Be humble. It’s somewhat counterintuitive to your real estate investor real estate investors are confident macho, and we’re gonna go out there and kill it. You got to have some eat some humble pie. And you got to be humbled to some extent, to really be open minded to want to learn from experts and to want to learn from people who have done well. That person may or may not have gray hair, and might be a 26 year old who has done incredibly well. They have wisdom to share. Those the 65 year old person’s been doing it for 40 years, take that one wisdom absorb as much as possible.
Chris Bounds 00:32
In this episode, I talk with Josh shine. Josh is a real estate financing expert and CEO of truest lending partners, with over 20 years of lending experience and handling more than a billion dollars in transactions. We discuss a lot about the real estate market, the power of relationships in this industry, and what new real estate investors should consider before investing in their first deal. I hope you enjoy now on to the show. How’s it going, Josh? Good. How are you? Good to see you. Doing good? Doing good? Yeah, no, thanks for thanks for coming on. I always love talking. And we were talking about this a little bit off air. But I love talking with those folks in the real estate financing space, especially in investment financing or hard money lenders, because you have such a good pulse on the market. Being very active log transactions, working with investors and seeing how things are trending and whatnot. But before we get into all that, how did you find yourself working in the like the hard money and real estate financing space?
Josh Shein 01:42
No, great. Absolutely. Great question. Thanks for having me on. I’m really happy to be here. I follow your stuff. I like the bulk. Everything you’re doing is great. So So Thanks for taking the time and have me on for a few minutes here. So I’ve been in mortgages since 1999. Okay, I was in a whole different world, which was medical product manufacturing years and years ago. And long story short, that brought me down to the Maryland area originally from New England, Providence, Rhode Island, and got into mortgages pretty quickly, actually, in around around 1999. And at the time was traditional mortgages, traditional loans, sort of, you know, homebuyers first home or refinance, and that kind of thing, rode through that whole market.
Through the Oh, eight meltdown, getting into reverse mortgages on a national level was with the large national mortgage companies as well, which was great learned a lot had a great time, great people. But I was getting tired of, quite frankly, the regulatory environment. And we were nationals, there was a lot of travel, I was running around a lot, and I wanted to do something that was a little more local. And really, more importantly, and most importantly, relationship based. So you know, working on loans for people who are buying their home and buying another home or a second home or larger home as they upgrade. There’s a relationship aspect to it, there’s no question about it. But I knew of who now one of my partner, Steve bond, who had had we’d worked together in the past, and how much of our relationship he was able to have on a more ongoing, more frequent basis in real estate investing.
And that really appealed to me, both the local aspect to it and the ongoing relationship. In real estate investing. It’s not one purchase now. And then maybe a beach house in a few years, or maybe an upgrade when the kids get older, and you need more space. It’s a constant stream, right? Some people we talk to and do deals three or four times a month, some are two or three times a week, depending on what’s going on. And I love that aspect of building that I’m a big fan of sort of customer service. The customer’s always right, what can we do to keep customers happy, just outstanding service attention and relationship building. And I knew that this niche of mortgage and real estate and financing would really sort of quench that thirst for me of wanting to sort of work closely with people and strengthen relationships on an ongoing basis.
And it’s done just that I got out of that traditional mortgage side about six years ago, partnered up with Steve and his son, David, three of us of the partners in the company. And we’ve just blown it up since then. And it’s been everything I wished for and hoped for and more. And just working with clients, staff who are starting from scratch, but we’re working over and over and over again. They’re building those portfolios. And it’s so incredibly rewarding. And I truly mean that word. Just sit there on the phone with someone I spoke to someone last week. She’s been working with us for years. She’s got 22 doors right now. It’s been a process day by day, week by week, year by year, and she’s leaning are in Austin working closely together and she’s got a good cash flow and knowledge and experience and sort of growth that we can sort of smile at and say we’ve been able to hold her hand through that process.
She knew nothing starting from scratch. Other than that she had owned a home and we’ve taken her she has a comfort level of knowing what she’s looking for and knowing how to do rehab, knowing how to get them financed and and rented and then we do the refi process. So it’s really really incredible to see that happen, and that other people would have taken from 50 units to 350 units or more. And so incredible stuff. And I love that we work with people and establish a relationship where someone can call us up and say, I have three more to close next week or five more to close this month, we’ll say, no problem. We’ll let you know when the doctor ready. And let’s go from there. It’s just it’s a great process. I just
Chris Bounds 05:20
love it. Yeah. And that’s interesting perspective. Yeah, is on the retail side. Maybe if you’re like, you just knocked it out of the park. And then there’s other factors involved that you might work with the same retail buyer, two times, like maybe maybe three, like, and it’s probably very, very rare. Just because of the gap. I mean, really, your relationship is more with realtors, and then probably just just other real estate professionals, title companies, whatnot. But yeah, on the investment side. It’s ongoing. And then there’s the education aspect to it.
Now, I’m not sure how much you’ll do that I’m like, I’m friends with the very first deal I did in Houston, I was calling up. I’m trying to build my buyer’s list. And a guy was like him, he owns a hard money company locally in Houston. And he just said, you know, call my company and did and but that was over 10 years ago, and we’re still friends. And we’ve built this relationship. And then I mean, I know he’s not flipping as much as he is he used to do. But we’ve we’ve collaborated and other other ways, but that would never happen with my like, well, as far as rockin.
Josh Shein 06:36
There’s no two things I’ll say to that, you know, again, I was in the mortgage industry for a long time traditional mortgages. There was a study that had come out that was going around the industry a number of years ago, how many clients remember the mortgage guy? And there’s probably a similar one for realtors, right? Like, you know, you bought your home, then maybe you bought another one a refi at some point down the road. But can you name the person who did the mortgage? And like, it was some crazy percent of people who had no recollection, because yeah, I worked with him or her seven, eight years ago, and I’m happy now.
That’s this is the exact opposite of that. And it’s so great. And you mentioned sort of someone from your 10 years later lender, we have clients who are still working with us communicating with us, some of them may not need as much of our money, or maybe some of them need our money only for the much larger transactions, no problem. But we’re still interacting and helping each other out. One of them called up the other day said, Hey, I got a place I took back, I’m not into it, you guys have anyone to buy it. Yeah, we got people to buy it, hey, I got another one, I’m gonna buy it with my own cash, he’s done incredibly well, he’s gotten money, it didn’t feel like using leverage on that deal.
And that’s fine. He still wanted to pick our brain just as a trusted adviser. And it’s great to have built that rapport of trust on both sides to say, Hey, can you guys throw some eyes on this place? What do you think of it? Do you want to either meet there, or can we just look online, and I can share some videos and walkthroughs with you. Give me your two cents, I really trust your opinion. And you guys see hundreds and hundreds of properties all the time to your two cents on the neighborhood. And the number is really helpful. I just love that. And that’s huge. Because I’ve
Chris Bounds 08:03
told folks like going in on your first deal hard money lenders, like your best friend, because at the end of the day, they’re they’re not going to loan you money on a deal on a property that they wouldn’t be okay, owning. If it came down to it, they don’t want to own it, they want you to do well, you come back and borrow more money. It’s just, that’s the oversight. And really, it doesn’t necessarily work that way it works in Hey, we know you’re here we actually we’ve seen a lot of deals in this area, we think it’s probably your your, your whole time is gonna be gonna be a little bit longer, it’s gonna be a stretch getting that a or V.
So, you know, you’re thinking 320, and there’s probably gonna be more like 290 just because it backs up into this school zone or whatever. So it’s that experience overlay. That’s, that’s invaluable. And a lot of people fixate on its history straight and points and fees or whatever. But the end of the day, it’s like, those first couple of deals like you’ve got a mentor is very well vested in your success.
Josh Shein 09:06
And I tell people, all your 100% I tell people all the time, you can get generally the least expensive rates out there I equated sort of like the dollar store, love the dollar store. They’re all at the dollar store, you go there for certain things, right? You can find lenders that are sort of the dollar store their national, this sort of big machine, they’ll give you incredibly low rates and fees, generally speaking, but do they know what the heck they’re doing with regards to those areas and neighborhoods in our region? There are certain areas certainly in Baltimore and Greater Baltimore block to block neighborhood to neighborhood, it can vary. You got to know what you’re doing. And we have other ones. And while we get a call from someone, generally it’s sort of in the in the New York region, which isn’t that far from where we are here. And they’re investors and they’re looking at the dollars and cents in our region. It’s much more affordable, certainly than the New York tri state area.
And they’ll say, I’m buying three blocks, and I’m spending you know, a million bucks. 130 Places or some some crazy number like that, and I’m gonna make a killing. And we’re like, you don’t know what you’re doing. You’re working with a national lender who also doesn’t know what they’re doing and doesn’t understand the market, you’re looking at buying shells that have been shells for 60 years. And unfortunately, the probably will be shelved for another 60 years, unless a major change takes place. We know the areas that are changing and updating and renewing. And we know the ones that aren’t, because we’re there every day.
And to your point, we care about what happens. And so we’ll tell those people, I’m not going to lend you on that I can make great money on you with that, I don’t want to get stuck with that property. And I don’t want to put you in that position. I want to do 15, or 20, or 30 deals with you. And I want a long term relationship with a national guy backed by some hedge fund out in New York, I want to just turn the money and make the money. That’s the role of making money being profitable. But I have to stay and and service that loan and take it back and figure out what to do if things go bad.
So to your point, we care in a different level. And so I’m a big fan of any investor, especially early on. But I would argue even as you grow, working with someone local, who understands the market, that meeting you talking with you and you can build that trust and rapport that is not possible anywhere else. You can make friends with appraisers and trusted brokers, realtors, etc. Still not the same as the money guy who’s seeing them all come through.
Chris Bounds 11:24
Yeah. With one of the appraisers or survey. I’ve never gotten to the rodeo with him. So I’ve done that with hard money. There you go and growing, you know, outgrowing so I mean, we use them, really only on a few transactions have referred them a ton of business. There’s just that collaborative relationship. Like you said, I like knowing that at the end of the day, if all my private guys all my individual IRA, they run out of IRA money is boom, I’ve got someone who’s ready to go. So it’s just that extra tool that should I ever need it. They’re there. And so I’m willing to always nurture that. And I’m excited to always nurture that relationship going forward.
And then going back to you mentioned, national guys versus local guys, I want to echo that because the there’s an agent on our team. And this is why I mean, I’ve used national guys before, it’s usually for longer term type investment. Right? Right away, it was straight in going in, I was going to go in as an investment rental loan. So not I have never used one that I recall, for a short term unless it was buying one of their Oreos. Guys, we let them fund it. But there’s a there’s an agent on my team who’s helping investor buy a house and they’re using a national hard money guy. And they’re on their second extension. Now I don’t know the the nitty gritty of this transaction.
But at the end of the day, I’m like, local, you got to call a lot of guys like boom, at the appraisals done. They might even still be able to use it closes on Friday, they could probably get that done everything else. If everything checks out, they could probably get that done. Just don’t don’t don’t mess with the National guys.
Josh Shein 13:15
No question. The speed on my record is pretty much what you’ve just said, record is one day, sort of an overnight close from getting the call. And now obviously, the title company was ready. Obviously, all the docs were lined up. But it was actually a client of mine who had done some stuff with us. And then was like, You know what, let me feel some of these other guys out there really good, the prices are better, it’s going to be great. And he went to them. And then at the 11th hour at the closing table. They said you know what, we did another secondary, tertiary gift review, whatever it might be. We just had we don’t like the loan, and we’re not going to fund it. I was like, Excuse me, like we’re closing today to call me up. You still got one more day left in the contract. He said, tail between his legs. Can you can you work with me on this and said I’ll work with you on it. But like you learned a big lesson here. I made him write like a whole review on Google review. So you put that story out there. You share that with our clients. And
Chris Bounds 14:05
is your reputation as a buyer word right point
Josh Shein 14:09
100% It makes such a difference. And and I’m not faulting, the bigger guys, they just have a different model. And by definition, I’ve worked with a large,
Chris Bounds 14:18
larger committees the different underlyings and the loan through Yeah, it’s different in 100%, which is why you just got to understand that
Josh Shein 14:28
no question and the speed and ease and working with someone local who can make those decisions. I can underwrite all the documents and 20 minutes visit the property within same day or the next day and close as soon as the title company is ready. Like where else can you get that? Is there a little bit of a premium for that? Absolutely. Should there be, I believe there should be to be able to get that kind of speed, attention and honest, transparent feedback and then building that partnership and relationship because once you’re set up with them, you call up and you do the next one. You do the next one you do the next one. The bigger guys
Chris Bounds 15:04
actually deal actively invest personally as well. We do. Yeah, we actually have some properties. Here’s another example. And not I mean, I’m not saying that y’all do this, maybe I’ll do or don’t. But there was an example of there was this deal hard money, lenders, same person. They funded it as a 27 unit apartment complex. My very first multifamily deal, and everything went very well until I couldn’t refi. And I thought I did my due diligence well enough, but this is also 2012. So commercial, still pretty tight. Yep. And at the end of the day, like, you know, I was getting no, no, no, no now, and I was like, crap, so we ended up selling it to another investor still still did pretty well. And I told the story to the hard money guy. And he goes, darn, Chris, you should have told me I would have partnered with you.
Josh Shein 15:57
Right, right. Right. Exactly. Yeah. And that does come up a lot. I literally got a text from a guy who called me about a waterfront property. And it’s a it’s a shack, but waterfront waterfront, always nice. And he’s like, he’s got an inside deal. It’s an estate sale, which are always beautiful, right needs to close pretty quickly, family wants to get out, not going on the open market. So he’s got a pretty competitive price on this thing. And he’s like, Hey, you guys want to go in on it? I was like, let’s talk. Let’s look at it. And so there’s opportunities to make things work, helping on all sides of it, buying selling contractors, fixes issues, you name it, there’s opportunities to really get incredible bang for your buck, I guess I would say really value add that I don’t even know how to quantify that.
And I’m telling you, it’s going to help. It’s just it’s going to help. We’ve We’ve mediated contractor disputes, sometimes physically standing in the front in the middle of them, because the contractor wants to hit the owner and the owner wants it. Guys calm down. Let’s figure this out. We’ve mediated people who’ve worked through multiple contractors and saying, Listen, we all got to figure this out. We’ve got money at it, you’ve got money at it, how do we get to the finish line, and I sit in those situations, and I say to myself, what other lenders going to do that other than the local relationship lender that
Chris Bounds 17:08
actually that’s another big point where folks, so I do a lot of coaching with real estate agents that are learning to invest or just investors in general. And they’re like, hey, I need a referral for insurance, or I need a referral for contractors or various services, I’m like, You need to call your local hard money lender because they know all the players. And even more than that, they know the players you don’t want to call. So reach out to them because they’re going to be a vital resource. And that would probably was the single number one thing of benefit that I got from outside of just providing the money. From my first harmony along was, they had a project manager, so he’s the one going out there approving drawers.
Josh Shein 17:55
But he had a list, you know, as gold,
Chris Bounds 17:59
age back my age back price, the first quote was an astronomical like $15,000, I, of course, got a second quote. And it was like 12,000, I’m like, sweet, I’ve just saved myself a lot of money. That was before they gave me their list. Get it done for five. And I’m like, dang,
Josh Shein 18:17
that’s exactly how it goes. And what happens is, you know, in training all the STI here, listen, and train and educate people ourselves on building your team, right? Building your team of all the partners that the key to success. Don’t let people talk about building out that team, very few people do it and stick with it. Now, I’m not saying it’s a bad team, you should stay with a bad team. And I’m saying when you’ve built it, and it works, why are you still going to three different insurance agents, and four different contractors and five different lenders, some people and we run into these people, they cannot help themselves. It’s like, it’s just something like, I got to shop around again, I got to shop around each time, I’m like, we’ve taken great care you, you’re gonna save maybe this much, but look what else we’ve done and look what else we can do, and we’ll do down the road.
And it’s that short sighted view versus that long, long sort of long view of like, real estate investing, real estate investing is a marathon, not a sprint, right? We’re in this for the long haul. So we can all sit and have passive income at whatever age, some people want to do it at 50. And we want to do it at 65 or who knows what. But it takes time to get there and building those strong relationships and cultivating them is essential. So when the people are jumping around and jumping around, you lose that credibility, you frustrate those partners, and you’re not going to get the access to the special deal, the inside scoop, the better term whoever it might be.
And conversely, the people that do have tremendous success. Are they paying maybe a tad more here or a tad more there? Maybe? I would argue not but much faster turn times which is less money overall, much faster response rates, much better relationships with trusted advisors at every level, from the age back guy to all the different trades to different inspectors to different appraisers different and title companies wherever it might be. And lenders of course to, that’s what makes the difference in moves.
Chris Bounds 20:04
And there’s also the experienced the highly experienced past client of yours, you’re probably giving them a little bit better of a deal question, rake on the admin fees or whatever I mean, appraisal costs that entitle that, that cost, what it costs. But there are other things that like, you’re just not going to give to a first time customer who’s like they’re doing their first flip. So there is that
Josh Shein 20:30
sharpen the pencil, you get this and you get the benefits we offer sharpen our pencils. And so you build out their,
Chris Bounds 20:35
their their risk is lower
Josh Shein 20:38
100%. Right, no question about it. And that that’s exactly where those benefits come from. And I think it’s the people who understand comprehend that are really are working the system, I would say in the right way in a positive way. That’s where we all win together, we really, truly are working together. Long term transaction after transaction after transaction that repeat business is how we also see just
Chris Bounds 21:02
put in what market are you in.
Josh Shein 21:03
So we’re in the Maryland to greater Maryland region are based in Towson, Maryland, which is right outside of Baltimore. So we deal with like us two or three hour radius bend in this neck of the woods that cover sort of Southeastern Pennsylvania, Delaware, the entire state of Maryland, DC, Northern Virginia, we go a little further into Southern Virginia, we don’t head up to New Jersey into the tri state area. And right now, we really don’t go below the state of Virginia. But we’ve got a lot of ground to cover. And a lot of active real estate investors, it’s a great area of
Chris Bounds 21:32
market there. So I was talking with an agent in New Jersey, don’t remember the talent. And he was just saying because he moved from Houston and New Jersey. And he’s doing real estate up there. And he was just saying like, like, there’s still no inventory. Because unlike Houston, which is very transitory, there’s people moving in people moving out constantly. Up there, it’s like people live in a house for 4050 years. And like No one moves or they just trade up. So there’s like no inventory. And when there is inventory is gone. You know, how’s the market? That you know that you’re seeing just on a macro level? And then dig down a little bit deeper? How’s it going on on the investment level?
Josh Shein 22:12
Sure. So overall inventory is definitely down, right. And that’s, in fact, affecting overall transaction volume, right. So it’s the same story here. It really is, it is everywhere. Everyone’s looking for the houses, everyone’s looking for the properties top to find them. Having said that, and this is what I always say, if you dig hard enough, and you’re open minded to dig deeply enough, I guess I would say you’re open minded, you’ll still find those deals, they’re still there, I still find people who are finding deals and opportunities. So they are still there.
Price wise, we’re sort of flat right now, I still see when there is a property out there. There could be a minor bidding war, but I say it’s minor. But there’s a lot of traffic heading there. I talked to a few agents in the last 10 days as the weather starting to clear to sunny day here today. But we haven’t gotten too much of that yet. But it’ll get better and better as the days go on, obviously heading into April next week. And there’s activity out there. And there’s there’s definitely interest because of that lack of inventory. So there are people scrambling to find that place, grab that place, etc. It’s not actually driving those prices up those record numbers, but it’s definitely driving the activity and keeping things that frothy, but they’re just sort of where they should be.
But there are people who have to drop the prices because they still think that the market from a year and a half ago still exists. And it doesn’t. And some people haven’t accepted that reality. Some sellers haven’t accept that reality. Some buyers haven’t accepted that reality. And so sometimes I see that those two sides haven’t been able to come together. And it’s like, hey, until you guys can come together. You’re both being stubborn, but it’s not getting done and one of the or you’re gonna have to blink. I mean, that’s just the reality of the situation. Yeah, that’s what
Chris Bounds 23:43
we’re seeing on the commercial side with especially with multifamily. It’s there’s a huge gap. I know nationally, I think NAR The National Association Realtors I think nationally year over year prices was still up by like a percent. But there’s a lot of markets right year over years down. I caveat that as year over year, you’re basically taking astronomical increase with, you know, the environment we’re currently in. So keep that in perspective. If you’ve owned your Helen’s home for five or seven years, like you’re still sitting pretty good,
Josh Shein 24:15
right? We’re sure no question about or that investment property, but the tree and
Chris Bounds 24:19
transactions are significantly down like double oranges, 20 30%, maybe more depending on the market you’re at. Now. It’s funny that this is very interesting to 2022 No, no, no, January, January. So January. There are three states right now that have tripled digit price year over year price growth. Florida, Maine. That’s kind of an odd boulder. Matt has interest in South Carolina. It’s kind of odd. So real estate. It’s very local. It’s still moving. It’s moving all kinds of directions. It’s kind of weird right now. That’s why I asked him in your area and I’ll let you
Josh Shein 24:59
know Oh, no, probably. It’s interesting. You said and I agree with everything there. Obviously, the data backs it up. But it’s funny, like, just in our own experience, we see that right. So I the number of people from our neck of the woods who have moved to Florida, mind blowing, and still hearing that. Today, I heard about two people like, Yeah, I’m looking for properties, I’m probably going to move, just just picking up and moving from the greater Mid Atlantic region. It’s incredible, with kids, with families with jobs, whatever, again, that flexibility for zoom for remote for what have you. But it’s incredible. And everyone is doing it, everyone’s making the move. And even as those prices continue to remain high and higher, and Florida, people are still buying, it’s like, when does this ever end with our neck of the woods? You know, he’s talking about some of those big cities that have seen some of those price declines. I think, you know, Seattle, Portland, San Francisco, etc. S
ome of those areas, you know, we never have in our immediate neck of the woods, sort of the Greater Baltimore region, we never have the high highs and some of the big cities have, okay, Austin, Miami Beach, San Francisco, Portland, Seattle, etc. Those big cities, those top cities, they go through the roof when the markets on fire, doubling, sometimes even tripling whatever or you know, 5060 70% increases. And then when things get tough, they’re obviously the first ones to be impacted. Yeah, it’s gravity sort of fall off the cliff, right, exactly. Without gravity 100%, what we see is sort of a narrower band overall, where we don’t go as high up, and we don’t go as far down even in 2008, we didn’t go through the roof. And when things went bad, we didn’t fall off the edge of the cliff. That’s
Chris Bounds 26:27
Houston. So Houston, I think only had three months that were negative. And it was single digits. Yep. Incredible, very, very, very low single digits, like one, maybe 2%, we were just flat.
Josh Shein 26:39
And that makes it a really strong mark and a strong region. And in this neck of the woods to affordability is huge. So we’re sort of becoming we already are a suburb of DC are continuing to become a suburb, Washington, DC, Washington DC as it is very, very expensive. Ton of government growth, the government, wherever, wherever your opinion, may or may not be the government continues to grow. That’s a fact. And so those jobs, and the commuters trickle into our neck of the woods where it’s much more affordable, you can buy a home here, average home price in the United States is I don’t know, 383 90, whatever it might be. In here, it’s a lot lower than that for you to get into a starter home, I talk to people on the West Coast are blown away 250 290,000, or if you can buy a home here. And it’s not a shack like it is in San Francisco, which you can buy a place for under 600,000 or more. And so it becomes an affordability factor here.
And for real estate investors, that affordability factor translates into that rental cash flow working a little better. So it’s really popular area for that. So to answer your question on the investors, investors who, for lack of a better word are hustling out there are finding deals and opportunities. Is it easy? No, it is a hard grind. Right now, you’ve got to be out there finding those opportunities, you got to use every resource, every source, and just straight up hours of hard work to find the deals out there. They’re not just popping up on MLS, or your buddies giving you a pocket deal, who’s a broker, that’s not necessarily going to happen as much. But there are opportunities and deals out there having said that, we as a lender are extremely busy right now. Because those people are finding those deals. So I would say for every call I get from that person saying, what are people doing? And how are they finding the deals I say they are i There’s no secret like like, potion, right? Like, if you just drink this Kool Aid, you’re gonna be fine, right? There’s nothing like that.
There’s somebody out there, you gotta be throwing it all against the wall, a little bit of a scattershot approach. And that’s always what I’ve been an advocate of every agent, every wholesaler, every online resource, you have the Facebook groups, the chat, the networking, the meetups, etc, you got to just be out there and put yourself out there and have a good reputation. That’s an important aspect too. We talked about the shoppers, the ones who constantly jumping around, I talked to an insurance agent the other day, so when we work closely with and he was talking about this one client who I know of to this person’s always shopping and always beating him up and always beaten them down. And that person has that reputation as just difficult to work with. never satisfied, never happy. Those people aren’t necessarily going to find those deals and opportunities, because no one wants to give it to that person. Because they’re going to be difficult, and they’re always difficult.
So if your reputation and ours locally is an incredible reputation of honesty, integrity, stand up, do what we say and say we do things come your way, because you’re known as someone who can perform a closing will buy it when you say you’re going to buy it does good quality work pays your vendors on time, et cetera, et cetera, that also helps you get access to it. And it’s important not to downplay those relationships and how important they are to give you access to properties to the real estate investors here are doing okay. I might say they’re doing well. I don’t want to say they’re on fire, but doing well. The other thing that’s causing us to be busier than then, I guess I would say normal is just a credit crunch, right? The stresses out there in the banking community.
I wouldn’t say that all the stresses in the banking community and everything we’re reading about has definitely trickled through to every product offering out there. But I am getting more calls and literally three this week, which I don’t normally get three in one week for some larger transactions, so our bread and butter sort of traditional residential rentals, flips hold burr method, that kind of thing. Having said that, we do commercial transactions as well, small multifamily, small commercial building small meetings, sort of one to 3 million commercial retail strip center, mixed use, etc. I’ve gotten three calls this week from people who were working with banks, to or working with banks, and the bank is getting tougher and tougher as the loan process goes on, which I think is indicative of whether it’s officially handed down from that bank or not, as far as a loan term change, they’re passing along, I need to see this and you double see this, they’re drilling down further and deeper and deeper, even towards the end, or what the client thought was the end of the loan process.
And then another one is having their loan called, or sort of not meeting the loan covenants on a larger commercial deal, which isn’t title default. And so this guy’s two years ago, maybe a year and a half ago, the bank would have been like, look, you’re gonna technol default. Let’s work this out. I’ve got some great products, I’ve got access to cheap money, the world is great. Let’s work through it. Now. It’s like, technical default. You’re out of there. We’re calling it you have X amount of weeks to get it done. So he’s coming up being like, what can you do? I’m like,
Chris Bounds 31:26
here for mixed on that that. I mean, that that happens and absolutely contract Lee it can and right, it really should happen. But but also banks, especially those who went through 2008 are being a bit more cautious on flooding their balance sheet with with Oreos, having an incentive to see if it can work out now if there are certain things they probably won’t look past. But if it’s just the DSCR and maybe a basis point or two below minimums on maybe
Josh Shein 32:02
I think you’re one you’re completely correct. I’m curious how it’s gonna play out. I think it might result in the bank, shareholders, leadership, etc, saying, hey, let’s unload anything that’s not clean, perfect. And if we mark it to market isn’t performing incredibly well, with let’s let’s make an attempt to try to maybe unload that get them paid off, etc. Having said that, if they don’t, let’s definitely look at it through a different lens and with a different perspective. So we don’t end up holding on to some junk and we figure things out, we get creative, we figure out do we take short pays?
Do we do we help them find other resources? Do we really dig deeper and try to figure out ways to still make this work in a positive way to your point of not having to hold on to a bunch of stuff, but but their real concerns any which way you hold it? Because the numbers are fleshing out to if and when you mark to market, all of this bank debt in the Lord, these larger commercial transactions and the other assets that they’re holding, it’s pretty deeply in the red. And that’s
Chris Bounds 33:02
the number of CBRE loans that are not really I need to boil it was, it was a considerable number, I want to say it was like 30 or 40%.
Josh Shein 33:12
Mind blowing. But um,
Chris Bounds 33:16
there’s definitely there’s a record number of bridge debt that’s that’s coming down this year. And one of them, even if they did get some rate caps, it still doesn’t really matter when it comes to refinancing. That’s it’s going to be at market rates.
Josh Shein 33:32
Correct. But that’s our approach. And this ties into what you’re saying, and really ties into a little bit of our approach as sort of a local slash regional lender, we take a very common sense approach to things we look at right? Very common sense. Can you afford this? Can you not afford this just to exit work? Does the eggs not work? We’re very conservative. And maybe that’s really the end? Or the answer to the question or comment I’m going to make right now, which is buying transactions large commercial, or certainly a small property to I have to think about and not base my cash flow and projections based on that three year rate.
I guess I’ve just been around the mortgage industry long enough to see the fluctuations and the ups and downs to say, just because the three year arm or the five year ARM has given me this tremendous rate, I still gotta do my math, and I’ve got to sort of stress are shocked has this property I’m buying to see what’s going to happen if things do go south, when they do go south, because they always do inevitably. Now this was a heck of a run up for all these years since the triple rates and months. Exactly. And that would never happen. Well, it didn’t just happen away. It would never happen. It did just happen. Right? All the things that everyone says will never happen and all the smart, brilliant Wall Street people say will never happen. They do happen. And so it does. It is so Trump somewhat mind blowing where you think about people who are buying large, large properties being like well, I met a 2.8 rate for 36 months. Yeah, but then what?
It doesn’t work if that goes up even a little bit, let alone double triples. And so it’s just shocking to me. And so when we’re looking at, and right now this ties what we’re doing right now, obviously, we look at everything through an adjusted lens in light of the interest rate environment, in light of the potential exit opportunities can this client get out of this deal or not more of our clients now are doing holds than we’re doing flips, the slips have gotten harder to make the kind of profit margins they were making three years ago, the supply chain is slowing things down. For us, the permit process is very long and daunting. And overall, when you’re buying at such a high price, and the costs are up that high, it’s just obviously eating into the margins, the flips have become a little less, a little less, a good bit less common in our in our region. And the holes are much more common.
I can take a long term perspective and look at this. But we’re helping people out with that berm that they didn’t looking at that we’re still trying to figure out and really make sure we’re doing that math, not necessarily based on what rates are this minute. But what could rates be, I want to make sure there’s a little pattern there. Does that make sense? And it doesn’t mean won’t do the deal. But we’re very transparent in talking with the client and saying, I just want to make sure you’re aware of what the math could should and may look
Chris Bounds 36:10
like. And that plays out mainly for the landlord investor, right? Who’s gonna flip it and then refi Correct. Yep,
Josh Shein 36:16
yep, yep. Got it right by rehab, right that that helper method? And then so when you’re looking to do that, that you’re going to rent and then you’re going to refinance and repeat it on that refinance? Is that gonna work? Yeah, because the LTV gonna work and is the rate going to work. And having been in the mortgage industry long enough, I say to myself, right now you can refi at a 75, LTV, maybe 80s. But 80s are tougher to find. And you’re currently right now in I’m gonna say seven and change, there’s a few opportunities to maybe get below seven, because rates got a little bit better over the last 10 days, with the 10 year and five year yield being down.
But maybe we should assume it’s in the sort of the low sevens. And so when I talk to somebody say, that’s what it is right this minute. But you’re not going to be done with this property for three, six, maybe nine months, depending on the size of the rehab, let’s just sort of shock tested and say, if that LTV gets squeezed a little bit with this sort of credit crunch, and everyone’s saying, we need to tighten up our guidelines, and maybe our LTV is 70. And I can’t get to 75. If the rate does go, and it’s eight and a half, until you can refi out. Are you going to be okay with that? Can you afford it? What’s that going to do to your cash flow? financially? Is it still worth it? And it may be depending on how that math works. But I think it’s important for people to look at be more realistic. On a worst case scenario outcome is not always sunny skies and rosy scenarios.
Chris Bounds 37:38
At the end of the day, the rental, like the worst case scenario is you have more cash out of pocket, because that’s how you solve the problem. You just got to put more money down on it. As long as you have that liquidity. And you’re okay with that scenario, you’ll be fine. That, of course, affects your returns and all that. But as long as you’re okay with that, that sort of covers you, if this problem happens, can I solve it? And what are my solutions? Is that okay? And then from there, yeah, you just make decisions.
Josh Shein 38:07
That’s exactly right. But But human nature results in so many people that we talked to, we talked to tons of people all the time, wanting to have the outlook always be the best case scenario. No, of course, I
Chris Bounds 38:19
get mad whenever they caught me. Five, and I get down there and they’re like, oh, it’s gonna be five and a quarter. I’m like, What happened to five or six? Right? Right. Right. Right. happy about it. But at the end of the day, I own the asset. Right. So downs, refi.
Josh Shein 38:33
Well, that’s it. The line I always use is, at the end of the day, long term holds, you’re going to pay it back, make money be profitable. It’s question of how long it’s gonna take to get there and maybe the longer than you’d hoped, maybe a little shorter than you’d hoped. But you’ll turn out positively over the long run. And it’s how real estate does work
Chris Bounds 38:52
as long as you cashflow, including vacancy, repairs capex as long as as long as you cashflow after that point, it’s my opinion, its assets under management, you’re letting that tent you’re letting someone else pay off your mortgage time works in your favor. You know, everything else being equal. So
Josh Shein 39:11
the rule the rule always is and I always say this, and this is from me, as well as everyone I run into, you know, everyone says, I wish I bought more and I wish I bought it sooner. Not I wish I bought when rates were lower. Not I wish I bought only at this time. If I want a
Chris Bounds 39:25
year, more than 10 years, you’re a multimillionaire once a year for 10 years. It’s very simple. You can do that with a full time job. Very boring. One year in one of your five years. Correct. You’re not gonna retire early,
Josh Shein 39:37
but you have lots of money. Got some equity. Absolutely. Yep. So
Chris Bounds 39:43
what should new investors consider before doing their first deal in this market? Show?
Josh Shein 39:50
I guess a few things. I would say one, if you’ve never done anything before, you’re doing the homework and getting educated is key. There’s so many incredible resources out there. on online YouTube, obviously social media, the networking and the meetups, etc, that I know every region in every neighborhood has. So really do that homework. Be humble at the big thing. It’s somewhat counterintuitive to your real estate investor, real estate investors are confident macho, and we’re gonna go out there and kill it.
You got to have some eat some humble pie, and you got to be humbled to some extent, to really be open minded to want to learn from experts and to want to learn from people who have done well, that person may or may not have gray hair, and might be a 26 year old, who’s done incredibly well. They have wisdom to share, those, the 65 year old person has been doing it for 40 years, take that when wisdom absorb as much as possible. And so what I say is being humble and networking is the most important thing you can do at the beginning to educate yourself.
So you’re going in with as much knowledge, information and relationships as possible, keep coming back to that word, of being able to have people to lean on, you can call the mentors, whatever word or term you want to use, paid unpaid, there’s a lot of different ways to do it. But having some trusted advisors that you can lean on, and that you’re learning from and absorbing their knowledge is I think one of the most important things out there. Obviously, the other most important thing is money. Right? I have a lot of people who come to us trying to get into real estate investing, dying to get into real estate investing, they really aren’t financially in a good position to do it.
And again, we’re we’re conservative, I’m not looking for someone to overextend themselves, and max out credit cards and go into debt and use every single penny that they have to get into real estate. I don’t think that’s the right move, pay off the credit card debt, get into a good financial situation. You shouldn’t be paying high interest credit card debt and getting into real estate at the same time. That’s my opinion. Some people differ on that as far as how they look at things. I believe in leverage. That’s what we do. But there’s different types of leverage out there. And so how do you do that? So I have someone call me. And I have a great story with it. He was a young guy, it didn’t even own a home he was renting. But he had some money to buy a property and he was buying this property. And it was going to be every last dime to his name, no reserves for the leak, no reserves for the termite issue, or flood in the basement or roof issue that you don’t know about. I’m not a fan of someone getting into something with Euro reserve.
Chris Bounds 42:18
Once you do it can be someone
Josh Shein 42:20
100 banker bankruptcy, right? I mean, you could go broke over this kind of thing. Worst case scenario, and I’ve seen it happen. And there was also a decent sized purchase a decent sized property and needed a decent amount of work. Now, those are opportunities. That’s how we all make money. But it was too much too soon. And it was too big of a of a bite to take out of the apple, right. And I said, I’ll fund this for you. But I want to get this out so I can sleep at night because I always want to sleep like a baby at night. I think you’re overextending yourself.
I think you’re taking on too much right now. I think it was too big of a deal. And I think you run the risk of really getting hurt. It could go well, and I hope it does. And I’m doing everything in my power for it to go. Well, I think you’re overextending yourself. Sure. Another day. back the next day. He said, You’re right. I had that gut feeling. I needed someone to sort of validate it for me, I’m going to pass and we get another deal with him. That was more in his wheelhouse more affordable, it was a better fit. And he’s still actively investing and doing great. He needed to hear that from someone from the average Joe lender. Go for it man I
Chris Bounds 43:19
was gonna make but you’re financially incentivized to, you know, sell on the money.
Josh Shein 43:26
Well, yeah, that Well, the key is that but then you talked about the Take Back and how I want to treat my clients, my reputation, the marketplace. And another unique aspect for not every local lender, certainly for us. I think for many of them, we service and hold all these loans. I don’t sell them off, I don’t securitize them, they’re not going to someone else and saying, bye bye, hope for the best. I don’t really care what happens to it. So if you’re not making payments, if you don’t turn out, okay, if you don’t pay this off in a timely manner, I care. And I’m going to be looking out for your best interest as well to trying to find a lender like that. Hopefully an agent like that, hopefully an insurance and a title and all those different partners who really actually care.
Have you been in the mortgage and finance and real estate world for a long time, we run into a lot of people who are not always the most savory of characters. And I think that’s a challenge for a new person, finding the people who are authentic, find the people that actually do have integrity and good reputations out there. And sometimes you have to sift through that. Do your own due diligence, do your own homework to find those people. But when you find them, there’s no no, I don’t know how you value that that person. It’s immeasurable. And that’s really, I think the best thing you can do to prevent the risk and to prevent yourself from getting hurt.
Chris Bounds 44:38
Yeah, love it. And we were talking about open mindedness that was in my newsletter this week. Ray Dalio is one of his biggest advices is be radically open minded, because nothing is more expensive than a closed mind. And it’s my experience that newer investors tend to be more open minded. It’s the experience investors that not not Not the long term veterans, they’re open minded through pain. You know, they’ve been there. Yeah, it’s the short term experience, though the ones that have been in the business for a few years, and they haven’t quite gone through the fires yet.
You know, they’re the ones that at least I see in the chat setting, you know, given definitive answers on what’s going to happen. I’m like, Ray Dalio, one of the greatest investors in the world, or at least fund managers. It would mean, he would constantly ask, How can I how, how is this maybe not true? What am I not seen? How is this wrong? How is this right? And really, really understanding in a, like 360 60 degrees? What’s going on and seeking out those questions? Because only then are you truly going to have the perspective you need to mitigate risk.
Josh Shein 45:53
And I would add to that, I agree exactly with what you said. And I’ve paid attention to his stuff as well, because he is brilliant, not only with your deal with your investment, but being open minded to everyone, regardless of experience, and even more so with the experience people he is known for sitting with the senior executives, he’s not day to day, now he’s transitioned that. But when it was day to day, it was radical openness of open complaints to each other open feedback to each other at the highest levels, recording those meetings and sharing them with the company. Yeah,
Chris Bounds 46:22
that was a sound. It’s mind
Josh Shein 46:25
blowing. To me, think about it, that experience person who’s speaking like they know everything in there never wrong. Think Wait a second, can you take the criticism maybe isn’t the right word, but the feedback to constructive feedback for you’re wrong about this, or I think you’re wrong about this, and be able to engage with open dialogue. I’m a huge fan of Paul, and that we try to follow that advice lending partners, sometimes it’s, it’s a little rough to hear, I had a meeting with some of our leadership not that long ago, I said, I just want to be completely open and transparent. I want to just put it on the table, it’s gonna make me feel good. It may not make you all feel good.
People still can’t help but be personally impacted by some of that information. And it’s tough as a human being, to hear some of those things. And that especially goes for real estate investors who are also confident, cocky, arrogant, I know. And I’ve been successful, I can do no wrong. I think being open minded at the newest level. And most and more importantly, as you said, at the highest level, is going to result in incredible success and growth to another level of profit, success volume, what have you by being open minded to say, I want to hear from that person, regardless of their seniority, but that feedback, and I think that’s helpful to me. And I think I want to internalize that and learn from that for people to do but it’s so important to do that. And one of the keys to their success, for sure. Love it. Love it.
Chris Bounds 47:45
Hold on. There’s a few questions I asked every guest in closing. So we’re going to start that now. If you could give advice to your 20 year old self, what would that be?
Josh Shein 47:54
Buy more real estate? Right? We just said it a minute ago, right? I wish I bought more wish I bought sooner, right? I just turned 50 this year. Okay. And you know, when I graduated college, I worked in a family business for a while, did some distance and that up, real estate has been in my family forever. So my dad, my grandfather, my uncle back in New England back in Rhode Island, always own properties. I wish I had been told, been pushed and encouraged by my dad, my uncle and my grandfather. And both sides by the way, my grandparents on both sides to buy real estate, buy real estate buy real estate. I was not and I did not.
And to your point, I’m sitting here right now I’m saying to myself, when I was 22, if I bought one place, and when I was 23 If I bought one place, and another and another and another 50 Now okay, I would have I would I would own a ton because I obviously I would have sort of steamrolled a little bit as we would get going there and and right out the oh eight which I would have done as well. I’ve had ups and downs I’ve owned real estate I bought I’ve sold I currently own we have a decent portfolio here at the company that we hold, but more and sooner, I think would have been the key. And that would be my advice to my younger self.
Chris Bounds 49:07
What What book or books have greatly influenced your life.
Josh Shein 49:12
I’m a spy novel guy. So but but I’m going to take an interesting twist on this year. So we do the business books. I do those two, I generally those are more audibles. And I’ll listen to those and listen to tons of podcasts. I love all those kinds of things. But I’ll say that, what motivates me in some of the books I read with the sort of espionage spy Navy Seal, sort of that kind of thing. Comes back to real estate and it does come back to me and my business on a day to day basis, a basis and it’s work ethic. Okay, I read these books about these special forces, tier one operators, Navy SEALs, Delta Force, etc. Work ethic and commitment to what they’re doing and focus on what they’re doing at that level. Life and death. It is unlike anything I will or have ever dealt with.
I was not in the military. I I have the greatest respect for anyone who serves that time and does that it is the most incredible thing. The focus at any level, and certainly at a tier one operator level is mind blowing. And if you can take even a fraction of that in your day to day business and your real estate investing business, focus, attention to detail, discipline, hard work, drive energy, and you repeat it over and over again, you don’t have to be a rocket scientist, you don’t have to know math, like a whiz, the tools and resources are there. Okay, these guys don’t have to analyze situations and, and dig up the intelligence. They’re just acting on it. We just need to act on what we know and what we can access from the internet and peers and from experts out there. But staying focused and doing it with that kind of hard work, I think is key to success. But
Chris Bounds 50:49
in the last five years, what new belief behavior or habit has most improved your life
Josh Shein 50:55
show during COVID. The lockdown for all of us was good, bad, weird mix. And depending on what part of the country you are, you didn’t have a lock down, we had a bit of a lockdown here. It allowed me to spend more time with my family to bond and connect with a family at a deeper and better level. I’m a workaholic, kind of guy. I think a lot of us in this business are right. There’s never enough hours in the day, there’s always stuff to do and always email catch you up on a property to visit and people to meet. Taking a minute, and we didn’t slow down business wise, we actually had a phenomenal year. And we’ve never stopped lending at all.
But being home more being around the kids and family more, I think was an incredible experience for us to connect more and better to appreciate family more than I had in the past. And we myself and my wife and my kids have been able to keep that bond and closeness that was incredibly cultivated during those few years. And continue and carry on with that at that level. I think it’s been incredible. I love it. And it makes me smile every day and helps justify what I do and what we’re doing it for every day. It’s a beautiful thing. Love it. Love it.
Chris Bounds 52:07
Well, before we get to the last question, this is probably this has definitely been the longest podcast that I’ve done it recently. So I can’t
Josh Shein 52:16
I’m sorry.
Chris Bounds 52:18
No, no, it’s good. I’ve enjoyed it. I’m sure a lot of folks out there will enjoy it too. But last question, how can folks reach out to you
Josh Shein 52:26
all over social media of course LinkedIn, Facebook, the easiest is my email address is Josh at Trius lending.com. Don’t get confused with truest bank which we get that a lot. We’re a little bit smaller than truest Bank, which is I think a top five bank, try us lending T ri U S lending.com. I’m on LinkedIn. I’m on Facebook, we’re on Instagram. We’re on everything. And of course, just go on our website Trius lending.com Happy to help answer questions, happy to help be just a sounding board for anyone. And that’s really what we’re looking to do. I always want to be helping out other people, regardless of whether in my backyard or across the country. We have people who invest with us in our funds. We provide great returns there. We have people who borrow from us we do the long term reifies on the rental properties, obviously we do the short term loans as well as they help anyone and just happy to network and connect as well.
Chris Bounds 53:17
Thanks for tuning in. If you got any value out of this at all, please like comment, subscribe, follow, I’d love to hear from you. And for more real estate related content, market observations, upcoming events, you can go to invested x.com And subscribe to our weekly newsletter. I promise you won’t regret it. Thanks again.