In this episode of The Same Day Podcast, Mat Zalk sits down with Josh Heintz, Vice President of Strategic Partnerships at LendingOne, to discuss how investor-friendly financing solutions can help unlock real estate growth potential. He explains the benefits of products like fix-to-rent loans and 10-year interest-only loans, how to use portfolio loans to streamline investments, and the importance of adapting to market trends.
Josh Heintz is the Vice President of Strategic Partnerships at LendingOne, a private lending company specializing in providing financing solutions for real estate investors. With extensive experience in the real estate and financial sectors, Josh focuses on developing innovative lending products that cater to the unique needs of investors, including fix-to-rent loans, portfolio loans, and interest-only options. He works closely with clients to create tailored strategies, helping them scale their portfolios and achieve long-term investment goals.
Here’s a glimpse of what you’ll learn:
- [04:54] Josh Heintz shares insights and predictions about real estate market trends for 2025
- [07:28] Why timing the market may not be as important as long-term investment strategies
- [09:15] The benefits of holding properties to maximize long-term gains
- [13:44] How LendingOne empowers investors to make smart property financing decisions
- [17:30] Why LendingOne can offer more attractive rates compared to commercial lenders
- [22:42] Josh gives a breakdown of LendingOne’s investor-focused lending products
- [28:25] How portfolio loans simplify and streamline financing for investors
- [32:34] An overview of the fix-to-rent product and its advantages for property investors
- [34:23] The collaborative approach LendingOne uses to work with clients and meet their needs
In this episode…
Real estate investing often comes down to one critical factor: access to reliable and flexible financing. How can investors, both seasoned and new, secure funding that aligns with their strategies, especially in a shifting market? What solutions exist for those looking to scale portfolios efficiently and sustainably?
According to Josh Heintz, a seasoned expert in real estate financing, the key lies in leveraging investor-focused lending products tailored to cash flow and scalability. He highlights solutions like 30-year fixed-rate loans for stability and portfolio loans for efficiency, offering a clear path for investors to expand their holdings while managing risk. These tools are particularly valuable in today’s environment, where traditional banks can be limiting. Josh emphasizes that long-term thinking and innovative financial strategies empower investors to maximize opportunities and achieve sustainable growth.
Resources mentioned in this episode:
- Mat Zalk on LinkedIn
- Yoni Schmidt on LinkedIn
- Walter Bowser on LinkedIn
- Keyrenter Property Management
- Keyrenter Property Management in Tulsa | Oklahoma City | Arkansas
- Keyrenter Property Management email address: [email protected]
- Josh Heintz: LinkedIn | Email | Contact no.: (561) 486-7911
- LendingOne
- Dunmor
- National Association of Residential Property Managers (NARPM)
Related Episode
Quotable Moments
- “You can’t make money if you’re not in the game, right?”
- “Our loans on our 30-year products are DSR loans, which… stands for debt service coverage ratio.”
- “No investor, you know, investors aren’t homogeneous. Investment properties aren’t homogeneous.”
- “We have very tailored solutions depending on what your particular needs are.”
- “It’s time in the market, not timing markets.”
Action Steps
- Educate yourself on market trends: Regularly update your knowledge on market trends to make informed investment decisions. This helps in navigating challenges like fluctuating interest rates and understanding long-term investment opportunities better.
- Leverage strategic lending options: Consider specialized lending options, such as those offered by private lenders, to optimize your financing strategy. These can provide more favorable terms and flexibility compared to traditional banking, especially in fluctuating markets.
- Adopt a long-term investment mindset: Focus on the long-term benefits of property investment, such as price appreciation and principal paydown, rather than short-term cash flow.
- Utilize portfolio lending for multiple properties: If you’re expanding your investment portfolio, consider portfolio lending to manage multiple properties under a single loan. This can reduce administrative costs and provide a strategic advantage by balancing the overall DSR ratio across properties.
- Explore interest-only loan options: This strategy allows more financial flexibility in initial phases, potentially increasing cash flow and enabling further investment opportunities.
Sponsor for this episode…
Keyrenter Property Management:
This episode is brought to you by Keyrenter Property Management.
Keyrenter Property Management is a full-service property management company that helps clients buy, renovate, and operate real estate assets.
The team helps clients build wealth while taking the headache out of property management.
That’s why, no matter what rental you have — single-family homes, condos, townhomes, or apartments — they can give you the management solutions you need.
To learn more about their services, go to https://keyrenterpmc.com/ or send them an email at [email protected].
Episode Transcript
Intro 00:04
Welcome to The Same Day Podcast, where we discuss driving incremental business growth and other topics related to real estate, property management and entrepreneurship. Now to the show at hand.
Mat Zalk 00:20
Mat Zalk here. I’m the host of The Same Day Podcast, where I connect with top business experts and real estate leaders. We previously had Brook Reutter on talking about contract for deed versus a lease to own options, and that was a great conversation that relates to financing and how you can finance homes or be the financier. Today’s episode is brought to you by Keyrenter Property Management. At Keyrenter Property Management, we are a full service property management company helping our clients buy, renovate and operate real estate assets. We help our clients build wealth while taking the headache out of real estate and property management. That’s why no matter what rental you have single family homes, condos, townhomes, apartments. We have the management solutions you need. Go to keyrenterpmc.com or email us at [email protected]. Today’s guest is Josh Heintz, Vice President of Partnerships at LendingOne, a leading private lender specializing in real estate investment financing. Backed by LendingOne’s industry leading SFR, that’s single family residential education, he partners with real estate professionals to maximize investment strategies and provide valuable insights on market trends. With deep expertise and strategic solutions and a passion for empowering investors, Josh connects investors with tailored financing solutions to help them meet their investment needs. You’re going to hear all about that today. I also want to give a big shout out to National Association of Residential Property Managers. It’s a conference. It’s an organization. It’s a wonderful group of people. And that’s how I got connected to Josh Heintz. Hello, Josh Heintz. Welcome to the show.
Josh Heintz 01:59
Hi. Thanks, brother. What’s going on, man?
Mat Zalk 02:05
You know, just out here living the American dream, or I was.
Josh Heintz 02:08
I’m in Houston. I’m not in my normal recording studio with my microphone. I’m in Houston. But I asked you, I asked you, I was like, sorry, I didn’t block my calendar. Can you book another time? Then you booked another time. And I was like, damn it, I didn’t block my calendar for and I’m doing our annual planning. We’re here with another property management company, doing some masterminding, doing our annual planning. And I was like, I just can’t. I’m going to do it. Let’s go. I can’t.
Mat Zalk 02:32
Look. Maybe we can reset. It’s all good.
Josh Heintz 02:34
No problem. Let’s go, let’s go. Sometimes life gets in the way and business gets in the way of life. And it’s just. We gotta. We gotta keep going. How are you man?
Mat Zalk 02:44
I’m pretty. Well, I just got back. Took a little weekend getaway trip up to Stowe, Vermont with the wife and. Yeah, enjoyed, enjoyed that a little. A little authentic maple syrup. And so back down to Birmingham. So does it.
Josh Heintz 02:59
Take like a thousand gallons of stuff to make?
Mat Zalk 03:03
It’s a 50 to 1 ratio is what they told us. So about 2% winds up actually being which is kind of crazy. But they got like the entire forest there is just tapped with these little plastic lines running out all these trees. It’s crazy.
Josh Heintz 03:17
I would say our family goes through a quart of maple syrup a week. Maybe every other week. I make pancakes and waffles for my kids basically every school day.
Mat Zalk 03:30
That’s awesome. Okay. Very cool. Yeah.
Josh Heintz 03:32
And I can’t, like, we cannot eat pancakes outside if they don’t, if the restaurant we’re eating at doesn’t have real maple syrup, it doesn’t have to be Vermont. It can be Maine or Canada or whatever. But if it’s not real maple syrup, my family, it’s crazy. I’ve raised these like, elitist, these elitist maple syrup folks that I just can’t I can’t do that other stuff. It’s too thick, it’s too sweet. It’s not the proper not the proper way to beat.
Mat Zalk 04:01
There’s nothing quite like some real authentic, like, fresh off the tap maple syrup. I’ll tell you what. It was fresh off the tap, too. The only thing that you’re going to see in Vermont is lumber, maple, anything. And then you got apples. So we got our fill of all those things for sure.
Josh Heintz 04:21
Got it. Good. Welcome back. How long? How long did you stay out there?
Mat Zalk 04:25
We were there. I got in late Thursday and then we got back yesterday evening. So just about two, two, two and a half days.
Josh Heintz 04:33
Got it. I’m on the masterminding circuit here. I got my team in Houston. Before that we were a bunch of Cuban or franchisees meeting in Denver to talk business and best practice and a bunch of other stuff. So it’s like it’s clear it’s the end of the year.
Mat Zalk 04:47
Yeah, yeah. And they’re hitting it hard getting ready for 2025. So what do you see being different in 2025?
Josh Heintz 04:54
That’s a great question. Let me put my situation on Do Not Disturb here while people are texting me. You know, I ‘ve been noticing. So in 2023 rates started ticking up. People were shocked. And we found that a lot of our owners were selling. And that happened kind of across the franchise network. It happened in our portfolio, for sure. And it’s hard to determine whether people are selling because of one distinct thing like rates or because across the board maintenance costs were skyrocketing. And of course, rent went up in a tremendous way. But if maintenance costs are in one or 2 or 3 months or makeready costs are astronomical, people might feel the pinch and get nervous and sell. So we saw that. And now I’m wondering if the lagging effect of insurance cost spikes are going to, again, put our owners in a pinch where they go, you know what? I didn’t make nearly as much money as I expected. The ROI on this is not as good as I thought. And I’m going to sell. And of course, in anything, whether it’s the stock market or real estate, it’s the compounding effect of time that really matters. So I’d like to communicate to our investors that you may feel a pinch because maintenance costs could go up and rent goes up here, and then maintenance cost keeps going up and rent comes across. And it’s not. But it will eventually like there will stabilize. Sorry. There will come a time when the return on investment stabilizes. All owners will have to raise their rents because the yield on their investment is curtailed or hurt at some level from rising costs in maintenance and insurance and property tax, etc. it will stabilize and the return will yield. The yield will return to a normal stabilized kind of long term average. You have to just be able to hold on for a small period. But I’m afraid that some people don’t see. Some people will buy a property in 2020. In February 2020, see a 15 or 2030% spike in sell. It’s like, okay, you made 30%, so you’re on a $200,000 property. You made 60 grand. But what are you going to do with that 60 grand? If you hold on to that property for 30 years, you’ll it’ll triple in value and then you’ll feel foolish. But part of the big thing is, is, is rates and refinancing and everything else. So let’s talk LendingOne. Let’s talk kind of what what you guys are offering what you’re seeing in the market.
Mat Zalk 07:25
I mean what are your major. What do you think trend wise for 2025 as we as we enter this, this new year?
Josh Heintz 07:28
Yeah, I mean there you know, the one thing that we talk a lot about is we’re not in the business of predicting interest rates. If we were, we’d be in a lot better space for sure. The one thing that’s hard to know is, you know, we’re sitting here on November the 18th, not, you know, even a full two weeks out from the election. And we don’t really know what type of an impact long term that’s going to have on the markets what the fed decides to do. You know, what’s going to be happening in the broader economy in 2025. So I think what was happening, you know, in a lot of 2024, what people were saying was, you know, survive until 25. Let’s wait. And so now the thought had been, you know, in 2025, things are really going to ramp up. Then they may still. But I think what you’re going to see is a lot of people are going to get into Q1 with that same mindset like, let’s not hit, let’s not hit the gas real hard. Let’s ease into 2025. Let’s kind of see what unfolds in Q1, first couple of months of the new administration, and then we’ll have a better picture as to what we can project. You know, Q2 three and four of 25 to look like. So look at the end. Let’s see.
Mat Zalk 08:34
It’s still like they’re still relying on their crystal ball on quarter one and quarter two. And for all the people that called me in March of 2020 and said, I’m waiting for the market to the bottom to fall out of this market so I can gobble up a bunch of real estate and then came back in 2022 and they were like, I’m pulling my hair out. I can’t wait any longer. I’m just going to buy something. And the prices are now 25% higher. It’s like just just pull the trigger and keep like go about your daily business, buy real estate in good markets and bad markets. It’s like a dollar cost average approach to the stock market. Just buy and buy and buy. And then in 20 years you’re going to go, I’m so happy I own all this real estate. That’s my philosophy.
Josh Heintz 09:15
Yeah. No, I mean nail on the head for sure. And the issue is, you know, for people who that it’s their life. They, they professionally invest. They’re always in it. You can’t make money if you’re not in the game, right? Right. And right now, although rates are certainly higher than we’d like for them to be, they’re not currently in a prohibitive place. If you’re in a cash flowing market historically, then you can still find properties that are going to cash flow. Right. And like we were talking about earlier, it’s believing in and trusting in the fact that rents are going to continue to rise and they are eventually going to plane off, even if there is an increase in maintenance costs or insurance, that over time the ROI is going to be there. And for the people that understand you can’t play the game if you’re not in the game, they’re going to have to come off the sidelines at some point. And the one so the one benefit that we’re seeing to all of this noise and fear over the last 12 months is we’ve seen inventory starting to build back up, and it’s starting to build back up in a lot of areas that are already going to be cash flowing spots in general. Look, in California, it’s going to be really difficult to get that $2 million duplex to cash flow, which is very difficult. But if you’re in markets in Oklahoma and Kansas and places where you have that opportunity rates being in, in the, you know, the sixes in the fives, you’re still going to have the opportunity to make money. And so people just have to get out of that 2020 mindset rates are unless something really catastrophic happens that we don’t want to happen. Rates aren’t coming back into the threes. And so people once they get adjust to that they get adjusted to the new asset prices. I think that’s when people are going to really start coming back into the game.
Mat Zalk 10:58
And and so I mean to your point it’s time in market not timing markets. Yeah. But it’s from my perspective it’s like it may not cash flow for a year or two. And you may have to pay out of pocket and accept that your principal pay down of 150 or $200 a month on this investment is equivalent to your actual putting cash into the property for up to $200 per month. But in a few years, if you have a long term outlook, and from thence forward you are going to, you’re going to be cash flowing. It’s just accepting that. And now you have an asset that has appreciated from the time of acquisition. You have depreciation. You have, you know, the negative cash flow is painful, but you have all the other benefits of ownership from from this point forward. So I’m with you. We’re still buying whenever, whenever we can find something that is marginal, we are like all in. And if you can exchange at this point, replicate the debt with a higher with a lower debt to equity ratio or debt to asset ratio, then you’re just in much better shape. You’ve got to replicate the debt though, to to kind of make it work in most cases. Well, and.
Josh Heintz 12:13
And people have really got to change. You know, people’s appetite outgrew their eyes. Right. And so people need to understand that, you know, this this expected, you know, 10 to 12% price appreciation year over year along with 20% rent gains. I mean, it can’t continue. And it’s like when people saw it normalize because we didn’t see there wasn’t any reversing. You’re not seeing rents drop 10%. You know, I mean they just it flattened out a little bit. And it’s like when people saw that all of a sudden real estate became, you know, maybe less sexy than what it was. But the reality is we’re now kind of back at the fundamental level for investors that say, hey, I’m not necessarily looking to buy one single family home, and that’s now going to pay all of my bills that I’m going to get through rental income. I’m buying this because it’s a long term investment that’s going to help both from it is going to probably eventually if it doesn’t already cash flow. But in the meantime, you are allowing somebody else to pay down that principal. You’re you’ve got your price appreciation with it. Obviously, all the benefits that come from, you know, the the debt and being able to, you know, alleviate some of your tax burden. It’s it’s when people get back to those principles and they start seeing it through the lenses of most of, you know, investment history outside of that 2 or 3 year gap is when people are going to get a little bit more active.
Mat Zalk 13:35
So let’s talk about why LendingOne specifically, how does LendingOne empower investors to make smart decisions about financing properties?
Josh Heintz 13:44
Yeah. So one of the things that’s unique for LendingOne is that we are a lender specifically and exclusively for real estate investors, so we don’t loan on owner occupied properties. So if you want a primary home, we’re not it’s not just that we, you know, don’t want to do it. We can’t do it. It’s not what we’re chartered to do, what we’re set up to do, but we are set up to work specifically with real estate investors. That means that we cut down on a lot of the red tape that you’re going to see through a typical commercial lender. And another thing that a lot of investors find as a frustration is actually a benefit with us. If you go to a typical commercial bank, they’re not going to allow you to close in the name of your LLC that your property is through. They’re going to ask you to close in your name. And then when that’s paid off, you can transfer that title then over to your LLC. Well, with us it’s a little bit different. We only close in the name of an entity. So if it’s a trust, a corporation, an LLC, you know, what have you, then we only will close in the name of that entity. So the benefit for that for you as an investor, one, we’re not going to be reporting on your personal credit for that loan. We don’t care about your personal income. We’re not, you know, hounding you over W2. One of the things that Mat, you and I know probably better than most is the average investor is is kind of poor on paper. Right. And so, you know, when they go to a bank and they say, hey like look at all of my assets, right. That bank’s going to say, okay, well your DTI is a little bit on the higher end. Well, for us we don’t care about that because our loans on our 30 year products are DSR loans, which, you know, if those listening aren’t familiar, stands for debt service coverage ratio. So really all we’re looking for is for a property to cashflow. So we’re underwriting the asset where when you go to a bank they’re typically underwriting the individual. Although we do care about the credit worthiness of the individual behind the corporation, we’re primarily looking to see does that asset perform? And if it does, that’s typically what we’re looking to make a loan on.
Mat Zalk 15:44
And so if it doesn’t perform at 80%, loan to value just means that the investor will likely have to bring a little more cash to the deal, bring it to 70%. And then the DSR ratios, the debt service coverage ratio will be at 1.2 or 1.25, or whatever. Your expected ratio is hundred percent.
Josh Heintz 16:03
Yeah, that’s spot on. So in a lot of situations, you’re going to be able to find that that property does cash flow. We do have a minimum 20% down. And so for those investors that are putting 20% down, a lot of times those properties are going to cash flow with no problem. But in a occasionally you’re going to find one where you may need to come with 25, 30 or sometimes even maybe 35% down to make that coverage ratio right for us to be able to loan on. But typically 2,025% is good enough.
Mat Zalk 16:32
A lot of our investors and my, my partner and a bunch of real estate, Yoni who you you know, he is he likes to bring more cash to the deal. He wants it to cash flow from day one. He wants to force it. If not, he’ll. He’s like, I don’t want it to be at 80 or 85% loan to value. I want this thing to be solidly ours. Feel like we’re we have some cushion and some balance. He likes to be at 30, 35%. I don’t necessarily agree with him, but but we’ve taken that approach in the stuff that we’ve bought together. What what makes LendingOne? I’ll start by saying, you know, on the stuff that we’re working on together and you’re working with some of our clients, you guys have very attractive rates vis a vis what we’re seeing in the traditional commercial banking space. And it’s not just rates. It’s also terms that we can get into the terms, but on the rates specifically, how is how does LendingOne, how is LendingOne able to provide such attractive rates when other commercial lenders are not in the same ballpark?
Josh Heintz 17:30
Yeah. So one of the things that’s important to remember is, you know, commercial lenders, commercial banks, they are in the business of loaning on owner occupied properties. So when you think about it, if you go to your mechanic and you say, hey, I know you’ve been working on my car, but I got a refrigerator that needs to be repaired, then it’s probably going to cost a little bit more money, even if he can do it right. Because he’s like, hey, all of my systems and processes are built to work on cars, not on refrigerators. I’ll do it, but it’s going to cost way more than if you go to the Maytag repairman who’s actually got his processes set up. We’re very, very similar in that if you go to a commercial bank that is primarily there to loan on, you know, auto loans and owner occupied properties, they are going to occasionally provide DCR loans for investors or loans for investment properties, but it’s not what they’re built to do. So their underwriting criteria, the specifications that they’re looking for, the way that they want to go about evaluating not just the individual, but the property is at a much greater scrutinization level than what you’re going to get with us, because, again, all we’re working on are investment properties for investors. So all of our processes, all of our, you know, SOPs and the way that we operate are going to be specifically for investment properties, specifically for investors. And so if you go to a bank and you say, hey, I’m looking to buy my, you know, well, and you can only buy up to ten where there’s no cap with the lender like us, but if you go in and say, hey, I want to buy my seventh investment property, if you think about it through the mind of that banker, right, they’ve got to be thinking, okay, what is the likelihood that this is going to default? And so they’re really, really worried about you as a person and all of the debt that you have. We work with investors constantly. Most of the people that we work with have, you know, many, many properties that they already own as investment properties. And that’s actually a plus for us. We’ve seen where you have been in a successful investor for a long period of time. Fantastic. We want to loan to you that much more now. So it’s mostly about how we’ve been set up and the fact that we are we specialize in that area where a typical commercial lender doesn’t.
Mat Zalk 19:42
I’d also think that there’s something around the cost of funds, like a commercial banker. If I go to a Bank of Oklahoma Midfirst Bank, any other of my local lenders there, they’re sitting on some deposits and they can lend ten times that deposit to keep the ratios in line. Right, to keep on the right side of the regulators. If they’re buying their deposits, then they obviously have to charge more money. They need to make a spread to keep the administrative functions of the bank working, and also to make a profit for the for the equity shareholders of that bank. So it really depends, I would think, on the cost of the funds for that commercial bank, which in a local community means you either have grandma that sits on a lot of money in her checking and savings account, or businesses that maybe run a little bit leaner and don’t keep as much money in there. And the bank has to then go and pay more interest for those deposits to actually come in so they can lend you guys. I mean, you don’t operate like a traditional bank, I would guess. I don’t really know. You haven’t, you haven’t. We haven’t talked about that. But you have a source of capital right. You can lend against. Is it not subject to the same regulations as a traditional bank would, would have.
Josh Heintz 20:56
No. So we are so we’re we’re governed a little bit differently than a typical chartered financial institution. We still have plenty of, you know, laws and regulations that we have to keep up with. I mean, given that we’re we’re loaning money, but we’re not we’re not loaning on Fannie Mae and Freddie Mac. So this is all what we call so LendingOne is what we call a private lender private being that it’s our money. So we’re not going and we’re getting money that’s backed by the government. We’re going to be different and we’re pulling down money from, you know, warehouse lines from large, you know, financial and financial institutions to where we’re not like you were saying, you know, if you’ve got grandma that’s now going to make a certain interest rate and then they’ve got to build off of the back of that.
Mat Zalk 21:38
Grandma’s money’s not at risk.
Josh Heintz 21:40
Right, right, right. And in our situation. So being a private lender, it’s our money that we’re lending out. And so that’s how we can also help keep rates. You know well below what you see at banks.
Mat Zalk 21:52
Yeah. So it’s it’s ultimately the expected return on your capital that you’re, that you’re optimizing for. Not a, not not administrative costs of the bank plus the profit, etc.. Right. Let’s talk for a second about terms of some of your most attractive investor products. Yeah. You a traditional bank. So the Fannie Mae Freddie Mac banks would do 30 year straight line conventional loans and commercial bank like as I said before, Midfirst or be okay would do a five year term with a 20 year amortization. And after five years, you’ve got to decide, are you going to refinance or are you going to pay this whole thing back? Like, what do we want to do? What’s the investor friendly LendingOne product?
Josh Heintz 22:42
Yeah. So there’s a number of different options. So we we are although we are exclusively a lender for investment professionals, we’re not a one trick pony. So we have a lot of different products depending on your specific situation. The one thing that I will point out that is of importance is we are a we’re a single family lender, so we will loan on single family rentals what we consider single family, because I know the definition varies a little bit, is anything in the 1 to 4 space. So a townhouse, a condo, a duplex, a triplex, a quad plex, all good. All things that will loan on what we don’t currently loan on is what’s what. You’ll see a lot of like mid-size multifamily. So 12 unit apartment complexes that sort of thing. So just to to get that out of the way. So on the single family side and we also do short term rentals, those look a little bit different. But on the long term rentals we have, if you’re a flipper, we do have a fix and flip product. So if you just want to come and you want 12 to 24 months of, you know, interest only financing on a flip, you know, we can take care of you. If you’re somebody who’s looking to pick up a single family asset with a traditional fixed. We do offer a five and ten year arm. It’s not really popular, especially right now with an inverted yield curve and a couple other things. It doesn’t make sense for people to be in that space, but typically what we do are 30 year fixed.
Mat Zalk 24:10
And the inverted yield curve yield curve is indicative of the notion that people expect rates to come down. I don’t know that. I don’t know like I don’t I’m not savvy enough to understand all that. But I from what you say, I take it nobody wants to fix for five and ten years with the inverted yield curve. Makes me think that that that yield curve really shouldn’t come down.
Josh Heintz 24:32
Yeah. So, you know, the, the, you know, the the factors that affect the interest rate. There’s credit risk, there’s interest rate risk, all those different things. And people typically would say, If I’m going to hold this, if I’m going to, you know, write this note for, you know, ten years, it should be more expensive because I’m having to carry the risk for a longer period of time than for one year. But right now, if interest rates are high, but they’re expected to come down a little bit more in the future, then all of a sudden the shorter money is as expensive or cheaper than long term money, where typically you would say, hey, I only need it for a year, so that interest rate risk or that that time period risk is a little bit greater. So those are the different factors. But that’s why people aren’t really interested in the 5 or 10 year arm, because typically five and ten year arms you would say, hey, that five years guaranteed. And then it’s going to be whatever, it’s going to be some type of prime and then plus a little bit of money and people will say, okay, well, I can get it cheaper for the five years versus something guaranteed for 30 years. But now, because interest rates on the short term are so high, people are. You’re not seeing that value. So most people are going with a traditional 30 year amortized over 30 years. And we do have two different products within that. So the first one is a very traditional, just like you would see on an owner occupied loan. It’s 30 year fixed rate amortized over 30 years. We also have which.
Mat Zalk 25:52
Is which is not a product that a commercial bank will offer. They don’t have that for or they will not. They will not execute the swaps and hedges required to guarantee that money for 30 years. Just so people know.
Josh Heintz 26:07
Yeah. And then the other is we have a it’s another 30 year fixed rate. But the difference with this one is it’s a ten year interest only period that then amortizes over the the final 20 years. So if you want something so we’re talking about cash flow earlier and cash flow is a little bit, you know difficult in some markets for some people right now and for people that are primarily interested in cash flow because there are a lot of investors, although, you know, it’s always a great idea to buy and hold, buy and hold for life, right? There are a lot of investors who say, you know what? What I do is I get in, I want to find a property. The cash flows. I keep it for 5 to 7 years. I take advantage of the the price appreciation. And then I’ll sell at some point in 5 to 7 years. This is a great product for somebody that has that type of mindset, because it allows you to cash flow at a higher level. Obviously, you’re not able to take advantage of any principal pay down over that ten year period of time, but cash flow can be significantly greater over those first ten years. You still take advantage of the price appreciation, and then if you want to hold on to it, it’s still a fixed interest rate, even as it amortizes over the final 20 years. What we know is most people in that 5 to 7 year range are probably going to refi out into another long term product before that comes.
Mat Zalk 27:24
Interesting that those are two unique products for, I would say, serial real estate investors. The average person with a W2 can take advantage of a 30 year conventional mortgage that that Fannie or Freddie put together, but they only have ten after that. And again, I go back to being a serial investor. So somebody that’s doing it many, many times they don’t have that opportunity anymore. And they do have that opportunity with LendingOne. And then and then number two, for those people that want to take advantage of the of the cash flow early on, they there’s not a besides a construction financing kind of bridge, period. I don’t know of any commercial product other than this, that LendingOne that will allow you to only pay interest for a number of years. And even when you do that bridge program, it’s generally 24 or 36 for like a heavy renovation of an apartment complex or maybe even a single family house. But you wouldn’t expect you’d need 36 months to renovate a single family house, right?
Josh Heintz 28:25
And and so that’s another thing that makes us, you know, pretty unique is we don’t have to go and jump through a bunch of hoops. I mean, it’s our money. And so we can dictate the terms and the way that we loan it out. And so we were able to go and create a unique investment product like that for investors because look, no investor, you know, investors aren’t homogeneous. Investment properties aren’t homogeneous. I mean everybody’s unique. And so we we have very tailored solutions depending on what your particular needs are. So we do traditional purchases. We also do, you know, cash out refinances. We do portfolio lending. So one of the things that is pretty unique for us is if you wanted to if you found, you know, 5 to 7 homes, let’s say. So I’m located in Birmingham. So let’s say you find a home in Birmingham or found one in Tulsa or Wichita or Kansas City, wherever it is, and you find seven somebody selling a portfolio of seven homes, instead of having to go and underwrite seven different homes and pay origination fees on seven different homes and then pay closing costs and so on and so forth on seven different homes. We have a portfolio loan where it is. It’s one application, it’s one origination fee, it’s one loan, and it’s one payment on all of those properties. And so being able to do that in a bucket together is of a lot of value. And so one of the things that’s actually pretty cool about our portfolio product is let’s say that you find, you know, in that five of those cash flow really well and two of them don’t. Well, the way we underwrite a portfolio is on the total DSR ratio. Not individually any property. So let’s say you find a property that you know will start cash flowing at some point in the future. We’re not really worried about that one, so long as the portfolio ratio is equal to, you know, being able to cover its debts and liabilities. And so that can be an advantage for investors that are looking to pick up, you know, groups of properties at a time.
Mat Zalk 30:19
How does it work on the partial release of the lien if you want to sell off 1 or 2, is that a complicated process? Is not an easy process. And what happens to the to the remainder of the loan? Does it recast? Is there an automatic thing or is it like you still owe the same amount in principal and interest each month, even though you have less asset now in the portfolio there is there is a recast.
Josh Heintz 30:44
But I’d have to get somebody else to answer that question. I wouldn’t want to provide some straightforward and honest. Yeah.
Mat Zalk 30:50
So that is that’s one thing that we see when we have bundles of properties and you want to sell one, sometimes you want to sell one to create a comp, and then you want to refinance for the whole portfolio. And now you have a really good comp to to get the appraisal done against. Or you just want out of one asset and there’s, there’s a consideration there that you got to figure out what the the partial lien release looks like. So for investors out there they’re thinking about that. That’s that’s something to consider. Let me ask you this on a cash purchase cash refinance, if an investor wants to come in and take out their cash. Is there a seasoning period? Does it need to be owned for some certain amount of time, in other words, or can they go, are they renovating that or are they renovating that?
Josh Heintz 31:38
Or do they just want to buy it so they can quickly get into the deal?
Mat Zalk 31:41
Let’s say let’s say I buy a property $100,000 cash. I put in $30,000 of of of cash to do the refinance. Sorry to do the, the renovation. And now I want to do a refinance.
Josh Heintz 31:52
So three months is the seasoning for that.
Mat Zalk 31:54
Three months. Okay. So if you’re going to do a full renovation on a house, you want to be in it three months before you gotta own it from closing date to refinance. What application or closing? It’s got to be three months of ownership.
Josh Heintz 32:10
Right. Now, it also depends as well on if you’re doing a if you’re doing a cash out refinance or if you’re just doing a rate and term finance. So some of that depends. But generally speaking in that situation we would not have to wait until day 90. We would begin that process at about day 45 so that we would actually close on the 90th day.
Mat Zalk 32:32
Got it. Got it. Understood.
Josh Heintz 32:34
Another product that we have that is kind of in in alignment with somebody who is looking to invest with that type of strategy is we have something called a fixed rent product. So what it is is we start with a short term bridge loan. So what we do is we will provide up to 90% of the purchase price to buy a flip will provide 100% of the rehab cost. So let’s say that you go and you find a that property and it’s 100,000. You got to put $30,000 in it. Then we’ll loan you $90,000 on the purchase. We’ll give you all 30 of the the rehab cost, and then we will turn around. And if you’re wanting to hold that property, then we will refinance that into one of our long 30 year products. And so what we do is during the interest only period of that fix and flip, then we’ll give you a discount on the interest rate. And then we’ll give you a 50% discount on the origination fee when you turn that into a long term loan with us. So you basically get a buy one, get one half off for the for for the loans, but it gives you two products with one. So it’s basically BR in one product.
Mat Zalk 33:42
Got it I love that. And you get the discount when you do this when you do the refinance to the long term product. Correct. It’s it’s you’re not locked in. In other words, if you feel like this is a great deal for a long term for a BR, and then you do the project and somebody makes you an offer for three times what you have in it. I walked in, you go, let’s, let’s sell this thing and do it again. Absolutely I love that. What’s your what is your best client type? Is it a new investor? Is it a seasoned investor? I know with seasoned investors you have there’s lower risk. You have a track record. But in an ideal world, who do you like to work with most?
Josh Heintz 34:23
So you know, and we’d love to work with everybody. I’ll tell you who we probably work with the most is somebody who has a handful of flips under their belts, or 1 or 2 investment properties that’s looking to to build their portfolio. And they’re they’re starting to realize that they can scale faster with a private lender like us than they can with their commercial bank. So somebody who may have, you know, 1 or 2 properties that they already own and they’re looking to continue to build and grow. Because one of the things that we like to be, you know, we’re not just a loan processor. So when you call us, we’re not just going to say, hey, yeah, thumbs up or thumbs down like you would get at a commercial bank. You know, you’re either approved or you’re not. Yeah. The the loan advisor you’re going to be talking to is going to work with you, you know, soup to nuts on whatever deal you’re looking at. But they’re also going to help you look at your total portfolio and think a little bit outside of the box. Hey, have you thought about, you know, you, you know, two properties here. You’ve built this equity. Have you thought about doing a cash out refi. Then we can take the two you’re looking at and the two you have and put them in a portfolio together. Because on those portfolios, sometimes we can get a little bit more aggressive with the interest rates, so we can make that a little bit cheaper. So when you talk to somebody on our team, you’re getting more than just a yeah, you’re good enough or yeah, the property is good enough. We’re going to really work you through what that looks like. And then, you know, most of the people on our team have been here for a long time. You had a chance to meet Hunter, who’s been here for many, many years, right?
Mat Zalk 35:46
And so he knows he knows y’all’s product really well and inside and out.
Josh Heintz 35:50
Right. And so now, you know, you’re yoni. It’s not a matter of having to pick up. And you got to call an 800 number. You got to hope you can talk to somebody. You can text Hunter and say, hey, I’m looking at here’s an address, I’m looking at this deal. Send me a quote. And then, you know, 15, 20 minutes later, you get something in your inbox that is really kind of a competitive advantage when you look at us versus a bank. That is one of the huge competitive advantages that we have, is just that. We have people boots on the ground and we control that process soup to nuts. So we’ve got everything in house from, you know, credit risk underwriting, valuations. Legal is all on our team. And so Hunter can walk down, you know, the hallway there and at the corporate office and talk to whoever it is so we can get answers quickly. You’re not having to wonder where your loan is in the process. We can give that information out and we keep you apprised the entire way through.
Mat Zalk 36:41
So if somebody is thinking right now, I’ve got a perfect project that I want to finance a house, an investment property, who do they reach out to? How do they how do they find out more information?
Josh Heintz 36:51
Yeah. So they can reach out directly to me and I’ll make sure that I’ve got them in front of the right person. They can they can reach me one of two ways. They can either give me a call. My direct line is area code (561) 486-7911. Or they can reach me at by emailing me at. jheintz last name is h e i n t z. It’s kind of like the ketchup just with a t in there. I don’t have quite that Heinz money, but it’s. [email protected]. LendingOne is all one word so they can reach out. They can reach me through either one of those mediums. I’ll listen to a little. Bit about what they got going on. And I’ll make sure that I get them in touch with the right person on our team to make sure we can help them best.
Mat Zalk 37:39
Beautiful. Josh Heintz is the Vice President of Partnerships at LendingOne, a leading private lender specializing in real estate investment financing. Backed by LendingOne’s industry leading SFR education, he partners with real estate professionals to maximize investment strategies and provide valuable insights on market trends. With deep expertise in strategic solutions and a passion for empowering investors, Josh connects investors with tailored financing solutions to help them meet their investment objectives. And I will say one thing Josh and I connected before the recent NARPM conference in Dallas, which is always a great place, but it’s an indication that that Josh is really on the cutting edge of what’s going on with real estate investment, with property management. We didn’t even touch on property management. Whether that’s something you guys look at as being positive or negative. But Josh, I appreciate you being an active participant in the industry and everything you’ve done for our clients.
Josh Heintz 38:36
Yeah, absolutely. Well, it’s been a pleasure. I’ve loved getting to know you and Yoni a little bit more, and hopefully we’re building something that will last for a long time and be happy to help you, your clients and anybody that’s listening in any way that we can. And hopefully we’ll we’ll only continue to get better. And hopefully these rates will maybe start moving in a little bit more favorable direction, which I think we all believe that they probably will. And now it’s just a wait and see.
Mat Zalk 39:02
From your lips to God’s ears. Josh, thanks for being on the show. Appreciate it.
Josh Heintz 39:04
Thanks, Mat.
Outro 39:10
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