On this episode, Jon Maddux sits down with FundLoans account executive, Alexander Inda. Alexander is a top producing account executive who has funded over $21MM last month alone. The two speak about Alexander’s recent $8.8MM funding, appraisal dispari
Funding Super Jumbo Loans with Wholesale Account Executive Alexander Inda
Here's The Full Transcription
Speaker 1: On this episode, Jon Maddux sits down with FundLoans account executive, Alexander Inda. The two speak about Alexander's recent $8.8 million funding, appraisal disparity in the jumbo loan space, why you should text your account executive at weird times, and much more.
Speaker 2: Welcome to the Million Dollar Mortgage Experience Podcast. Listen in as CEO Jon Maddux of FundLoans reveals tips, secrets, and origination ideas to fill your pipeline with million dollar opportunities.
Jon Maddux: All right, welcome to the podcast. We're here with Alex, our top producer at FundLoans last month, and I think probably most months. Right?
Alexander Inda: Well, recently I've been on a good streak, I'll say.
Jon Maddux: I'd say it was a good streak. I've seen your paycheck, so I know you've been on a good streak.
Alexander Inda: Right.
Jon Maddux: You do some big loans, right? I mean, I know that's what we do. That's what we specialize in, non-QM. We specialize in jumbo. Even some jumbo A. But really, my opinion of non-QM, the word non-QM, is really it's a terrible name. It's like someone thought how can we not say, it's not subprime, but how can we not say nonprime, not subprime? Let's come up with some crazy non-QM type of name. And it's really not representative of what we're doing, because we are qualifying people. They are qualified. But, I understand non-QM comes from the Dodd-Frank and all the stuff that QM represents. What is your definition of non-QM?
Alexander Inda: I would say non-QM was probably a lazy way of labeling it when they first came out.
Jon Maddux: Yeah, I'd say so too.
Alexander Inda: But, you know, it's crazy. In the majority of the files, you'll see anything from 20 to 100 document pages in a file. Because we really do take an extensive look at these borrowers to ensure that they do qualify for a mortgage. So, a lot of times, I think it's even more of a qualified mortgage than some of the products that are out there, like in the traditional sense. Because we do a full scope. But, at the end of the day, these are great loans and we grind it every day, making them work.
Jon Maddux: That's right, that's right. Let's talk about the biggest loan you just closed. Eight?
Alexander Inda: Yeah, it was a $8.8 million loan, just shy of $8.9 million. And, of course, it was tough to get by. Every lender out there wanted it. Every lender out there tried, as you know. You told me right after we closed it.
Jon Maddux: Yeah, we heard some stories that some other lenders had tried to do the loan and they couldn't do it, so it's nice to hear, when we something done others can't do.
Alexander Inda: Yeah, exactly.
Jon Maddux: It's a good feeling.
Alexander Inda: Yeah, exactly. Especially when you can make that call to the broker and say hey, we're good. We funded it. He's ecstatic. He's like all right, let's do the next jumbo, super jumbo loan with you guys. But yeah, I mean, great income in the Orange County area, as you could probably assume in that area. A great house and-
Jon Maddux: It had a pretty good LTV. It was like, 47. Right? Or something.
Alexander Inda: ... Yeah, just shy of 50% loan to value.
Jon Maddux: Mm-hmm (affirmative).
Alexander Inda: Owner occupied, single family. The borrower had three different businesses and we qualified using all of his business bank statements.
Jon Maddux: That's great, yeah. I know you put a lot of work into it, too. It's interesting when you see most loans, I think, that most lenders do are probably an average loan size of like, $300,000 or $400,000. Or even lower, $250,000, $300,000. What is it like to focus and just work on big, jumbo loans? I know you do some smaller loans too, but I think your average loan size is $1 million or more, something like that. Right?
Alexander Inda: Yeah, definitely. I definitely take it all in. Because you-
Jon Maddux: Yeah, you're not going to be a snob. Be like sorry, we don't want your $300,000. I mean, we do have a cutoff, but-
Alexander Inda: ... Right.
Jon Maddux: ... for our tier one brokers, we'll take anything, usually.
Alexander Inda: Right, right. And you'll be surprised, as many brokers as I have send me $1 million plus jumbo loans, they'll have a client or a referral saying hey, would you do this $345,000 loan? All day. Essentially, once you get it down and get your guidelines down in the programs, you just kind of copy and paste to other files and other borrower situations. Yes, there's always going to be a small difference in each file, and you're never going to know unless you ask the question hey, why is this? What else can you tell me about this bank statement loan? Or what have you. By getting that full picture, you're easily able to place it. But, we do love jumbos here. I think our average loan amount is in that jumbo space, for sure. And people could trust us with that jumbo business. We get tons of referrals from it too.
Jon Maddux: Right, right. I think there's a slight difference in the way you care about a loan, and I think part of that is that you don't do ... You did $20 million plus last month. That's a huge number for an account executive, for anybody. But how many units did you do? You did 11? 12? 13?
Alexander Inda: Yeah, it was right around 13 units, mm-hmm (affirmative).
Jon Maddux: So, any other AE that I know of that would do even close to that, even $10 million, would probably have 30, 40, 50 loans in that $10 million box. So, it's harder for an account executive to care about each one of those loans like you do, because you have less loans to care about. But, they're bigger. I think there's something to that. It's kind of like, I mean, this is a weird example, but like someone has six kids. How do they spend that much time with each one of them? I mean, it's harder, even though you love them all the same. But if you have less, not telling you to have less kids, but it's just the reality. It's hard to give quality time to that many loans. You can give really good, quality time because you only have so much bandwidth as a human. Do you see that, too? You're able to really care and really focus and give more time and effort to each loan that you get? Is that something that you find here?
Alexander Inda: Yeah, definitely. And I think the atmosphere kind of sets you up for that. Having everybody here in one roof, for the majority of it. Like upper management and underwriting staff and account managers. Being able to walk down the hall and say hey, on the Johnson file, can we get this, this, and this? Or, what else do we need? Or, how can we move it along? That's a big help in my ability to fund these loans. Because as we touched upon earlier on, we might have 50 to 100 documents in a file, because these are alternate based lending. For example, bank statement. It could be 12 or 24 month alone, in just bank statements. So you really do need to give that extra tender love and care, and being able to be in that environment to succeed is half the battle.
Jon Maddux: That's good.
Alexander Inda: But yeah, you definitely watch these babies go across the finish line one step at a time. Especially that $8.8 million. We really want to ensure that it keeps on the track. Make the extra phone calls, do what you can to get it all across the finish line.
Jon Maddux: I think some people watching, I know if I was watching this I'd be kind of wondering, where the heck do you find these big loans? $8.8 million loan, you don't just stumble across that. Do you know? Do you ever ask your brokers hey, would you get this referral? I'm sure a lot of it comes from relationships and referrals and stuff like that, but do you have any examples that you can share with us and our viewers?
Alexander Inda: Yeah, I think right before this $8.8 million, I funded a $4.7 million the month before.
Jon Maddux: Now you're just bragging, dude. Just kidding.
Alexander Inda: Well, it was funny. Yeah well, maybe I am a little bit.
Jon Maddux: No, that's good.
Alexander Inda: Right. The way it arrived on both those scenarios is they were their clients for a long time. I think what we touched on multiple times over, self-employed borrowers, they're always going to try to succeed in every facet of their life. So, maybe they had that $500K home like, five years ago and then $1 million home four years ago, and then $2 million. Blew up their business, and now they're like you know what? Now I'm having six kids and I want that $8 million home. So, a lot of their clients are referrals they've seen along the way. [crosstalk 00:08:31]
Jon Maddux: Been in the business a long time and they've just kind of helped them buy houses, and then stayed in touch. And then, yeah, as they succeed and you succeed, you stay together. Yeah, I think I can see that.
Alexander Inda: And that's how they got that business. Thus, we advertise with the $15 million. My $4.4 million, I met at a show in Vegas, a conference. Not a lot of non-QM lenders, at the time we were advertising above $2 million and we could go to $15 million. So, it's a no brainer. Priced them out right there at the conference and kind of got it going.
Jon Maddux: That's good, yeah. So, you enjoy doing the big loans.
Alexander Inda: I do, I do.
Jon Maddux: That's good. I do, too. It certainly is a different type of ... It is more work, I will say. It's not always. Sometimes it's easier, right?
Alexander Inda: Yeah.
Jon Maddux: I mean, because people have their shit together in some ways and in other ways they're not. But, you might find someone who has all the help in the world, when it's a jumbo loan, that they can easily just have those people send you the docs or things like that, so it does help. What do you consider jumbo lending? Do you consider it million plus or $500,000 plus? What's your definition?
Alexander Inda: For my jumbo, I kind of consider anything above $2 million, for me. I don't know, just for my mind, I think above $2 million.
Jon Maddux: That's kind of like super jumbo, I'd say.
Alexander Inda: Yep, super jumbo. Just, some non-QM lenders advertise quite a bit above X, Y, and Z to this loan amount. So, that's just kind of like my viewpoint. If I really had to think about it, it would probably be around that range, $1.5 million plus.
Jon Maddux: Yeah, that's good. And that's kind of where you typically need two appraisals.
Alexander Inda: Right, mm-hmm (affirmative).
Jon Maddux: Which kind of brings me to a good subject, appraisals. We've seen a dramatic drop in disparity. Because when you start getting to like, the $2 million plus range or one and a half million plus, then you have to get two appraisals. And then you're ordering through AMCs, and a lot of times one will come in way high, one will come in way low. We've taken a real strong effort to fix that problem, and I think part of that is through our appraisal firewall and our chief appraiser and all that stuff. Have you seen a change ever since we've hired on the chief appraiser? You know what I mean?
Alexander Inda: Yeah, yeah.
Jon Maddux: Have you seen kind of a shift in that? I remember way back when you started, we would get some appraisals that would be different. Like crazy. It's like how can one guy or girl think this is a $3 million and the other one think it's a $4 million?
Alexander Inda: Right. I remember I had one pretty bad that we were trying to go for a $4 million value. One came in at $4 million, the other one came in at $2 million.
Jon Maddux: Yeah, that's a big ... That's either fraud or someone doesn't care and they're not paying attention. Or something weird is going on. Right?
Alexander Inda: Exactly. Our chief appraiser did, right away, this was like right when he got on board, was able to rebut it and we got it up like $1.3 million, something ridiculous. Which he did mention that for an appraiser to come up that much, there's a huge issue with that level of value. For us, being in this space, where we consistently do above $1.5 million to $8 million, $9 million, appraisals are very important.
Jon Maddux: Hugely important.
Alexander Inda: Yeah. LTVs, pricing. Just the ability to do a loan. If you were going for a $21 million value and it came back at $15 million-
Jon Maddux: That's a massive difference.
Alexander Inda: ... you're dead in the water, kind of, depending on the loan amount that you're asking for. So yeah, those conversations of saying hey, this is a tough report, $1 million less, has been few and far between in the last three or four months.
Jon Maddux: I'm glad that that sure helps, somewhat, to your volume. I mean, because without those appraisals with the right values, you're not going to be able to close the deal.
Alexander Inda: Absolutely. Yeah, it doesn't matter how much income you have and things like that.
Jon Maddux: Right, right. You consistently put up big numbers. I see you, you're here before I am, and oftentimes you're here after I am. That's something. You're working really hard. You're always there for your brokers. You're putting in the hours, and it shows. It's like some people put in hours and then they don't have the results like you do, but there's got to be something beyond that. That's part of it. That's part. Like when I first started the company, I was working nonstop, 24 hours a day. I've been able to take off a little bit of time here and there because we're doing well and things and there's guys like you working really hard, but what else is it? What other things attribute to your success, would you say?
Alexander Inda: I think it's my internal motor just kind of gets me going every day. As you know-
Jon Maddux: Do you have a routine in the morning? Do you just get up-
Alexander Inda: ... Kind of.
Jon Maddux: ... and look at yourself in the mirror and say you can do this?
Alexander Inda: Well, you know I'm commission only. So, nobody is driving this train but me. One thing I've learned from you guys a lot is nobody cares about your loans as much as you do.
Jon Maddux: It's so true.
Alexander Inda: So I'll get on the road as early as 5:30 in the morning and stay here, recently, until 9:00 PM. Part of it is because I need to get better with time management and things like that, but part of it too is-
Jon Maddux: You must enjoy it a little bit.
Alexander Inda: ... Love it. And these files, I look closely at the borrowers and when I prequalify, I want to do it 100% of the time. We're fortunate enough to have a lot of different ties to programs, to where if something were to fall off the track for the slightest bit, I already know in my head how we can cascade down. So, a lot of the times I'm spending troubleshooting and things like that, with not only everybody in this room, but our team out there. I think that drives the boat just as much as my work ethic or my time, the team out there. Definitely.
Jon Maddux: If an underwriter wants us to spend a file, they call you and they talk to you about it. I think that's something that ... Let's talk a little bit about cover letters. Do you do that a lot? Do you make your brokers do cover letters? Or do you help them do it?
Alexander Inda: The majority of the files I'll do my own cover letter for the broker and for the file.
Jon Maddux: For the broker?
Alexander Inda: Mm-hmm (affirmative).
Jon Maddux: Wow, okay.
Alexander Inda: Yes, because I know how our staff works and our underwriting team and our account managers. I speak with them daily. Our underwriters will talk to brokers, depending on what the circumstances are, but if I'm next to an underwriter every day, I know kind of what they're thinking. I can put into words before this happens and say hey, this is what we have in file. This is what I was thinking. Hopefully we match up at the end.
Jon Maddux: I think that shows ... I don't know if you guys every shop, like people shop at Macy's or Nordstrom's or whatever. I've been to Macy's before and it's cheaper than Nordstrom, but you look around and there's like nobody there to help you. You're like you got this in a different size? And there's no one there. You go up to the counter and there's still maybe nobody there. Finally, there might be someone there. But, you go to Nordstrom and there's someone always asking hey, can I get you sizes? Do you need this? Do you need that? And as soon as you pay, they walk around the counter, give you a pat on the back, hand you your ... It's like a different experience.
Jon Maddux: I know our pricing is good, but maybe we're not like the scrapy bottom, lowest price, and I know that matters in some cases, in a lot of cases, but it doesn't matter if the deal never closes. Especially if you have a big loan. So, I think service matters. And what you're saying really resonates with the service that we preach and that we talk about. It's very important to a broker that they can make sure that they close this loan and they know that someone cares about it as much as they do on the other end. Because it's true, a lot of people don't care about a loan as much as the broker does. The broker cares a lot. Usually the next person to care is the processor, and the processor does not care as much as the broker. And then the next person after that is maybe the owner of the company. You know what I mean?
Alexander Inda: Right.
Jon Maddux: There's very limited people that care about a loan. But, when you have an AE like you, who's fighting for that deal just as much as the broker is, like as a team. And, I know you're big on teams. You're into team now. Do you feel like you're a team member with a broker? Do you guys feel like you're a team, with most of your brokers? Or, how does that work?
Alexander Inda: Yeah, I think, speaking with your broker multiple times a day or a week, every broker is going to be different. Some want you to call them once a week. Some want to talk to you every day. I have no problem talking to you every day. I have no problem calling you once a week. Everybody is a little bit different, but I think getting to that level of understanding each other and saying hey, Alexander, you only have to all me every other Tuesday. Or, let's go over the conditions once. You'll have everything. I have a broker that conditional approval comes out Tuesday night. Wednesday morning, I have everything on my desk.
Jon Maddux: That's awesome.
Alexander Inda: And other brokers, you really have to go through it. It might be their first non-QM deal. They might need to talk to an underwriter, get the full picture. Either way, I'm more than happy to do either one of those because at the end of the day, as long as we fund the loan, then it makes sense. My repeat brokers are getting more from the non-QM side. My first time broker, hopefully we slam it out of the park so he could have the confidence of getting more non-QM business, too. That's equally as important.
Jon Maddux: I think when you do non-QM successfully and good and well, other business comes your way. I think a lot of people may be watching, they're like I don't know if I want to get into non-QM or I don't know if I want to do this. But once you do it and you do it well, people start referring you loans. I'm sure you've probably seen when you do a good job for a broker, they start sending you more business. And they probably get more business out of that too, right?
Alexander Inda: Yeah.
Jon Maddux: I mean, I know as an originator, I've always got referrals from people when I do a good job. And if it's a tricky, hard loan, because a lot of times they, I don't know want to say rich people, but just entrepreneurs or self employed people, they hang out. They talk. Just like everyone else. Like if you're a veteran and your specialty is VA loans, they all hang. They talk to other veterans and there's just a circle that people have. That little sphere of influence in their groups. I think entrepreneurs have groups and organizations that they're part of and they talk about stuff. Oh yeah, I had trouble getting a loan. Oh, you should call my guy. And then it just turns into more business, when you're good at something. I think having, as a mortgage broker, on your tool belt, having a really great non-QM AE like you or a company like FundLoans is a huge benefit to being able to get more referrals. Would you agree?
Alexander Inda: Yeah, absolutely.
Jon Maddux: I think it really helps. I mean, because there's companies out there, I'm not going to name names, who do every kind of loan under the sun, and then they have a non-QM product. And then it's like their underwriter is underwriting FHA in the morning and a VA at lunch, and then they're trying to get a non-QM done before the end of the day, and it's like, there's just no way they can do that. It's like someone who's an eye doctor trying to do the ears or something different. You know?
Alexander Inda: Yeah. You might not mess up too bad, but ...
Jon Maddux: You want [crosstalk 00:20:13] someone working on your eyes that's an eye doctor, that's all they do.
Alexander Inda: Right, exactly.
Jon Maddux: All right, so we've said in the past, we have some videos out, we're the Spartans of non-QM. We pride ourselves. This is what we do, this is what we focus on. Where have you seen that in your business? Like where being highly focused on something just makes you that much sharper, makes you that much better? The Spartans were special because they were professional soldiers. Like that movie we talked about, I think in the last podcast, the 300. Where the Greek guys, one's a potter, one's a baker, one's a fisherman or whatever. And then the other guys, that's all they do, is they're fighters. They're soldiers. They're professionally trained killers. When an AE at another company that does a ton of different business, they got to remember FHA guidelines. They got to remember all these different types of guidelines. Then, to try to remember guidelines for non-QM, which are so different. I mean, a loan is a loan, but there is a lot of differences, right?
Alexander Inda: Mm-hmm (affirmative).
Jon Maddux: Have you ever gotten feedback from brokers that have said hey, wow, you know this right off the top of your head. Or, you know this information. I want to work with you. Have you seen that happen? Like, where someone's talked to a Carrington or someone like that and then they call you?
Alexander Inda: Yeah, I think quite a bit. Especially with our bank statement programs. The number one question I get, usually, after a bank statement scenario is how do you calculate income? I say well, we have over eight different ways. And they're like what do you mean? What do you mean eight different ways? They're not used to that kind of level of options. The way I explain it is not every one way is going to fit every self employed borrower. If you're a CPA that works from home or if you're a construction guy that has 100 employees, it's not fair to do a straight 50%. Things like that. So, usually when I have this conversation with a broker, they're like holy cow. You really do, not one, know your stuff, but two, have the tools for me to be successful in my business. I think that's the name of the game, giving our brokers tools for them to go get more business so we get more loans. Not only in the jumbo space, but all non-QM atmosphere in general. But, going back to your Spartan reference, I think one of the big things that they were known for too is the formation and moving all in the same speed at the same time, and knowing their role. We really know our role here at FundLoans in this non-QM space. As long as you move in the same direction, everybody is going in the right direction.
Jon Maddux: Right. Yeah, it's helpful when everyone is paddling the same way, right?
Alexander Inda: Right, exactly.
Jon Maddux: When you've got a weak link, you're only as strong as that. One thing I will say that you've probably seen over the years, because you've worked here what? How many years now?
Alexander Inda: It's about a year and four months now.
Jon Maddux: So, a little over a year. Non-QM is still fairly new. I mean, it's starting to come of age. When we really all work together as a team, part of that is because we've done enough loans together. Especially these big, tougher loans. We've done enough of those to where we can really kind of see, and through the experience. It's like if you're going out on a trail somewhere, like Machu Picchu or something, you're going to want someone that's been there many times and can tell you where to go. You don't want to go this way, there's scorpions.
Alexander Inda: Right, yeah.
Jon Maddux: We've been there. We've been down this path so many times and we've finished these loans. Especially the big ones that are tough. I mean, lot of things that people don't understand about big loans is that unless you have billions of dollars as a company, it's really tough to fund really large loans. Because one, the warehouse banks don't want you to do it. They're like, it's over our limit. Two, the investors might say we want it, but then what if they don't after a certain point? We pool our loans together. We also have great relationships with our investors. It's a tough thing to do these big loans, but you've seen it. I mean, tell a little bit. Do you have any stories about where a broker brought a loan to you, didn't like the price maybe, and then left and then came back because someone couldn't do it?
Alexander Inda: Yeah, absolutely.
Jon Maddux: Tell us about that, because I've heard you talk about that a few times.
Alexander Inda: Yeah, and that's why sometimes ... I've said this before. I don't know if I've said it in the podcast, but usually the first conversation with the broker is about price and the second one is never about price. Because you realize there's so many people now doing non-QM. As you were mentioning, they might have a traditional FHA program plus a non-QM program so they could blend their rates maybe. I don't know what they do, but they go there. They try to make it work, spend 30 days. Next thing I know, I get a call saying hey, remember that scenario? Do you take transit appraisals? I love that question, do you take transit appraisals? Yes, I take transit appraisals.
Jon Maddux: That's awesome.
Alexander Inda: Yes, we can do your scenario because I remember I did your bank statement analysis 45 days ago.
Jon Maddux: You already did the work, right.
Alexander Inda: Yeah, so now we're ready to go. Let's get it in. But, no hard feels. At the end of the day, can I service you better? Can I get you the loan? Can I get your borrower a loan? Yes. Okay, let's do this and then next time let's not have a conversation about price.
Jon Maddux: I think part of it is too, say another lender, they only have maybe one or two ways of doing bank statements, let's say. So, they have their little, narrow non-QM product. And maybe they have really good pricing on that non-QM product. Really low pricing. But, they're going to get a select number of loans that way.
Alexander Inda: Correct.
Jon Maddux: You might price a loan out on the spectrum because you know, well, you're not going to fit in this little box, but we have these four other boxes. So, you're going to quote them this box. Not this box or this box, the lowest. Where these guys don't even know any better because it's all they have, is this box of non-QM. You could've quoted them probably a rate very similar, but with the experience that you have, you'd be like, you're not going to qualify for that. Brokers typically are looking for the best rate. Unless they're very thorough and they've done a lot. If they've done a lot and they know that's not going to fit in that little box. I'm not going to risk it and waste 45 days with these guys. One thing, I don't know if people do this ever, but do you ever tell your broker well, why don't you just leave it here? Let us get it approved. Let's get the docs. And, if you get them the docs too, at the three and a half percent or four, whatever the rate is. Take that one, but at least don't waste time and let us get you the docs. Have you ever done that strategy?
Alexander Inda: Yeah, absolutely. It's funny, I just kind of had a situation like that a couple weeks ago. It was submitted with another lender. They gave us a call. I knew exactly what program they were talking about based off what they were saying that they needed an exception for to get that one approved. The exception was for multiple bank statements for a bank statement loan. We have no limit to the amount of bank statements we could use, so I knew it was an exception for us in this prime program. They were trying to go for this prime plus program, which I knew what it was and the rate was the same for us as it was for the competitor. I told them on the phone, I said look, we have the exact same prime plus. You're not going to qualify. Here's your rate for a prime [crosstalk 00:27:56] loan. This is like an eighth of a rate.
Alexander Inda: I said we can try it this way, but I'm letting you know I know exactly why you're getting denied over there. But, the good thing about us is we have all these other different options. They have one, we have a ton. So, she brought it in. Condition approval out the next week. I don't know if they ever got the exception, but the next think you know we're ordering both appraisals. I will dissuade my brokers to double submitting, what have you, like you were mentioning, because you know what? If somebody else says they can do this for me at three and a half percent, go ahead. David always mentions [inaudible 00:28:31] saying go ahead, tell them to lock it as soon as they can because that's a great deal. If we're off by a point or half a point, I know we'll match if it's like for like. But, we believe in what we can do here. I don't believe a concession is always warranted. If it's one of my repeat brokers that's really saying hey, this is close, then yeah, let's have the conversation. But I believe in our ability to fund these things.
Jon Maddux: That's good.
Alexander Inda: Versus everybody else's.
Jon Maddux: Yeah, I like that. I mean, it's like being in the desert with no water. You'd trade anything you have for that water. It's like if you can't close a loan, then a 3% rate doesn't matter. It can't close.
Alexander Inda: Yeah, exactly.
Jon Maddux: You got to just be realistic, I think, about ... I think people have to realize that yeah, rates do matter. But not if they can't qualify.
Alexander Inda: Right. Another broker of mine just said we have to put a pause on an approval on an appraisal which you already have back because somebody else told me they could get three and a half rate. And they're not at three and a half bar. We're doing 90% interest only, complicated tax returns. We're using bonus off the new W-2 and the new pay stubs. Just changed businesses a year and four months ago.
Jon Maddux: Have you ever fired a broker? You're just wasting your time so much that you're just like I'm not going to talk to you anymore.
Alexander Inda: Have I fired a broker? I've wanted to so many times.
Jon Maddux: But nobody that's watching, obviously.
Alexander Inda: Right. Nobody that's watching, obviously. But, that's not my temperament. Sometimes in this business-
Jon Maddux: You're a kind AE.
Alexander Inda: ... Right.
Jon Maddux: And anyone is lucky to work with you, so I get that you wouldn't just fire someone. There are some AEs in my past, where I worked with, and they're like oh, it's Jon Maddux. I don't want to answer this. He asks me the same question for or five times.
Alexander Inda: Well, I flat out said hey, Jim, we talk to each other not the best of ways. Do you still want to work together? They're like, you know what, Alex? I do. They'll call me back a week later, give me a new scenario. I'm like okay, so we're on the same page. I think as long as you're on the same page, you can have an honest conversation. Be like hey, Jim, you know what? I'm sorry. And then he's like you know what? I'm sorry, too. And then, it's like you move on. Because we're in the business of funding loans. No hard feelings. We don't have to grab a beer afterwards. I would love to grab a beer if you want to, but if you don't want to, no problem. Just keep [crosstalk 00:30:56] business.
Jon Maddux: We're here to help lift the loans across the finish line. That's very true. What would you say you like best about ... Anything you could give? Like, any tips that you could give? Besides, obviously, the cover letter, what else helps separate the bad loans from the good loans? Like, one of your brokers. What's a good tip for your brokers?
Alexander Inda: I think I get this more so with new brokers versus experienced brokers, but you'll get ... Again, I'm not familiar with the FHA or the government loans, but-
Jon Maddux: Well, that's a good thing, because you only have so much bandwidth in everyone's brains. It's like, if you had all those guidelines in your head, you would be less effective, I think.
Alexander Inda: ... Yeah. Like, we don't do 100% down. No finance. We don't have those products. So sometimes when you get like a 90% loan to value, they'll be like oh, what do you mean? We need reserves? It just takes a little more time to go over those humps. But, I mean, my recommendation is, if you're a new broker or established broker, I would just text your AE at weird times of the day just to see how fast he responds, or if he does respond. Because if he's responding, he knows the business, he's working the business. He might be at work, he might be at home working. One of my brokers called me, he was in Florida, he called me at 5:30 California time. He called me and I answered. He's like hey, I know it's 5:30, but rise and shine. Loans don't sleep.
Jon Maddux: That's right.
Alexander Inda: It was funny, but at the same time, he knew I would always try to answer my phone. Sometimes you can't answer your phone.
Jon Maddux: Right. No.
Alexander Inda: If you're in a meeting.
Jon Maddux: In the showers.
Alexander Inda: Yeah, things like that. Dinner with the wife. My wife got tired of me answering-
Jon Maddux: You don't answer?
Alexander Inda: ... She got tired of me answering the phone, but I still do. I'll be like hey, I'll be right back. But, if I was a broker, I'd text my AE at weird times and go hey, what you doing? I think it's-
Jon Maddux: Do you want to work on a loan?
Alexander Inda: ... Right.
Jon Maddux: It's 2:00 in the morning.
Alexander Inda: Yeah, because if they're up and they're at them, or if they're responding at least, or if they ... Don't, I mean, [crosstalk 00:33:05]
Jon Maddux: I think what you're saying is brokers should be looking for people that care about their loans as much as they do.
Alexander Inda: Right, exactly. That's my point.
Jon Maddux: I mean, if I was doing a lot of loans out there, I would want to be working with an AE like that.
Alexander Inda: Right.
Jon Maddux: Yeah. It's hard to find someone that cares about a loan like you do. You know what I mean? Like, when you're the broker, you're talking to the borrower, it's all on your shoulders. And when you have someone on the team that's very into it and making sure that the deal is going to get done and you can trust them, that matters. It makes a huge difference, I think.
Alexander Inda: I just care about the borrowers in general.
Jon Maddux: Yeah. I mean, they're human beings. When they're going to the closing table or they're ... It matters.
Alexander Inda: Right.
Jon Maddux: It's their life. It's not just numbers and a paper that you just saw. It's like you know there's humans on the other end of these who have to make their mortgage payments, but they also have to close or they have to ...
Alexander Inda: Right, yeah.
Jon Maddux: We don't close loans, we don't get paid. That's what we're here for.
Alexander Inda: Exactly.
Jon Maddux: Closing loans. Talk to us about team Inda. Just give us a little overview of team Inda.
Alexander Inda: I hired both my brothers, Quinn and Joseph Inda. They joined the team. I think they just finished month one and a half, so it's their second month.
Jon Maddux: Cool.
Alexander Inda: They funded just north of $2 million their second month.
Jon Maddux: Nice.
Alexander Inda: And they're on track to do just north of $5 million their third month.
Jon Maddux: Nice.
Alexander Inda: They're just hungry. They're hungry. Obviously, they're [crosstalk 00:34:38]
Jon Maddux: They're like sponges, too.
Alexander Inda: Like sponges.
Jon Maddux: They're just learning so much.
Alexander Inda: Right. Kind of like the Sparta of non-QM. If I go right, they go right kind of thing. But they both bring completely different things to the table, and that's why I knew they would be good as a team-
Jon Maddux: That's good.
Alexander Inda: ... with me helping or guiding. They help me too sometimes. My plan is to grow the team to where we could deliver the service to all of our brokers to answer the phone call every time. So, if I don't answer, you know Quinn or Joseph are going to answer, and vice versa. Because my plan is to really take team Inda inside FundLoans. I want to do $30 million as a unit by the end of the year, and I think that's highly attainable.
Jon Maddux: Awesome.
Alexander Inda: That's kind of the brief over.
Jon Maddux: Have you already thought about what you're going to spend it on?
Alexander Inda: No. Well, there's a bunch of stuff. I want to get a new house and things like that, but my wife wants to have kids in the next year.
Jon Maddux: Nice.
Alexander Inda: So do I.
Jon Maddux: Six kids. Six kids.
Alexander Inda: Six kids. Yeah, we'll do six kids all the way next year. Just pound it out.
Jon Maddux: That's cool. Well, when you make good money, I mean, it doesn't matter if you're making money, you can have a lot of kids. But, it's just great. Family is great. Having a goal. Having what you want your future to be is huge.
Alexander Inda: With this business, you get what you put into it.
Jon Maddux: You do.
Alexander Inda: If you're a 9:00 to 5:00 guy, you're going to get a 9:00 to 5:00 paycheck. If you're just grinding it out, trying your best to do best and doing your internal work to learn the business and get better in your own aspect, you're going to pay some good dividends.
Jon Maddux: Yeah, they say work smarter, not harder. But you can do both, work smarter and harder.
Alexander Inda: Right. I need to work on being more efficient, but that's why I'm here from 6:00 to 9:00 PM, because obviously I'm not.
Jon Maddux: But, I think as you grow and as you get more experience, there's ways that you can put together a plan and then know I got this covered with Joseph or this covered with your brothers. You can put stuff in place to scale, I think. I think that's what a lot of people do, is they grow in their businesses. Like brokers, they'll hire loans assistants and they'll hire more processors or different ... You have a big team. There's big broker teams that do huge numbers and they just scale it. They just know what they're good at. They know okay, my highest and best is not doing the bank statement calculations. I just can't do that. So I'm going to find someone that can take care of that. My best is just to be on the phone all day with borrowers. So, people make calls for them and then they get on the phone and then they transfer it. There's all kinds of ways you can leverage your highest and best use, I think. Finding that and knowing yourself is a key to success. If you know you're good at this, do more of that. If you know you're bad at this, don't do that. Hire someone else that's great at that, put them in that seat. Like you said with your brothers. They both have different strengths, right?
Alexander Inda: Mm-hmm (affirmative).
Jon Maddux: By doing that, you're able to grow and scale your business, which is just going to get you to $30 million sooner.
Alexander Inda: Right. Yeah, for six months we plan to be at full pistons.
Jon Maddux: Yeah, firing.
Alexander Inda: Broker visits. Everything every which way. Just show up at a broker office and say hey, here we are. Let's go through every file you guys have and all of us be subject matter experts.
Jon Maddux: That's good. Well, how does someone get approved with us and how does someone get to have you as their AE?
Alexander Inda: It's quite easy to get approved. We utilize Comergence and our broker package is pretty quick to go through. It was just redone. We just revamped the whole broker approval process, so onboarding has been pretty efficient and with a nice greeting at the end. Once you get approved, usually it takes about 24 to 48 hours, depending on the package and some things that the brokers need to collect, then we can start submitting right away.
Jon Maddux: Nice.
Alexander Inda: We have a pool of AEs here in the office. On the website, you could find us. LinkedIn, big presence there. Things like that. So, there's a lot of different ways to find an AE here at FundLoans.
Jon Maddux: So you're not just in one state or one city, you can work with brokers any part of the country that they want to do loans in the states that we're licensed in. Right?
Alexander Inda: Yep. [crosstalk 00:39:11] closing loans in Texas, Florida, Hawaii, Oregon, Washington, and California this month.
Jon Maddux: Nice.
Alexander Inda: But we're licensed in Colorado, Utah, Maine, Wyoming, Georgia.
Jon Maddux: Did you say Maine? Maine? Are we in Maine?
Alexander Inda: Montana. Montana.
Jon Maddux: Don't send us any Maine loans.
Alexander Inda: Not Maine, Montana.
Jon Maddux: Not, it's true. But we're adding states too, so there's a few others that are on track to be getting us to 20 states, I think, here soon. So, that's good. Also, we have some announcements coming up pretty soon for automation, which is really cool. So, some cool stuff coming for non-QM. Even though we hate the name non-QM, it's what we do.
Alexander Inda: Right, exactly.
Jon Maddux: Anything else you want to leave the broker community today?
Alexander Inda: I mean, just be out there grinding. I'll be grinding with you guys. Let's do it one loan at a time. Not every loan is going to be easy, but we're going to be able to get them done.
Jon Maddux: That's awesome. Please like, share, subscribe, and tell your friends about our podcast. It'll not only help you, but help them, help us. And call Alex.
Alexander Inda: Call me.
Jon Maddux: See you next time. Thank you for listening to our podcast. If you guys are looking for more content like this, we have a FundLoans YouTube channel, where we give away more tips, secrets, and origination ideas. You can also email us at firstname.lastname@example.org. And if you've made it this far, I think it's safe to say you like our content, so please subscribe, share, and send us your scenarios. Let's FundLoans together.
On this episode, Jon Maddux spends some time with FundLoans Underwriting Manager, Jerry Tubbs. Since making the switch from Loan Officer to Underwriter, Jerry has quickly moved up the ranks, managing large networks of underwriters as well as personally u
"Mind-Bending Mortgage Lending" With Jerry Tubbs, Secrets from Non-QM's Top Underwriting Manager, As Featured On FundLoans' Vlog "The Million Dollar Mortgage Experience.
Here's The Full Transcription
Jon Maddux: 00:00 On this episode, I get to spend some time with our underwriting manager, Jerry Tubbs. You might be familiar with his voice from our intro. He's underwritten thousands of loans in his career and has seen almost every scenario you can imagine. We discussed topics from catching mortgage fraud, to how you can package a loan to almost guarantee an approval. Just, kidding, but definitely his advice will give you the highest chance to get your loan approved. Listen close as we hear about the craziest loan Jerry has ever underwritten, to finding creative ways to originate million dollar Non-QM loans.
Jerry Tubbs: 00:32 Welcome to the Million Dollar Mortgage Experience podcast. Listen in as CEO, Jon Maddux of FundLoans reveals tips, secrets, and origination ideas to fill your pipeline with million dollar opportunities.
Jon Maddux: 00:48 Welcome to the show, Jerry. Thanks for coming on.
Jerry Tubbs: 00:51 My pleasure.
Jon Maddux: 00:52 So all of our viewers, most of them are mortgage brokers, they're people that want to learn a little bit about Non-QM. This is a chance for them to really lift up the curtain and look under the hood, and just to kind of see what's behind a loan. When someone is looking at a Non-QM file, and I think we talked about this before we started the cameras, is for an underwriter, maybe it's in my mind, it's like they get a present. They get this present, they got to unwrap it and see what's in there, because you never know what's going to be in that file. It could be a big $3 million loan, it could be a smaller loan, it could be something crazy, but I know as an originator, how many different scenarios I've seen in 21 plus years. As an underwriter, I mean, you get to see every little detail about this person. So you get to look in their, you see their dirty laundry, you see everything about them. Tell us just real quick about how you got your start in underwriting.
Jerry Tubbs: 01:52 I actually started out in sales. I was originating loans, and kids started coming along and I made the decision that I might want at the end of the night, rather than being in a real estate office at 8:30 at night, I might want to be home playing with my kid.
Jon Maddux: 02:11 It's a good life choice.
Jerry Tubbs: 02:13 I took an opportunity to stay involved in the mortgage business doing that way. I had a really good track record as an originator, getting loans done. Went three years without a denial, so I was doing a lot of underwriting at the application.
Jon Maddux: 02:28 You were actually your own underwriter.
Jerry Tubbs: 02:30 I was, I was. It was a natural transition for me. One of the things that really benefited me and kind of skyrocketed my career was being able to take that ability to structure loans like an originator and not forget how to do that when I got into underwriting.
Jon Maddux: 02:47 Interesting.
Jerry Tubbs: 02:47 So being able to leverage loan structure as an underwriter and figure out how to make things work, verus how to make them not work has kind of helped me make my mark in the underwriting world. So pretty soon I'm being asked to manage underwriters and contribute in bigger ways because of that ability.
Jon Maddux: 03:06 That's very cool. So in your office, you have on your wall it says, "Mind-bending mortgage lending." What does that mean to you?
Jerry Tubbs: 03:14 For me it's a reminder that again, I'm trying to figure out how to make the business work for customers, not how to remind them how it doesn't work, and in the space-
Jon Maddux: 03:28 Coming from a place of yes, sort of.
Jerry Tubbs: 03:29 Yeah. The really cool thing that makes it fun for me to come to work every day is I'm not doing commoditized loans, I'm not doing Fannie, Freddie, and just reminding people how they don't fit into this cookie cutter that those agencies have created. I'm in a space where when people, when it makes sense that people have the money, and the wherewithal, and the desire to be homeowners or change their financial situation, that we've got products that accommodate them even if they don't fit into this cookie cutter that the agencies have created. So that's fun for me.
Jon Maddux: 04:08 Because you get to use a little more creativity in the process and it's not just anyone can do it. It's kind of like I think, and I almost look at it from a songwriter standpoint or from a musician standpoint. There's the people out there that can read music and then there's the people that can either play by ear or they can play by just kind of making it up. They can sit down in a piano and just kind of make up something, but it sounds good, right? Or they can go pick up a book and read, read exactly Bach or whatever the piece is and they learn how to do it. But often people who can read music have a tough time playing by ear or just making stuff up.
Jerry Tubbs: 04:49 Or coming up with something new like you're saying.
Jon Maddux: 04:49 There's some creativity I think that fits in certain people. It sounds like you're not just the kind of person that can just read music or make sure something fits in the box, but you can say, "Well, maybe this makes sense if I do these two different things or look at it from a different perspective." Is that?
Jerry Tubbs: 05:08 I would say, and in music, I'm a remedial reader. I can read it eventually, but after a fast, but when I can play the radio that's in my head, you lock me in a room and 30 minutes later, if you need a jingle, you're going to have it.
Jon Maddux: 05:23 That's cool.
Jerry Tubbs: 05:24 And I feel the same way about underwriting. This is going to be this mishmash of assets, and income, and property, and credit, and you'll look at it and once you evaluate it, you have an opportunity to say, "I can make something out of this."
Jon Maddux: 05:39 That's cool.
Jerry Tubbs: 05:40 Whether this would fit in this product, or I can't do it there, but I could do it there, or if I tweak this or pay that off, and keep molding it until, or almost like turning a Rubik's Cube until those colors start to line up and you can cross the finish like with a solution.
Jon Maddux: 05:56 That's a cool way to look at it, yeah. I don't really like the word Non-QM just because it's like, what does that even mean, right? But I know we call it make sense lending or alt-doc, or non-prime, but it's not really not even non-prime, because a lot of these loans are good FICOs, good credit, maybe one little thing is off here or there because they're human, right? And they don't always pay attention to their credit. Some people are paying attention to their business, they're self-employed and they just, either the person they've hired to take care of their credit, or just something missed, or something got missed, and so their credit score is not always perfect, but what about this as what we call make sense lending? What do you see is kind of the reason why Non-QM is make sense lending?
Jerry Tubbs: 06:41 Well, I think one of the things is sometimes you'll find a disparity between someone's FICO score and their credit performance, and it was something I struggled with when FICOs were first introduced back in the '90s. They were really introduced to create some electronic convenience for what was a new fangle toy in the mortgage business back then, which was LP and DU. It was a lot easier to program one box to plug a FICO score in that to actually create a computer that would look at a credit report and decide whether someone was credit worthy, and one of the first things we ran into then, that I still run into today, is some people have different attitudes towards using credit, and especially with some of the wealth profiles that we see. We have people that have so much money at their disposal, they would never have to use credit. They would never have to borrow money, unless it was a convenience for them, whereas certainly never a necessity to borrow money, and those people traditionally that don't use a lot of credit are going to have a lower than normal credit score, and it has nothing to do with their ability to repay.
Jerry Tubbs: 07:48 You can look at a sheet full of account they had years ago that they paid on time. So you'll get people with lower credit scores, and by that I mean someone in the 600s instead of the 700s, let's say, and they've got 10 or 20 tradelines they haven't used in years, and every single creditor they've ever had contact with has been paid on time, but they're pulling a 640, and someone with two or three tradelines they've used recently might be in the 700s, and I would rather lend money to this person that doesn't need the credit, frankly.
Jon Maddux: 08:21 Yeah, right, and that's what you see sometimes in banks. It's like if you don't need the money, that's when it's the easiest to get it, right?
Jerry Tubbs: 08:27 Yeah.
Jon Maddux: 08:27 You got all this money in the bank, and you got no real need, but when you're like gosh, I need to borrow another few grand for whatever, they're like, "Nope, sorry, no, no, no."
Jerry Tubbs: 08:36 Yeah.
Jon Maddux: 08:38 So without divulging private information, you've been in this business a long time, I know you've probably got at least one interesting story that you can share about a crazy underwrite, a crazy borrower, a crazy profile, whatever it might be, just something interesting. What would you say?
Jerry Tubbs: 08:55 The one that comes to mind almost immediately, and to your point, there's hundreds. It's like making me pick my favorite child. One that comes to mind that was one of the trickiest ones, I was working for a big bank in New York, and a very well-known formed baseball player came in and.
Jon Maddux: 09:14 Like walked in?
Jerry Tubbs: 09:15 Yeah, actually physically walked into the-
Jon Maddux: 09:17 Came into the bank.
Jerry Tubbs: 09:18 To the branch, and when he explained the situation they were like, "We can't help you. We need you to talk to this guy." So got ushered up to my office. Anyway, when he left baseball he was on this extended contracts that continued to pay him years after he played, so he was still at the tail end of these multimillion dollar contracts, dropping money in his lap and hadn't picked up a bat or a glove in five years. Anyway, post baseball he had got successfully involved with some real estate developers, and they began buying up high-rise apartment buildings that were in disrepair, and they would form an LLC for each building, each individual address. They would take the building from a bombed-out hole, they would completely rehab it, they would fill it with Section 8 subsidized rentals, and then when this investment was upright, it was full of paying tenants, they would present that as a turnkey rental opportunity for an investor that didn't want to get their hands dirty with the rehab process and the rental process. The numbers were astounding. Each building could be acquired for 10, rehabbed for five, held for another five, and sold for 30.
Jon Maddux: 10:43 Wow.
Jerry Tubbs: 10:47 The reason I came to pass, to even talk to this gentlemen is he was looking for a mortgage for his own home.
Jon Maddux: 10:55 Gotcha.
Jerry Tubbs: 10:55 He was moving his family away from the city and out to where he had grown up, buying a beautiful home, going through the traditional mortgage process, and confronted with the type of things that the traditional mortgage process slaps in your face which is I need two years of tax returns on all of your businesses. At that time, the moment that I met him, he had 60 of these buildings in the pipeline. About 10 to 15 that were in the acquisition phase.
Jon Maddux: 11:24 Were these each LLCs or corporations?
Jerry Tubbs: 11:26 Every single building was a single LLC.
Jon Maddux: 11:29 Wow.
Jerry Tubbs: 11:29 He had 60 LLCs.
Jon Maddux: 11:32 So what's it like talked to you?
Jerry Tubbs: 11:34 It was presented as a full doc double year because that's the only type of things that that big nasty bank did.
Jon Maddux: 11:42 Yep.
Jerry Tubbs: 11:43 And he was-
Jon Maddux: 11:46 And this is probably back in the day when you had physical files at your desk, yeah?
Jerry Tubbs: 11:50 It was digital. This is only a few years ago, but the idea of a single underwriter tearing through all 60 for both years, coming up with cash flows for a situation where every building was on some different level of spectrum of completion to.
Jon Maddux: 12:10 Man.
Jerry Tubbs: 12:11 Just blocked the building yesterday, got it rehabbed but not rented, fully rented and on the market, or sold, but this process of grinding these buildings through this process. They got so good at it, it was like printing money. In the two or three times that I met to get some documents, ask some questions, clarify, this gentlemen brought in multimillion dollar settlement checks from buildings that successfully closed, and he's just depositing them into his checkings.
Jon Maddux: 12:44 He's like, "Here's another one."
Jerry Tubbs: 12:45 Absolutely. But anyway, the solution for us was to leverage the portfolio power and isolate balance of the LLC's cashflow. So we actually ended up cash flowing all these buildings but did it at okay, one level, added back the millions of dollars of depreciation on all these buildings to show that this man didn't lose $10 million last year.
Jon Maddux: 13:11 Like it says on his returns.
Jerry Tubbs: 13:13 Yeah, but he actually made 30 million and didn't pay taxes on any of it.
Jon Maddux: 13:19 It sounds like a good model.
Jerry Tubbs: 13:20 Yeah, presenting it the right way, understanding those cash flows, knowing what we could add back, what were the paper losses, knowing what we could do with those loans, be able to prove that he was an extraordinarily wealthy person, a very good risk for the loan, and we were able to get him closed on his new purchase on time, and the last time I spoke with him he was wildly happy and still very grateful.
Jon Maddux: 13:46 That's cool. Were you a fan too?
Jerry Tubbs: 13:49 Had never met the person or had followed his career, but at the tail end got him to actually autograph a couple baseballs for the guys on our acception desk that said, "Thanks for getting me home."
Jon Maddux: 14:06 That's cool, that's great. These kind of deals are obviously different and there's a make sense approach to them, but how does it differ, what's some of the main differential or different points that you could say between agency, government, and Non-QM? What were some standout things that really could differentiate it?
Jerry Tubbs: 14:29 I think one of the mission for Non-QM has turned out to be making it easier for self-employed to get money that they deserve.
Jon Maddux: 14:38 Right.
Jerry Tubbs: 14:40 Typically if you're starting a new business, even one that gets traction immediately, you've got to sit out two and a half to three years to have enough of a paper trail at the IRS to be able to walk into a traditional lender and say, "I can prove to you I make enough money to afford this house payment."
Jon Maddux: 14:57 Right.
Jerry Tubbs: 14:57 And using products that have flexibility like bank statement loans gives me the opportunity to catch those people once they're already successful but not make them sit through the two or three years it's going to take to develop an IRS worthy paper trail.
Jon Maddux: 15:13 Yeah.
Jerry Tubbs: 15:13 So we can get people that have an immediate need for the money, they have a great ability to repay, they're not a big mortgage risk, they just don't have the paperwork they need to satisfy those big bad agencies.
Jon Maddux: 15:28 Right, and I mean, you said it just right with self-employed borrowers. I mean, that's something that's a trending up, especially more recent there's a lot of people that are just starting new businesses. People that are going from being a W-2. They're going from a W-2 job to being a contract employee. So they get let go, or they say, "Well, we still want you but we're going to pay you 1099." Or they've been doing, like say they've been a doctor at Scripps for many years, and then now they're a doctor but they're on their own practice. So it's like you really are going to say this guy's risk is much different? I mean, I know going out on your own versus having people walk through your door from a big hospital is different, but they're still a similar profession, things like that, they've been doing it for a long time. It's always interesting to see how the guidelines of Fannie, Freddie and government just, it really doesn't take into consideration the make sense approach.
Jerry Tubbs: 16:24 Yeah. They're biased towards wage earners.
Jon Maddux: 16:26 Yeah.
Jerry Tubbs: 16:27 When you think about it, self-employed people are still the exception and not the rule.
Jon Maddux: 16:32 Right.
Jerry Tubbs: 16:35 I would bet it's an 80 20 type situation, where 80% of us, 90% of us are wage earners, it's that special 20 to 10% of folks that are out there doing their own things. The rules aren't really written for them, and so those exception type borrowers need exception type mentality. You have to think about those people aren't going to be living their life just so they can come in and make it easy to do a mortgage once every seven years when need one. They're living their life the way they need to. They're managing their cash flow for what makes sense for their business and their business strategy. It's my job I feel to take a look at that, stand back for a moment and go, "You make more money than I do. You deserve a loan." How do I tell your story in a way that takes advantage of what you've done that is exceptional, and present it in a way that makes people realize there's not a lot of risk in this borrower compared to the one that has two W-2s and a pay stub and [crosstalk 00:17:40].
Jon Maddux: 17:40 Yeah, because they could get fired tomorrow and lose their job.
Jerry Tubbs: 17:43 Yeah, and then they'll be self-employed anyway. Look at the world.
Jon Maddux: 17:47 For sure. Well, on that kind of thought, what can brokers do to better, how could they do a better job at getting the loan prepared to be seen by an underwriter like you?
Jerry Tubbs: 18:01 I honestly think you need to be a better storyteller. If you, and I would take the time to type up a paragraph of what does this guy do, how does he make his money, how much money does he typically make, how often does he make it? It's so many times I can't tell you where you'll have a very generic sounding business name that really doesn't tell you if this is a product, if it's a service, or if it's any other kind of operation, and those type of details help make sense, because then when I look at bank statements, it makes the deposits that are going in make sense, like oh, that's probably one of his business deposits because it's the right size, it's the right frequency. So telling the story, understanding, and I got to believe if you're an originator, I got to believe that showing that much interest in your borrower to find out how he makes a living, it's got to be a great rapport builder.
Jon Maddux: 19:10 Oh yeah.
Jerry Tubbs: 19:10 So there's a great reason to do it anyway.
Jon Maddux: 19:13 Sure, you have a great chance. People like to talk about themselves too. So if you're asking like, "Tell me how you make money." They want to just talk and you can take notes.
Jerry Tubbs: 19:20 I would assume you'd have trouble shutting them up.
Jon Maddux: 19:22 Right, yeah.
Jerry Tubbs: 19:24 But you're going to learn things that are going to help you present the loan to someone like me and help me understand, because I'm going to have the same questions from a different perspective, which is I need to know how this guy makes money.
Jon Maddux: 19:35 Yeah, and you're looking at bank statements, so you're seeing all kinds of deposits, and some of these deposits you're like, "Gosh, is this income? Is it not income? Is it just somebody is transferring money from here to there?" So yeah, to understand that right off the bat would help you from going down some bad rabbit holes and thinking things that aren't necessarily true, right?
Jerry Tubbs: 19:56 It reminds me of a situation I had. I had a borrower where there was a Schedule C borrower, I actually had tax returns in this, and it wasn't really obvious what he was doing. What was really obvious that he was making a lot of money, and the expense ratio was really almost unrealistically low. So low that it felt like, could these be fraudulent returns? I actually ended up calling the borrower just because I was curious, because it looked like it had something to do with precious metals, but it's not like he had a storefront or he's buying and selling precious metals. I couldn't quite make the connection. So I finally just broke down and said, "If I have permission, can I talk to your borrower and find out." So I called them up, got them on the phone. Turned out what he had discovered is that catalytic converters in cars have a small amount of recoverable platinum.
Jon Maddux: 20:49 Really?
Jerry Tubbs: 20:50 And he had a process that would recover that. So his day was spent going from auto junker to auto junker buying as many used catalytic converters as they would sell him. He would recover the platinum, and he was so good at it, and platinum was like, I don't know what it is per ounce, but back then it was.
Jon Maddux: 21:08 It's expensive, yeah.
Jerry Tubbs: 21:08 Yeah. Back then it was a $1,000 an ounce and he was recovering pounds of it every month from junkyard salvage.
Jon Maddux: 21:17 Jeez. I wonder if he's still doing it. I mean, there's probably only so many of those.
Jerry Tubbs: 21:20 He's probably retired by now. He was making a lot of bread when I knew him.
Jon Maddux: 21:23 Wow. That's a cool thing. So went and called the borrower and found out what, that that's kind of what was going on.
Jerry Tubbs: 21:28 Yeah. Tell me the story, and then it just made me jealous afterwards.
Jon Maddux: 21:32 So I mean, that makes me think like, I mean, and I know mortgage lending is not always exciting. Trust me, it's not the most exciting business, but there are times when you get to look and see some things, and you hear some scenarios that actually are exciting in a way, because this stuff is interesting. You actually could probably.
Jerry Tubbs: 21:51 I've been doing it for 30 years and for me it was Shark Tank before there was a Shark Tank.
Jon Maddux: 21:56 Oh, that's cool.
Jerry Tubbs: 21:57 Because I would learn how every, especially self-employed, how they found a niche and exploited it with their knowledge or their first to market, or whatever their advantage was, and yeah. I've seen, I've had the benefit of seeing a 1,000 different ways to make money.
Jon Maddux: 22:13 That's very cool.
Jerry Tubbs: 22:14 And it's all fascinating.
Jon Maddux: 22:15 That's very cool to see. You mentioned fraud a minute ago. It's been a long time since I've heard about or seen fraud in the mortgage business, thank god, but before the crash, before 2008 there was some fraud happening, like forgeries and different things. Using debt appraiser's licenses, I mean, I've heard of stories and stories, but recently we kind of came across something that could look like fraud. I know that someone did something. It seems like a loan officer would not risk their livelihood, their potential freedom, go to jail or anything like that. I think loan officers are probably less likely to do fraud these days, and maybe it's borrowers. What do you think? Do you think that's something that's kind of coming back? Do you think there's more fraud coming or, with these type of loans or?
Jerry Tubbs: 23:12 That's a great question. One of the points you made was I think most loan officers, and most people in the mortgage business have that mindset that you kind of, once you're in the business, you kind of decide well, I really like this.
Jon Maddux: 23:27 Yeah.
Jerry Tubbs: 23:27 And I had that feeling very early, it's like, "I like this. I'm good at it, I'm going to do this." And as soon as you have that much skin in the game, you are very conscious of I got to make sure that my behavior doesn't jeopardize this, because this is something I'd want to be able to do, and I wouldn't want to do something that would prohibit me from being able to ever do it again. So that mentality is always on my mind.
Jerry Tubbs: 23:53 Also, I think the longer you're in the business, your personal reputation means a lot. I mean, if you end up working with other companies that are because you're selling them loans, or appeasing to their other quality process, and if they don't trust you, it impedes your ability to do business with that. So I'm a big fan of, once you've decided this is a business for you and you want to stay in it, it's pretty easy to stay on the right side of what to do.
Jon Maddux: 24:21 Right.
Jerry Tubbs: 24:22 In terms of the fraud question, I've been doing this long enough to where I see an evolution in fraud, and believe it or not, in the '90s when I'm managing large underwriting groups where we were at at the time, credit report fraud was our biggest problem.
Jon Maddux: 24:41 Really.
Jerry Tubbs: 24:42 There was a 1,000 mom-and-pop credit bureaus, and it would be very easy if some account that was jeopardizing your loan approval showed up on a collection account, let's say.
Jon Maddux: 24:54 Sure.
Jerry Tubbs: 24:55 It would be really easy to call mom-and-pop credit bureau and say, "I'm not ordering another credit report from you again if you don't get that off of the guy's report because that's keeping us from closing." So there was some undo pressure you could apply. One of the things that solved that was when DU and LP came out and people were ordering credit on their own untouched by-
Jon Maddux: 25:15 Right, [crosstalk 00:25:16].
Jerry Tubbs: 25:16 An unscrupulous player.
Jon Maddux: 25:18 Once removed, yeah.
Jerry Tubbs: 25:19 Yeah. Then you knew this is the real credit data, blemishes and all, and what are we going to do with it? And with it came kind of some doc relief where at that point then, the agencies knowing they were getting good data could then start to create relief or yeah, if it's this balance, you don't have to pay it off, or if it's this old, you don't care, you know?
Jon Maddux: 25:38 Right, right.
Jerry Tubbs: 25:39 So it actually, it solved the problem. The next biggest thing we had was tax return fraud, and once the cooperation was set up with the IRS to get transcripts, it really took a lot of the tax return fraud away, and companies that do a good job of making sure they transcript that information protect themselves from a lot of exposure. So you got two big chunks that have been taken out of the industry in my lifetime.
Jon Maddux: 26:05 And also appraisal fraud is probably way low now because there's just, you have to have an AMC, you can't just order an appraisal from their appraiser. You can't just, hey, I need a 2.2 value, can you do that? No. Okay, the next guy.
Jerry Tubbs: 26:18 Yeah. There was a lot of pressure.
Jon Maddux: 26:18 That's how it was.
Jerry Tubbs: 26:20 And it sounded very much like the credit report pressure.
Jon Maddux: 26:23 With the credit, yeah.
Jerry Tubbs: 26:23 Where I'm never ordering an appraisal from you again if it doesn't come in at this.
Jon Maddux: 26:27 Right.
Jerry Tubbs: 26:27 So now that that pressure is gone, I do think appraisal values are a little more solid, and computerized tools help as well. AVMs have come along so far that.
Jon Maddux: 26:38 You can pull up Zillow and Redfin and go, "That says it's worth only a million three, but you're saying it's worth three million?" And then there's no comps. You can really, call bullshit-
Jerry Tubbs: 26:47 You could start to triangulate.
Jon Maddux: 26:47 Really quick, you know?
Jerry Tubbs: 26:47 Yeah. You could start to triangulate what your appraiser is saying, and what your realtor is saying, and what data is saying and start to, yeah, it's probably somewhere in here, and the only thing that we haven't really done in the appraisal world that we need to do, is we need to give appraisers the ability to create a value range rather than a value. Because then any given day, depending on how desperate of a buyer you are or how desperate a seller, that million dollar property might go for 980 and it might go for a million 20.
Jon Maddux: 27:21 That would be an interesting concept to do a range instead, yeah.
Jerry Tubbs: 27:25 Because then you could as a lender, you could decide hey, this is in the upper part of the range, but it's still within reason. Maybe I'll do it at 90 instead of 95. You could play with that range and get comfortable.
Jon Maddux: 27:37 Change the pricing a little bit too, you know?
Jerry Tubbs: 27:40 Yeah.
Jon Maddux: 27:40 Going to the red. You get into the red zone, you're adding a little bit to the range.
Jerry Tubbs: 27:42 Yeah, exactly. Make me interested again. So the last bastion for me is bank statements, and unfortunately it's one of the few pieces of information that we still ask borrowers to provide because we don't have easy direct access to get the information ourselves, and with the tools that are out there, it'd be pretty easy to turn that $1,000 deposit into a $10,000 deposit and make it look like.
Jon Maddux: 28:14 Just [crosstalk 00:28:14] zero.
Jerry Tubbs: 28:15 Yeah, and I think the reason we're possibly even talking about recently after this evolution of, while the other things we've chased out of the business, is bank statement loans are now a popular way to get financing, and it's an easy platform to if you're not getting the answer you want with your bank statements, a little Photoshop might change that answer.
Jon Maddux: 28:39 Right.
Jerry Tubbs: 28:39 There is something that I'm sure the industry is going to have to address, and frankly, there's a lot more technology out there too that could possibly address it than there's ever been. I see that window closing because bank statement loans are getting so popular, and people aren't going to stand to get ripped off using borrower provided information that's not quite on the up-and-up.
Jon Maddux: 29:06 Makes sense. So we've kind of talked about some of the things you like about borrowers and just being able to see kind of interesting stories, and hear interesting scenarios, but what would you say is your least favorite borrower or type of borrower even? Would it be like crazy income tax stuff, or would it be just maybe someone who is just spending too much money? Do you ever get kind of not judgemental, but at the end of the day you go like, "This guy doesn't deserve credit." "This girl doesn't deserve credit." Because of whatever. Do you ever get personal in there? I mean, I know I'm putting you on the spot, but.
Jerry Tubbs: 29:44 I don't really have, I can't say that I have a prejudice on how people make their money or how they spend it, and most borrowers are pretty, it's amazing how self-disciplined they are. It always has amazed me when, but even before I figure out what someone makes or doesn't make, they're pretty good about coming up with a monthly housing payment number that's comfortable for them, and sometimes a challenge for me is figuring out, "Why do you think that's a good payment for you?" But then when I get all the facts in it's like, "Oh, a big chunk of your income is tax free, so it feels like you make more." Or, "You had this debt but you're not having to pay it, someone else is paying it." So there's different things at play where sometimes I don't get it initially, and then the longer I work with a borrower it's like, oh, I get it now. In terms of, I would say the only frustration I ever have with borrowers, and it's fairly rare, is occasionally you'll find a borrower that you've kind of created a roadmap on how to get them from where they are to the closing table, but you need this, this and that, and they've decided either from their personal frustration or lack of understanding about the business that I'm not giving you that.
Jon Maddux: 31:03 Yeah.
Jerry Tubbs: 31:04 So every once in a while it's like, you try to be patient with people, and I realize it could be frustrating for some borrowers because they don't go through the process very often, they don't understand it, but I would say if there's a borrower that ticks me off is the one that tells me what the documentation level is going to be rather than the other way around, but what are you going to do?
Jon Maddux: 31:24 You got enough stuff. Just tell me yes or no.
Jerry Tubbs: 31:26 Yeah, exactly.
Jon Maddux: 31:28 [crosstalk 00:31:28] Those people.
Jerry Tubbs: 31:28 It's like, "I don't think so." I think it's a little bit of the golden rule there.
Jon Maddux: 31:32 Yeah, and they always also ... But I gave you everything. You said that was it, and now you want more? And it's like, "Well, it's like conditions beget, put in conditions." It's like they just.
Jerry Tubbs: 31:44 Sometimes it raises another question that you didn't think to ask because oh, that's the answer. But that doesn't happen very frequently, but every once in a while you get someone that's just had enough and unfortunately they're giving up a few yards from the finish line. It's like, we got to get one more furlong down the track.
Jon Maddux: 32:05 So do you think these loans are risky?
Jerry Tubbs: 32:08 Well no. The type of loans that we're doing typically have really sexy LTVs.
Jon Maddux: 32:15 Yeah, they do. Skin, skin in the game.
Jerry Tubbs: 32:19 Yeah. When you have a borrower making that kind of investment either protecting an investment, equity they've already earned in a refi, or hard-earned money going down for a down payment. That's a big deal. That kind of skin in the game really helps predict what their behavior will be if they ever run into trouble, some life event that keeps them from being able to make the house payment. The hope is as a lender that you'll make the decision of whether or not you could truly afford the home anymore. Is this a temporary setback or is my income is going to be reduced for a while, this not the right house for me? And the hope is that you'll take the right kind of action and put the house in the market, grab the equity that you have and make a better life decision based on your new circumstances.
Jon Maddux: 33:06 Sure.
Jerry Tubbs: 33:06 Versus dropping the keys in the mail or not making your payments, or those sort of thing. Doing the larger down payment loans, you can see a lot of people that their intent is to make those payments, preserve their credit and enjoy that equity, and I love working with people with that kind of motivation all day.
Jon Maddux: 33:28 Yeah, that's true. I was thinking about, I've been seeing lately people talk about there's another crash coming, there's a big downturn, it's due, it's inevitable, and I always think about it like, I like to look ahead and try to look around the bend, but it's never easy to, you don't have a crystal ball, but knowing what we know about how tight mortgage lending has got, has been, and how all these laws are in place to protect us from getting crazy appraisals, to protect us from having fraud, to protect us from really, and then the inventory being small and builders not going crazy and overbuilding again like they did back in '05, '06. So what would you ... What are your thoughts about a crash? Do you think it's going to be centralized? I mean, I've heard corporate debt is going to be something that we got to watch out for, that's going to be a bubble that's going to pop, but as far as just residential real estate, what are your thoughts on that being that we've been so tight?
Jerry Tubbs: 34:38 This is going to go into a second hour, you realize. I'll give you my very short synopsis on what I feel the crash was, and it really gets back to if you go back to Econ 101 in entry level college course, supply and demand.
Jon Maddux: 34:57 Yeah.
Jerry Tubbs: 34:58 Traditionally in the mortgage space, housing there's a relationship between housing prices and median income, and that relationship narrows and broadens based on a couple variables, one would be interest rates. So even at the median income, median household income, if the interest rates get lower, you could support more house price with the same amount of household income, and if there's only so much real estate inventory out there, there could be a tendency, we can buy a house, the rates are really low, and you get some more bidders out there, and supply and demand, there's more buyers than sellers and it'll drive the price up.
Jon Maddux: 35:42 Right.
Jerry Tubbs: 35:42 Similarly, when rates increase, that gap narrows because this median household income can only support so much median house price. So that relationship's been in there for all the times that we've tracked both of those numbers, but it goes through times where it's not quite parallel. My view of what the crash did was because of some of the products, it removed the median household income cap.
Jon Maddux: 36:16 Like ARMs or interest-only, or neg-ams, is that kind of thing?
Jerry Tubbs: 36:19 That plus I could tell you any number for my income because you're not going to-
Jon Maddux: 36:23 Oh yeah, so you took that thing out and threw it out the window, the median household income.
Jerry Tubbs: 36:25 So now, so temporarily for a couple years my median household income is infinity.
Jon Maddux: 36:33 Right. That just makes unlimited demand.
Jerry Tubbs: 36:37 Unlimited buyers.
Jon Maddux: 36:38 Yeah.
Jerry Tubbs: 36:39 So now I have everyone in world could buy a piece of property if they wish to.
Jon Maddux: 36:44 Right.
Jerry Tubbs: 36:44 And many of them wished to.
Jon Maddux: 36:45 Right, many of them did.
Jerry Tubbs: 36:47 And when you have a 100 buyers chasing a property instead of 10 buyers or one buyer, the price just skyrockets.
Jon Maddux: 36:54 Right.
Jerry Tubbs: 36:55 I can tell you that that's happened a couple different times. It's happened in the '70s, where the spread, the traditional spread between house price and median income got 20% worse than its historic norms, but then prices froze and median income rose to get back to that traditional, and then the market could legitimately go up again. So something has to give, the prices have to plateau until income approaches, or income has to go up so fast that allows prices to go up again. In the '80s and late '90s, or early '90s, late '80s, it happened again, that it was like a upper 20s, and then it had to, the market had to close that gap.
Jerry Tubbs: 37:46 Well, during the height of the crisis, I said in a meeting where we could demonstrate that that traditional gap had stretched to 45%. The predictions were it was going to go to 55, where it actually did, but this is a year before the crash. We're seeing that bubble, and then historically we knew that bubble would have to close 90% of that gap. At that point the only way it could give, you just couldn't get household income to creep up that fast. So the only thing that had to give was, you actually had to have value decline. So which we hadn't had in the other bubbles, in the other bubbles you had plateaus, in this you had.
Jon Maddux: 38:30 Crash.
Jerry Tubbs: 38:30 It had to actually tank.
Jon Maddux: 38:32 Interesting.
Jerry Tubbs: 38:33 So it gave back, the market gave back, or had to give back 50% of the 55% bubble had to be given back before the market could ride itself. Getting back to your primary question. What could we have done differently to prevent that bubble? The thing that we did wrong in my opinion is that we continued to add fuel to the fire by doing those stated income or no income loans at extremely high LTVs.
Jon Maddux: 39:03 Yeah. Because the skin in the game wasn't there.
Jerry Tubbs: 39:06 Yeah. If we could've dialed back the LTV as the bubble grew, people could still speculate on housing, but they'd have to do it with their own money.
Jon Maddux: 39:15 Right.
Jerry Tubbs: 39:16 And then the losses wouldn't have been lender losses, they would've been-
Jon Maddux: 39:18 There would've been less demand because less people had their own cash.
Jerry Tubbs: 39:21 Yeah, and fewer people would, it would've eliminated some of the speculators, the highly leverage speculators. It would've been speculators that could afford to speculate with their own cash.
Jon Maddux: 39:32 Right, right.
Jerry Tubbs: 39:33 And then the losses that were taking place, again, going back to borrower repayment behavior, the losses that were taking place would've been losses out of people's cash not out of lender's vaults. So the thing we're doing differently today that encourages me is that even though we're doing creative products, we're doing them with people that have large equity stakes in the property. So even if they are speculating on a particular investment property or even a homeowner, but they're speculating with their money, they're not speculating with money I have in the vault.
Jon Maddux: 40:04 Right. People would play a lot differently in Vegas if they had their own money versus someone else's money.
Jerry Tubbs: 40:10 Yeah, that's a great point.
Jon Maddux: 40:12 That's why all the people.
Jerry Tubbs: 40:13 Yeah, if you get $10 of free play, you're like, "Woo."
Jon Maddux: 40:15 You're like, "Hey, give me some money." Bet it on black or bet it on red, I'm like, "No, I'll do it when I go to Vegas." You can bet your own money.
Jerry Tubbs: 40:22 Yeah. So that's my short opinion of what made prices go crazy is you took the cap off a median income, and I still think you could've controlled it if you hadn't accommodated it with extremely high LTVs on that type of product.
Jon Maddux: 40:38 So you think we're going to be okay.
Jerry Tubbs: 40:40 The skin in the game makes me feel like if people are going to take loss is because of a price correction, it's going to be out of their equity not out of their loan amount.
Jon Maddux: 40:49 Interesting. Yeah, yeah, that's good. So last question for you, Jerry. If you were to say, "To hell with underwriting. I'm going to go back to being a mortgage broker." What would you do today to try to find this kind of borrowers? How would you, would you buy leads, would you call up some referral sources? How would you go about getting these type of loans?
Jerry Tubbs: 41:15 I believe where the business may be going would be taking like an inbound marketing approach where you become a resource for people's questions. So long before they even think about buying a piece of real estate, they start to think about what does it even take to do that, and you create an area where people can navigate in and read, watch videos, type of things that you're doing, educate the self-educate, and then create a forum where as people get more and more educated, and they realize, "I think I'm ready based on these tools and the things I'm reading. I probably could afford a house." And create a launching pad to where when they're ready to get pre-qualified, it's easier for them to do in maybe an automated way.
Jon Maddux: 42:06 So maybe you'd build a website and create a little place for people to read, get educated, and then once they're ready they can do a little application online. So you'd kind of do some online marketing, I see that. Is there any type of other ways you would get it? That's creative and I think that would work.
Jerry Tubbs: 42:24 And I'm a big fan of pre-approvals.
Jon Maddux: 42:29 Yeah. For buyers, right?
Jerry Tubbs: 42:33 Yeah, using a platform like that of finding out how much, the toughest thing about buying a piece of real estate is figuring out how to finance it.
Jon Maddux: 42:42 Yeah.
Jerry Tubbs: 42:43 If you reverse that process and figure out your financing first, then go find a real estate agent.
Jon Maddux: 42:48 Right.
Jerry Tubbs: 42:49 [crosstalk 00:42:49].
Jon Maddux: 42:49 Usually it goes the other way around, though. Most people are like, "Oh, let's go house hunting this weekend." But they don't do the hard work upfront.
Jerry Tubbs: 42:56 Yeah. And it's really not that hard work. We make it easy, a lot of companies make it easy for you to come in, bring a handful of credit documents and figure out based on today's rates and these programs, you could afford this, and that number, then that's the time to go out and test the market and figure out what can I get for that kind of money. Is it something I want to put up with? What could I do to change those numbers?
Jon Maddux: 43:22 That's cool.
Jerry Tubbs: 43:22 So to me, being an information base for people that want to get involved and getting them involved before they fall in love with the house, let's fall in love with your financing first, and then leverage that into, you'll know what part of the market to be looking in and know what you can have.
Jon Maddux: 43:39 Awesome. Jerry, thanks so much. It's been very informative and I appreciate you coming on.
Jerry Tubbs: 43:43 My pleasure.
Jon Maddux: 43:45 Thank you for listening to our podcast. If you guys are looking for more content like this, we have a FundLoans YouTube channel where we give away more tips, secrets, and origination ideas. You can also email us at email@example.com, and if you've made it this far, I think it's safe to say you like our content. So please subscribe, share, and send us your scenarios. Let's FundLoans together.
On this episode, Jon Maddux speaks with award-winning Entrepreneur, Author, and Real Estate Investor—Stefan Aarnio. The two speak about how Stefan used $1,200 to build a multimillion-dollar portfolio, the #1 rule in negotiations, best practices for su
"Respect The Grind" With Stefan Aarnio, As Featured On FundLoans' Vlog "The Million Dollar Mortgage Experience.
Here's The Transcription
Jon Tilghman: 00:00 This episode of the Million Dollar Mortgage Experience is brought to you by our new Insignia product line, jumbo mortgages for A-paper borrowers. Contact us today at firstname.lastname@example.org for product details.
Jon Tilghman: 00:14 On this episode, Jon Maddux speaks with award winning entrepreneur, author, and real estate investor Stefan Aarnio. The two speak about how Stefan used only $1,200 to build a multimillion dollar portfolio, the number one rule in negotiations, best practices for successful mortgage brokers, and most importantly, why you need to respect the grind.
Jon Tilghman: 00:40 Now before we get to this episode, I want to let you know that FundLoans is giving away several copies of Stefan's new book Hard Times Create Strong Men. To enter this giveaway, head over to this episode's video on our FundLoans YouTube channel and leave a comment. At the end of June, our marketing team will pick a few lucky winners. Now onto the show.
Intro: 01:01 Welcome to the Million Dollar Mortgage Experience podcast. Listen in as CEO Jon Maddux of FundLoans, reveals tips, secrets, and origination ideas to fill your pipeline with million dollar opportunity.
Jon: 01:18 Welcome to the Million Dollar Mortgage Experience podcast. I'm here with Stefan. How's it going Stefan?
Stefan: 01:24 Very good. How are you?
Jon: 01:25 Doing great. Thanks for joining us today. So, talk to us about your respect the grind. I love that.
Stefan: 01:35 Thanks dude. Yeah, well respect the grind is a saying I've been saying ... I'm a real estate coach and investor and I had a student some years ago and he was saying, "Oh Stefan, this isn't working. I'm making my calls and my offers and I'm just not getting anywhere and I don't think this whole thing works." I said, "Jason, you just got to respect the grind. It's going to take you ten years and ten thousand hours to be a master, and why do you think that you can cut the line and get ahead of everyone who's been working at this for so long?" So it's a saying to respect the process and respect that journey towards mastery. That's what it's really about.
Jon: 02:11 That's great man. Yeah, it's true, and so many people think that things can just fall into their lap. And then just come so easily, when the truth is, it's the overnight success 10 years in the making, kind of thing, right? I mean, it takes a lot of effort, a lot of work to get to success. And then kind of like, I think Gary Vee says, "If you want to be in the 1%, you got to be willing to do 99% more than the rest of the groups." So I agree, the grind is very essential. And you talk about, I think in your book or on your podcast and your sites, that you became a multimillionaire and you started with $1,200. Tell us about how you became a multimillionaire. Was it mostly real estate related? Really what drove that?
Stefan: 03:01 Yeah. My first million dollars was real estate joint ventures. So I worked for a private equity company. I learned to raise money. And after leaving that company, I went on to the real estate game and I did 12 joint ventures my first year with a coach. So I did one deal in my first year in real estate. Second year I did one deal with development. Third year I did 12 deals, investor deals with a coach, and then the next year I did 24, 30. At one point we're up to 50. And my, I guess notoriety and brand from doing that, won me Rich Dad International Hall of Fame.
Jon: 03:37 Oh cool.
Stefan: 03:38 Which is a pretty big award. Rich Dad is the biggest personal finance brand in the world, over 40 million people own that book, so big recognition. And yeah, first million dollars was real estate joint ventures, which was buying, fixing, selling properties. I had some private partners who were multimillionaires and I would get some fees up front for doing the deal and we'd also split the profits or whatever kind of iteration that was. And that was how I built the base of what I'm doing now.
Jon: 04:08 That's great. So do you do more of the buy and hold strategies, is that your strategy, or do you do both flipping and holding?
Stefan: 04:16 So I've got a buy and hold portfolio, several million dollars there. And then I had a company that was doing a big flipping pipeline. I'm just reorganizing that. I think we're going to come out with a company that's going to do a hundred deals a year. I'm building that with some of my students right now. And then, I'm doing wholesales every now and then, contracts come in, you maybe don't want to do the deal yourself, but you know who does, so you assign and sell the contract to somebody else and make three, five, 10, 20. I have a student who just made $25,000 a couple of days ago on a wholesale in Ottawa, Canada. And then I have another student actually in Ottawa as well. He was doing a $20,000 wholesale. So, that's something anybody can do from any city at any time, where you get a contract or a deal and you sell it, assign it to somebody else, and that's a great way to make money in real estate too.
Jon: 05:08 Interesting. So yeah, it's like you're the one that finds the deal and you're able to pass that on or sell that or monetize that ability. So it sounds like you're teaching secrets on ways for people to do that. Yeah?
Stefan: 05:23 Yeah. So my company's called Black Card University and Black Card is a five year program where anybody can join, and if they join they can qualify. I mean we don't just really let anybody in. And over five years you become a self made millionaire in real estate, through doing flips, raising capital, learning to sell, learning to negotiate. We're actually doing our negotiation classes this weekend. And I'm a firm believer that anybody can be a millionaire in five years, if they put in the work and if they actually do the things they're supposed to do. Anybody can do it. Real estate's non-discriminatory, money is non-discriminatory. The real question is just are you going to do your push ups and your sit ups? And the things required to win.
Jon: 06:07 Yeah, absolutely. I don't know who said it, maybe it was you, but it was like you can read a book about pushups, but that's not going to help you, just got to get on your hands and knees and just go for it and do it and get your hands dirty. So that's absolutely something that we preach here. We just did a recent podcast on how I became a millionaire at 30 and it was in five years. And really, really kind of reminiscent of what you're saying here and there's any way that ...
Jon: 06:35 So one of the things that we do obviously, is we're mortgage wholesale lender, and what we'd like to teach our mortgage brokers is unique ways on how they can find referrals, how they can find jumbo loans, what they have to do to go out and grow their business and grow their sphere of influence and their network. What kind of helped you as you were starting out to get a sphere of influence and have a good network that you could get referrals from. Was there anything specific or it's just knocking on doors, just putting in the work? Was there anything that was extra kind of helpful and beneficial in that regard?
Stefan: 07:17 So something I have my students do when I'm coaching them in real estate investing, and I think this applies to any business is if I was in the mortgage business, I'd been doing 50 calls a day, every day to just people I knew. And I think you've got to get really good at selling, get really good on the phone, because deals in any business come from networking, marketing or negotiating. And so I teach my students in real estate investing, 50 calls a week to people in real estate plus 10 offers in the market. If I was a mortgage broker, I'd do a minimum 50 calls a day. So that's my mentality around it. My sales guys in my office do up to a hundred calls a day, sometimes more.
Jon: 07:57 Yep.
Stefan: 07:57 And a absolute minimum of 50, you got to be dialing the phone like crazy. Now, I think the best way to get businesses to build a brand. And so, I built a brand through coaching, or not through coaching, but blogging. I was blogging everything I was doing. So I was documenting. This is in 2011, 2012, 2013, I would start blogging. And every day I put out a blog. I blogged for 120 days, an 800 to a thousand word article on whatever I was doing or whatever I was reading. And people really liked the blog. They were like man, this is a good blog. And after about 120 days I had speaking engagements, I had people asking me to come to their clubs and talk. I had all sorts of opportunity falling in my lap because I was putting out a lot of value in the marketplace. So we're putting out value, value was coming back in. And then I ended up making that into a book called Money People Deal, which has now sold over 20,000 copies of that book, which is crazy.
Jon: 08:54 That's awesome.
Stefan: 08:55 Within a year I raised $5 million from my own deals and really kicked off my career by blogging, training, and now I have a pretty nice education company that has grown out of those same blogs man. Those blogs turned into a book and we're printing and selling that book every day. So really I think the best way is to get the cat to come to you. So get what the cat wants. Maybe it's some catnip, maybe it's some cat food. The cats in the investor market, they want information. The cats in the mortgage market who want homes, they want information. So become a dealer of information, become a person who builds value in his information, educate the market, and then you're going to have the most leads of anybody.
Jon: 09:41 That's awesome. Definitely good advice there, man. So talk to us about negotiations. I know you have something that's called the 10 commandments of negotiations. What is one commandment that you always see that's unsuccessful? What's an unsuccessful way to negotiate? We'll start with that and then we can kind of talk about what's actually worked.
Stefan: 10:03 Well, I think a lot of times it comes down to the ego getting out of control. The first commandment of negotiations is get what you want and get out. So if you go into a negotiation knowing what you want and you're very specific about it, you say "This is what I want." It's really simple to be a negotiator when you try to help them and you tell the truth. And so, those are the two things, try to help and tell the truth. The first commandment of negotiations, get what you want to get out. When you get that thing, time to get out, time to just say, "Hey, okay good." Deal, shake on it and move on. What people do all the time is they end up, what's the word? They end up going too far. They end up going for things...
Jon: 10:46 Talk their way out of it and they oversell and they continue to, yeah, no, I know some people like that. Yeah, it's definitely...
Stefan: 10:54 Yeah. A lot of deals, exactly, they keep talking or something happens past the point where the deal's made and you've got to get what you want and get out. I was originally going to call the book that, Get What You Want and Get Out. It's called The 10 Commandments of Negotiation, but at the end of the day, I think that's the base of negotiating if you just do that. Get what you want and get out, life is good.
Jon: 11:18 That's good. Yeah. Don't oversell. Just once you get the yes, move on. Move to the next thing. So that's good advice too. So tell me a little bit about your daily hustle. What does a normal day look like for you? When do you get up, what do you do? What's important to really maximize the daily hustle?
Stefan: 11:42 Well, my daily hustle has changed a lot over the years. When I was in real estate, I'd get up at 5:00 AM and I'd do the whole 5:00 AM routine. When I started traveling and speaking, that really smashed my daily hustle because you get on a plane at 4:00 AM or you get up at 4:00 AM for a plane. And so it depends man. I do my life in theme days and so on Thursday I'll do my podcast and my content. Monday's my coaching day, I coach my students on Monday. Tuesday is usually open, Wednesday's open and then Friday I try to keep that open.
Stefan: 12:19 So I've got different theme days and I put flags on different days and say this day we're only doing this and this day we're only doing that. And that's a more of an entrepreneurial thing. I think that maybe being a mortgage salesman, if you're being a mortgage salesman everyday can kind of be the same. When you start running a multi seven or eight figure enterprise, I think it's more, theme days become a bigger thing. Because switching between departments is really difficult, to switch from management to sales, to marketing, to branding to fulfillment. Those switches are very hard on this psyche and that's why I do theme days.
Jon: 12:58 That's good. Very cool. But if you can remember back to the days when you were really trying to get, when you were more of an agent. What would you say really made the difference in the hustle? Was it was the 50 calls, was there anything else that you can share with our audience about how your hustle?
Stefan: 13:18 Totally dude. The biggest thing is get a coach.
Jon: 13:20 Really?
Stefan: 13:20 Just get a mother fucking coach.
Jon: 13:22 So if you don't have a coach, you say go get a coach. That's one of the main things.
Stefan: 13:26 Go get the coach you can't afford, hire the exact best guy. Hire the champion. Go find the guy at whatever it is you do, who is the undisputed champion and pay him whatever it costs to get you to his level.
Jon: 13:40 That's awesome.
Stefan: 13:42 That's the easiest way. Now here's the thing, I charge investors, to work with me direct is usually between 63 and $75,000 for the year. But guess what? If I can make you 300 or $400,000, it's worth it right?
Jon: 13:58 Yeah. Yeah. That's like free.
Stefan: 14:00 And I used to be cheap about it when I was younger. I'd be like, "Oh, I don't want to spend the money." Well I just paid a guy a hundred grand to build out a program for us to make me $1.6 million. So you've got to think like a business owner, think in annual terms. Don't think in monthly and just say, "Hey man, who's the best? Who's the best at this thing I'm trying to do." If you're a mortgage broker, find the best mortgage broker in the world and you can either go work for him for free and be his bitch for a year or two. Or if you don't want to do that, call him up and say, "Hey man, I want to learn your game exact how you do it. What's that going to take?" And he might say, "I don't know, give me 10 grand." Or he might say, "I'll do it for free." Probably won't.
Jon: 14:41 We might just tell you to fuck off.
Stefan: 14:44 Well, not if you're paying.
Jon: 14:45 Yeah, that's true.
Stefan: 14:48 And that's the reality. People who are really good at stuff, their time is valuable. They don't want to hang out with you. They want to go home to their kids and play with their daughter and play their dog and go for a nice life. They don't want to deal with you and your shit.
Jon: 15:00 Unless you pay them.
Stefan: 15:02 If you call them up... Well then it makes sense for the sacrifice their very valuable time.
Jon: 15:07 Right.
Stefan: 15:08 And so what I'm saying to you in any industry is find the guy who's done it and pay him whatever it costs to do it like him. And once you make that investment once, you get that for the rest of your life. So I think you can really win at anything like that.
Jon: 15:27 And that just comes back to investing in yourself really. I mean it's like, you as a professional, if you decide that you want to be the best or you want to make more money in your industry, you've got to do what 99% of the people won't do and you got to go out and do it. I love that idea, to go out and find a great coach and get that coach. I mean if you don't do that, you're going to stay stagnant and be exactly where you were yesterday and the year before. You're never going to change, you're never going to improve. So invest in yourself. That's what I'm hearing hearing you say. Is that right?
Stefan: 16:02 Absolutely. Absolutely. You've got to invest in yourself.
Jon: 16:07 And willing to. You've got to take a risk. Right? And that's somewhat of a risk.
Stefan: 16:09 Well, dude. Here's an example, Russell Brunson, he's a nine figure entrepreneur. He spent 750 grand on himself. Some people go, "Oh my God, 750 grand," but if you're making $100 million gross, 750 grand, almost a million dollars, who gives a shit? Who cares? And I think people are sort of thinking in annual terms and go, "Okay, so if I spend let's say 50 grand on a coach, but I make 250 who cares?".
Jon: 16:37 Yeah.
Stefan: 16:37 Instead they go, "Oh my God, it's 50 grand. I can't do that right now." Well, you never will.
Jon: 16:40 Right.
Stefan: 16:41 And you never will have the money. You'll never be there. But it's always investing in the thing. Look at Elon Musk. Elon Musk is trying to go to fricking Mars. Well, he doesn't have the money for that. He doesn't know how to do that, but he's fucking doing it. Richard Branson started Virgin Air. Well, he just chartered a plane, the guy didn't have $100 million sitting around. He just started making that happen.
Jon: 17:04 Right.
Stefan: 17:04 And that's an entrepreneurial thing. You're never going to have the money. You're never going to have the resources. You're always outgunned, so you might as well just say fuck it and just start doing it.
Jon: 17:16 Right. I love it. I love that Richard Branson story too. I read his book, that guy's awesome. He's an animal, but he's smart.
Stefan: 17:23 I mean if you go back to Richard Branson, he went to the bank and he wanted like 300 grand or 900 grand to put TVs on his planes. And they said no, they rejected him for the loan. So he went back to Boeing or something. He said, "Hey, how much to build a new fleet of planes with TVs installed." Well, they threw it in for free. So he went to the bank and he said, "Hey, I want to replace my whole fleet." And they said, "Okay." And they gave him the loan.
Stefan: 17:48 It's just this outside the box thinking. They won't give you 300 grand or whatever for my TV, but let's just replace the whole fleet.
Jon: 17:53 Yeah. And not just taking no for an answer and if you hit a wall, there's a window, there's a door somewhere else. There's another way to get around it. You've got to be able to not just go pout in your room if you get a no. You've got to be able to be thicker skinned than that and just be creative and have a little bit of an optimistic mind so that you know that there's a way, right. If someone else is out there doing it, if someone else out there is selling 50 houses in a month or doing 50 loans in a month. Then It can be done. And you just have to have that mindset, that if someone else can do it, why can't you do it if you put in the work, right. You put in the time.
Stefan: 18:32 Exactly. That's what it's all about. It's all about finding that way and sometimes the way doesn't exist. Again, coming back to Elon Musk, he's going to Mars.
Jon: 18:44 Yeah.
Stefan: 18:44 Nobody's been to Mars.
Jon: 18:45 There's no roadmap.
Stefan: 18:46 Nobody's done it. The government hasn't done it. There's no recipe. I'm doing some things right now in my company that there's no recipe for. It's never been done before. And it's scary because there's this whole unknown to the whole thing. Nobody's ever done it, and it might be a total piece of crap or it could be the thing that changes the world and that's the essence of entrepreneurship. I know that people in this call are mortgage brokers and not necessarily entrepreneurs, but I think the goal with being a real estate agent or a mortgage broker or house flipper is to become an entrepreneur and get out of that and not stay there forever.
Jon: 19:23 Yeah. I think most mortgage brokers, they are in essence, entrepreneurs because they have to run their own business. They have to...
Stefan: 19:32 No, but they're not. No, no, no, no. They're not.
Jon: 19:33 They're self employed in some sense.
Stefan: 19:36 No, they're brokers. Now let me define entrepreneur. An entrepreneur has an actual product. Okay. Mortgage broker is brokering products. So he's a salesman.
Jon: 19:44 Right.
Stefan: 19:44 He's a salesman of a product. If he had, now if a mortgage broker said, "Okay, we're going to create our own fund and we're going to raise capital from investors, I'm going to create a big marketing system" and all sort of stuff. Maybe he can call himself an entrepreneur. But it's like a realtor, a guy who sells homes is not an entrepreneur. He can say he's like an entrepreneur. He might think like one. But a guy who creates something or makes a product or, that's a real entrepreneur versus just a salesman.
Jon: 20:14 Yep. Good point. And there's a difference. There's a true line between a self employed person and an entrepreneur. You can be self-employed and not be an entrepreneur all day long. To be an entrepreneur, you're right, you have to create something. You have to make something and yeah, it's more risk for sure. And that's kind of what I think my point was that a lot of people are self employed and responsible for their own business. Yeah. They go out, they pick a niche maybe of the business that they want to focus in. But most mortgage brokers, they do take kind of whatever comes their way and they market and they blast market and there's not as much of the niche, kind of...
Stefan: 21:01 Well, there's no production department in that business. There's no production. It's sales and marketing only. Sales, marketing, sales, marketing, sales, marketing. You never have to go to the factory and fix the widgets.
Jon: 21:15 Right.
Stefan: 21:15 It's like, "Oh shit, the widget machine's broken." That never happens to a mortgage broker. He's got 50 lenders or whatever.
Jon: 21:21 Right.
Stefan: 21:22 He calls them up. He says, "Hey man, do you want this deal? Yeah, you do." Okay. Paper it up, done. Next deal comes in. It's transactional. And I think that what was my statement was you got to transform and transformationally change into something more. I have an actual education company that I grew from the ground up and that was, that's a brutal process, man. It cost me $1 million to build this thing I've got right now.
Jon: 21:49 I believe it.
Stefan: 21:49 And I'm looking at it, I'm thinking like, "Oh my God." And then I'm investing another 300 grand into it right now just into infrastructure. I'm like, "Oh my God." So anyways, a broker of something would never invest like that in themselves. They would just say, "Well, I'm a broker. I'm just going to keep hustling and I'll work Saturday." But the difference between an entrepreneur, they're building something usually.
Jon: 22:09 Right.
Stefan: 22:09 Whereas a broker is just selling shit. And it could be selling candles out of the back of your trunk or it could be selling mortgages or it could be someone homes or whatever.
Jon: 22:19 Yeah.
Stefan: 22:19 But there's a huge difference there between those two animals.
Jon: 22:23 I love how you respect the word entrepreneur. I love that. It's something that we take for granted. So many people want to be entrepreneurs and they want to their name as founder, entrepreneur and it is, it's different than just being self employed and it's different than just being a salesperson or a marketing person. There's a whole world of things that are different about it. And yes, a mortgage broker could become an entrepreneur in their business and create something and do something. I challenge mortgage brokers to do that. I mean, I think that's, there's something to that you're pointing out that I think resonates with me is, yeah, I mean you need to separate yourself from just the run of the mill mortgage brokers out there.
Jon: 23:10 There's so many mortgage brokers that just sort of live their life on autopilot and just do whatever the market's doing. They ride the wave of the market versus saying, "No, I'm going to pick this niche or I'm going to pick this part of the market and just focus in crush it and not be someone that's blown by the wind in the market." I mean, because the truth is you can make a lot. I think the majority of the mortgage broker community make a lot of money when the rates are low and then they suffer. It's like feast or famine. They suffer when the rates are high.
Jon: 23:41 But I've always been one of those that just goes out and finds where different parts of the market where you can make money all the time, whether or not the rates are high or low and whatnot. So I do challenge our listeners to definitely look into that type of business. Become an entrepreneur if it's in you to do it. I mean, do you think anyone can be an entrepreneur? Or do you think it's something that has DNA attached to it? Just curious.
Stefan: 24:12 I think theoretically anyone could, but I don't think anyone will.
Jon: 24:16 Right.
Stefan: 24:17 It's like saying like men and women are equal. Well, in theory you could say that they are, but in reality it's not even close. And so the theory is anyone can be an entrepreneur, yes in theory anyone can. I think a lot of entrepreneurs like real ones are driven by pain. They they went through, maybe they were an immigrant or they had nothing like myself. I had nothing, I was desperate and I became an entrepreneur. Just started running as fast as I could. So I don't think people choose entrepreneurship. Usually entrepreneurs, they have a lot of pain, they've got dead parents, incompetent parents. They're addicted to risk, they have all sorts of, mental entrepreneur diseases are bipolar, ADD, ADHD, there's all sorts of depression, anxiety. There's all these things that go with being an entrepreneur.
Stefan: 25:09 I think entrepreneur is kind of like the new rock star. It's a cool thing. Guys like Gary V or Grant Cardon or Kyle Lopez make it super cool to be an entrepreneur. But I think it's the hardest thing. I think that's the hardest thing. I could've just stayed as a house flipper guy and had a super good life. I could've stayed as a joint venture guy who had a rental portfolio, had a super good life. When I went into the full blown entrepreneurship and building what I'm building right now, I'm like, "Oh my God, this is so much harder than it looks. It's so much more scary. It costs so much more money and I'm built for it." For me, it's the only game I play. But a lot of people see that they want it and it's a fantasy.
Stefan: 25:54 And if you're a fantasy person, I think you're better off to have a job. Because this is something that will take everything you have and more and more and more and more. And I'll go back to Elon Musk. I mean, the guy put 100 million into his companies or whatever it was, and it's taking more and more and more and more. And it will absolutely consume your life. Maybe consume you 99% chance of failure over 10 years. And a lot of entrepreneurs have children. They don't recommend that their children become entrepreneurs because it is mother fucking heart dude. And I'm riding the lion. And I hope others ride the lion. I train people in entrepreneurship, but I wouldn't just say to anybody, "Oh go do this." Because it's like going to war. You don't just tell your children to go to war. War is hard.
Jon: 26:39 Yeah. So true.
Stefan: 26:41 I don't think that it's something that is meant everybody at all.
Jon: 26:45 Man, that's good stuff. So I think one of your posts or maybe it's on your book, I think I saw it. Where how tough times create strong men and I'm sure I'm butchering that but the whole... Hard Times Create...
Stefan: 27:06 Hard Times Create Strong Men.
Jon: 27:09 Yes. I love it. It is absolutely true. One thing that my son, and he was at, I think it was at 12 years old when he said this or maybe 11 he said, because we were watching like gladiator or something like that. He said, "Dad, why is it that the sons of kings are always weak?" And I was just like "bingo man." He nailed it on the head. And I was like, "Because they got the kush life and then life's too easy." Right. They got servants, they got maids, they got things just handed to them. And I was like, "That's a very, very good point." And what you just said about entrepreneurs, they had pain, they had a hard time, they had something that drives them. Right. That's absolutely true.
Jon: 27:52 And I mean so what do you recommend if someone does have, how can you change a son of a king into a warrior? I mean, what do they have to do they have to go through hard times? I mean, or is there a way that they could get in their mind to say, "You know what, I'm going to fucking just, I'm going to figure this out." Because I think you're right, it naturally creates strong men if it's a hard time. But is there a way where you could tweak that or game the system and become strong, even if you've had a good life?
Stefan: 28:30 Well, it's hard times create strong men, strong men create good times, good times create weak men and weak men create hard times. That's the cycle of history. And it's about an eight year cycle. Each line of that poem is 20 years. And can anybody, or how do we make the prince strong? And the answer is I'm a high performance coach. I make people into millionaires over five years and people hire me to kick their ass so I kicked their ass. And it's one of those that I get two types of clients. I get the self-made starting out with nothing guy, hero's journey. I'm going to just conquer the world. Starting out with nothing kind of guy. And it's like the story of Oedipus. Every man has to kill his father and marry his mother. And so that's a big struggle. If you have a really good dad, like Donald Trump for example, his father was $100 million man. Well he had to step out of his father's shadow and become a billionaire.
Jon: 29:30 Right.
Stefan: 29:30 And Donald Trump had, I think four or five other siblings who are not billionaires. So those other men where as brothers didn't step out of the shadow of dad.
Jon: 29:39 Right.
Stefan: 29:41 And so that's a man's struggle against himself, is to kill his father and marry his mother, find a woman like his mother and straight up kill his father. Straight up kill his father in outproducing him or becoming different or more than his father was. That's the struggle of being a man. And so the tough thing, like going back to the movie gladiator with Commodus who followed Marcus Aurelius, the greatest emperor of Rome who ruled at the height, it's hard to follow that act. That's the best act. So his way of trying to beat his dad was create the games and the gladiators and Commodus was just an unprincipled man.
Stefan: 30:18 And Marcus Aurelius studied with the greatest men of his time and he was a great philosopher and we still read his book. Marcus Aurelius's meditations today. And I quote meditations over and over again in Hard Times Create Strong Men. I don't quote Commodus, the Prince of the King, he really sucked. So at the end of the day, but there are guys who win. For example, Alexander the Great, he inherited the greatest army in the world, the Macedonian army, and he conquered the whole world by 30.
Stefan: 30:50 Donald Trump is like an Alexander the Great, and if you go to his Trump Tower, he has got Alexander the Great art everywhere because he is the Alexander the Great. He inherited the best real estate company and he built, he got world domination out of that. He's the President of the United States. Officially on paper, he's the most powerful man in the world. Under the table, maybe there's more powerful people. But that's an Alexander the Great story where he inherited the greatest opportunity and made it even greater. So if you're a rich kid or if you're a son of a king, you got to look to Alexander the great or a guy like Donald Donald Trump who's building that Alexander the Great story.
Jon: 31:29 Absolutely. No matter what your opinion is of Donald Trump, you've got to admit that he has become the most famous person in the world. I mean the guy infamous or famous, however you like them or not. I mean the guy has done more than anyone else. I mean the guy lives off of media. He plays the media like a fiddle.
Stefan: 31:48 Well, and you know what? Fake news will never admit that. The fake news will never admit that. So that's why people are divided on him because there's fake news. And that's just simply it. I mean, the guy is, he's the real deal. He's a self made billionaire for God's sakes. The guy's the real deal in every way. So real that he shouldn't even be in politics. Because you look at all the other scumbags and lowlifes and degenerates and whores in politics. He's not like them at all.
Jon: 32:15 Right.
Stefan: 32:16 And it's amazing because fake news out there will actually beat the shit out of him every day. And he just keeps on winning. So good for you fake news.
Jon: 32:27 Absolutely. Do you think he'll win again in 2020. I know this definitely affects the mortgage business.
Stefan: 32:31 Yes, absolutely. A hundred a hundred million percent because there's a power vacuum on the other side of the table. The Democrats have no good leader. And there's a bunch of guys fighting for power over there.
Jon: 32:42 It's divided. Yep.
Stefan: 32:43 And Donald is more famous than ever. More powerful than ever. And he's doing great things. He's doing the country a great service. And he absolutely will get a second term. So some people say he's a time traveler. There's a book out there. What is it, the last president from the year 1800 that says he's the last president. But who knows, man. I mean I have my own thoughts in my book Hard Times Create Strong Men on that. But Donald Trump is certainly a strong man and he certainly is a fighting back against some of the bullshit out there.
Jon: 33:16 Definitely man. I agree. So I'm going to read your book, we're going to do a giveaway with our listeners and viewers. And we're going to get your book out there to our community and I appreciate you coming on. Is there anything you want to leave us with as far as I got from this. Get yourself a coach, pony up the money. Don't be a wimp and say I can't afford it. Get yourself a good coach, make 50 calls or more a day. Don't be someone that says you can't do it because you can. And be like Alexander the Great. Is there anything else that you think that we're missing that we could, that our community could thrive off of. You've got to hustle, get your book, because I'm sure that's going to help but, but any last words you want to leave us with?
Stefan: 34:02 Yeah. Get the book at a hardtimesstrongmen.com, that's hardtimesstrongmen.com and anybody can win if they put their mind to it but only so many choose to do that. And that's the real difference is you can choose to be a champion or you can choose to not. So respect the grind and go to hardtimesstrongmen.com.
Jon: 34:23 Well, thanks for coming on and like, share, and subscribe everybody and we'll see you on the next episode.
Jon: 34:29 Thank you for listening to our podcast. If you guys are looking for more content like this, we have a FundLoan's YouTube channel where we give away more tips, secrets and origination ideas. You can also email us at infoatfunloans.com and if you've made it this far, I think it's safe to say you like our content. So please subscribe, share and send us your scenarios. Let's fund loans together.