On the show today we talk with… Beth Johnson of Flynn Family Lending!
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Show Links:
– Flynn Family Lending – Website – Facebook
– Nghi with Certain Lending
Show notes for Beth Johnson of Flynn Family Lending
The Vantastic Life is…
– is in Monterey CA!
Beth grew up on a farm in Issaquah, and her dad was into real estate. Back then she grew up spending time at flips. Although they didn’t call them that back then.
Her family taught her about flips but not about the financing.
When she met Matt about 5 years ago he asked her about hard money and she didn’t know about it.
Matt had a real estate background, and they ended up going down that road. Real estate takes care of their why, which is to stay at home with their kids.
Julie
What year did you start lending?
Beth
It was about 6 years ago. Matt was doing conventional mortgage, but that has changed and he saw a lot of fall out. So he had a lot of clients reaching out that wanted to invest with him. And that was the impetus. He wanted to be able to help them.
Julie
You did not meet at a real estate event?
Beth
Unfortunately, no. We were actually setup by a friend. So a random blind date.
Julie
What’s a typical day look like in the lending business.
Beth
3 kids in 3 different schools, and working from home in the basement. Everyday is a little different. We’ve grown substantially year over year. Matt’s phone is ringing off the hook most of the time. He’s sales, and I’m operations (strategy, leadership, planning). And I do some social media, and providing thought leadership.
Julie
Your rep is so impeccable. It took us too long to hangout.
Do you feel like your growth is borrower base… tell us about how you work?
Beth
We started out growing out community of investors. Our borrowers are small business owners. We wanted to do a whole note investing. Where we can match people with investments and help them make solid returns. They are on the promissory notes. They get a little more control over the deals they choose to fund.
Julie
You can borrow money OR lend your own money.
Beth
We have quite a few people that get out of the active real estate game, and start lending with us.
Julie
What’s the minimum that you think people need?
Beth
For both borrowers and investors we’ve gone as low as $25k – $30k. We do smaller loans like that. And we like to operate in that space.
Most of our investors aren’t independently wealthy , and we want them to be able to invest.
We use Evergreen Note Servicing which is an auto ACH deposit.
Julie
Do any of your investors ever want to sell their notes?
Beth
They don’t. And I was talking with Larry and Marishka a little while back about this.
Our investors want their money earning income by retaining the notes. They are perfectly happy keeping their money employed.
Julie
How does it work?
Beth
We source the deal and create a high level overview. We like to use Pellego a lot. We have someone in house that does evaluations for us.
If they like the deal, we move forward.
No money is ever sent to Flynn Family Lending. This is great for us and great for the investor.
Julie
Is there an email list or how does someone get a deal?
Beth
We prefer to meet with our investors in person. We like to get to know them and understand their risk tolerance.
Not everyone wants to invest the same way. And that’s fine.
We also have daily huddle ups with our team to make sure we’re making all of our clients happy.
Julie
Is there a sweet spot?
Beth
We do around 60% seconds, but now maybe closer to 50/50.
Julie
What about owner occupied business loans?
Beth
We partner with another broker that helps us with owner occupied business loans. We have a lot of owners that come to us looking for seed capital.
Julie
You do in-house ARV’s. Are more people moving toward BURRRS these days?
Beth
We are seeing both. The real estate market dropped 5-10%, so there were a lot of people looking for deals. During this time we were working to keep our investors heads above water.
We try to keep investors at 65-70% LTV. We can’t always do that, but we try.
Julie
What is cross collateralized?
Beth
Essential… it’s using more than one property. Could be your primary, could be a rental. We don’t love having standardized programs out there. We take everyone on a case by case basis.
We’ve even cross collateralized over 5 properties before.
Julie
Having you had any of the adult family home calls yet?
Beth
We have, but it’s hard for me to remember. We get so many calls right now.
Julie
Let me ask you… so newer investors are thinking they can find their equity through you guys. But each situation is different. Just because someone is looking to put on a second you can’t always get the equity to close.
Beth
A lot of times people feel like experience is the best way to get the best deals. But that’s not always the case. There are so many different factors that are out of people’s control.
We’ve been in real estate for so long that we’ve had the dips and the peaks. And that can determine if you can handle a market fluctuation.
We really want our clients to vet out their projects. We really want to have win/win/win experiences.
We look for multiple exit strategies.
Julie
Do you have a plan b for your borrowers?
Beth
We don’t. We need the borrower that can understand this, and that’s part of us vetting them.
Julie
Checkout our podcast – Who’s responsible for a bad deal
When someone is going to get a list back from you… maybe that makes them more responsible.
Beth
I don’t know. We don’t really delve into that space. We are going to make sure you are poised for success. We won’t ask for a list back.
We want to make sure that you’re finding the deal, managing it, and getting it all the way to closing.
We’ve had quite a few ARV’s come in inflated. Unfortunately we’ve had some people find deals at auction, do a good job renovating the deal, but not be able to sell it for a profit.
We don’t like to see people working with a very short margin.
We will challenge people when they have short margins. We want them to be very successful.
Story about a recent client (listen to podcast to hear the whole story).
Julie
I think that’s great! That might be the best story I’ve heard in a long time.
Beth
We want to see people succeed. In some cases we even use our own money as well. We’ve done it before. We’ve been the investor, we’ve been the lender.
I think that’s why people like working with us. They get to talk with the owners.
Julie
What do you have to do… do you review the first position loan docs to make sure it’s allowed? When you are coming in later.
Beth
Sure, our sweet spot is coming in behind a bank loan. But we have done it with private loans. We need to review the docs that make sure they match ours.
We will look really hard at what’s in the first position. We make sure PITI is all being covered.
We don’t do gap funding. Unless they pony up additional collateral.
Julie
So, it doesn’t alert the bank when you come in on a second?
Beth
I don’t know if they get notified.
Julie
You’ll have to be added to their insurance.
Beth
Yes we get added.
That doesn’t set off a lot of fire alarms for us.
I know there are some people that you have to get approved to get a second.
And we have a lot of good people that we have good relationships with.
Julie
It’s easier to just go with Flynn Family Lending.
Beth
Yes, we are quick and easy.
Julie
What does the tax document stuff look like? Do lenders have to issue tax docs to borrowers?
Beth
You do have to list it on your tax docs. With us it’s a quick call to get the right tax forms at tax time.
Julie
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How do you feel about deals that are over a million?
Beth
We do all different asset classes. RV park, multi family, some luxury. A good deal is a good deal.
Having an equity buffer helps us factory in longer lead times to sell. We just make sure it’s going to sit on the market a little bit longer.
Julie
How are the borrowers that don’t mind having more equity in the deal?
Beth
It runs the gamut, but most have existing real estate, or they have cash that they want to use.
Julie
So you can use your other assets.
Beth
Yes, like you can use your existing real estate to leverage that and buy more.
Julie
How about stock portfolios?
Beth
We don’t. That’s the notion of hard money. You have to have a hard asset. Generally speaking just real estate.
Julie
Back in the day I heard of someone offering up an attachment to their stock portfolio.
Beth
We have done some creative things with businesses.
Julie
What was that lease option that you funded?
Beth
Yes, it was from Nghi with Certain Lending.
Julie
We love Nghi!
Beth
We facilitated that purchase transaction for them.
Julie
It’s so nice to have a local partner.
What do you like to do for fun?
Beth
My life evolves around soccer these days. I like to run and play poker.
Julie
That would be fun!
Beth
Yeah, I’ve talked with some people about that.
Julie
Now that we know…
Nghi and Albert are having their meet up at work event.
We have a few meetups and masterminds that are cool. We sit around face to face and talk about deals, problem solving. Beth and Matt show up. Nghi is there with Certain Lending. So many people working together. It’s awesome!
Shoutout to Keith Pilch. Get some beef cannelloni at Angelo’s.
Then we are in Redmond on Thursdays.
We also have the Mount Vernon Meetup that’s kicking off in November. It’s moving to Burlington.
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