On the show today we have an… Maximizing Your Borrowing Power with Flynn Family Lending!
Listen on: Apple Podcasts | Stitcher | Spotify
Show Links:
– Last podcast with Beth Johnson is SIC088
– Flynn Family Lending website
Show notes for Maximizing Your Borrowing Power with Flynn Family Lending!
The Vantastic Life is…
– is in Chelan WA!
Flynn Family Lending is a Local boutique private lender here in the PNW. They even use creative options for getting loans done.
Joe
Matt we’d love to hear your background and how you got into real estate and lending?
Matt
I’m from the PNW, and have been in real estate and lending for 20 plus years. I even worked with Wells Fargo for almost 9 years. I was looking for things that were a little different than the Freddie and Fanny stuff. And then asked Beth if it would be ok if I went out on my own. And after a short time we had both quit our jobs (at Wells Fargo and Microsoft), and got into business together.
I went to Newport High School and WSU. I found my niche because I bought a condo back in 1988 on a seller contract. I had the condo for 3 months and I got $30k for it and thought I was rich. Then I found another house on Lake Sawyer on a seller contract as well. This house had some issues. We were using a cooler and a fire place. Then we decided to renovate the house and fixed it up really nice. Then the seller came by the house and told us that we had to get any renovations approved, and they called the note due.
Long story, but I couldn’t get a loan because I didn’t make enough, so I borrowed the $100k from my parents at 10% and 10 points for 1 year.
From there I had to figure out how to pay my mortgage, so I got a few credit cards, and I would use one card, and then pay off the other card with a new card. So I wasn’t paying any interest, and learned how to use other peoples money.
Then we had some hard times in 2008 timeframe, and we’ve learned a lot since then, and are now a little more conservative.
Julie
How did you know about seller financing?
Matt
I was talking with a few friends, and knew a few people at the condo complex. And a friend knew some of the tenants who would take a nice down payment and hold the note. I was just out of college and had some money, but couldn’t get a loan yet.
Julie
This is why we love you guys. You have some much experience.
Some if you might want to talk with Matt and Beth about how you can become a private lender yourself.
What has the last few months been like for you during the health crisis?
Beth
From a lending side we’ve been quite busy. Matt’s phone wouldn’t stop ringing because people were trying to save their deals. But we had to look at the uncertainty ahead. And we had some moments of pause.
But if the deal makes sense prior to Covid… it still makes sense now. This is because we are quite conservative.
And in WA we own over 40 doors, and we’ve only lost a few hundred dollars where we’ve had to give concessions.
Julie
You’ve already learned your lesson long ago in 2008. But what does more conservative mean to you guys?
Matt
We’ve learned that keeping our LTV’s and leverage we protect our investors. We make sure our borrowers have a good exit strategy. We try to look a little deeper, and educate people. We are actually still batting 1000, and are proud of that.
Beth
We also balance that out with higher risk in other areas, like cross collatoralization and 2nd positions.
We are on average 65-70% loan to values.
Julie
How are your loan terms, and have you had to be more flexible?
Matt
No, we haven’t had to change anything really.
Julie
What does a loan app and approval look like with you guys?
Beth
I would say it’s easier going because we are asset based. With the larger lenders you have to go down the whole approval process.
With us, you get to talk with Matt on the phone right away.
And we get to talk with each borrower individually.
Julie
What is your draw system?
Matt
We like to do 2 or 3 draws and like the borrower to be very proactive in the constitution process.
Beth
We don’t want to handcuff. For a fix and flip we might do one hold back, just to see how they are using their fund.
Julie
Awesome! So each loan is actually done by a private money lender. How does that work?
Beth
We started out with just a couple private money investors that Matt was working with back in 08. We have local investors that are maybe landlords that don’t want to fix toilets anymore. Or people that don’t want to only be in the stock market.
People can get double digit returns without having to hold their own real estate.
Matt
We’ve even transitioned a lot of our borrowers in investors.
Julie
What is the minimum that people need to become a private investor?
Beth
Usually around $50k, but it has been less. And you don’t have to be an accredited investor. We don’t pool our money, so you would be investing on one loan. So, usually $50k-75k in second position.
Julie
Not a lot of lenders offer that second position, let’s talk about that.
Matt
So, we like doing that. The first position has to be with a traditional lender like Wells Fargo or Chase. We like that because you can get a first at 5% and we can do ours at 11-12%, and we like that.
Julie
We are talking about going behind a conventional. Do those bigger banks allow you to do that?
Matt
Yes, there is no limitation behind a traditional loan. But private lenders can ask for you to have permission.
Beth
Yeah, if you go behind a hard money lender, the loan terms are a lot shorter, and could potentially be riskier for us.
Julie
If you get into a situation where you can get some seller financing, you can ask them to go into second position, right.. can you give us an example of second deed of trust.
Beth
We did a business seed capital loan for a guy that wanted a troweling license. He wanted a $40k loan that he could pay off at the end of the fishing season in Alaska.
We’ve done a few others as well. Including a very successful marine services business.
Julie
Let’s get into this a little more. So you used these people’s rental properties to leverage them to get a loan that they needed for other things.
Matt
Yes, and we are able to keep more money in their pockets because of the rental properties.
Julie
Let’s say they own a rental property in a partnership?
Beth
It can be in a partnership but all members in the partnership with need to be onboard with the loan.
Julie
Let’s say you have an active investors that wants to borrow private money and roll it forward, do you need to close it out every time?
Matt
We could do that, a partial recon. We can always have those kinds of conversations. And are open to creative ideas and opportunities. Whatever makes the deals work.
People like to talk about their equity positions, but when you ask them what they are using it for… you see the deer in the headlight look.
Julie
Will you take things other than real estate as collateral?
Beth
We have done UCC leans on businesses in the past. Matt has put leans against boats and Rolls Royces. They don’t always want to give you the keys.
Julie
I know that sometimes people have timing issues with things like filing taxes. Can you guys gap that?
Beth
Yeah, especially for things like BRRR’s.
Julie
How about working with self directed IRA’s?
Beth
We do have investors that are lending out money with use from their self directed IRA’s. But we haven’t’ done a lot of investments inside of IRA’s
Julie
Are you still buying right now, or pumping the brakes?
Matt
We still like the market, and have both recently bought multi family properties.
Julie
Are you using seller financing for those?
Matt
We are using our own investors money, and are working with conventional lenders to refinance into longer term loans.
It’s not always the price, but the terms that can make it nicer to borrow private money instead of conventional money.
Julie
What does the seasoning mean?
Matt
A lot of banks want to see that you have a rent roll or what the profit is.. so we can get into the property to see if we can get the rents to go up. So in 6 month we can go back to a conventional lender with the appraised value and not the acquisition price.
Julie
We just saw that conventional borrowers are asking for more cash reserves. Which can make it harder to borrow money.
It’s not like it’s bad news if your loans get paid off. I’m sure you guys are well informed of the banks that can do the take out financing and things like that.
Matt
We like to help people structure their transactions. If there’s a way we can help you structure your deal to optimize every opportunity.
Julie
How can people reach you guys?
Beth
Website at FlynnFamilyLending.com, we are also on Facebook. You can reach Matt at matt@flynnfamilylending.com.
Julie
What do you do for fun?
Matt
We have 3 kids that is a full time 2nd job. I love to golf and play poker, hint hint.
Julie
I’ve also noticed that you’re a pretty good dancer on TikTok. Haha!
Matt
I think that this Covid thing has been a great thing for getting more time with family.
Julie
You guys are a great resource!
Are you finding that you get people that need to be saved or what is it?
Beth
Yeah, it was that in the start. Now people are seeing things stabilized a bit, there are a lot of purchases coming through, and there needs to be some skin in the game. It’s not really a time for newbies to start out.
Julie
That’s good stuff right there. How about with businesses going through troubles right now?
Beth
We haven’t had calls from business owners. I think those business owners are using the SBA funds that are available. Those are the cheapest loans available to them.
Julie
Something that I love about you guys, you use the word coopotition rather than competition. Why do you use that?
Beth
We like to work with people to create win/wins for each other. We help each other out!
Julie
Awesome! I love our local market here!
We appreciate your time today! Hopefully it will stop raining soon.
We need to get our kids and dogs up to some lake somewhere.
Matt
We’d love to! And thank you for doing this, and your platform. With all of these tools it makes it easier for us to get exposure.
Julie
If you want to plug in with us we have a Zoom meeting every Thursday at 11:30am PST, and you are welcome to jump on. Go to https://meetup.com/seattleinvestorsclub. We talk about all of the hot topics that are happening these days.
Like you said Matt, all of this covid stuff has been very very valuable for us to get together and share resources.
Leave a Reply