On the show today we talk… StackSource Commercial Lending with Michael Coffee!
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Show notes: StackSource Commercial Lending with Michael Coffee!
Julie and Joe are in snowy/rainy Seattle and Michael is in wonderful Bend Oregon area!
Stack Source is a prop tech company that helps you achieve an optimal leverage, rate and recourse!
How did Michael grow up?
In Everett WA with roller skating and parachute pants!
Then family moved out to Central Oregon.
Michael has been serving people in commercial real estate for 20+ years. He started in the back room working with escrow and appraisers.
He’s seen a lot of different phases and cycles of real estate. Including the 2007 crisis times.
The goal is to get ahead of the potential issues to find the right capital for your deal
How did Michael end up at StackSource?
It was during Covid and he had a feeling that the market was shifting away from calling “your guy”, and investors needed to see options. When he was looking for this, he kept running into StackSource, and decided to join them.
What is StackSource
They have capital advisors all over the country. They are the mortgage brokers. The platform kicks in after analyzing the deal and doing the write up. Then the platform matches it up with like 20-30 data points and find the lenders that fit that exact criteria. With a hit of a button they can send that package to all of those lenders.
The investors can login and see offers and compare them side by side.
How do you get away from people being loyal to the lender they’ve been using?
Sometimes lenders change. It can be drastically! So, it’s important for investors to know what’s going on.
If your lender can’t hit the leverage or structure that you need…. It’s important to know what’s out there, and keeping your options opened.
You don’t want to get locked into long term financing or a pre pay if you need flexibility.
How do the lenders get notified of the deals?
When a deal is uploaded a capital advisor will take a look at it. They will underwrite it and stress test it. Then call a couple capital partners to test it.
They don’t want to build an expectation that can’t be met. Things to be obtainable.
What’s the process
It can be done a few different ways. The investor can do it themselves. Some of Michael’s older investors prefer to pick up the phone.
What is the difference from other mortgage brokers
It looks at location, loan to value, assets type, development stabilized… it starts dissecting other things.
The main thing that makes them different… there is more data and pictures, and it’s going out to over 1200 different products in the database. Which is much more than what a normal mortgage broker would push it to.
How long does it take to get back a term sheet
Michael has had term sheets within hours of submitting.
A big part of getting deals is timing!
If Michael has all the data… rent roll, PNL… you upload it, Michael analyzes it… he can get it out within a couple hours.
Are there underwriting guidelines that people need
For Michael… he need a current rent roll. Then he needs the utilities. From there he can build a robust PNL.
He will talk to see if they will use the current manager or get a new one.
Every party in the situation has an NOI.
They go through and build their own prosoma and walk though it with the lender. This ties is all together.
As long as they can build a story.. they will go fight for it!
There’s going to be lenders that you won’t win battles with, and you aren’t going to change their minds. That’s what StackSource goes broad, and finds lenders that will consider things.
Is there a team member that brings lenders onto the platform
Yes, there is a team that does this. And they are keeping terms up to date on the backend.
The matching happens automatically.
Like if you need interest only… there is a section that will only match that with lenders that will do interest only.
This benefits everyone!
As things change, as they do, StackSource is keep up to date to make sure matches work.
Top questions you ask a borrower
How are they getting into the deal (where money is coming from).
How long they are going to hold the property.
What are their long term plans.
What about 1031 funds
What structure did you sell the property?
What does Michael think is great about StackSource
Michael has a great story that you can hear on the podcast/YouTube!
Do they always put the property out to the platform
Yes, it’s important that the borrowers see all of the various quotes.
Are the lenders giving options
Some do. They will give multiple options.
This is great for the borrower.
How do you make sure the lenders will close
They have a rating system that consists of speed, underwriting, and re-trading.
Michael can see info on lenders, like how often have they closed with them, and a big issue is the re-trading. Meaning did they close on the terms they promised.
They also have a banned lender list that will not show up on matching.
How long does it take
Just a few hour to get the deal out. They a basic multi family they could have lender responses within hours. If they don’t hear back, Michael will reach out to the lenders.
Are borrowers relying on you to look at deals
Yes, Michael has some long term borrowers. He likes to under promise and over deliver.
He tries to be honest and clear, and loves teaching his borrowers.
Are you seeing things changing
Yes, lenders are starting to adjust. Things a very volatile with rent stabilization and other laws that are causing restriction.
Michael will build a story and strategic plan based on the plan the borrower has for the whole deal. And it needs to work with what is going on with the current crazy laws.
How does value add work in today’s market
They are seeing some 30 year AM. There are some lenders that are not lending.
You are making money on your buy.
Buzz work is “pencils down”.
A lot of the equity sources are drying up.
Lower leverage is where most deals are ending up. So, if you can raise more capital, you’ll have a better chance. OR if you’re under 10 units.
How can people get Michael’s articles
Search Michael Coffee on LinkedIn or call at: 503-866-8817
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