Caption transcript. This text is pulled from YouTube captions and may contain minor wording errors.
[00:00] is talking or I'm talking. So Dylan will will kind of go for Dylan. I'll let you take it away. Dylan will rock first and then he'll pass it over to me. >> Yeah. I'm not going to be too long. We'll Apologies guys. This is I do I talk for a living, but I this is the first webinar I've done and I'm like
[00:14] extremely sick right now. So my my ears, you know, they're pressurized and all that stuff. So bear with me a little bit here, but I wanted to get this out tonight so we don't uh have to postpone, especially past, you know, Thanksgiving. So, um, how many of you I'm going to open up the chat here. How many of you
[00:31] are in Florida or just tell me the city you're in or the state? Oh, cool. Elizabeth, Tampa. Me, too. Okay, so everybody's basically Tampa. Cool. Making sure everything's still good on YouTube. All right. So, um, Gotcha. Yeah.
[01:02] All right. So, you know, I'm talking a little bit about Tampa and Florida, like the central west, uh, west central Florida, and this could apply to northern and southern Florida as well. Probably Georgia is not too different. Um but some of the things that I'll I'll share
[01:18] with you, especially the calculator that I use and I built um will definitely be helpful for you. Um underwriting properties and making sure that you know I used to underwrite with a very basic calculator and you know was great for a while but um this has allowed us to be a lot more precise with our numbers and I
[01:34] can push back with investors with these numbers and it really shows how good of a deal some of these deals are and sometimes I don't even share deals because I'm like you know what I'm not convinced that they're a great it's a great deal. So, um anyway, uh what I wanted to talk about was um
[01:52] basically that and um give me one second here. Pulling this up. You know, if you're if you're looking at investing in Tampa, which you know, here's the thing. half of you or probably most of you are already in Florida or Tampa specifically. So, this won't really apply to you that much, but
[02:16] um the there's benefits to investing in Florida, which you already know that cuz you're here. Um, so but I'm just going to say this for the the audience on YouTube that we have so many things already set up in
[02:33] Tampa and in Georgia as well because Georgia is the Atlanta is the headquarters, right, for for Pads Split. So it's the most established market, I believe, with the [snorts] most units. But in Tampa, we already have over 2,000 units, I think, um, actively managed and being rented just in the the Tampa
[02:49] metro. So there's a lot of great things about Tampa. We have a mature mature market with operators here like agents. You have property managers. Probably some of you already know Fred or if I don't How new are you guys to padsplit right now? Can you type in the chat? Are you brand new or or do you have a deal
[03:05] or have you learned about it? Okay, so you're very familiar with it. So, we'll get to the the calculator. Hopefully, that'll be helpful to you. And you know, if you already have something better, that's fine. Just start burning. Okay, cool. So, the benefit to Tampa and there's other
[03:20] markets, so I'm not, you know, I don't know all the markets intimately uh for Pat. I know there's like 30 plus markets. Um there's a lot of good stuff there. But with Tampa, you know, I've done a video on YouTube that has been very helpful for people with Fred Vhau, the guy who manages almost half, I
[03:35] think, of the units here just in Tampa Bay. And we have another video coming out in uh I'll probably drop it in about a week or two. But I [snorts] think it's it's very helpful to have somebody who knows what they're doing and you're not in a fresh market where um you know mistakes have to be learned, right? And
[03:53] then corrected over time. So I think um for a lot of reasons, you know, Tampa is a an appreciating market. It's a long-term growth market, but also it's hard to get cash flow except with passplit opens the door for rentals in Florida. So, I want to sh share with you guys uh
[04:10] some numbers that I ran here on a a real deal that I found about um two months ago. So, let me know if you can see this. Okay, this is a long-term rental. Can you guys see that the calculator here? I think you can.
[04:36] >> I have a few monitors here, so I'm really just kind of like scrolling around. Make sure everything looks good. And the chat. Okay. Can I zoom in a bit? Yes, I think I can. Hopefully that's helpful. Perfect. Okay, so actually let's zoom in
[05:02] a little bit more. Um here's here's here is um the long-term rental, right? So it was a $333,000 property. So we we ended up getting it down to needed a little bit of work. Mostly it was Turnkey Key. It's in Tampa um around Siminal Heights. I forget the exact submarket there, but it was around that area. Um, these were
[05:21] the numbers and I don't remember the exact interest rate. I think my guy was in like the high sixes um with his rate, but I just put seven there. It's not going to change too much. Um, and then I just left the points at zero. You know, there's no heliloc. Um, this was a hedge fund I'm working with, so you know, it's
[05:36] not no homestead, of course, with PAS, but there's never a homestead exemption. Um, uh, property taxes, we have them estimated automatically at 1.7% of the purchase price. You can update that right here. And you can also override insurance, but I I have it estimated about 1% of the purchase price because
[05:55] that's kind of what things have been been averaging out to. So, all that stuff as a long this is as a long-term rental. You know, a typical 8% management fee. You're not paying any of these expenses because the tenant pays them all. Um, this is probably the best deal you'll be able to find for a
[06:10] long-term rental here in Tampa. If you look at If you look at Sorry, I got a lot of things going on here. Make sure audio is okay on on YouTube. Um, so if you look at um things keep moving around on me. If you look at um the rents here, if we get about 2500 a month and and again
[06:29] this is a non-HOA property, so a lot of times you'll find these deals close to that, but it'll be like an HOA fee of 300 a month or something. Um, we have pretty conservative numbers here. 5% vacancy is turnkey, so there's a few things you need to do in the attic with this property. blah blah blah. Uh we
[06:48] have about uh including the reserves. So that's vacancy capex and maintenance. We have about negative almost 500 a month. And if you remove the the reserves and you're just looking at, you know, numbers um like the straight numbers, it's it's probably -211 a month. You
[07:05] know, 3 or four years ago, we could have gotten this property. We could have cash flowed probably uh we were finding deals that could cash flow $100 a month. And that was that was like pretty average about four it was like 2021 and then 2022 things started to change with hurricane Ian and and you know and uh
[07:23] insurance went up and of course interest rates went up as well. Um, now if we take a look at this same property, but through the eyes of Padsplit, which was what we were going to do, it was an extra 15,000 about for the rehab. And then uh it was about a pad split. So the
[07:44] here's the furnishing costs, right? If you talk to Fred or somebody who manages your property, you have to set up these with furnishing. And so apologies if you guys already know this, but I am going to say just for for people who uh may be brand brand new, the average cost per room for him for a
[08:04] pretty good room is about $1,800 per room. So we were getting about we were getting about uh eight rooms at this property. So that's 14 400. We'll run up to 15,000. Um and then we have all these things. ly, if you look at this uh checklist here of what you're paying for as the
[08:25] landlord, you're paying for electric, water, sewer, trash, all that stuff. Um this is about maybe maybe it's a little bit low, but um you could bump it up just a little bit probably for some of these for electric and water for eight rooms. Um but this is about right for Tampa. So, we're going to go to the pads
[08:41] split management side. We're going to go to eight rooms and we're going to go to um this this area was I think 190 uh it was 190 per week on average and this had an occupancy the zip code had occupancy average of uh I think it was about 80 um it was about it was like
[09:01] 90% but I'm going to put 88 cuz it might have been a little bit lower and then we have the average moveouts per so this is assuming that everybody stays at least at least one year at a time. So, we'll bump it up to 12 and we'll we'll keep a high maintenance reserve, a high capex reserve and of
[09:19] course we have the that's essentially vacancy, right? So, we have all this put in place and this property is cash flowing, you know, positively 500 a month. It's a stark difference. It's $1,000 spread. So, this is this is how, you know, we're looking at these properties now to make them cash flow in
[09:36] uh in Tampa. Um, and if you want this calculator, you can go to dillancco.comcalcs and you'll be able to see it there. But these Tampa properties here in Tampa, they the pat shine between 250 to like 400K. Um, we have people who have done very high um like high level
[10:04] renovations on distressed properties and that's where you can kind of do your partial burr. Um so like buy um rehab, rent, repeat. Uh but uh for the most part there's a lot of people who are trying to get into into pads split with you know little a little down. Sorry I should silence
[10:23] this. And um this is the way to do it. Now padsplit is going to cash flow far far better than any long-term rental here in Tampa um with the right property. But um it's going to require more capital, you know. Um and Fernando will talk to this talk about this a little bit more about
[10:42] the the the lending requirements. But after you close on a property, even if it's mostly turnkey and zero repairs are done, you still need somewhere around 20K on average to to a property and get it get it operational. Um any questions on that so far? Anything I should expand on or
[11:07] clarify. >> You're good. >> Cool. >> Um, so yeah, that's Yeah. Yeah. 250 to 400K is kind of like the sweet spot. No, there's there's a lot of things you need to do to make the property cash flow, right? You can't
[11:28] just find any property. There's there's a lot of nuances out there. And so that's one of the things like depending on if you're an agent or you're you're a buyer or you're a landlord already, we can, you know, we look at properties. We walk through the layout after we do all of our, you know, due diligence
[11:44] virtually. And then once everything kind of aligns up, you can we can decide if this makes sense as a purchase or as a conversion to a from a property you already own or, you know, any one of those things. But yeah, it's generally this the uh the sweet spot.
[12:02] We have had I think one of the best deals I think I've ever done was like $540,000 in South Tampa, but um the happiest client [laughter] a year later. He's still super his best property. But uh generally, you know, generally if you want cash flow, you
[12:21] know, we We are looking at properties that cash flow generally between $500 and $1,000 a month. Uh the one in South Tampa was was uh was 10 bedrooms and our we've done ones that there were 14 bedrooms too, but that that's like you're getting really you're
[12:39] kind of bordering what's possible. Um like what what you know it's it gets a little bit more risky, right? In in some ways. So you have to be careful doing too many rooms. It has to be the right the location has to matter even more. it has to be split up almost as like a duplex into different you know there's a
[12:55] little bit more I think underwriting manual underwriting that goes through for those properties but generally eight bedrooms is pretty pretty nice so um any questions about that if not I can turn it over to Fernando here pretty soon but I just wanted to share with you guys I'm going to turn off my my screen share um
[13:12] oh one other thing too when it comes to this calculator so one of the things that helps the most when talking with investors is you know you you can show the cash flow. You can show your total uh cash invested. So that includes all the money you have down and you know DSCR although you know I have to check
[13:31] with Fernando. I feel like different lenders calculate DCR in different ways so you have to make sure that's accurate for them. But um >> what do you have it calculated as? >> It's just NOI. So this is factor >> it's factoring in basically everything. I think I think it's factoring in like
[13:45] um uh the NOI divided by debt service but the NOI includes the reserves right >> so it includes basically all your expenses your taxes and all your variable expenses over here includes the electric water so all that stuff and it's still hitting a 1.29 29. Um, >> so I think this is good for from an
[14:05] investor's lens, but from a financing side, it's ours. Luckily, >> right? >> Yeah. But but at least for an investor for you to know, hey, as an investment, this is good, then that's better. >> Yeah. Yeah, for sure. The IRRa is where I what I really like because this is
[14:18] where you can compare to commercial deals. You can compare more apples to where when there's an apple and an orange, you can kind of change that apple into an orange and it's oranges to oranges and you can really see what's performing better. Um, so anyway, that's that's one of the great things and and
[14:33] this is over a 10-year time horizon, which you can go to the master summary and you can change all that right here. Uh, we would expect that zip code to appreciate 4% annually based on 20-year historicals. Um, Ny growth of 2.5, all that stuff. So, you can change that and take a look at what that is and compare
[14:50] different deals. Um, um, all that stuff. So, all right. Uh, thank you guys. Uh, oh, last question. Uh, I think the 114bedroom was zoned as a this was like three years ago, so I think it was it was split up as a duplex, but it wasn't a legal one. It wasn't in like Palmetia
[15:11] area, so I think it was just residential, but it was like half acres, so it'll be really cured. It's a little bit more private. Yep. All right, Fernando, I think it's all yours.
[15:29] >> All right, you're passing it over. >> I am. It's all you, man. >> Cool. So, um, what's up everybody? My name is Fernando. Let me share my screen and then we we can hop into it on my side as well. So, I'll be talking financing. We've closed for co-l livingiving
[15:44] investors probably over 200 in the last two years. And so, a lot to a lot to share. Um, candidly disclaimer and I'll share it with you guys here. We've had to switch lenders eight times for our co-l livingiving products. Just like if you've been in the game for the last 5 years because I I've owned my pad switch
[16:04] for 5 years now. It's uh we've changed insurance probably five times. So, it's just one of those things when you're, you know, in this new world, you um for us, we're just constantly problem solving, which is uh which is good and bad. Good cuz it keeps me in business, bad cuz every single it feels like every
[16:27] few months I'm switching to a different lender and different offerings and all that stuff. So, what I'm going to share with you today is pretty much solid rules of thumbs in financing. Um, let's see that doesn't matter what season of like what lender is in, we have access to all
[16:52] this stuff, but the terms do change. Ah, sorry, wrong one. [sighs] All right, this is it. So, making Tampa Reynolds work again with Padsplit. My name is Fernando. Uh, I thought was something I want to share
[17:13] something that was really cool. This past week, I got to speak on the same stage as Pace Morby and Attekus. Attakus, for you guys don't know, is the CEO of Padsplit. And, um, two days before, uh, I had this idea like, wouldn't it be really cool if if I reached out to the CEO of Padsplit since
[17:30] he's going to be there somehow if I got his phone number and I asked him to introduce me on stage. My wife didn't even know what I was doing. She just heard me on a on a phone call with Attekus and she was like, "Wow, like you're extremely courageous." And at the time I was just like, "I just got to do
[17:43] it." And yes, of course, all the fears and insecurities and all that stuff can go in my head of like what if he says no and d all that stuff. But at the time, I've [clears throat] been working so much on my on myself to believe that I'm worthy, that I'm enough to be able to have that conversation with him. uh so
[18:01] much so that after my presentation and uh after our speeches and his as well because I had his phone number so I ended up getting his phone number through some clients and he was cool with it. I reached out. He was super cool. He he spent like a few minutes presenting me which is great.
[18:17] >> Um >> afterwards I texted him and I said, "Hey, >> do you want to have dinner?" And I [clears throat] don't know for some of you guys if that's like a big deal or not, but like for me, I used to have like massive status alignment issues
[18:30] where like can I can I even reach out to this person? Do they want to hang out with me? What am I going to talk about for a whole hour or two hours that we have dinner? Like am I that interesting? Do they even want to hear what I have to say? Like all those limiting beliefs exist up here.
[18:46] >> And so as I was about to send the text message, of course I wanted to stop because of of those limiting thoughts. But I said, "What do I have to lose?" Sent him the text message because I at that time I was like, "I think I think I am worthy to sit at a dinner table with just him." And he said yes. That was the
[19:03] coolest part that he [snorts] said yes. It was just me, him, with the CEO of Padsplit and my wife Amy. And we just sat for like two hours having dinner, hanging out, talking about his story, my story. Like it was it was so cool. Um, so all that to say as well, like his the CEO of Padsplit, such a cool guy.
[19:23] Really, really great story. And he's truly building Padsplit from a position of abundance, not out of like a position of I'm doing this to make money, and you could you could see the authenticity from just the whole conversation. It was great. All right, let's go. So, what we're going to cover co-l livingiving
[19:40] padsplit market stuff. uh pretty much what just the overall climate of padsplit and its growth trajectory and where [snorts] things are landing. Then we're getting into the why co-l livingiving pads financing is challenging especially if you're new and Leslie I think this is a great
[19:55] opportunity for you to bring up maybe where the discrepancy was with Kia or with David that you're talking about. We're going to talk about financing products for converted and non-converted co-l livingiving product or properties and the differences. Uh and then what my suggestion is if especially if you're
[20:09] going to buy and refi, how you're going to handle that. We have creative income documentation beyond DSCR. Um maybe comparing convention, when to use conventional or hard money or DSCR. We'll be going through that and then um I might have an example I have a few example scenarios that we'll go through.
[20:28] So, here's my disclaimer. In the last 2 years, we've switched co-living lenders seven times, and this number is actually eight as of last month, unfortunately. So, what I'm sharing today is true as of today, and I'll continue to provide updates, you know, during these webinars or on Facebook, Instagram. Um, just
[20:47] always sharing the updates of where we're at. So, let's rock and roll. Let's see how housing have changed. I don't know if you guys have seen this yet, but back in the day, so this is a chart back in the day of 1960, a lot of couples that live together, single, no kids, 13%.
[21:08] Then you got families that made up a majority and all these others in the 8% which is unmarried partners, roommates, adult relatives. And now this has grown. So when people are asking you like is pads split saturated I think think about this that
[21:26] single no kids has grown as well as households with just households in general with different types of family groups have grown as well that's doubled from 8% to 16% single no kids has more than doubled um and I see this just within my own family you know my I I'm one of very few friends that has kids
[21:48] and I'm 33 turning 34 for my brother and his wife decided they don't want kids. So, it's so interesting that, you know, just the the times, the eb and flow of the boomer age versus now and how things are changing. Um, [clears throat] my background 7 years ago, I ventured out into the entrepreneurial world because I
[22:10] I decided like I was in so much pain. I don't know if you guys have felt this where like you just feel capped by your income or you feel capped by your potential. you feel capped just by your freedom of time. And so I went to my manager and I said, "Hey, like I don't think this is for me." And so I I left,
[22:27] right? I actually I quit twice. I quit two different jobs at different times of my 20s because uh I thought I quit to go travel for a year. Then I came back and worked. Then I was like, "Nah, this is probably not for me." So I quit again to become an entrepreneur. Unfortunately, what they don't tell you is that when
[22:46] you become an entrepreneur, what that means is you just have to get punched in the face so many times figuratively and you try to solve problems and try to make money and figure out ways to become valuable to the marketplace, but but nobody really taught me how. So, in the last seven years, I've probably built
[23:04] six or seven companies, and the majority of them have not done well. And but I learned I developed skills in that whole process. In that time I met my first private money partner which was my wife and then I married her. She was not only my private money partner who gave me money but then I married her. And then
[23:23] not only did I marry her, we we bought a padsplit. It was the first one. So I was like, "Hey, look, I got this crazy idea. We're going to go and buy a padsplit. It's out of state. We're not going to visit the property. We're just going to put a bunch of people in that house." There's like 82 at the time. It's a
[23:39] converted from a 42 to an 82 and we're going to make a ton of money. We're going to retire, be financially independent, and you know, we'll be sipping margaritas in no time. And then it took us 9 months to get our first pad split and finally close. Took us 3 months to convert it. When we launched,
[23:58] the bottom floor flooded. So, I don't know if this resonates with anybody where like you have this perfect vision of how this is all going to play out and then you do it and everything just like falls and you're like, "No, no." But it's okay. We had to tell her
[24:15] parents and my parents that uh that it was not working out that, you know, that was it was a struggle in that first few months and my parents and her parents were like, "We told you this is, you know, this is a crazy idea." But that year, we actually ended up closing out the year with a positive $20,000 in cash
[24:32] flow. So, yes, some of those initial hurdles and barriers and struggles, like absolutely true. Same thing with my businesses when I was starting these different businesses. And and everybody was like, Fernando, why are you starting all these different businesses? Like, you just get so much judgment for trying
[24:48] to do things a different way. And you do that long enough, eventually people are like, "Wow, you did such a great job. I should have invested in padsplit five years ago when it was there because we you know blah blah blah all these other things and it doesn't look smart sometimes when you're in the struggle
[25:03] and the suffering but over time you you yeah people start saying yeah that's pretty cool this is one of our properties [snorts] second property third property fourth property so we have 34 doors and all of my properties I did not buy with my own money or my own income I bought with other people's
[25:21] money I bought with partners and it was because I was unemployed employed and none [snorts] of my businesses were were working out, but this one was working out. So, in that time, I got my wife, who was my first private money partner, got her to buy a property with me, and then we had two kids with a third one on
[25:42] the way. Dylan, I don't know if I told you, man, we're uh we're expecting a third one, and Oh, sweet. Yeah, congrats. Uh 10 days ago. Oh, man. You're fresh. Sheesh. And you're getting All right. Yeah, you're sick and you're not getting a ton of rest.
[25:59] >> It's [laughter] okay. >> It's a brutal combination, you know, right when the baby comes. But it's all good. >> It makes you stronger. It builds character. >> So, we had little ones. Um, and like I said, in the last two years alone, we've
[26:12] crossed over 200 loans closed for co-l livingiving investors. And that's not to say that I built this business um in two years because there's so much of my story from five years before that of the struggling entrepreneur. So I I say that because I'm I'm not self-made. I struggled so much. I had so many
[26:30] failures and and all that stuff. And so this is natural for you guys in your journey, especially if you're just starting. As you hit these failure blocks, those are just going to become stories and skills that you're going to t uh stack on and that that eventually becomes experience. [snorts] Um, I like
[26:49] sharing this because what have I had had to overcome in order to get to 34 doors on padsplit in order to raise I mean now I've probably I've raised over a million dollars for different projects. um in order to show up on webinars and speak on stages, in order to to have dinner with the CEO, what is everything that
[27:10] I've had to overcome? And I share this because if you want financial independence or if you want to make more income or you want to be in certain rooms, you want to speak on whatever whatever whatever overcoming courage means to you. All of these fears I had to [clears throat] go through. Fear of
[27:26] loss, fear of failure, fear of humiliation, fear of rejection, self so much self-doubt, negative selft talk, fear of judgment, fear of success. This one time we had a bunch of loans close in a month and I was like, well, what if I can't sustain it? What if I share my success? This is the crazy part. What if
[27:45] I share my success and then I fall? That isn't that crazy? It's like I'm I'm already like becoming, you know, my Patlits were successfully performing and I was afraid to share that because like what if what if next month I I'm not cash flow positive and now I got to share that right there's like fear of
[28:04] humiliation, fear of rejection, fear of failure, all that comes in. There's the fear of success which is like well what if I am successful and all these other negative thoughts. So I like reminding myself this is everything that I continuously would have to go through if I want to go and live the life and be
[28:18] the person I want to be. Let's get into the pop quiz. Now we get into the financing. I was trying to get through that as quickly as possible. Um, thanks for hanging in there because now we're at the pop quiz. So, this is where you guys engage. Number one, what makes co-living financing challenging? Is it
[28:36] A, appraisers often struggle with 6 to 10 plus bedrooms? Is it B, properties with no living room are hard to comp? Is it C, lender see rent by the room as a boarding house? DSCR lenders don't count all the co-living income. E the valuation mean meaning the value of the home on an appraisal is based on sales
[28:58] comps not NOI cap rate [snorts] meaning if you even though you make significantly more money in that property does not mean that the value of the home is going to go up like it would maybe in a commercial property. [snorts] What do you guys think? Is this A B CDE E or F?
[29:18] Oh, Carson, Elizabeth, you guys all looked at my um at the answers to the test earlier, I think. Just kidding. You guys got it. All right, let's go to the next one. Pop quiz number two. How do you scale a co- livingiving portfolio? So, I like to think about all the different ways that
[29:34] the investors I've worked with are currently building their portfolio. So, they're not gated by they're not gated by things. Okay, the first one A is buy regular properties and convert, which is what this is what I did for our first two properties. We just bought a regular house, 15% down, 10% down. Some
[29:58] people, if you're going to live in it, you can buy 3 and 12 or 5% down. Um B, you want to buy beat up properties, rehab them, convert them, refinance that. I did that for my third and fourth properties. We bought them beat up. We rehabbed them, refinanced them. One of those refinanced as it was a co-l
[30:14] livingiving property. The other one we waited and refinanced it vacant and then we converted it. Um buying already converted co-l livingiving properties since I bought many years ago. I'm all a lot of people back then are now recapturing their equity by selling. And so in this market right now I know Dylan
[30:33] and I we closed a property that last year I think that was already cash. It was already occupied um and we helped close that. So there's people selling co-l livingiving properties. That doesn't mean that you're going to be making more money from it, but you do you can have less risk at times if the
[30:50] property is already performing. You can have a history of data, but that doesn't mean you you won't make the cash on cash return. You'd have to still see if you're going to make the money you want to make. D find another host co-l livingiving property and squat in it. Strategy right
[31:06] here. Not saying it's not saying it's there, but I mean some people are really really ambitious and they they got to do what they got to do. E sign a lease and do co-living arbitrage. That one I thought was pretty cool. One of my uh one of my friends actually does that. She she's an immigrant from Colombia and
[31:25] [snorts] she didn't let that stop her, right? She didn't necessarily have all the money or the paperwork to get started, but she did have the drive. And she's the first person I knew. She has like five or six co-l livingiving arbitrage properties. It's the coolest thing. She
[31:41] signs 5-year leases. Anyways, I'm not saying that we should do it. If you have the means to buy, then just do the buy. But the point is to not let yourself get stopped from not having money if that's the case. So, which of these which of these is would you not use? I could say that. Which of these is right?
[32:02] Which of these is not right? We'll let I'll just let one person answer on this. Uh, so yeah, you can you can do A, B, you can do C, you could do E. How do you scale a coding portfolio? The only one probably Yeah, you probably don't do D. Thank you, Elizabeth. Uh,
[32:21] yeah, you don't do D. So, we're good there. The last one, this is the last one that's critical with most appraisers. What is the legal definition of a bedroom that they abide by? You have A. Does it need to have one mode of egress like a door? Uh B needs to have two modes of egress.
[32:46] Sorry, let me go back. No, we got to go back. Uh here we go. So with most appraisers, what is the legal definition of a bedroom that they that the appraisers can go by? Needs to have one mode of egress like a door.
[33:06] Needs to have two modes of egress. A door and a window and a bathroom. C needs to have two modes of egress, a door, a window, and a built-in closet. Needs to have a bed in it. Or all the above. Which one do you think helps us as co-l livingiving investors?
[33:25] Nice. Yeah. Hey Vonda. Cool. You got it. So it is C. We want to be we want to have a window, a door, and the window has to be facing the outside. We had somebody we had somebody build a uh property where they they built the window on the inside of the house. It was the funniest thing cuz they told
[33:46] their contractor, "Hey, every room needs a window." and the contractor [laughter] put the put the window facing the hallway, not the outside of the house. So, I have to say that I thought that was hilarious. And he [snorts] sent me pictures of it, too. He was like, "Are you serious?" [laughter] The funniest
[34:05] thing. Okay. Yes, it is. See, okay. Okay. And the reason why that helps us right now in the marketplace when you're doing a sales comparison report on an appraisal, 8bedroom, 10bedroom homes, they don't really exist. And so if an appraiser goes out and sees your house and they they do call it an 8bedroom
[34:25] house, for example, they're not going to find other 8bedroom homes nearby for the square footage that you're in. Right? There might be another 8bedroom house, but it might be 3 4 5,000 square ft² versus like mine was really only like I don't know 2,000 ft². And so it's more of like a four bedroomedroom.
[34:44] So by me not having built-in closets, [snorts] I was able to still get a fourbedroom appraisal value. It was still within comps. And then those other four rooms could be bonus room, living room, still dining room, studio room, yoga room, you know, office room,
[35:09] sun room. We have all these different types of room varieties that we've seen now. So yeah, the yoga room was a good one. If you guys ever you're like, "No, no, no, that's not a bedroom. It's a yoga room." it goes really well where Okay, let's talk about where
[35:25] conventional primary financing fits and falls short because I still think there's value here. I like sharing it because if you have access to it, I would do it. You can buy a duplex, a triplex, a forplex for 3 12% down, 5% down. I don't personally have access to that loan product, but like if you're in
[35:46] Tampa and you live nearby, I mean it just depends on the person, right? Some people are like, "Yeah, but I have kids now or I'm married. I don't want to do that." Like whatever the scenario is, but ultimately it just knowing that it exists. You can buy three and a half, 5% down, duplex, triplex, forplex. You can
[36:02] live in one of those units and then you could padslit the other three and make buku dollars. Like I think you could do you could crush it. Absolutely crush. And um [clears throat] yeah, I think that that'd be such a cool spot. So, we talked about that. FHA VA, conventional loans allow owner occupants to start
[36:19] living three to 5% down, lowest rates, ability to house hack, you know, great for your first or second co-l livingiving property, hands down. And then once your debt to income ratio caps, you can get into the DSCR space and the the hard money space. But I I really want to share this. I don't I
[36:35] don't I know one person that converted their VA loan 0% down. They bought a forplex and then they're patsplitting that. I think it's such a cool strategy. Let's go. When it breaks down, so it's not it doesn't scale, right? Cuz you're going to be capped at 10 finance properties on personal credit, assuming
[36:55] that your debt to income ratio is strong enough, your income is strong enough to even support that much debt on your personal credit. because yeah after two like for my wife we were able to use a 15% down and then a 10% down loan and then her debt to income ratio got capped. Um the problem there is let's
[37:14] say well well don't I can I show the income every year so that my debt to income ratio changes? Two problems with that. The one is when you go to your tax returns how much profit are you showing because they're going to look at your tax returns. Uh, number two, they they're
[37:31] not a fan of pads split leases in the conventional world, right? So, you can't like just show them a pad split lease. They're gonna be like, "We don't we don't look at this lease. We don't validate that lease." Um, and the income. Yeah. So, you can see there's going to be like variable income and
[37:46] you're going to have to write letters of explanation and stuff. So, some of the conventional world hasn't caught up to co-l livingiving. I mean the not the unconventional world is still trying to catch up as well, but who knows when exactly the conventional world is going to catch up or not. We'll see. Um the
[38:04] other piece I'm not a fan of is as you grow and scale, usually if you're using outside capital, the debt reports to personal credit and you cannot close in an LLC if you're using a conventional loan or FHA, any of those things. So if you're partnering with people, you want to protect your liability and you want
[38:25] to get outside money, you want to have partners and you want all that stuff, it gets harder to do in the conventional space. That's where people start to go into DSCR or hard money loans. So you start to collaborate with others. Conventional is a starter lane. DSCR is a freeway. DSCR or alternative methods.
[38:44] I actually share there's a con there's a it's called a full doc. I'll share it right now. There's a full dock loan that you can close in an LLC. Meaning, we can use your W2 income and we can close in an LLC. It's it's pretty cool. Or we can use bank statements or we can use 1099. I'll share that right now. [snorts] So,
[39:05] let's just say it's a non-converted padsplitter co-l livingiving property. So, just a regular home. Or let's just say it's vacant. Even if it's a vacant co-living property, we probably still do it. 20% down is standard. 80 LTV 80% rate and term refi 75% for cash out refies. This is if it's non-converted um
[39:25] pants but co-l livingiving property. So what happens if it is converted and people ask me well Fernando should I convert should I convert the property before or not? Just turning on my AC. Um should I convert the property if I buy it? Should I refinance it? converted or not, there's risk. So I depending on
[39:51] what stage I'm in as a broker, meaning do I have access to the lender that can refinance you with great terms? A month ago and for the 5 months before that, I would have said, "Yeah, you can build and we can refinance you and get great rates and great terms." And then, you know, less than a month ago, that lender
[40:11] pulled the plug on the on the offering. So I'm like, "Oh man." So, it's kind of tough. So, I'm going to share with you as of right now what we have today. Non-converted 20% down ADLTV for refies um rate and term 75% cash out. Again, non-converted co-living properties. So, my recommendation is if you if you buy a
[40:30] house, you rehab it to its highest comps, then you refinance, and then you convert it to padsplitter co-l livingiving. In that way, you can get access to the the highest quality products uh for terms and LTV. If if it's already converted, you're like, "Oh, man." Which happens sometimes.
[40:51] You're either buying properties converted or you already rehabbed it to a fully converted property and you're already cash flowing. Situations like that. We now have to go 25% down. So, you lose 5% on your down payment. or you go 75% rate and term again losing 5% or you're at you're capped at 65 to 70% um
[41:14] on a cash out refi. Uh I mean we can probably go 75% on cash out refi but the interest rate becomes like 9.5% with one of the co-l livingiving lenders we have. So, it's only if we're really really trying to solve a problem do I go to like the absolute extreme of worst case scenario, which usually just means that
[41:32] somebody's about to get foreclosed on and we have to, you know, solve it a certain way. So, preference as of today is rehab to highest comp, refinance vacant, finish your conversion, rent it out. So, that is the current recommendation. Uh but that could change again once I I'm always looking for new
[41:53] lenders and so a month ago when I did the same presentation I said you you know it's a risk but you could build convert and then refinance after the conversion and there would it would be the similar terms. Any questions so far on these two? Elizabeth or Leslie? Any questions from
[42:17] you guys? Ronnie O' Carson I know Leslie does um anything here I know we might have had uh you don't build a closet nice it's best to buy an IKEA wardrobe all good so far okay cool but that's not all so this is this is the one where like if you do make an income if you do have a
[42:42] bank statement or you do get deposits even if you have a 1099 income uh if you have a business, we can still go 15% down and close in an LLC that does not report to personal credit. We don't ask you where the cash to close came from as long as it's inside of your LLC and you use that
[43:00] money to close. You can buy with multiple members in the entity and you only need one borrower to pull credit for. So that's helpful if somebody else has bad credit, you have good credit, but they have money partnership do deals. So financing helps solve problems. Uh I don't want I don't want I
[43:19] want I don't want people to feel limited in terms of like I can't buy because of this problem and if it has to do with financing. I want to be able to help solve that. Let's talk about why people get DSCR loans. You close with less paperwork. So we don't ask you for W2s, no tax
[43:34] returns. We can close in an entity like an LLC. High debts, the high debts don't matter as long as your credit score is still above 680. Once you get below 680, then your LTVs change. I mean, even at 680, your interest in rates is going to be a little higher, but yeah, once you go below 680, it gets more difficult.
[43:54] Down below 650, even more difficult. Um, self-employed partnerships, entrepreneurs, perfect for DSCR loans. You can buy multifamily, duplex, forplex, 5plex, and we're using the income of the property to qualify. It's a lot more flexibility on the property types. So, we can buy
[44:12] short-term rentals, Airbnbs. We can buy using Airbnb income. Um, we can buy co-l livingiving properties like I mentioned, mixed use properties. Mixed uses like right now we're working on one where there's four units on the top floor and there's a restaurant on the bottom floor. That's a mixeduse property.
[44:29] We can scale. Doesn't matter if you if you buy 5, 10, 15, 20 of these or more, you can still use DSCR loans forever. and we can support foreign nationals. So Dylan, this is good for you, too. If you're ever working with a foreign national, no I it 10, no credit score. We can still do loans for them. Their
[44:49] terms are going to change a little bit, but yeah, we can help. And then uh yeah, buy and refy co- livingiving properties. The terms are also changing, right, in that case, but we can still do it. Um how to qualify, literally the easiest thing in the world. So, if you're ever going to work
[45:05] with Dylan to find something in Tampa, we just ask for a screenshot of your credit score, Experian, Credit Karma, any of that, and then a screenshot of your assets where the money's come or just that you have the money. And it could even be your private money lender, private money partner's account,
[45:19] screenshot it, cross out the account number. That's totally cool. And then front and back of ID. Uh, that's just to make sure that we spelled your name right when we give the pre-approval, right? Or you tell us what entity you want the pre-approval in. Then you qualify. Uh we talked about the layout
[45:33] scenarios a little bit. So at the time of if it's a if you have the choice, the recommendation is to currently build the property out to its highest comparable. Just had a conversation with somebody today. They bought the property for 180. When they rehab it for, let's say, $50,000, it's going to appraise at
[45:56] 300. Perfect. you just do that to its highest comp. We do the vacant refinance. He he wants to convert it to a 10-bedroom and and then I just gave him this the suggestion here and just explained, you know, if we want we want better rates, you want higher LTV and then let's just do it that way
[46:17] first and then finish the conversion to the 10bedroom later. I do get some investors that are more creative or thinking, "Yeah, but how would I how could I do this and still get some of my framing up?" In that case, what I'd suggest like let's say the living room or some of the other rooms, you can
[46:36] build them with double door with a double door opening and do not put the door in. So now it just looks like a double door opening, right? Which is normal. Like living rooms have double door openings. Dining rooms have double door openings. So there's no issue there. So if you're thinking,
[46:53] "Yeah, but I I still want to I might I might as well build this to the best that I can." You can make your dining room and living room have those double door uh openings without the doors and they can still be called living rooms and dining rooms. That's a pretty cool little trick you can do. [snorts] Um
[47:09] leases for the lease. If it's a pads split, we can still we can use a pad split lease. if it's already co-l livingiving like we can still do we can still use those but they're not going to take at the moment they're not going to take the higher
[47:22] lease amount so we still have to go off of the market rents. So just because you make a ton of co-living income doesn't mean that we can use it right now. Again that can change it. We had a we had a lender if the property Yeah, that's not true. So let's see if the property has not
[47:41] been heavily converted. Right now we have four bedroomedroom which sounds and I know most people are going to say like that's impossible but let's say you had a regular house that was a fourbedroom two bath and it was on padsplit or something else and we can use padsplit income and we can use a higher number.
[47:58] It's the the problem comes where if the property is heavily converted then now you start to have issues not so much with padsplit or the or the lease but it's about the layout. Most lenders right now are having issues with the layout, but if somebody really wants to do it, like
[48:16] we're we'll do a nine-bedroom, nine bath. We're looking at a 14 bed, 14 bath single family home. We're going to have to refinance a 10 bed, 10 bath. So, you know, we still solve these problems, but you just may not get the best terms. And I think that that's the key point here.
[48:35] Um I think we'll we'll leave this right here. So, any any last questions? So, that's the last piece. If you don't have my info yet, you guys can scan this and you get access to my contact info, phone number, and email and either be connected with me or somebody on my team. But I really enjoy helping our
[48:53] investors figure out financing problems. So, um Leslie, either we catch up right uh on this call if you want to chat or we can catch up after this call, but I really want to help you out in solving the scenario that you're talking about as well. and see what we can do for your refi. Um, any Let's see. Do I might have
[49:14] some questions in the chat. >> Um, I think she just needs to look into Tampa, maybe. >> Yeah, maybe she just needs to go to another market. I'm just kidding. >> That's it, huh? 100%. So, Elizabeth, all right. Later.
[49:30] Bye-bye. O, Carson, I I don't think I know Carson. Um, but yeah, O Carson, any questions? I think some of you are newer. I don't think I know Carson. I don't think I know John or Ronnie. Hey guys, any questions that you guys might have as you get started?
[49:51] Are you doing anything out in West Palm? So, I I do financing in 45 states. So, when it comes to financing, yes. But maybe ask Dylan specifically if if he's doing any deals out there. Dylan, are you >> No, I don't really go past Orlando, actually. But let me let me take a look.
[50:08] Are you familiar with the uh the padsplit map? We can actually take a look and see what activity is even going on over there right now. I'll open it up. >> Yeah, go for it. I would say and then if you guys are on Instagram, I'm going to drop my Instagram handle,
[50:24] IG answera, and then I'll drop my email in here, too. But I think that's it. All right, I'm gonna stop sharing. I dropped in the chat. Dylan, go ahead. Share your screen. Let's check out. >> Yeah. Okay. One second here. >> It looks like a very It looks like a
[50:44] very new market. So, give me one second. Just making sure I have everything on YouTube as well. Not only need to do that. So, share the screen here. And then let's do Okay. So, I think you can see that. Um, this is the right place, right? West
[51:06] Palm Beach. I'm trying to zoom in. Where is West Palm Beach? Is it? It's down here. So, this isn't even an active market right now on the radar. It looks like you can go down to Miami here. You can see actually this is part of the Miami market. So, it does go up here. Sorry about that.
[51:24] So, you can see here you have to have a host account in order to get into this portal. basically and look through their their some of their data. But you can see how many searches Miami and surrounding like the metro has had and how many active units. They don't have many active
[51:42] units. They have under 400 right now. And you can look through each zip code. There's 20 there. Yeah. Okay. Good. Good. Good. And and um so while would it be su could it be successful? Yes. I think very easily it could be successful even though there's not much data here yet. But by
[52:02] comparison, you can go to um I don't know. I know Orlando's I don't want to cherry pick Tampa, but you know what? I'm going to cherry pick Tampa. Uh yeah, two Yeah. Well, I mean, you know, it's almost 2,200 active units. We've been I I probably helped purchase half of them.
[52:22] I'm just kidding. I didn't do that. But um uh Orlando, actually this is Lakeland. Where's Orlando? Orlando's This is Orlando. Sorry, I should know the the map a little bit better. Um you know, Orlando has about half and Lakeland has Yeah, actually that's news to me, too,
[52:40] because I don't look through the map on Florida very often. I I actually thought Orlando would be about right, about the same. But if you go to Jacksonville, everybody talks about Jacksonville. It's still not as much. But people lately I've heard have been unhappy. Yeah. Yeah. And then you go up to and I
[52:58] I think this data is pretty up to date. I mean it's coming directly from padsplit. So I would assume they have some sort of automated way to to you know um put that all together. Okay. They have way more than 6,000 now. This is you know where all started and they have about you know they're approaching
[53:13] 9,000. So is there room to grow? Certainly in Tampa, you know, or Atlanta is very big. I would say it's much larger. I I don't know how how it compares to like how would you compare Atlanta size-wise or population or business-wise or whatever to to some of the Florida metros. I I don't know all
[53:30] those data points, but um but it, you know, I I I think Tampa's large enough that there's still plenty of room to grow. So, yep. I'll stop the share here. not a lender. I'm a broker and depending on the scenario, I connect people through. Uh I am probably in the beginning of next year, I'm going to get
[54:14] my own warehouse line to be able to fund deals. And so I'll be like a mini a mini lender. So, I'll be able to fund fund pro fund deals and I can sell sell those deals to the the lender who would be doing it. But even then, you know, yeah, I guess I can call myself a lender when I do that. But ultimately, I'm still
[54:35] what's the word? I'm still responsible like to whoever buys the loan from me, even if I'm funding my own deals. But it does give me a little bit more control. Any reason that you ask, O Carson? I think you're muted. Reach out to me though if you have more questions. >> All right. Thank you. Uh no, I was just
[55:02] uh just curious just understanding like what what your main like business is. >> Yeah. Main thing is is brokering these deals. Uh helping helping to package the loans so they get funded because it all it all is in the packaging of the loan. How do we need to how do we need to construct the loan so it qualifies? Um I
[55:23] think that's the that's the problem solving part. >> I see. Yeah. Because the looks like the loads for pad splitting sometimes need to be a little bit more custom or modified unconventional. [clears throat] >> Right. >> I see. And even on the regular DSCR
[55:39] stuff, [snorts] you know, sometimes you have um properties where the market rents come in low and you have to solve a DSCR coming in under one, but you need to get the LTV higher. Um so situations like that, too. You have first-time investors, first-time home buyers. [clears throat] So, there's different
[55:57] problems. You've got multiple investors partnering on a deal. How do you how do you navigate that? Is there reason to use Sounds good. Yeah, reach out anytime though, you know, if you have questions. I'm reading John's question here. Is there a reason to use Pads Split versus Facebook
[56:14] Marketplace? So, John, in your first probably in your first few properties, one depending on what you do for work, if you do your first one or two properties and you want to do it on Facebook Marketplace yourself, um it makes sense if you have the time,
[56:32] you're going to self-manage, maybe you live near where your properties are. I think I think John sorry just to cut you off here. I think John actually wants to house hack one of these potentially. So that that might be more more context to his question too. >> Yeah. So so yeah, if you house hack,
[56:48] it's not scalable. I'll say that. Right. It's it's very hard to scale that model. But if you're just doing one, you're house hacking, you don't need padsplit. Padsplit's there to solve a problem as well. So the main problem Padsplit solves, there's two. One is marketing. So some people like myself, I'm building
[57:07] a business, I'm have a family, all these other things. I don't want to spend my time marketing my properties. So I pay pass with those fees. That's number one. Number two is scale. And at scale, how do you manage the collections of the of your rents and then the management of each individual room and h and the codes
[57:26] and sharing all that stuff with everybody and and having a member rating system so you can know when people are are good or not good. And so there's there's they're there those pieces that add value to me as a as a host at at a later scale. So those are the two main problems they solve, right? Marketing,
[57:44] getting people on the platform and then managing the people on the platform. But if it's just one or two properties and you're nearby or maybe this you want to make this your own business and yeah, you just solve those problems on your own. You know, I I think people do that too. they have WhatsApp groups or
[58:01] Facebook groups for their tenants. But yeah. Yeah, John, I think you can do that. You don't necessarily need padsplit if that's the case. All right, I think this is it. Thank you everybody for for coming. Leslie, it was nice nice seeing you on here. John, Ronnie,
[58:21] >> everyone. >> Yeah, thanks everybody. Carson, hopefully we get to talk too. Um, yeah, follow if you guys aren't on Instagram or if you are on Instagram, reach out. I'm probably the most active on there. Um, yeah, it's Fernando Corona. I'd love to get connected with you guys on there,
[58:37] too. >> Cool. Thank you. Bye. Cool. See you guys. Thanks, guys. Yep. Take care. All right.
