Ground Up Construction Loans: Why Building is Better Than Flipping

Hey everybody, Toby Potter here with Global Integrity Finance. We are here today in Dallas at the LeverageCon real estate expo, and we have the honor of talking with Janine Casio, right? Yes, with Simplified Funding.

Simple Lending.

Simple, simple lending. I knew I screwed something up, but we're here to talk to her, kind of get an understanding what Simple Lending is all about, what they look for, and how we can help them grow their book of business.

Love it.

So tell us a little bit about you, Janine.

Yes, my name is Janine Casio. I'm the CEO and founder of Simple Lending Financial. We are a private lender leader in this industry doing fix and flip, DSER, ground-up construction, and bridge financing. Nationwide. I'm not only here as a lender, but also as someone that wants to make deep impact in this business, in the industry as a whole. It's a very male-dominated industry, really. And I'm hoping that I could plant my feet, make a difference, be a woman founder, and really make an impact to show other women that we can manage millions of dollars and close big deals and live our dream.

So how did you get into lending? That's my first question. What, what prompted you to say, whatever you were doing prior to this, I'm going to jump out of that frying pan right into the fire of lending?

Yeah, for sure. I mean, I went to college for accounting and finance, and I lived in New York City, and I luckily just met a family office that was lending out their own money. And I worked under 3 brothers, and I really learned the business, you know, through and through. And When I relocated to Houston is when I kind of found the opportunity to dive in and branch off and do it myself.

So you guys are located in Houston?

Yes.

And what areas do you lend in?

We're nationwide.

You're nationwide?

Yeah.

Okay. So tell us a little bit about your products, programs, and what a client looks like for you.

Yeah, I would say our go-to client does fix and flips or home building. We really don't have a cap as to to, uh, what we look for, um, as far as experience. So we'll go from new, new investors or experience, um, really looking to do either one home or you're looking to build 30 to 40 homes. Uh, we're really just here to cater to the business purpose, uh, real estate needs nationwide.

Perfect. And so, um, you're big in ground-up construction, or is that your sweet spot?

I wouldn't say it's our sweet spot because I don't want to like with the other products in the low light. But right now with the market trends, uh, ground up is just so hot.

Oh, so yeah, it's the hot commodity out there.

Yeah. And especially with just supply and demand, it's where we should be focusing our attention. So I do want to cater to the home builder. I want to cater to, you know, right now, uh, we're financing 13 ground ups for Houston local builder. Like, that's my— who I want to cater to right now because it's just such a need.

Well, we have a 6.5 million housing shortage nationwide.

Yes.

So it means we've got 6.5 million people looking for housing they can't find. Yes, you're right. We got to build more houses. Yes, we've got to convert more houses.

Yeah. And if we weren't here financing these houses, like, our economy just wouldn't be—

it wouldn't be functioning. That's correct. On, uh, on your ground-up constructions, what do you look for in a builder to say, I'm willing to invest money into this guy to build a house because you're not going to take somebody who's never built a house and fund them, right?

Yeah, no.

So tell me about—

so that is the only— yeah, that's the only product that we really want to see at least one ground up and in that local market that you're looking to invest in. Um, so a lot of our ground up product and how we verify and vet is that they have local hands on the ground, boots on the ground experience in that area. Just because like one zip code over here can be booming, but literally 5 miles down the road it's the HPA is failing.

It's a ghost town.

It's a ghost town. It's not like— so I really— that's what I'm looking for is like, as long as you've done one ground up or even 3 fix and flips, I'll get you qualified to do it.

And when you say on the 3 fix and flips, there's got to be some substantial amount of work done. Can't be a lipstick on a pig.

Yeah.

So I changed carpet, paint, and appliances.

So as long as it's heavy rehab and the heavy rehab, we consider it 30% or more than the purchase price.

Good.

So if you show us that, you know, you bought a house, you invested over 30% of that purchase price into the house for renovations, we consider that heavy rehab. And as long as you've done 3 of those, we'll convert that over to a one ground-up experience.

Let's talk about the— so you've got the ground-up construction, you got the fix and flip. Do you guys do the DSCR?

Correct.

Okay.

Tell me about your DSCR. Our DSCR is a sweet product. You know, we do 1 to 10 units nationwide. As long as it DSCRs and breaks even at 1%, you know, we're going to invest in that. So as long as it's cash flowing or breaking even. Yeah, um, yeah, we'll end on it.

So, uh, your office is in Houston. Do you have branches in other states, or is everything ran out of the Houston office?

No. Yeah, so at first I had this mindset of I'm gonna have a bunch of remote loan officers nationwide, um, and it just wasn't working out, especially that I'm, you know, being a woman in finance, wanting to create a space that people can really learn and different people that you're not your typical white male in the industry. Like, I want to create this space that is like nice and open. Um, that means you need to come to my office and like for me to really give you that hands-on experience. So I went from having a full remote team to early 2024 making it fully in office. I have about 10 employees in office. With that being said, I do offshore, uh, employees, um, from India for like processing and things like that.

Loan setup.

But everyone in Houston is in my and coming to office.

Where do you see your, uh, sweet spot in, in the United States? Is it Texas, Southwest? What is, what is your—

yeah, I would say, you know, obviously wherever people are migrating to is where you want to finance. So, you know, that's Florida, that's, uh, Texas, that's North Carolina, South and North Carolina, um, every— and you also want to look for, you know, the big, like tech companies moving their hub and you want to be able to find those, you know, builders and make sure you're there financing all the new homes that the demand is needing.

You know, we're in this pickle right now with the high interest rates, high valuations, property valuations haven't come down. You know, we, we all thought that when Trump took office that there'd be a change of the guard on the Federal Reserve. Yeah, that those rates would come back down and our boom would take back.

Tricks up his sleeve.

And that hasn't happened. He's been so busy on Doge and all that. But we, we all believe, and there's been a consensus for everybody that I've talked to and interviewed with, that the minute that our, our interest rates, our primary resident interest rates drop below 6, that our industry will, will boom back up, that it'll come up. Um, what's your thought on all that?

Yeah, I, you know, I'm a big mindset person, so I'm not someone that like gets hung up on the macro. I'm very like, our, our industry, the reason why there's so many people here today is because it's a good industry to be on, be in. It's a— no matter if tariffs are being thrown around and interest rates are going up, like, we got to just focus on underwriting and underwriting good deals, uh, and finding the profit within that. And, um, I'm growing and scaling a business in an environment that people say is the hardest that private lending and housing has gotten hit.

When did, when did you get into the industry?

I've been in the industry for 8 years, but my company started August of 2022.

So right when rates jumped up, you jumped in right when it was the worst time. Yeah. So you've had a heavy burden on your back building and growing. And here's, here's what we're faced with. Every person that got into real estate investing 2016, '17, '18, '19 was spoiled.

Yeah.

If you couldn't make a profit on a deal back then, you need to just go back to whatever you were doing. And then COVID hit in 2020, which kind of put a damper on it, but then came right back in 2021 with the low interest rates. Things were growing and blowing. And then 2022, boom, the rates went up. And put the brakes on everything. But one of the things that we struggle with when we're coaching our clients is they'll say, well, you know, I'm just going to wait till valuations come down. I'm going to wait till interest rates come down. I want to tell you that's not going to happen.

The time is always now.

The time is always now. I don't care if you look back over the history of real estate, and I've been in it for 30 years. You go back, valuations have only climbed. Yeah, they've never dipped and stayed down for a period of time. They may, may have a little bit of a dip, but then the climb is twice as high. So if you want to get into real estate investing, you need to do it now, right?

Yes, always now.

It's always now. The time is now. Uh, like you said, find the deals. It's a little bit tougher now to find the deals. Fix and flips are down, ground-up construction's up, but you got to find those that make a profitable margin. Start building a portfolio, start growing and building, because you're right, real estate is the only industry to invest in for generational wealth.

Yes.

Uh, and every billionaire that I know, and I know a bunch, will tell you 70% of their portfolio is in some form of real estate— commercial, strip malls, uh, all that stuff, housing. And to me, housing is the biggest demand that will always be there. Oh, when there's 6.5 million people needing housing and we can't find them housing, that demand's only going to grow.

Yeah. As Warren Buffett says, you know, crypto— people can mine crypto all day. Yeah, but real estate and land, there's no one's making more of it.

No one's making more of it. And we've got to get better at funding these deals and providing housing for society.

Agreed. I think we're in the best industry in the world.

Well, Janine, how does somebody find you to come and do business with you?

So I'm very active on social media platforms. You can reach me directly on my LinkedIn, which is just @JanineCassio. Uh, but simplelendingfinancial.com. Uh, we're also as a company very social media heavy, so we're on every platform, whether it's Instagram, Facebook, TikTok. I'm sure you, you won't have a hard time finding us.

So go find Janine, get your funding, like, share, subscribe to her Instagram, to these podcasts, and let's grow. Let's grow the business.

Thank you.

Thank you so much, Janine. Appreciate it.

Thank you for having me on.