Private Money vs Agency Loans: How To Fund More Deals

Hi, my name is Brian Ogilvie. I'm the Chief Operating Officer here at Global Integrity Finance, and today I have the pleasure of bringing you Chad Skelton, one of our account executives. We're going to learn more about Chad, kind of who he is as a representative for both, and an advocate really, for both real estate investors and brokers. Find out more about him as a person, human being, businessman, and then ultimately see what he can teach us about the loan process, going through him as well as Global Integrity Finance. So, you know, Chad, tell us about who you are and a little bit of your background.

And with Global Integrity for about, um, 6 months, uh, started in August. Prior to that, been in various parts of the mortgage industry. Um, that's been something that I've done my entire, you know, adult life post-college. Prior to this, I was doing second lien originations for agency loans. The thing that I love about being a loan officer for private equity, hard money, is that there's so many different ways to get deals done and that every single property has a value. Every single deal is valuable to an investor in different ways. Every deal has its own story. I'm all about developing relationships and I'm probably going to go out of my way to try to make you laugh, break the ice. That's just kind of who I am. My brain kind of filters everything through humor.

So you don't want to have a conversation with somebody that's super dry and you don't have somebody that doesn't know how to get down to business either. So that happy medium, I'm sure, is what makes you shine. You know, tell us, tell us a little bit about, you know, the products you have at Global. What, what's your favorite product, right? When you get somebody that says like, hey, I'm an investor and I do both, you know, long-term rentals and I do some fix and flip stuff, like, what's your favorite? Tell us a little bit more about that. Unpack that for us. Okay.

So yeah, I mean, we specialize in two different products, bridge loans and DSCR loans. Do single-family, multifamily, and mixed-use. Ground-up construction is also, a lot of people consider it a different product, but that falls under bridge loans. My personal favorite, I love bridge loans. The fix and flips, fix and holds, even stabilized bridge. It's because it's always for a unique reason. The DSCR loan, it's a standard 30-year fixed. Those are great too. But those are usually, you know, your turnkey properties or you've finished your rehab. With the bridge loans, you know, you get to get hands-on, you develop a relationship, a working relationship, you know, the ins and outs of that deal, you know, everything that they're trying to do to the property, why they're trying to do it, what their ultimate goal is as far as investors go. Sometimes have a little bit more hair on them, but that's one of the challenges that as a loan officer, I think that you really value is getting in and, and challenging yourself to figure out exactly how you're going to make this deal work in the most efficient way possible. Because you're always setting up that relationship for the next one as well. You don't want to just close with one single deal with, with somebody. That's what separates me personally. That's what separates this company from a lot of other ones in this industry.

Okay, great. So when it comes to the bridge, kind of building on that, it's more like what is— of all the documents to get right, or the ones that kind of dive in the most, what document would you say that, you know, somebody that's doing a fix and flip or, you know, a ground-up construction, what's the most important document they could have and why is that the one that they really think about the most? Just to kind of clarify that question.

Documents that I've seen people have the most issues with, the things that get missed the most. Is making sure that your scope of work in a rehab budget actually makes sense. And making sure— because you have to think long term as a holistic process. After that loan closes, us as the lender, we have to pay out based on that scope of work. You can't change it once you've submitted it because that gets put into the appraisal and everything is based on what was stated is going to be done in that scope of work. Not saying that your numbers can't change because everything, you know, real— anybody that's ever done a real estate deal, you know, you run into, you run into issues where, okay, this was more expensive than what I thought, or this was less expensive than what I thought. But the types of things that you state are going to need to be done on the scope of work, that's what needs to be done in the project when you get into it. Other than that, just, just making sure that you've thoroughly vetted all of the potential red flags for borrowers, um, proof of funds, you know, not saying that the documentation itself is a problem, but, um, just making sure that at the point where you sign the loan term sheet, um, going through that— like, me personally, I want to go through that with every borrower or broker, make sure that, okay, when we see here we've got reserves, make sure they understand that that doesn't mean they're bringing that to closing. That means that we have to show that, and all that they can show it in any, any type of account— checking, savings, retirement—

as long as it's liquid, right? Something that they can pull out of if an emergency happens. They can grab those funds right away in an emergency situation.

Exactly. And that's different than the cash to close requirements. Um, just making sure up front that you identify, like, hey, is that going to be a problem?

Since you mentioned documents, like, I mean, what, what is needed for an application to kind of at least get that process started? And then what's the big ticket items you would see throughout the process that are like, hey, this is something we're going to have to get down the road, right? You have your standard, your title, talk to us about appraisals, you know, that sort of thing.

Yeah. So in order to get the process started, you just obviously if it's a purchase, you need the signed purchase agreement. If it's a refinance, you need proof of ownership via the HUD-1 or the warranty deed. We're going to need the scope of work. If it's a rehab project, we're going to need, you know, your driver's license, make sure that that's valid, it's not expired. Make sure everything that is on the application is actually accurate. You know, you'll sign the loan term sheet, sign the borrower's agreement, sign the application. And then other than that, that's what you need to get the process started and into processing. Then once it gets into there, that's when the processors will dig in. And if additional documentation is needed, LOEs, things like that, based on credit and background pulls, then they'll let you know. But then there's, you know, your standard docs, title, appraisal, insurance, things like that.

All right, great. What is, what is the term sheet? Like, what would you equate that to, to somebody that maybe does agency loans versus the the business purpose loans that you all do, you know, explain to me what a term sheet is and why somebody should come in or give us a call and get one.

Absolutely. Well, the term sheet is what starts the process. The term sheet is basically like the good faith estimate to detail out what the loan amount is, what the purchase price is, all of the cash to close requirements, reserve requirements. It's basically your entire deal all in one piece of paper. Um, and that's why that, that one is very important to go through upfront and make sure that everybody that's involved in this process is fully aware of everything that's stated on that. And they don't have any questions or they don't have any hesitations about, um, understanding particular pieces of it because it's going to break down what the project is. Our term sheets, we list all the third-party fees as well. A lot of lenders don't do that. But we want there to be a very clear, legitimate transition from the term sheet to the final HUD at closing so that there's not a lot of surprises. Once that gets signed and the application and the borrower's agreement gets signed, everything else is just a matter of us getting the documents and we can move as pretty much as fast as you want at that point in time.

All right, perfect. Thank you for sharing that. Thank you for going into so much detail. So To kind of wrap things up, because I'm sure you got plenty of stuff to get back to, you know, why should somebody call Chad, right? If somebody, somebody is looking for additional information, they want to be educated, they actually have a loan, a property they want to do right now, whether they are broker, real estate investor, why should somebody call you, Chad?

I like creating relationships. I— business to me comes second, even though business is what probably will bring us together initially for the initial meeting. But I mean, I'm— I want to be your partner. I want to be your consultant. I want to develop rapport with you.

That's great, right? Everybody needs that advocate and everybody wants to have that clear communication throughout the process. They don't like being passed off to one person to another. So that's great to know that you got to control that and own that, that experience for them. So what is your phone number for your direct line and then what's your email?

Absolutely. You can always call me Chad. That's my name. You call me Brad, call me Dad. Just don't call me late for dinner. That's what— that's what Larry Skelton always would say. But yeah, give me a call anytime. Phone number is 214-396-6151. Email is real simple, just Chad@globalintegrityfinance.com.

And then are you on any socials particularly?

Facebook and LinkedIn are the main ones.

All right, perfect. That's great. So hopefully everybody found this conversation enjoyable today. I got to learn a little bit more about Chad, Chad's business, what Chad specializes in and what he likes. Uh, if you are interested in talking to Chad, please reach out to him. Uh, or if you're interested in talking to us here more at Global, um, we are in McKinney, Texas. But if you can't get with us, we'll schedule a Zoom interview. We can have a, a conversation with you. Um, globalintegrityfinance.com, um, reach out to us, check us out, and hopefully we'll be able to help you in the future. Thank you all so much. Have a wonderful day.