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Get ready to find your recipe for a successful real estate lifestyle from America's top experts here at Greenlight REI with your host, Lance Edwards. Well, hello, everyone. Hi. This is Lance Edwards. Welcome to this session of Greenlight REI where we cover the successful real estate lifestyle. And we have a guest today on a topic that is of interest to everybody is where's the money coming from, where the funding come from for these multifamily deals? And. And this gentleman has a lending product which is very, very popular. You're about to discover why. But first of all, let me bring in on. His name is Mr. Jack Pomeranz. Jack, welcome to Greenlight Rei.

Thank you for having me. Happy to be here.

Jack, you deal in an area known as small balance loans for multifamily. And so I thought it might be maybe interesting if you could kind of. First of all, I do want to tell everybody your background. How did you get into small balance loans? And then what are small balance loans? And we'll start there. Sure.

So again, thanks for having me on. I guess we'll start from the beginning. Born and raised in Atlanta, Georgia. Went to college in Alabama, went to Auburn, studied finance with a commercial real estate minor. My mom was a real estate agent. Growing up residential, just kind of grew up in real estate. So new I kind of wanted to use my finance background and my love of real estate to try to find a job. Knew I didn't want to be an accountant, didn't want to do marketing, so just kind of lined up naturally, ended up working for getting a job out of college at Walker Dunlop, which is who I work for now. I started out as an underwriter, underwriting Fannie Mae and Freddie Mac loans, large institutional loans, 50 100, $200 million deals all over the country. And then about five years ago, I pivoted more to the sales side of the business, bringing in my own book of business for clients that need financing for either acquisitions of their multifamily properties or refinances. And I kind of fell into the small balance platform. So what, what defines a small balance loan? So again, everything I'm going to talk about is going to be geared towards Fannie Mae and Freddie Mac, because Walker Dunlop, who I work for, we're a direct lender. So I'm a direct lender of Fannie Mae and Freddie Mac. In Fannie Mae and Freddie Mac land, small balance lending are loan amounts from a million dollars to seven and a half million dollars and everything in between. So you know whether we're Talking about an 8 unit deal, that's a million dollar loan or 150 unit deal, it's a 7 half million dollar loan. We do it all in that space. And the good thing about Fanny and Freddy is we lend in every single market across the country. So not like your local banker who only you know can do loans in your backyard. I do loans in Seattle, Texas, Georgia, middle of nowhere, Tennessee prime, New York City. We do it all. It's all, all non recourse debt, no personal guarantees, all 30 year amortizations. You know, it's what a lot of the largest institutions in the world use to finance their buildings. Is this is the small balance arm that got created about 10 years ago. So happy to answer a bunch of questions about it. I'm sure everyone's going to have questions, but that's kind of just a quick synopsis on it.

All right, very good. So you actually opened up some doors there. So that's what let's, let's get this kind of dive into the attractor factors of these small balance loans you mentioned. Some of them is, is for. First of all, it's multi, it's multifamily specific. Correctly small balance loans.

Correct. So that for the Fannie Freddie small balance offer stabilized multifamily apartments.

Okay. Minimum $1 million up to seven and a half million dollars loans. Loan amounts and the terms are 30 year amortization. And then what are the balloon terms on these loans, Jack?

Yeah, so it's all five, seven or ten year terms. So it'll be a five, seven or ten year term with a balloon payment at the end, but the payments are calculated on a 30 year amortization.

That's excellent. That's excellent. And I heard you also mentioned non recourse. So talk about the non recourse and how that works. That's always of interest to people.

Yeah. So you know a lot of local banks, credit unions, you have to sign a personal guarantee essentially meaning if you default or the loan goes under, they can come after you personally. On a non recourse loan, all they do is take back the property. Now no one wants to default or get foreclosed on, but it's nice knowing that if that happens, the worst thing that can happen is you just have to hand the keys back to the bank. So no personal guarantee. You will sign what's called bad boy carve outs, which pretty much means the only way a personal guarantee is triggered is if you commit fraud. Essentially is, is, is the only type of personal guarantee that's on these non recourse loans, but it's as non recourse as non recourse gets.

All right, that's excellent. And what type of LTV are we talking about when small balance loans?

Yeah, so we can go up to 80% LTV, but in, in the agency world, you hear me here, you'll hear me say agency, which just means Fannie and Freddie, we're in place cash flow lenders, meaning we're going to look at the current in place income, the current expenses. Now the expenses can be modified slightly based on your budget expense comps because a lot of times sellers are running properties, fat whatever it may be. But we're going to look at current income and then kind of underwritten expenses that can be supported by an appraiser expense comps and then we're going to see what that noi the net operating income that we come down to where you can, where you can cover at on a debt service coverage ratio. So the debt service coverage ratio is typically going to be anywhere between a120 to a135 depending on leverage market, a number of factors. And so you can go up to 80% leverage if you have enough DSCR right now in today's world where interest rates are elevated, your day one going in cap rate needs to be very high to gain 80% leverage. Right. I'll tell you that for the majority of deals we're seeing are around, call it 6 caps going in and for 6 cap going in, the base of what we're seeing today is around 65 to 70% leverage. I say that's kind of on average what we're seeing. But you know, I do some business in the south side of Chicago. In the south side of Chicago, you're buying true 8 caps day one at true a cap you can go up to 80 leverage. So the short answer is 80 leverage. The long answer is all that info I just gave you, I got it.

So let me, let me kind of recap there for everybody. So it's up to 80 LTV. But what probably is going to be the deciding factor is your debt coverage ratio.

Exactly.

To be limited. And that's going to specify what the maximum leverage is that you can get.

Correct.

All right, I understand that and. All right, so with small balance loans, of course you can use these for acquisitions and can use them for refis. And can use them for cash out refi.

Yes you can. So acquisition refi, cash out refi, all of the above. A few things to know if you've owned the property over Two years. There really is no limit on how much money they'll cash you out. As long as the property appraises for what it's appraised for and there's enough support. If you've owned it for under two years they'll look at your loan to cost, right? So look at what you bought the building for and how much capital you put into it and to look at, you know what the new loan is, are they going to give you all of your money back? Maybe. Are they give you all of your money plus some back? Maybe just you have to look at that calculation and then if you've owned a deal for under a year. The other thing to note and just giving you a lot of information here is that let's say you bought a deal seven months ago, you've turned around operations, you've doubled your noi, the property value has gone way up. That's great. But we're only able to lend off of your cost basis. So what does that mean? So let's say you bought the deal for $2 million, put $1 million of capex into it, so you're in it for 3 million but you've increased income so much, that's worth $10 million now, right? I'm just making up numbers. If you don't it for, if you had owned it for over a year that means we could lend off that $10 million new appraised value, you've owned it for under a year, means we have to lend off of and value the property based off your cost basis which in this case would be the $2 million you bought it for plus the million dollars of capex. So that's a big thing to know for people that want to cash out a lot of money. You probably need to own it for over a year before you can really do a substantial cash out, be able to go off the new appraised value.

That's still a pretty short time frame. I mean just to have to hold on to it for a year to get that stuff. Pretty good. That's pretty good. Okay, so those are the loan terms. Any other loan terms we have not discussed that people find very, very attractive with this small balance loan products. Before I talk on the property, the.

Only other thing to mention is that we provide a lot of interest only payments so you can go sometimes the full term of the loan, sometimes for half the term of the loan but going years at a time without paying any principal down, just interest only payments to maximize cash flow. So I'd say the Bulk of the deals that I do have call it half term IO So a ten year deal. Ten year term. In the first five years you're only paying interest. For lower leverage transactions you can get full term interest only. So 5, 7 or 10 year term where the whole term you're only paying interest, that's a real benefit. Where a lot of our, excuse me, outside competition can't really compete with that because they're not providing any interest only. So when it comes to maximizing your cash flow, we have a lot of interest only options which is, which can be very, very, very beneficial.

And I imagine it's quite popular right now with rates being high like the make the deal.

Right? Because you know, a lot of people are like, you know Jack, I'm currently paying, I don't know, 475, but if you're, but if you're paying 475amortizing meaning not interest only, paying principal and interest, then my 550 interest only rate, I'm actually going to lower your payment. Right? So it's, it, the interest only is very, interest only is very important when it, you know, when you're comparing it to whether your current payments right now or whatnot. So a lot of the deals I'm doing are call it cash out refis where they're able to cash out money and then also get them into a full term interest only loan where maybe they don't love the rate just because rates are elevated, but they're going from paying a fully amortizing loan to a full term interest only loan. So it kind of gives them the best of both worlds.

Well, that's going to be my question. So if you're trying to get your LTV up, you could do it. You'd go interest only to get your payment down. So you can help squeeze in the debt coverage ratio.

Is that right? It's a very good question. Even the short answer is no though because even on a full term interest only loan, we still have to calculate the DSCR on an amortizing basis. So even if it's a full term interest only loan, it's almost like a stress test. They're going to make you still calculate the DSCR on an amortizing basis.

Got it. Okay, got it. All right, so let's recap the loan terms. Non recourse between 1 million 7.5 million 30 year AM 5, 7, 10 year terms, LTV up to 80%. But it's probably going to be dictated by debt coverage ratio. So you're probably going to do less than that in the current environment. And you could do it for acquisitions. Refis, cash out, refis. Correct. Very nice. All right. Okay. So that's the loan, that's the attractor factor. So what requirements are around the property to be eligible for this product, Jack?

Sure. So the biggest thing, I guess one only multifamily properties, self storage hotels, short term rental type assets won't work just for, that's for multifamily. It's for stabilized multifamily properties. What does that mean? We want physical occupancy of 90% or more. Right. So you know, if you're trying to buy a heavy, heavy value add deal that's, you know, it's got a bunch of delinquency and it's only 50% occupied, it's not going to work. I tell them, hey, get a bridge loan, go to a local bank, stabilize the asset and come to me for the refi. So they want 90% occupancy for 90 days. We call it 90 for 90. So by the time we close the loan, they want 90% for 90 days. So typically I tell guys, once you can bring me a deal that's been stabilized at 90% occupancy for a month and you have a strong T, one strong trailing one on your, on your T12, bring me the deal. Then by the time we close the loan, plus or minus 60 days later, you'll have that 90 for 90. So that's the biggest thing. Minimum number of units is five. That's what's considered multifamily in the Fannie Freddie world. So at least five units, that's really it. In terms of property, again, any market is fine, whether we're talking New York or a small town in Texas. Primary, secondary, tertiary markets, we can do it all.

So there are there literally no market exclusions?

Not too broad of a statement, no market exclusions. Now your turns might be lesser in a middle of nowhere tertiary market than in Dallas. Right. So they might, they might make you go to a lower maximum ltv, lower minimum dcr, but they will lend in every market across the country.

Okay, and, and with your business, are you strictly the small balance loans or do you help people get into mezzanine as well and then take them out?

Yeah, it's a good question. So my real value to my clients is in the direct lending capacity. Right. So in, in Fannie Freddie world, right. Because I can serve as broker, but I don't have as much value when I'm a debt broker as when I'M a direct lender because I really facilitate the whole process. I am the lender for all intents and purposes. So I'd say 80% of my book of business is in Fanny Freddy world. I do a lot in the small balance. I do much larger loans as well. My team last year closed a $60 million loan and we closed a million dollar loan then kind of everywhere in between. But I do put on my broker hat for some of my clients and, you know, help them find bridge debt, prep equity. You know, if it's ever they're buying an industrial deal, I can do that. So the short answer is I do it all but my real bread and butter and the real value I bring is as the direct lender for Fannie and Freddie.

Well, thank you. Thank you, Jack. Let's talk about that. Because you use the term direct lender, help explain that to everyone and why that's important to them and how that's a special value you're, you're bringing to the process here.

Sure. So to, to get Fannie or Freddie debt, you have to go what we go through what we call seller servicers and there's only, you know, it depends on the program. But eight to 10 companies that are seller servicers are Fannie and Freddie, because you can't actually go to Fannie Mae or go to Freddie Mac. You have to go to the direct lenders, the Walker Dunlop's of the world, the CBREs, the arbors, and why that's important is there's a number of reasons why it's important. One, I'm as close to Fannie and Freddie as you can get. You can't get any closer. So we're limiting the number of mouths that have to be fed on a deal. If you, if you go through a debt broker, you're going to pay the debt broker and then my team has to get paid as well and we have to split it with Fannie and or Freddy. So that's one cheaper. Two, it's streamlined. You limit the game of telephone. If you go through a debt broker or someone that's not direct, you have to call him and ask him a question and then he's going to have to call me to get the answer. A lot easier if you just get rid of the middleman and the client just calls me direct. Right. Because that's what I do all day long. And then the third thing is that there's been quite a bit of fraud in the marketplace recently, and mostly for broker deals, meaning getting agency debt through a debt broker where they're not direct. And so because of that there's additional hoops that Fannie and Freddie require the borrower to jump through. When you're not going through a direct lender and you're going through a debt broker, you can still get deals done, but slows down the process. So you put all that together, it's really a no brainer to go direct. It's always been a no brainer to go direct, but now that there's been that fraud in the marketplace and additional hoops, it makes even more sense.

And that's good. And the thing to me, are you guys doing, are you doing the loan underwriting in your office? Are you guys really the one. So you, when you say it's approved, it's approved, is that, is that correct?

We had. So, so it's a good question. On, on the Fannie Mae front, our company takes the primary risk on the deal, not Fannie Mae, it's our company that takes the primary risk. So everything is from Walker Dunlop approval. Essentially. There's certain things you have to touch Fannie about, but for the most part we're the ones that make the decisions on Freddie Mac deals. Freddie Mac takes more of the risk. So we are somewhat more at the mercy of Freddie Mac and their decision making. But we work with them all day long that we know how they think. So you asked me a question. I already know what Freddie Mac's answer is going to be. So not quite as much delegated authority on a Freddie Mac deal, but still it's as much authority as you can get going, going direct.

Okay, all right, so that's the property requirements. Let's recap that. So 90 for 90 need 90% occupancy for, for at least 90 days. But you can start the process before, before that. By the time you close that, you'll satisfy the condition. You mentioned the debt coverage ratios. There was a ratio you gave 1.125. You said give the deck.

Yeah, it'll be anywhere between a 120 in a top market for Freddie SBL. So Freddie SBL, that's Freddie's small balance is, is all market based. So there's top markets. So for top markets, think New York, Miami, Dallas, Seattle, some major MSAs. Then top markets, you get the lowest pricing possible, lowest interest rates and you can go to a 120DSCR, which is a huge benefit in standard markets. Standard markets, think Nashville, Atlanta, markets like that, you can, you get the second best pricing Freddie Svel has to offer. And you have to cover at a125DSCR. Then you have small markets where you have to cover it at 130. Then you have very small markets, very small. Think very tertiary, very small towns. You have to cover at a 140 DSCR. And so the DSCR will be anywhere between a 120 and a 140. Fannie Mae. Most deals are either a 125 or a 135.

Got it. Okay. Okay. All right. So those are the property requirements. And those fall in our sweet spot because, you know, we're doing, quote, small apartments. We've got that covered. All right, so we've covered the loan terms, the property requirements. Okay. Now let's talk about the borrower requirements. Yeah, if we could, Jack. So what are. I'll let you just start. What are the borrower requirements? And I'll ask from there.

Sure.

So.

The requirements are. So there's an experience requirement and then there's a financial wherewithal requirement. Let's start with the financial wherewithal. This can be on a combined basis for the individuals that are signing on the loan. Right. So it can have more than one person signing on the loan on a combined basis. They want net worth equal to loan amount in liquidity, equal to 10% of the loan amount. So let's just, let's, let's put some numbers on that. Let's say we're giving you a million dollar loan. They want your assets minus liabilities that you can put on a personal financial statement to be equal to a million dollars at least. Again, it can be between two people, 500k and 500k. That'll work too. Then they want liquidity. So cash or stocks or bonds, not retirement accounts. Retirement accounts do not count towards liquidity. And Fannie, Freddy, that you can prove out through statements equal to 10% of loan amount. So for a million dollar loan, call it plus or minus $100,000. Again, that can be on a combined basis. Most people can meet that, some can't. But you know, that's where I don't have that being the bigger issue most of the time. The bigger issue is the experience piece, especially in small balance world where it's someone's first deal. The black and white experience rule is they want you to have current GP ownership, not limited partner. You know, you're the real managing member in the deal. You're the, you're the sponsor. They want you to have GP ownership in three apartment buildings, one of which you've owned for two years or more. Or GP ownership in one apartment building but you've owned it for five years and that's where it can be tricky. Right. This is someone's first deal, Jack. I have the net worth, have the liquidity. I don't have the experience. Okay, what do I do? What you do is you partner with somebody that has the experience. Right. At least on your first couple deals, you guys take it down together. Your co managers in the deal, you know, the, the, the person that's signing on a loan with you, it's going to need to have the managerial authority or at least be a co manager because he's the one that has the experience on paper. And you guys sign the loan together and do that for your first couple deals until you have the experience and then you go off on your own merry way. I've done that a bunch. Where you know, a lot of my clients starting out, Jack, selling my first or second deal, I'm going to have a partner for these first couple of years. And now he does large deals all by himself because he's, he's grown. So those are really the, the requirements. If you're close on some, but not quite, can you go in for a waiver to get it approved? Sure. But just the black and white plain experience and net worth liquidity requirements are as I just said.

Got it. Okay, so let me repeat that. So on the, on the. Because I got a question that came out of that. So they want to have the borrower's net worth to be at least equal to the loan amount. And for that net worth you can't use retirement accounts. What about somebody's home equity? Do they count that as an asset?

You can use your, your, all of your assets and all of your liabilities will count towards your net worth. The retirement accounts won't count towards liquidity.

For liquidity. For liquidity. Got it?

Correct.

Okay. All right. And okay, so we have that net worth requirement. You have liquidity requirement. And of course they can partner with someone to help on that as well. If you're have a gap of whatever amount, they just, they just need to be a co borrower on the paperwork or the co applicant. How does that.

Correct. And they need, they need to have, you know, they need to have some skin in the game and have. Be a co managing member of the deal. Right. They need to have some authority as well. So I'd say be co managers of the deal.

Okay. So any other requirements from the borrower? You didn't mention credit score or anything like that. I didn't hear?

Yeah. No. So we don't need any tax returns. That's good. That's one. Minimum credit score is 680. So I want a 680 credit score. Obviously, we'll run a back. Run a credit check. Want to make sure there's no real skeletons in the closet. No past bankruptcies, no past foreclosures, no ongoing lawsuits, stuff like that. But as long as you have clean credit, have at least a 680 credit score and meet the net worth liquidity and have the necessary experience, you'll qualify. You'll qualify 100 out of 100 times.

Okay, so this sounds very formulaic in terms of the underwriting process. So you can know what, you know, you got a high probability of qualifying for the loan or what you need to do to make meet the requirements. So walk me through. I don't know. Is there a, Is there a type of deal that you just, you guys see over and over? That's be a great example. And especially if you lean towards more, my group, probably more towards getting their first deals done, you know, just coming out. Maybe you could share if a case study comes to mind, Jack, that would help paint a picture of the process and the type of project and the individual.

I think the number one reason deals don't work for Fannie and Freddie is because the property is not fully stabilized. You know, maybe it is stabilized. It's at 91% occupancy, but the delinquency is through the roof. Concessions are through the roof, expenses are through the roof. Could we get a deal done? Maybe, but it's not going to be at a leverage that makes sense for you. Right? So it needs to be, it doesn't have to be a totally clean deal. I don't want people to think, jack, this is a value add deal. It's not going to work. Fannie and Freddie, value add's fine. We want you to bump up rents, but it needs to be a stabilized deal that has some real day one cash flow. Right. Because we're looking at your day one cash flow to calculate the dscr. So if you're like, well, yeah, they've been, you know, they are at 9% occupancy, but they're only collecting, you know, 70% of the rent that's actually due because of delinquency. It's probably not going to work just because the DSCR is not going to work. So, you know, I don't want people to think, well, we plan to renovate a bunch of units and bump up rents I guess it's not ready for agency. That's not, that's not the case. You can, you can renovate units, you can bump up rents, but it needs to have some day one cash flow, right, that will give you the necessary leverage and is clean enough to show that I could show to Fannie and or Freddie to get it approved. So the biggest thing I'd say is typically just a property that's not really quite ready for, for agency or maybe it will be ready, but let's wait two or three months until, you know, we can see that stabilized. They kicked out the bad tenants, they got rid of the concessions, now they're operating at a much better pace.

All right, so Jack, what questions have I not asked that I should have asked in your work?

It's a good question. It's a good question of which question to ask. The only other thing I'd like to, I'd like to make clear, um, Fannie, Freddie is all about providing financing for affordable housing. Their whole charter is to provide financing for affordable housing. What does that mean? It means that for properties that are deemed affordable to tenants, you actually get discounts on your interest rate. So for example, a class B or a class C deal that has below market rates will actually get you a lower interest rate than if you bought a brand new class A deal in New York City that has top of market rents. Even though that's a clean pristine deal, that's great. If any Freddie does lend on that, it's not where they can give you major rent rent rate discounts. So we have an affordability estimator spreadsheet that we run where we look at the current in place rents and compare it to the average area median income. And based on the in place rents, if they're deemed affordable, you can get major discounts on your rate, call it up to 50 basis points off in your rate. So it's beautiful for a lot of clients that are, you know, playing the class B class C value add space because you get the discounts on your rate for day one having rents that are low, but then you can turn around and increase rents the next day the loan closes and you still get that benefit lower interest rate. Right. So it's a real synergy between these, you know, syndicate orever, it may be that are buying value add real estate with below market rents. You're getting the interest rate reduction and you're getting the benefit of that. But then we wanted to increase rents day one. We want you to do your value add program, your rents there's nothing that says, hey, your interest rates only going to stay this low if you keep rents this low. It's not an affordable, like a deed restriction, affordability restriction like that. We just look at where rents are at the time that the loan closes. And if they're deemed affordable, you're going to get major discounts on your interest rate. So that's just something I like to make clear about how kind of how Fannie and Freddie work.

Well, I'm glad you said that because my members are mostly looking at workforce housing. It's this class B, class C value add stuff. And you're talking about these small properties this mom and pop owned and operated when they got it, and they've never raised the rent because they'd hate to lose Mildred. And I mean, there's a rent bump just moving in there. So that's. That's exactly our sweet spot.

Yeah, I would tell you this is. We can certainly do a lot of other deals in this, but this just like you send me this deal, it's like my eyes light up like, oh, this is perfect. A mom and pop owner operator that's actually done a good job operating but hasn't raised rents for 10 years because they're best friends with the tenants. Right. It's a clean deal to collect all the rent. Expenses aren't bad. The rents are just Super Low. It's 100% occupied. It's been 100 occupied for forever because it doesn't push rents. Perfect deal. Perfect. That's. It's going to be easy to get done. The financials, you know, can be mom and pop accounting. That's fine. We'll figure that out. But you know, it's a stabilized deal, just has really below market rents. Perfect. That's just. That's a beautiful deal.

Yeah. That's our world you're talking discussing, Jack. Yes, that is. That's great. That's our world.

That's it.

All right. Idiot. Idiot. That was a great one. Any what other jewels you got, though? I haven't asked about. I should have been asking about it. Come to mind.

I'm trying to think there's anything else I really want to mention. So I guess let's talk about Fannie Mae versus Freddie Mac. Which one makes sense?

Good.

Versus the other. So Freddie sbl. Let's talk about the benefits of Freddie sbl. The benefits of Freddie SBL are twofold. One, you rate lock at signed application. So I send you the term sheet. I send you the application. You sign on the dotted line, your Rate is locked. So in the, in the market we're in right now where the treasury is going up and down every day, it's very valuable. So if the treasury goes up 100 basis points the next day after you sign the app doesn't matter. Now the inverse is true as well. The treasury goes down, we can't lower your rate. Your rate is locked, it's not changing. Which 9 out of 10 times is a good thing. But want to make that clear. I view that as a major strength of Freddie SBL. 2 Freddie SBL is the only program within Fannie and Freddy world that offers prepayment flexibility, meaning Fannie Mae Small and then Freddie Big and Fannie Big. So we're talking larger loans. All of those are yield, maintenance or defeats which pretty much, you know, we maybe that's another call what yields and diffusions mean. But pretty much means that you don't have great prepayment flexibility. You need to hold it for the term of the loan or at least close to or else you can pay an arm or leg. When you refire sale with Freddie sbl they offer step downs, accelerated step down prepays where you're only going to pay a percentage of the outstanding balance loan amount every year. So year one it could be 3%, year two it could be 2% and then 1% the last three years in a five year term. So for, for deals we really want to be able to get in and get out, either cash out, refi or sell after three years. For Freddie SBL can make a ton of sense because that they have that prepayment flexibility. So those are the two benefits of, of Freddie. What's the benefit of Fannie? The benefit of Fannie is one, you can close quicker. It's a quicker process than Freddy SBL Fannie Mae you can close and call it 45 to 60 days. Freddie SBL takes more so 60 to 75 days. So it's quicker. You, you can get more interest only in Fannie Mae. So if you do a 65% leverage loan and you cover at a 135 debt service coverage ratio, we can almost always provide full term interest only. So a five, seven or ten year term where you're not going to pay a cent of principal the only time only interest only, which is beautiful. And in Fannie Mae my team has a little bit more authority. We're not at the mercy of Freddie, we're not the mercy of Fannie and a lot of Fannie Mae deals, my internal team can make a lot of credit decisions and help get deals to the finish line. The downside of Fannie Mae is that it's all yield maintenance, right? You don't have the prepayment flexibility. So if you take a seven year yield maintenance deal, you probably need to hold it for at least five years or so or else you're going to pay an arm and a leg. Now, a lot of it is depending on what happens with interest rates, but just something to keep in mind. Now the only thing I'll say is all Fannie Mae and all Freddie Mac loans are assumable though. So what's the best prepayment flexibility assumable loan? Right, so if you bought a deal this year and you look to sell in two years and your loan is still attractive for an incoming buyer, they can assume it and then you pay zero prepayment penalty. So that's, that, that's a huge benefit there as well. So any deal. So you guys send me, I would look at it, Fannie and Freddie, I'd send you both quotes and talk through which one makes more sense for your business plan specifically. But there's pros and cons to both and just a conversation we have that's, you know, varies depending on the investor, their equity, their investor base, their, their, you know, investment time horizon. A lot of things go into that decision.

Excellent. All right, Excellent. All right, Jack, how do, how do our members avail themselves of your services? How do they, how do they get in contact with you?

Yeah, so you can call, text, email, and I will almost always respond. So I guess we can put my content at the, at the bottom, in the comments or at the bottom of the link whenever you post this. But you shoot me an email, you shoot me a text, you give me a call and tell me about, you know, whether you have questions or you have a deal you're looking at, let me know. My team will turn around a soft quote, a soft debt indication in a matter of typically 24 hours. All I need is a T12 and a rent roll to provide you with, with a soft quote. And then from there we can talk through, you know, all the various options there are.

All right, well, Jack, go ahead. For people that are listening to the audio on whatever platform they're listening to, go ahead and give them your whatever contact information you want them to have.

Yeah, so cell phone number, the best number to reach me at is 678-699-0628. That's my direct cell phone number. They can call or text and then my work email that I'm, you know comes to my phone, I'm all I'm always available is J Pomerantz. So J P O M E R A N t z@walkerdunlop.com that's W-A l k e r d u n l o-p.com any of those phone, phone call, text, email, I'll be sure to respond in a timely fashion.

All right, let me repeat that for advice list Jack Palmerantz, P O M E R A N T Z. Right. Jack. I got that right.

Correct.

And mobile number 678699, 0628 and his email is like his name J. Pomerantz. P O M E R A N T z@willer dunlap.com that's it. And small balance alone. Small balance loans. Jack, this is, this has been outstanding. You covered a lot of ground in a short period of time, kept it concise. But is there any final bit of wisdom, final bit of advice that you would share with? Again, my listeners are folks that are fairly new to the small multifamily space, maybe done some deals, looking to scale up, do some deals. Any advice for them?

Yeah, I would say getting into Fannie and Freddie sooner than later is very smart. I'm obviously biased, but there's a reason that the Blackstones of the world, the largest owner operators in the world, use Fannie and Freddie for almost every one of their deals that are stabilized multifamily. And the fact that Fannie and Freddie have this small balance arm for smaller private investors is something you need to take advantage of. Now, having a partner on your first couple deals is paramount. I think hopefully that's where you can come into play. You need to be willing to partner up with somebody to get Fannie Freddie debt for your first couple deals. But getting your foot in the door where Fannie and Freddie know you and trust you as an owner, operator, as a borrower will only help you down the road to get start getting better and better terms. And knowing that you have Fannie and Freddie and you know the process, you know what your terms will look like is going to help you win deals as well because sellers and brokers want to know that you can get the financing, be able to tell them, yeah, I've already closed two Freddie SBL deals and a Fannie Mae loan last year. I think it's a huge selling point to help you win deals and it's not easy to win deals right now. So again I'm a bit biased, but I think getting into Fannie and Freddie and Getting that under your belt sooner than later is, is really Paramount today's world.

Yeah, I'm going to end up add to that everybody listening. Jack was describing somebody getting you getting a discount on the rate for quote affordability product. That's workforce housing. That's our sweet spot. That's what we're doing. And the situation he described where mom and pop have been operating for years, haven't raised the rent forever, but they got this high occupancy because the rents are so low. Yes, the, that's our, that's our sweet spot. And if you can formulate create a machine to do it using Jack's products and need a partner, I'm able to help you out there with regards to some of the borrower requirements. So I think it's a sweet opportunity. Jack, thank you again so much, man. This been, this has been fantastic. So everyone get a hold of Jack Pomerantz for your lending needs on these small balanced loan properties. Thank you, Jack.

Thank you guys.

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