Interview with Josh Heintz / Lending One

Hey, Josh, great to talk with you today. I'm excited to learn a little bit more about what you're up to. So LendingOne, what's LendingOne up to these days? I see their name a lot. You guys have been out to conferences quite a bit. You're investing a lot in the space, and I want to hear from you sort of what your team is up to over there.

Yeah. So LendingOne has been around for a long time. We're about 10 years old. We're a direct private lender, so we only loan to real estate investors and we only loan on real estate investment properties. We've been in the business loaning to real estate investors for many years, but we've recently realized that, you know, property managers can really use our services. I mean, as the gatekeeper to investors nationwide, what we've learned is a lot of property managers aren't even really clear on what private lending is and what private lenders do. So a big push on what we're doing is just for education and to help the community understand a little bit more about different investment products and different investor resources that they should be connecting their investors with.

Yeah. So as a property manager, I'm really concerned about my clients and I, and I like working with investor clients because the data from our company shows that they tend to stick around longer. They have a lower churn rate than accidental landlords. So I want to cater to them and provide as much value to them as I can. So it sounds like you guys are a national lender, but when I think about getting a loan for a piece of rental property, first thing that comes up for me is either one of the national banks or maybe even like a local bank that I already have a relationship with. So help me understand, like, where does LendingOne fit in this landscape?

Yeah, great question. So for the, for the average investor that maybe owns one rental and they want to buy another one at some point in their future, we're probably not going to be the best solution for them because it's going to make a little bit more sense for them to go to a national bank or to a credit union and connect with a lender there. But we're geared 100% towards real estate investors, so we don't loan on owner-occupied properties. We're not going to loan on your property if you just want a vacation rental. So it is all specific to invest. Well, let me clarify that. We do loan on vacation rentals if you're a short-term Airbnb person. But if you personally just say, hey, I want a second home, we don't do that. So we do real estate investment loans, but we really do it in scale and we do it with like true investors. And so the difference between us and a bank is a lot of investors are pretty poor on paper, right? They're wealthy, but they're poor on paper. And so when you go to a bank, a bank is— all of their systems and processes are designed to cater to somebody who is buying residential homeowner, you know, owner-occupied properties. And so it's a very laborious process. And we are very, very different than that because we only work with investors. We don't care about their W-2 income. We're not going to ask to see their tax returns. For us, We only care about what the asset is doing. And so if it's a performing asset, that's what we loan on. But also, you know, the average bank, if you go and you're trying to get a real estate investment loan through a local or regional bank, it's probably going to take 40, 45 days. We will close on our loans anywhere from 10 to 21 days.

So yeah, we're geared to deal with investors and that can be a big advantage if you are trying to get into contract on a nice property. Being able to close quickly increases the chances of you or your client securing that property. So that's a, that's a big win. And that distinction between you guys looking at the property versus the income of the buyer, that's a huge difference. And I know just from my personal experience, especially when I first started my management company, I couldn't buy anything because my W-2 income was tiny or nonexistent or hadn't been around long enough. That's a big problem for entrepreneurs and investors. So I love that you guys are just looking at, hey, let's look at this fourplex, this 8-unit, whatever it is. If it's cash flowing and the DSCR looks good, you're good to go. I mean, that, that's really the way it should be, especially because, you know, it's under professional property management. So speaking of which, speaking of which, last question, like, how are you guys working with property managers? How can you make it easier for me to help my investor clients?

Yeah, absolutely. So, you know, most people are familiar with like true hard money, right? Uncle Tim down the street, and he's charging 5 points and 15%. And so that's a great solution because they're usually, you know, very local. They understand 123 Main Street. And so you've got that and you've got big banks that are charging, you know, lower fees, but they're a little bit more difficult to deal with. And so we live you know, really right there in the middle where we're, you know, basically cheap, as cheap or cheaper than a lot of what you're going to get from your local banks. But we're as fast as what local hard money is. And so being a solution for property managers, one, just helping them understand the type of investment products that are out there. So a lot of people think, well, if I want a fix and flip loan, if I just want to flip a property, then I need to go to hard money. But they don't understand that, You know, we do that, right? 90% on a purchase price and then 100% on rehab cost. And then we can turn around and refi that into a 30-year investment product that's based on the asset and not on the person's income. So we help them understand that. But we have where banks again aren't geared for this and the local guy isn't so much. We have an entire team dedicated to helping property management companies' clients.

Got it. So you understand my business, you understand my clients and the relationship there. I think that makes a big difference.

Yeah. I mean, and property— look, all, all companies deal with the challenge of reputational risk, right? Am I going to pass off this relationship to somebody? They better take care of them, right?

Yeah.

We fund tens of thousands of loans for investors nationwide, over billions of dollars of loans. And so we can help them in whatever stage of the investment cycle that they're in. And then for the property manager, the cool thing is we are a business purpose only lender, which means that we only loan to the entity. So we loan to LLCs, to trusts, to corporations. Now, the person that is over that entity is the personal guarantor of that loan in most situations. But we loan to the entity, which means that we are not restricted and the people who work for us are not restricted by RESPA. And so we have the ability to pay out referral fees. So where you're sending— maybe sending your person to a local bank, you can't really receive anything from that when you're working with us because we're a business purpose only lender. We're 100% above board. We have the ability to pay out referral fees on that, make sure we're taking care of your clients and we're taking care of the property manager in the process.

Perfect. This sounds like a great solution, Josh. Thanks for coming on and helping clarify that for me.

Thanks so much, Peter. Appreciate it.

All right, great.