SHE'S GOT ASSETS LIVE

I'm actually a corporate tax executive, so I've been doing corporate tax probably over 25 years. And somehow I got laid off last year. And after that, I'm like, okay, well, what should I do? I really don't want to go back to that stressful. I'm sure you guys know when you kind of down to your April 15th, right, trying to file your tax return. It's always stressful, but that's only for individuals. But for corporate, you pretty much have deadlines almost every single month, every single quarter. So that was a very stressful job. And so I said, well, you know what, maybe I don't want to continue with this career. Let me take a break first. Of course, you know, I happened to join a real estate mentorship program and I learned about private money lending. I'm like, Wait, it's really eye-opening. I'm like, you can make that? There's people actually borrow that much money and pay that much interest? And I'm like, who would do that, right? And then so I started exploring. So I actually, you know, made my first loan in April of 2023, and that's how I got started this whole journey.

That's— yeah, it's kind of a— I think it's always been there. It's like an age-old thing that we haven't been exposed to a lot of times, and it just— it's kind of mind-blowing, right? When you first like realize like, wow, we don't have to use a bank or a, you know, it just opens up a whole world, right, of possibility. Yeah, I was kind of like, how do I find one? It's like a unicorn.

Well, there you go, right? Now you know where to find it, right?

Totally. Yeah. So I mean, I think the other thing is I think in this industry, like, we oftentimes come into this, like, from a course or something, and there's a lot of terms thrown around, like, you none of your own money and all of these things. And that's possible. And I'm going to talk about our case study. But I also think, like, you have to do the work and you have to make the business case. Like, no one's going to just throw the money at, you know, you're not just like, here's some money, like, without vetting it. So I'd love to hear you kind of, like, you know, how to talk to, I guess, like, really, like, basically, right? If you have, like, say we're in real estate, right? Generally it's fix and flips. It's, you know, you're looking for money to, like, for funding or rehab. How do you, how do you want to be approached for, like, a loan? What was, what's kind of, because you're very thorough and I love how you kind of vet people in.

Well, I mean, because my process is pretty simple. I mean, I only have one thing in mind. The first thing is I assume everyone's going to default on their loan. What am I going to do with this property? Right. You know, do I have an exit strategy? Am I okay in holding this property as an investment property? You know, so that's kind of my number one rule of thumb is to think that going into every single deal, looking at it, keeping that in mind. And then I kind of go, okay, well, you know, there's two parts really you need to really underwrite. What I call underwrite is you underwrite the actual property, the deal, and you also need to underwrite the person because you can't do one without the other and you got to do both, right? Because if you have a great asset, a great deal, but that person cannot complete the projects, cannot exit, right? Then, you know, you kind of like stuck with this property. What are you going to do, right? Or the other hand, you have a really great person who's really responsible, but the deal didn't really pan out. What is that person, you know, going to do, right? Are they going to try the best efforts to complete the projects or pay you back? So I think, you know, you— I really need to kind of evaluate both sides. And you just need to also look at a lot of the details, like not just the deal itself, the person itself, but the legality. Like getting a great attorney to draft good documents to protect you as the investor or the lender. I think that's also very important because I just know that, um, you know, sometimes I see some of these documents, it's like it's not written so well And then as a lender, then you kind of lost that protection. So I think there's things that you really need to be careful and also look at it from not just underwriting a deal, but also looking at it from the total package and also the macro environments. So I think there's a lot of things that needs to go through, but I like to go through all these details. I'm a very detailed person, right, Shona? You should know that, right?

Very much. I got your loan out, your loan kind of intake form, and usually it's just like a pretty informal conversation. And I was like, wow, this is very thorough. But I really want to unpack what you're saying, right? Because it's the person and it's the deal, and they both have to make sense. And you have to make the business case for why it's a good deal and your experience. So how do you want someone to present that to you? And is it a presentation, a deck, or what are you looking for in that scenario?

Well, I think first of all, when, when a person told me, oh, you know, here's the deal, here's the address, here's the amount I'm asking, I go, well, do you have a pitch deck, right? Because yeah, you can put it in a text and email, but if you have— if you spend the effort putting it together in a very organized fashion, then I know you kind of as an organized person, right? Um, you know, I, I know you put it together and you did a very nice pitch deck. And actually I have another one that I've came across, I think, you know, a very, very organized pitch deck. And she actually have link to all the supporting, like, you know, she will put the deals, the purchase price, you know, the rehabs. And then with the rehab, she has the link that links to that, to a G Drive, you know, Google Drive that links the, you know, contractors bids, right? The comps, she actually put the links of each comps. and I can go back to a link to Zillow or Redfin. So, you know, then I can, I can really just from looking at that, I know, okay, this person has really thought through the analysis herself or themselves, so they know that what they're really doing. And for me, it already gives me like some level of comfort. I know this person will look at the details, will think through the different strategies or an exit extra plans in case, you know, Plan A doesn't work, there's a Plan B. And so then I think that's very important to present to a lender, potential lender, um, you know, to kind of walk through, you know, have it all lay out very organized fashion. I think that's, you know, that's kind of my number one things I look for.

You don't want a back of the napkin presentation.

No. And then I've heard someone says, you know, I'm not good at doing Canva, you know, the pitch deck, you know, the pretty slide deck, you know, and it's just taking too much time. I'm like, well, nowadays there's AI who can help you put together the pitch. There's always AI, you know, or, you know, Canva has some really simple template. All you do is just upload some pictures and then put put in your bullet point, whatever you text me or in the email, and it's just there. And I think also my intake form or the applications also ask a lot of like your experience, you know, your credit, credit scores, or how many projects have you done or currently. I think that also gives me kind of more information about you as a person and also what's your experience in terms of, you know, real estate investing or fix and flip.

Yeah, for sure. So I heard, I thought Amy commented, totally agree, a pitch deck makes it worth desirable to PMLs. Yes. If anyone, I'd love to hear if anyone, maybe type a 1 in the chat if you've done a PML deal or maybe 2 if you're new to this. But the way I see it, Jenny, I don't know if you agree, I feel like it's kind of a mini business case, right? Because a flip is its own kind of, and you have to make that case just because it's a 65% deal. Like, okay, but how are you going to execute that? Right? What's your strategy?

Yeah, yeah. It's also very important. Yeah, I think also, you know, you have a great contractor team. And that's also important. You know, if you said you haven't done a flip before, but, you know, you haven't, haven't even talked to any contractors, I'm just, you know, kind of goes like this and say, well, I need X rehab funds. I'm like, well, did you get a contractor in there to look at it? Did you, you know, get— I think From my experience, what I've seen, a lot of fix and flip, it's, you know, the breaking point is if you have a good contractor team or not. I mean, Shona, you should know, you flipped many properties and they can, you know, break or make your deals profitable or not, right? 'Cause if you don't have reliable contractors or you have backup teams, then it can turn your deal from profit to losing money because first, if they do the wrong thing, you gotta redo it, or it's the timeframe, they drag on forever 'cause that's just normal for contractors. They like to take on, start off very fast. The first few days, the first week, they will get everything really, they have like 7 people at your property, and then afterwards, like, okay, they only show up every other day. And only with 2 people, you're like, okay, that's not a good sign.

100%. And that goes back. Yeah, it's your team and vetting them. And I think GCs are notoriously— they have good intentions, but yeah, that's a whole nother conversation. But I think it's super important. Okay, so going back to like, so it's a business case, like what are your— I mean, I think the things we hear about a lot are like ARV and like, so what do you— I mean, What are you looking for? Are you looking for exit strategies? What are you like if you were to say this is the perfect pitch deck, like what you want to see? And I love that you're vetting the person too. And I don't think we talk about that enough. Like it might be a good deal, but if you don't, to your point, don't have the team or don't have the skills or don't have the persistence, because there's going to be bumps in the road, right? Like I can't wait to share our dog story, Jenny.

You have to share that one. I think, you know, you know, on a pitch deck, of course, ARV, you know, but I always never take whatever the borrower presented me, the ARV, because there's people that will, you know, hyperinflate the ARV or they pick the wrong comps. You know, I like to be more conservative on ARVs, so I will do my own comps and ARVs, right? You give me the address, I will kind of I will not use exactly the comps that the borrower sent me, but I will use it as a kind of a guideline, you know, a reference point. And then I will find my own comps and see, you know, if they are really good comps or not. And then, you know, I would also take some discounts off the ARV once I get the average, because you never know in this market, right? And I think also you look at the macro economy. We don't know what this kind of right now, how the economy is going to turn, right? Especially with the elections, you know, and also, you know, they're cutting interest rate hopefully, right? And that means the economy is not doing so well. That's why the Fed, you know, cuts the interest rates. And but then it's kind of like right now I hear both sides. Some people say real estate is going to do great once they cut interest rate. Another 50% say no, that's mean the economy is going bad and that's mean the housing market will be impacted as well. So to me right now, I would take a very conservative approach on ARVs, right? And I take the discount of that ARVs and then making sure you really have at least a 70 cents deal. Sometimes 80 cents is just, mm, you know, And also I will look at, okay, I actually do the calculation for the flipper. Like, okay, if you, you know, I'm like, literally, I'm like, okay, you told me the ARV is this and your purchase price is this and then your rehab is this. And then you pay me, you pay me as a PML all these interest and points and then the closing costs and everything. And now I'm like, you only left with $10,000. I'm not sure, even though that could be like 5% or 10%, you know, some, some are lower value homes, but in this market, $10,000, it's not going to give you a lot of cushion. So I kind of says, you know, these are the deals that I'll pass, you know, I wouldn't even look at it. So, so that's why I kind of looked at everything. Like today I was looking at a deal And I even look at, okay, so you're telling me you got a great deal. Okay, so I'm doing my underwriting, kind of look at the properties, and but I'm like, well, it looks like the neighborhood, the surroundings, you, your, this property is much bigger than the majority of the properties there. Like that, this one is like 3,000 square foot, but everybody's, every, all the other properties around, it's only like 1,500, 1,600 square foot. So you really— then it makes it really more challenging for you to sell this property when it comes down to when you're done flipping, because, because with that big square footage, your price point is going to be higher, right? And if it's priced by that higher, is it really people looking at that price point gonna look in that neighborhood? Because most of the price point of that neighborhood is gonna be in the lower range because it's only 1,500, 1,600 1,500 to 1,600 square foot, right? And so then I can look at, well, how many days on the market, the average days on the market for even the 1,500, 1,600 square foot versus this 3,000 square foot home. And it's like, okay, well, it looks like right now it's going to be 70, say 60 to 90 days. And okay, I added back, you know, the points and the interest for additional holding costs. Then I'm kind of like, okay, well, does it still have profits in there, right? So I kind of look at it from like all like 360. I'm not sure if any— like, I'm just looking at it like I am investing in this deal myself. Like I'm the flipper. Does it make sense for me to go into this deal? So I think as a PML, I think a lot of people don't realize, they just say, oh, you know, what is the ARV? What is the, you know, your purchase price? Is This is a 70 cents deal. Okay, all right, I'm gonna lend. But I think the key is you got to make sure that the flipper or the borrower can exit. The, the key reason is you want your money back, right?

You don't want those house keys, you want the money.

I think the most important thing is I want the flipper, the borrower, to be successful so they can exit and complete complete the transaction or whatever, either refinance or flipping or selling, I want that person to pay me back my money. That's what I care.

And you want them to be successful because like, you know, if you're saying, hey, your payment's due, and they're like at the end of their budget, and it's sitting on the market, that you don't want to be in that position either, right?

That's like, no.

Yeah. So many things. But yeah, I think just, I'm just thinking about like when I first heard about PMLs and I was like really kind of like nervous. And I, what I realized was if you have a good deal, if there's meat on the bone and you have a good business case, there's definitely money out there. Right. And I think if you have like a thin margin deal, it doesn't make sense. Again, to your point, the ARV is wonky, that it's like a dock in a whatever it is, then it's going to be hard to find PML. But if all the things line up right, I'm sure you're happy to loan if it's a good business case.

Um, exactly. You know, I, like I said, I just realized there's actually lots of money out there. I'm serious. I just, I just came back from a, you know, private money lending conference. There are so many people out there, or a company that does private money lending, and they're just looking for people to borrow the money. So there's definitely lots of money out there, but I think sometimes when, when people says, well, I can't I can't find a PML to fund this. Well, maybe you should look at it. Is it, is it your deal, or that means it's not a good deal? If it's a good deal, people will lend. Okay, is it because of you as a person, or you have something that, you know, that people wasn't able to trust you, or, you know, or, or, or you're inexperienced? Um, and, you know, so I think there's Oftentimes I think as a borrower, you always have to ask for feedback. Sometimes people ask me, "Hey, I know you passed on it. Do you mind telling me why?" Right? I'm pretty honest. I will tell them exactly why. I would say, "The ARV just doesn't make sense, and you don't have a lot of cushion in this deal, and so that's why I'm not lending." One time I actually, um, I feel, I feel so, you know, I'm not a stalker, but once a person give me their name, I would start Googling them or ask ChatGPT, you know. I said, hey, you know, can you give me, put me everything, you know, of this person and start looking at the social media, you know, kind of checking them out and see if what they tells you over the phone, the video. I usually do video calls. I don't do as well, um, you know, and, and see if it matches up what they tell you, right? Because sometimes, like, you know, I can tell you, like, a recent example, um, I was just, you know, on a deal, on a Zoom call with someone who's, you know, trying to, you know, get, you know, do a deal. And I, after a call, I kind of just went online and Google, and that person actually has some, you know, lawsuits against and it's, well, and there you go. I click on it, I start looking at it, I'm like, well, you can say a benefit of doubt, could be the same, a different person with the same name, but it kind of matches the location that he said that he used to live. And it's like, okay, it says this person, the court sent him stuff and he didn't attend or it just keep on repeating, sending him stuff and he didn't show up and stuff like show up to court. And so that's already— I told the person and then of course they gave me an explanation. Oh, it's just something that is just an oversight or there's some issues. And I go, well, if you can't really manage your own finances, take care, be responsible of your own finances, How can I trust you to take my money, right? And run away, right? Yeah, right. You have to be responsible, you know, to me as a lender, because I lend you my hard-earned money, and you gotta make sure you treat it the way that, you know, that's more important than your own money. And if you don't care about your own money or that's kind of the attitude that you do to your own finances, then how do you expect me to trust to be a partner with you?

Yeah, no, that makes total sense. And the way— I mean, that really reflects on how you're going to treat the next project or— Yeah. So, I mean, just basically what I— Jenny, when I was working with you, I'm like, oh, you're like a bank. Like, you were underwriting me.

I didn't ask for your tax return. I didn't ask for your full job. Okay, so I'm not exactly like a bank.

But it was very thorough and it was just a level of professionalism that I was like, it was just like, and you were very just easy to communicate with. And so I just felt like, oh, you know, like, cause I also on the flip side, right? You hear of stories where PMLs, they commit to, you know, lending and something happens. Like I felt very confident that it was gonna work out and there was really good communication. You were even traveling at the time and it just was like, I think, I think you mean—

yes, I was traveling all the time.

Um, but yeah, so, okay, there's so many things. So I think we're really emphasizing like you're on both ways, right? And you want to kind of like understand the PML. Have— do they have a good track? I think it's also the reverse is true. Make sure you maybe talk to some of their references, right? Make sure that they're going to come through because you don't want to be at the escrows in a day and they just you know, find another deal or they're not able to fund you, right? That's not a good place to be.

Yeah, yeah, definitely. I think, I think it goes both ways, you know. You have to trust— the lender has to trust the borrower, the borrower has to trust the lender, you know. I've heard, you know, can go sideways on both sides, right? There's lenders who pulled out last minute, leaving the borrower hanging and couldn't close, right? And, and why is that, right? You know, I think That's why I think you got to make sure that you are comfortable with the deal. Once I said yes, I'm funding, I'm committing, you know, to fund and close the deals. Don't just say yes, yes, yes, I'll lend to you, but before you've really thoroughly underwrites it and felt comfortable that you want to lend on this deal. Um, because once you say you're committed, you're committed, you know, because the borrower is relying on you to fund the transactions. Right. So, you know, I, for me, my process is I don't really tell people until I'm thoroughly done my underwriting, check references, you know, Google them, stalk them on social media, and, and just making sure, you know, everything, and, and got my, you know, legal documents, you know, ready. And then, you know, that's kind of, I think that's when you write, okay, now I got, you know, underwrites, now I'm committed. So that's why I really don't do any like requests that say, hey, I need to close in 2 days. That doesn't give the lender a lot of time to underwrite. And, you know, I like, I literally right now I said I don't do any deals unless it's at least 2 weeks, you know, ahead of time. I think that is the minimum, bare minimum. If I have never known you, like if Shona, you come to me, I don't know you before, I have to start from my underwriting from the beginning. I would need at least 2 weeks and also get all my legal team to get all the documents ready and prepared to go and all my funding, like all my funds, you're ready to go. Because if it's shorter than 2 weeks, you're just giving yourself as a lender pressure. Right, to either, oh my God, I gotta underwrite this really quick, then you kind of just got— you get stressed and pressured, and you will miss a lot of things when you're under, you know, when you're under time constraints. So I think, you know, you know, let just, you know, to me, I always tell people, if it's too rushed, don't do it. There's plenty of deals out there. You don't feel like fear of missing out. Yes, always the next opportunity. It's like, you know, for me right now, I'm just looking for my next opportunities. Yeah, I know my money is not working for me right now, but it's okay. Don't, don't feel like, oh my God, I gotta, you know, push out the money, you know, as soon as fast as I can. But I'd rather get my money back and have a good return than rush into it and not get any return at the end.

Totally. Or a risky deal. Yeah. If this is resonating with anyone, let us know in the comments. It's really good to hear feedback. I wanna go back to a couple things. I think we often have the, you know, it comes down to mindset and how finding a PML, and I think it's out there, but how do you network with PMLs? Like, you know, I think, you know, there's a lot to that. And, you know, again, we talked about there's money out there, the deals to be good. So like, What are ways that you find your deals? Or if someone's like saying, I've never heard of this, like, how do I find a PML? It's a little bit daunting in the beginning, right? If you haven't networked and have a good relationship. Do you have any tips on that? Because they're out there.

You mean like for lenders to find borrowers or borrowers finding lenders?

So I think, I think, you know, for a, for like a flipper to find a PML, like, how do you network with— I guess, or both ways, what are your tips? Because I think we think they're hard to find, or it's just You know, who would loan me that much money, right? When you first hear about this, if you haven't done a lot of deals, it's a lot to process.

I think important is what I find is this industry, real estate, it's all about network. It's who you know. It's not how smart you are. It's not how much money you have or the skills that you have. It's who you know, I think. So networking is very important. Like, join, you know, a lot of these Facebook groups. You know, like if you have your mentorship programs, you know, join those mentorship programs. There's definitely lots of people in there that are real estate investors. And even that group doesn't have PML, the other, your colleagues, you know, I can call it your fellow flippers, they need to borrow money, right? They will give you references, like, you know, referrals. Oh, I have used I've used this hard money lender. I think there's always people who know somebody or someone that you can connect and find your lenders or your borrowers. So it's all about connecting and networking.

It's so true. Yeah, well, that's a good segue into how we started working together.

Yeah, it has nothing to do with PML and fix and flipping.

Yeah, no, I think we connected over midterm rentals. And I happened to say like, I'm going— I was under contract or something about how it went. And then I went to the property the first time, went to the property by myself. And I was like, do you want to do a tour? And this is the dog house, if anyone's heard of it. There were dogs, ferocious dogs. You met the dogs, like, eat you dogs in kennels. And so Jenny was like on the FaceTime with me as we toured the house with dogs growling on us.

Oh yeah, I mean, yes, that was, that was a bit scary. First scary encounter virtually, and then, then, you know, shortly after that in real person.

Yes.

Yeah, yeah. I mean, that's what I'm saying, you never know. We originally connected is not talking about PML request. It was just talking about, oh, I'm interested in, you know, probably learning more about midterm rental, you know, maybe start a midterm rental. And then I can reach out to Shona. And of course, Shona is very nice and said, okay, well, let's have a chat, you know. So we were chatting about, you know, midterm rental, and she just casually said something, oh yeah, you know, I'm under contract for this property. And I'm like, oh, my money just came back. I need to find a deal to fund. And that just started. That's how it started, right? And then of course, Shona said, hey, I'm going to go check out this property. You want to get on FaceTime? I go, yes, of course. So we were FaceTiming, looking at property. She almost got eaten by dogs.

We don't—

and then I'm like, oh my God. And of course, at that During that time, I actually was only 3, 2 hours away from the property, and I said, hey, can I just come down and look at it in real person? So I actually hop onto the car. I think that afternoon, we talk in the morning, and I think we hop.

Yeah, you were like on it.

My husband and I like, okay, let's go. So we hopped on in the afternoon, in a couple hours, and we were down there meeting Shona in real person. By the house.

And the dogs.

And the dogs. That's right.

And the dogs.

Yes, that's right.

So I still remember there was like a counter and there was a pit bull in a cage and I had to— you were on FaceTime. I put the phone down over the counter to like avoid the dog that was in a cage. Oh man. Yeah, but it's a good story now. But real estate is definitely— yeah. And I guess I just want to like, I really want to emphasize like let people know what you do and when you're doing projects, because that builds your credit. I don't know what you think, Jenny, but builds credibility. And don't just like, if you're just asking for money and you haven't built up that credibility rapport, I would think that it's, you're less likely to get, you know, it's important to have that out there.

Yeah, I totally agree. Like, like I said, you know, I look at people's social media posts, you know, what they've been posting or their comments. And if they have not posted anything, and if their Facebook page is just background, no person, no head. I'm like, okay, you know, then I will be a little bit cautious, you know, about that. I know some people like to be private. I mean, I'm a very private person. I'm an introvert as well. I don't like to blast on social media because it's like, I think it's part of, you know, being my culture, you know, being Asians, and also my faith, you know, Christian. Okay, you got to be humble, you know, you can't brag about your achievement or accomplishment, right? And I know in life, you know, you gotta do some kind of— some level of marketing about yourself. You know, you don't have to go overboard about it, but if you just— if you have something that you think you should share with other people, then just share it. You know, don't— but don't go overboard, you know, like, okay, you're, you know, slamming, you know, emails every 5 minutes to people, or just You know, we call it, you know, washing the Facebook news feed, the feed, right? The Instagram or the Facebook feed. But I think sometimes you just need to, you know, do a little self-promotion, just a little bit. You don't have to do a lot so that people know what you're up to. And I have to say, I'm pretty bad at that. And I usually, I've been very quiet on some of these, you know, real estate Facebook groups, but I think I got the encouragement from a lot of other friends and sisters and say, hey, you should start, you know, doing sharing. You just don't think of it as promoting yourself, but just think of it as sharing.

So I think 100%, and I think like it's— there's so much value, and I think we're actually helping so many people when we're, you know, there's like private money, there's the sellers, and we're improving the community. So we can frame it in our heads. It's like, hey, we're giving back and we're keeping money local, right? There's a lot of things that have— and just, I think that's important. It's how you kind of frame it. Because yeah, I used to be very private. Now I'm not.

But it's like, well, no, but let me tell you, let me ask, let me interview you. Now you're not being private. Now you are more out there. So does it mean now you got more deals coming, right? You got owner's finance, right? So people will check you. Okay, well, yeah, she's serious. She is. Not a scammer, she's houses, and you've got that credibility, right? Is that right? Am I correct?

Totally. Yeah. And I think it's just, it's just, yeah, it's really important. I think people are like, to your point, they're going to Google you. And if you're not, and you don't have to be like prolific, but if you're not talking about what you're doing, and it's like a little bit like, well, are they legit, right? I mean, I've had sellers tell me to listen to my podcast that was like, oh my gosh.

Oh, wow. That's amazing.

But I also think it's not bragging, your point. It's just letting people know what you're up to. And it can be like a simple update and don't overthink it. Right. I think we tend to get in our heads a lot and I think just it comes down to communicating what you're up to.

Right.

I don't think that's bragging. I think you don't have to put just the fun stuff. I think we all kind of curate these beautiful Facebook worlds that we have a real life. Right. So you can post. So I post when I'm labeling garbage cans, which isn't the funnest thing, but it's the reality of landlord life.

I mean, I think sometimes people resonate if you actually share mistakes or failures, right? Or things you have learned. Not always going to be the rosy and, you know, gloomy, you know, success stories, right? Sometimes you just have to show them the real hard work behind it, right? Because I think sometimes people get kind of, um, I don't want to say misled, but there's a lot of influencer YouTubers out there just telling you, oh, this is great, you're gonna make tons of money now, you're gonna make this amount, okay, it's easy, you just need to put in 4 hours of work every week, blah blah blah blah blah. And I'm like, I'm not Sure, that is true, you know, and, and it's funny because a lot of people think private money is very passive. It is in a way, it is. Yeah, but it's not. I, I have to, I have to say, if you really want to do a good job or find a great good deal with the right person, it takes a lot of time to filter through a lot of deals and underwrite it. And once it's underwrite, that doesn't mean that's the end of your job. There's a lot of things from underwriting all the way to closing or funding. And even after funding, you think you're done, but you're not. After funding, you gotta service the loan unless you outsource the servicing to a third party. But if you servicing yourself, then you got another, you know, phase that you got to work on it. And then once it's done, you got the payoff stage, right? And hopefully in between, you don't have to deal with late payments or defaults or foreclosures, right? If there is, you got to work it through. So yeah, if you compare People say mailbox money. Yes, it is mailbox money to a certain extent. But if you really wanna do this well and successful and really mitigate your risk, there's a lot of work that you need to do, I think, and process, right? Process and procedures. Now I got kind of my process, still refining. Every deal I refine my process. Making sure you got all the documentations, chasing people down, like chasing title company. Yeah, I just have one horror story, but we can go on a different discussion to talk about. It was like crazy. Every title company or even escrow title officers are so different. Some are really on the dot and really really responsible. Others, it's like you chase them. It's like, hey, I think the closing is in 2 days, send me anything, you know. Yeah, I run into one that's closing in 2 days, and I said, you haven't sent me wire instructions, okay? Are we still closing in 2 days? And of course, you know, I said that— actually, I sent her an email like 4 days beforehand. She didn't respond. And then 2 days beforehand, I sent another follow-up. I say, hello, can you please confirm receipt of this email, that you got your email? I'm trying to, you know, fund this deal, okay? You have to send me wiring instructions and all these other things so that I can make sure that I send in the money on time. So yeah, so there's a lot of work Yeah, don't, don't get fooled by people say, oh, it's mailbox money.

No, I think we throw around the term passive a lot in real estate. And that's, there's levels of passive. I don't, I mean, yeah, I mean, even if you're, you've got long-term rentals, there's no passive in that. You still, yeah. So I love that you emphasize that because I think, yeah, it's a great model, but it's also, it's work and to do it well, right. And to have good deals. I love that you brought up title because I do kind of— what I also love about this model is, right, like, if the loan is really secured to a real asset, that's what I love about real estate. And I don't know if people understand— I mean, not to go into the weeds, but I think that's a really thing just to— what I love, like, I feel like, yes, you're trusting me, but you're also— there's a piece of property involved. So if something goes wrong, you have an asset. The stock market, not so much, right? Um, so I'd love to hear you kind of like, um, If you don't mind, I know maybe it's basic, like deed of trust and promissory note. It's just like saying I owe you money, but it's a very formal structure, right? And for anyone that hasn't done it, it's really important to understand.

Yeah. Okay. I always say the key documents is, of course, the promissory notes, which is the borrower have to sign and says, this is how much I owe Jenny or your lender. This is the terms and everything. That's your promissory notes. Now, of course, there's the deed of trust, and deed of trust means that you have collateral. That's been that property, you have a lien against it in case borrower doesn't pay you. You can, you can take, you can foreclose on the property, right? So these two are actually the most important document that you must have, okay? Now of course there's also other document which I think now, now after I've been doing this for so, so many, so many times, actually it's also very important which people doesn't realize. Um, so sometimes I ask for personal guarantee, right, in case, you know, that they run away or they have no skin in the game, you know, or something happens. I still have a chance to go after their personal assets or whatever, but there's a personal guarantee. There's also other documents now. This is going to be more complicated, but you need to certify that this is a business loan, an investment loan, is not a primary residence, or this borrower will not intend to move in as a primary resident or live in there. Because for lenders, you know, if you start lending to people on their own primary residence, you actually fall under the mortgage law. There's different sets of laws, regulations that falls in when you lend to people as primary residence versus it's a business loan. So, so that's why you got to be careful. So you need to borrow to start certify that, hey, this is truly a business loan for investment purposes. I have no intention to, you know, live in there. And, um, you know, so making sure that if they eventually move in there, you have this document that, hey, you told me this is— you're not going to live in there. And now I got, you know, probably some regulations or laws that says, oh, I'm now lending as a more— you know, I need— I'm lending as a mortgage or mortgage license that I need to get. So that's very important, I think, you know, for people to understand. And also sometimes in certain states, you actually need a license to be a private money lender. And I think a lot of people didn't realize that either.

Yeah, that's all really, really important, very detailed. Like I just did a DSCR loan and you always have to sign a statement saying I will not occupy the property, right? I mean, because it's income So the business loan, how do you— is that like a document, or how do you kind of certify that? That's a really good point, I think.

So my attorney actually draft a document that just says, you know, of course the borrower has to certify, and actually they actually have a section that they have to handwrite it that they certify this is a business loan and it's not intent for you know, to live in their primary residence. So now they cannot say, oh, well, I didn't know, but you actually handwrite it yourself.

Yeah, I mean, that's the law. You can't— yeah, that's very thorough.

My wife just said, you know, you didn't read the document, it's already on the document, and you write it yourself with your own handwriting, then you have no way to say you didn't know what that is.

Well, you know, that makes me think, Jenny, you're definitely a pro. And if you haven't done you haven't been in PML and this all sounds great, like you get this great return, right? You get points, but like, get guidance. Don't just go out on your own if you don't understand it because you could— and I, I've often hear of like unsecured loans. That makes my skin crawl because you have zero protection, right? Like, yeah, you want to talk about that? Like, that does happen and it really is like—

I have not heard a lot of horror stories. I mean, it just happens. Last week in one of the Facebook group chats saying this lady was asking, oh, can someone refer me to a real estate attorney because this borrower hasn't paid me in a year? And I said, okay, the real estate attorney, I go, if they haven't paid you in a year, what state you're in, I think you can start the foreclosure process, right? I say, do you have a lien or deed of trust? And she goes, no, I just have a promissory note. I'm like, uh, so is that it?

You—

that's you— all you have? She goes, yeah, I didn't know any better, it's my first deal, so I don't have any deed of trust or any lien. I said, well, okay, then I guess it's just a personal loan then. No, no security or no collateral. I think you can probably just go to a small claim court. I don't know. I'm not sure if a real estate attorney can help you much because there's really no property or lien against these promissory notes. And so I don't know what else they can do other than you go to personal small claim courts or go after them personally, I guess.

Yeah. And I think that There might be times where that's intentional, but if someone doesn't know, it's just, just do your homework, get help, ask the questions on both sides, right? Because that's so critical. And you hear of these stories and it just, it's heartbreaking.

All the time, all the time, you know. And also I think people don't realize also lean positions, you know, there's first lean, second lean, no lean, which we just talked, you know.

Zero lien.

I think that's kind of the level of risk. First lien, second lien, and then zero lien.

So that's a good thing. And really, the only time that comes to pass is if there's a default, right? The first position is the most secure, right? So do you loan on second? I'd love to hear your perspective on the positions and where you're willing to go.

Yeah. So for me, Now all of my loans has been first so far, but of course, you know, it doesn't mean I don't lend on second. Now why I say that, because even with first lien, you can still have risk in losing money. So why I'm telling you that, because so you look at really the total combined loan values, because if say for example your that property as is, it's say $200,000, okay? And you lend that person the full $200,000, okay? You lend them 100%, okay? Say, because they say the ARV once they add the rehab could be $400,000, okay? So you say, well, that's a great deal, you know, 50% or 70% deal, right? And to be honest, if they start demoing it and they walk away during middle demolitions, do you think that property is still worth $200,000? Right? It does not, right? So even as a first lien, I'm just saying, even first lien, you can still lose money, right? Because if you take that property and sell it to a wholesaler to finish it, you might only sell it for $160,000 or whatever, right? And you still lose $40,000 because she lent $200,000. Now vice versa, let's say you have a property, another deal that's, you know, $200,000. You only lend that person $100,000 as first lien, and then they, they went to ask Yoshona and asked for a second lien for $20,000. Even though it's a second lien, but the total loan values 100 plus the 20, it's only 120 out of that 200. So in case anything happens, right, I think that second lien position still has better security than our first example of that first lien positions, right? So I think it's important that you look at the total loan value versus, oh, first lien, second lien. Yeah, you can have third, fourth, fifth lien if that total loan value is weak. 50%, right? So in that case, if that property goes into, you know, auction or foreclosures, you know, all these lien positions will probably get paid if they— there's value in it. And there's equity.

Yeah, that's really what it comes down to. Because if there's enough equity, right, there could be third— there could be more. I'm not— that's not common, right? But that's really the risk factor. Yeah. I mean, So I had a coach tell me, like, you know, I think first lien is kind of coveted because it feels more secure, even though it may not— to your point, excellent point— may not be true. But I think that's always like the juiciest position, right? Like, if you're going to get a PML, you've got a first lien, tons of equity, just like a good— that's just like a solid, right? If you're like, yeah, second, and you're squeaking in, it might be tricky.

So I would say in general, that's how it works. But of course, you know, you got exceptions.

So you're not— I think it's like you're very analytical. You're looking at the whole thing and you're not like, I'm only going in first. You're seeing what's there, what the loan, the value is. Yeah, that makes a lot of sense. We get hung up on these terms and we don't necessarily unpack what that really means. It really only will come to pass again if something defaults, right?

Correct. Yeah. So don't get hung up on the terms, but I think look at the details. So ask questions.

Yes. Right. Yeah. That's like, I love that you said that. And also I just, um, there's so much to unpack here, but I want to talk about like, you know, where I feel like we're partners. Like if you loan me money, I'm your partner. And I, I'm really big on like communication. I'm like, what do you, what do you like from a partner when you're, when you're, you know, lending money? What's the ideal? Like how much communication? What cadence? I think we don't think about that enough sometimes. And when we get into the deal, we're heads down, right?

Yeah, I think the more communication, the better. From a lender perspective, like, I want my borrowers to just keep me updated. I think, Shawna, you did a great job. Every single— I mean, I would say even that short duration, you keep me updated almost like every week or something. Just let me know what's going on. We have completed XYZ, and now we're working on ABC, you know, I think that at least gives the lender comfort, at least know what's going on, and if you have a handle over that project, right? If that person is scrambling, disorganized, doesn't know what's going on, having issues with contractors, you know, then I don't think they want to share those news with the lenders, right?

Right.

And, but, but I think, you know, even, even that you should still share because, you know, me, like you said, it's a partner. Maybe I can help you think, okay, well, what are the alternatives? What are the options? Maybe when, when people like just stress and they might just think this way, but if you start talking to people, they probably see a different perspective that you don't see, right? So maybe they will help you figure out an alternative way to solve your issue. So sometimes it's actually better to share, you know, even challenges with your lenders and say, hey, you know, I just want to give you a heads up. I don't want to be a surprise. Here's what happened. I'm working on it. Or, you know, at least just tell them you're working on it, you're trying to find solutions, you know, you're, you're you're on it, so don't worry about it. Or, you know, so at least the lender said, okay, at least I know she's trying to figure out a solution to the problem. Or I can say, hey, do you need me to offer you some help, or do you need support? You know, because like I said, like you said, we are a team, we're partners, right? Because I want you to be successful, I want you to complete the project so I can get my money back. That's the most important. Yeah, right. So I mean, it's to my best interest to also help you, right, to finish this project. And so I think that is very key. You know, I think, you know, just be on top of it and just communicate with your lender. I think that's really important, even though I try to like give them like, hey, at least I need a monthly update if it's going to be a long projects, at least some videos or pictures and what's going on. You know, I have one borrower, she actually has a, um, a social media account of her flipping business, and she constantly posts on there, right? And so I can actually go to that social media, like, like you, you sort of, you, you would post on your social media, say, hey, here's the, you know, I'm working on this project, here's the status. Then actually I already know, you know, I could just go to your social media page and say, oh yeah, your show is working on this and now they got all this done, just need the last touches. So I think that really helps and give comfort to the lender.

Yeah, no, um, I think we don't— and especially with smartphones, there's like really no excuse. Like you can document, you can, you do a video walkthrough and that would, I would imagine, just, it's simple, you're not even writing it. No.

Yeah. With smartphone technology, you know, it's just so easy to just take a few pictures or a few videos. And I mean, the best is, you know, real time, but, you know, but taking videos and pictures, just send a glimpse, you know, I think that helps a lot already.

Yeah. And you made me think of something I don't think we touched on too. It's kind of like thinking through all the scenarios and like, do you build in like, hey, if you like— obviously we don't want to extend, we build in a budget and we need to be realistic, but if we need an extension, do you build that into your, you know, promissory note? You have the option to extend, or how do you manage that? Just because things happen.

Yeah, so I usually will allow extensions. I usually put that it's already in the promissory notes, you know, and you can limit to how many or how long. Like, for example, most of my deals is I, you know, my term is usually 6 months. And then I will say, okay, I will allow one extension for 3 months. You know, some, it depends on the deals. You know, some, it's not like set in stone, but some will be longer, some will be shorter. So I usually put in that another, you know, one-time extension. That's what I would do. Now, of course, you know, there's, there's fees you got to pay to extend, but I think that gives the borrower flexibility, right? For example, I have one borrower, she was— this was a BRRRR property, which means she's borrowed the money to flip— I'm not flipping it, but to rehab it and then put a renter in afterwards, right? And then she's gonna keep it, refinance it, and pay me back. Now she started her refinancing like at month 5, you know, 4, 4 and a half or 5, and she started early already. Now unfortunately, she couldn't get the appraised value high enough, right? So now she got to go to a second lender using a second appraisal, and then And that's why she extended it because she needs more time. And it turns out she needs to go to the third one before it gets to the value that she needs in order to refinance the amount to pay me back. So I think sometimes the extensions, it doesn't mean a bad thing and doesn't mean that borrower is not good. It's just things that they can't control. Like especially, this is a refinance, project. Now for fix and flip, like we said earlier, contractor, they always tell you, yeah, it can be done in 2 months or a month. Okay, double that timeframe. You know, if they say 1 month, assume 2 months. If they say 2 months, 3 months. You know, if they say 9 months, we say 12 months. You know, build in that cushion, build in that extra time. I think As long as you are on top of it, you're doing your job, and you let your lenders know that you're trying everything, you're trying to pay you back, but it's just things that just beyond your control, you're working hard on it. I think most lenders will extend.

Yeah, I think that's really— it's communication. I mean, I remember when I was working with you, we're under contract and it fell out, and I hated texting you that, and I felt really that. I was like, but I don't want to— I want to just be— and then it got back in contract, but it was uncomfortable. But I communicated it even though it was not the funnest update, right, to make.

You know, things happen, and it's like, it's not your fault that it fell out of contract. It's the buyer just backed out or got cold feet. And, you know, I think it's better you tell the lenders that, hey, it fell out, so now we need more time to put it back onto the to the market and we gotta start the process again. So at least I, I have, you know, some time. I go, oh, then I can better plan when my money is coming back because then I can say, okay, when do I look for the next deal? Or I won't commit to a next deal until later. I think that also gives me, you know, a heads up, like, when am I gonna get my money back? So I can plan.

Yeah, no, that makes a lot of sense. Yeah, because you're— you want your money to work when it's sitting there. It's not— it's not earning money. So yeah, I mean, you're really— it's a business, and you— this is a business. It's not just a— it's not a hobby, right?

No, you have to treat it as a business. I think if you just treat it like, oh, a side hustle, well, yeah, you can do it as a side hustle, but you know, they always call side hustles, but you know, you have to really treat this as a business so that you will run it like a business and you would take it more seriously, you know, and not just like, oh, okay, well, all right, I'm gonna lend you this money, here you go, you know, and just forget about it. And, you know, and I think the other things that I always see people do is like they don't require monthly payments, and that's really— I want to, you know, stress about that. I know some people said, oh, you know, we will make payments at the back end, but that adds another level of risk to you as a lender because what if that person never completes the project? You didn't even get those monthly payments that you're supposed to get, right? And I think also the monthly payments also is a way for me to validate that person, like to how that person, are they on time? Are they on time on payment? Do I have to chase them? Hey, your money's due or you're late. You know, I've been very, knock on wood, you know, lucky that most of my borrowers, like, you know, they either pay me on time or pay me early, or sometimes I just need to send them a quick reminder. You know, like, I usually, I'll try, you know, I'm not I'm not too good about it, but I will— I will— I'll be better. But usually I will try to send them like a reminder, hey, you know, your payment is due in, you know, 2 days or 3 days. And they're, oh, okay, you totally forgot, it's due, you know, due— it's due on that day. And, you know, they will— they will start sending money in. So I think that's very important. Also is a way of, you know, checking to make sure that person is accountable and responsible for what they, you know, on the loan. So I think that's very important.

Well, I will just say, I think it circles back the fact that you've had— and I'll say luck in quotes— is because you vet really well. You treat it as a business. You're not doing risky loans that you haven't thoroughly underwritten. So I think that's probably a big part of it, right? Because you're very intentional about who you're lending to.

Yeah. And I think sometimes it's even you did the best underwriting, it doesn't mean things will not happen.

Yeah, right.

You know, and to me, it's like, so far I have to like knock on wood again. So far it's been okay, nothing went wrong. But I was told, just assume one day, it's not if it's gonna happen or not, it's when it's gonna happen. That you're going to have a foreclosure or foreclose a property. Just hopefully you can delay that timing as far out as you can, but eventually one day it will come. And so it's true, you just have to be prepared for it, like mentally, and making sure that finance-wise, you know, you are okay in case that day comes.

And we don't ever talk about that on either end, right? Like, it's put— it's always put out there as such a great passive thing, but there is risk, right? And I think we should go into it eyes wide open, understand, like, that's why banks are so serious with underwriting, because they're assessing the risk, right? I mean, that's just— yeah, yeah.

I think in life, you know, all kinds of investment, doesn't matter what kind of investment, that there is zero risk. Even you put your money in the bank, you can lose it too, right? Right, there's, there's banks that close down and you couldn't get your money back. Or, you know, of course, if they're not FDIC insured, or, you know, you, you put in more than the FDIC insured, um, your amount, then of course you lose that excess amount. But like I said, there is no risk-free investment. If someone tells you there's risk-free investment, that's a lie. Even I said, even, you know, you invest in US Treasury bond, it can still— this still can have risk, but that risk price very, very tiny, you know, because, you know, the US government can go bankrupt.

Yeah, I mean, true, right? We forget that it's all risk, and I think there's a lot of reward too, though, right? But you have to be comfortable. Like, I was going to say to you, like, Don't loan your IRA or self-directed. If you lose that, I feel like you should— I mean, I don't know how you feel about this, but I think we hear a lot of these like, oh, just tap your equity and loan it out. But you have to be comfortable with that. I think that's important to where your comfort level is. Maybe as a PMO, I don't know.

I've never been a PMO. So you should be one. Like I was just answering a question today on one of the Facebook groups. Someone says, oh, should I take out HELOC to do PML? You know, and I clearly tell them that's gonna be very risky because if that person doesn't pay you back or is late in making payment, or you're relying on that payment to pay your HELOC monthly payment, and if that person gives it to you late, then you're gonna be late on this end. You gotta make sure you have your own funds to pay in case the borrowers make late payments or default, because that HELOC is against your own home or your property. It's against your own credit, right? You got to make sure you can fund that and you have enough reserve to continue to make payments if that borrower doesn't pay you back. You know, so I think that's very important. Yeah, it's very— I would say, you know, very, very lucrative because you're using other people's money to lend it to at a higher rate, borrow at a lower rate and lend it out at a higher rate. But you got to make sure the worst-case scenario is if that person doesn't pay you or default, do you have money to continue to pay that HELOC?

So Yeah, that's a good point. I think really thinking through it and understanding like what, yeah, weighing that, all that out. Jenny, this is so fun. I wanna get to some Q&As or anything else that we didn't cover that you feel like is often overlooked or not talked about as a PMO? 'Cause there's a lot into this, right? Is there anything?

You know, definitely there's a lot, you know, in PMO that I didn't realize when I first got in, but I think the most important thing is, I think people didn't realize, like, I think I briefly mentioned it, it's, you know, some states require licensing to do PML. But of course, some states, even though there's licensing requirement, there are usually exceptions to the requirements. Like, the main reason why these laws is meant to target people who's like consistently doing it, right? Like a, like a true business, like, you know, not like us individual who makes, you know, a few loans a year, you know. So, you know, make sure you check with an attorney if there's license required or not. And if there is, is there exemptions, you know, exceptions? Because I know, like, for example, Idaho— I lend in Idaho, but there is a licensing requirement. But they said if you do 5 or less within a year, you don't need license. So making sure that you are aware of that, because in case anything happens— because we always say, if the deal went well, everybody's happy, nobody's suing anybody, right? If anything goes wrong, then people will start suing people. And if you don't have the right, you know, legal documents, or you don't know that you need a license and it, you know, that loan could be, could be invalid, right? You never know what's happened. And the other thing is the usury law. I think a lot of people didn't talk about what's usury laws. Each state has like puts a cap of how much interest rate that a person can charge to another person, um, in terms of like some say will just personal loans, some state business, even including business loan, like for example California, you know, it's capped at 10%, which means if you charge anything in excess of 10%, that's including points, so not only APR but points, points and APR, total 10%. If you charge exceeding that 10%, you could be, you know, under criminal, or, or, or anything in excess you have to pay back the borrower, plus you can be subject to penalties, like the government can find you, right? So that's why I think it's very important, because I see a lot of like those second lien or, you know, equity partnership that says, oh, 20% or 30% flat, you know, for 6 months, you know. I'm like, oh, okay, well, have you checked the usury laws. Now, if so, are your legal documents kind of helping? Sure. I mean, there's ways that you can go around it. Of course, check with your attorneys, but if you structure the deals correctly, you know, you can— you know, I wouldn't say go around, but there's ways to mitigate that risk. So making sure that you are aware about that before starting your, you know, your PML journeys. Always find a good attorney, a real estate attorney, or actually the best, at least a minimum, a real estate attorney within that state of the property that you're lending. Or the best is find an attorney who specializes in private money lending.

Yeah, because I mean, getting your documents right, you can't ever go back. I mean, that's so critical if something ever comes to pass.

Yeah, yeah, exactly.

Awesome. Oh my gosh, um, there's been a lot of questions I've been ignoring.

Oh really? Yeah, I mean, let me see if I can see.

Okay, I will. If anyone has questions and still listening, we still have a few folks on. First of all, let us know if this was valuable, you know, takeaways, um, because I don't know, it's good for us to hear. But I'm gonna go through this see. I'm going to start asking a couple of questions. Eunice is asking, do you have time, Jennifer? Sorry, is that okay? Do you have time? Okay, perfect. Do you get financial statements to make sure they have sufficient funds to pay the interest payments?

Now, I actually don't ask for it, but it should be a good practice to ask for it. but because I always say sometimes I know that people can, well, yeah, I asked for financial, well, when you say financial statement, is it bank statements or financial statements, right? Financial statements, you know, I don't want to say anything, but anybody can just put together spreadsheets essentially. Yeah, you can put any numbers in there, right? You know, yeah, if you ask for bank statements, yeah, I mean, it will be good to ask bank statements, but sometimes I kind of try to stay away because I don't want to like get into the privacy issues, right? But I think it's a good practice to ask for it. And but sometimes, you know, people can just borrow money and put it in theirs, you know, temporarily and, you know, take it out. So to me, I look for not only, you know, if they have interest reserve or the reserve funds the funds reserved, but what do they do? Like if people that has W-2 jobs, do they have a stable income or does their spouse have stable income? And kind of look at it from that perspective. 'Cause I know, and that one of my borrowers, she's an attorney and I know that, okay, I don't think I will be scared 'cause she's, making money as an attorney, right? That's her business. And also, I don't think she will do anything wrong because she's an attorney, so she can ruin her own reputation if she does anything wrong. So I got like, okay, well, that gives me a little bit more comfort in that. So, yeah, that makes sense.

Okay, that makes a lot of sense. Okay, another question. If it's out of state PML, is the percent based on the state the deal is in being lent, or is it based on the lender state?

Oh, I think that was talking about the user rates. It's actually the property, where the property is.

Okay, that makes sense.

Okay, so even when you're looking for licensing, right, it's where the property is, you know, because— or the borrower. I think most of the time the borrow is probably within the same state as the property, but it should be the property. That's my understanding. Now don't quote me, I'm not an attorney.

This is not legal advice.

This is not legal advice, no accounting advice, and this is just for educational purposes only.

There's a disclaimer.

And so, yeah, I think I look at it from where the property states.

That kind of makes sense. Okay, yeah, the great question, and I hadn't ever— I don't think I've thought about that, so I'm really glad you brought that up. Okay, another question: what do you charge for extensions, like when you're, you know, in the promissory note, how do you work that?

I think it's just, you know, the beauty of private money lending is it's so flexible. You set your own terms, right? You know, you can charge, you know, 10 points if you want, if the borrower is willing to pay, that's fine, right? But, you know, I usually charge, like, for example, it depends on my initial points, right? If I say I charge, you know, 2 or 3 points for 6 months, then okay, if I need to lend another 3 months, then I probably take 50% of whatever I originally charged. Because, you know, think about it, I need to make my return. So if I— if you don't pay back, I need to, you know, if I pay— if you pay me back, I would just use that money and lend it out again. But now I'm lending you again, so I think, you know, in order for me to have a good, you know, fair return, I usually just kind of calculate that way. But, you know, like I said, it's just negotiation between you and the borrower. Or, you know, I know some people don't charge for extensions. You know, I think it just depends. But I think, you know, the other things that I also forgot, one thing that I should tell a lot of first-timers is don't, you know, make sure that you actually charge all the fees back to the borrowers. You pass the fees to the borrower. It's not for you to absorb it or mine it. My cost of doing business. Because I know a lot of newbies, and I, I've been bad at that one too. You know, when I first started, I didn't know any better. I said, okay, well, you know, I'll pay 50%, you pay 50%. But it turns out, you know, it— you should charge it. You should charge out all your fees, um, like your wire fees, your— of course, the document fee, the attorney's document fee, that's paid by the borrowers. I tell people, just think about it. When you buy your homes, you take out a mortgage from Bank of America or Chase or whatever, you take out your HUD or final settlement payment and statements. Did they charge you every single penny? Just look at that, okay? You know, the financing, what do they charge you, right? They will charge you everything. So you're no different from Bank of America or Chase, you know. You just now, you are the a mortgage company. You know, it's just, just the same thing. It's just a little different format, but you're still the same. So basically then you should pass all the costs to the borrower. It's their, their cost.

So yeah, and don't feel bad about it. Yeah, I know I'm the same way with like rentals. I didn't— I felt bad charging a lease breaking fee and now I'm like, nope. Yeah, that's what—

I'm not eating that.

Sorry.

No, no, no.

Yeah. Um, okay, awesome. We're scrolling this. Lots of comments. Amy says, love the discussion. Thank you so much. Sani says, it's so good. Awesome. I— we really appreciate the feedback. It's fun. Um, um, okay, I'm just looking for— and if anyone has questions that didn't get answered, feel free to like pop them in here.

Um, someone says, can you recommend a few states to start in? Yeah, did you see that one? Can you recognize?

Yeah, is that like states? Like, I'm not sure what that— like, hey, I didn't— yeah, feel free to answer it if you know what they're asking.

I think they're asking like to start in lending, I assume. I think because I said some states, you know, have licensing requirements. I mean, there's states that doesn't require licensing. Yeah, I don't— because for me, I really didn't like focus on like what states should you start in, you know. Of course, I would say, always say start in your home states if possible, because you can literally go check out that property, you know, if possible, right? Like I said, I, I don't check, like physically see all my properties that I land on except yours, Shauna, and then a few other ones. Because I was just close by. So I— yeah, and I can travel there, I would do it, you know, because it makes a huge difference if you're there to see the property with your own eyes versus virtually. I mean, still virtually still good, better than nothing, but you know, going and seeing with your, for your own eyes and checking out the neighbor neighborhood, I think that's very important. And the real condition of the house um, but I think, you know, just starting in your own backyard, that's good. If you can travel to— if it's not, then start, you know, lending. If you don't want to deal with licensing, you know, kind of start in states that doesn't require licensing, you know, to begin with. I think Texas is one of them. I'm not— I, I don't exactly sure, but, you know, I think there's some states that doesn't require licensing. So like I said, I'm not an attorney, I don't give a flip. Back with your journey. But yeah, so I would do that.

Well, I like that you said your own backyard, because you're also going to have an— I mean, there's a lot of data in this, but an intuitive feel. If someone's giving you an ARV that makes zero sense, and you know your market so well, it's going to be like automatic, like alarm bells, right? Or you just know what— or if it's a great deal, it's like, oh, that's a great deal, right? Yes. You know, that's working power.

Like, you know, Shona, you're— you know the areas, you know, you know, you live there, you, you know, you pass by those neighborhoods all day long, so you know what's there or not, right? So you kind of, you know, think— I think it's easier for— I will have more trust in the borrower who knows the area very well. They have lived in that neighborhood for a long time, you know, those that are like doing virtual flipping, that adds another level of, you know, risks, right? Because they are relying on somebody else virtually, right? How well do you— do they know the markets? How well do they know the contractors, right? Did they vet them, or are they gonna fly there to check on the properties all the time? So, you know, if you're lending to someone who's going to do virtual flipping, you know, that's I think that's an additional level of risks.

So that's very true, right? Yeah. I mean, that's just another layer to kind of consider. Yeah. Sorry, I was just— I didn't know you could pin the questions over there. I don't see any other ones. I know we've been on for a while. I'm just going to do a quick browse. But thanks for— you guys hung on. It was really— it's a really good turnout tonight. So thanks, everyone, for joining and hanging out. It's been a fun conversation. Conversation.

I thought this is for the people doesn't like talking about numbers.

Oh, I mean, we could, but I feel like that's right. Yeah. Okay. Maybe we should have. Well, that's the next one, Jenny. We'll do a deal deep dive or something.

Deep dive into deals. Yeah. Right.

Yeah. Well, I didn't want to, I mean, rates are flexible. We're in a weird time and I think that's something and that is the beauty. Like you said, everything is negotiable, right? You can offer a crazy good rate, you could be like, it's all negotiable. And I don't know if we emphasize that enough. That is, it needs to be a good return, but it's negotiable, right? Yeah, beautiful thing.

Correct. You negotiate. And also, I think it's, you know, sometimes if the borrower say, hey, this is what I propose, you can counter. It's negotiable. Options, right? You have, you know, and I always say, you know, lenders— I don't want to say that, but it is who has the money, who has more savings. But no, it's all like you say, it's all negotiable. And, you know, even the lender, you know, the borrower say, hey, I'm gonna pay you, you know, 1.10%, you're like, no way, I'm not gonna do 1.10%, you know, you can counter back, right? And just say, hey, this is how much I gotta do 2.12% or whatever, and that's what I think I want my return to be. But also, you know, don't overcharge it in that market. For example, you know, if the going rates, you know, it's like 2.10%, you're charging 5.15%, of course for the same lien positions. Now let's talk about same lien positions. Then people is going to go, well, I don't need to borrow from you, I can go to them and get money at the same low, much cheaper rate. Now, of course, it depends on the lien positions and how much, you know, loan-to-value you're lending, right? Because I know some, you know, private money lender or hard money lender only lends up to 80, 85, 90, so you still have to put in some amount into the deal. But if you try to borrow full 100%, you got to make sure you pay more in interest and points because that's a lot more risk for the lenders. And if they don't have better returns, they're not going to lend.

So that's a great point. I mean, it's more risk and there's more reward. And yeah, that's— that there's like all those nuances to it. Yeah, no, that— I'm really glad you mentioned that. Yeah, that's a great point. Um, okay, I have another question here. Um, Maddie is asking, what if it's a third party and you're lending to them rather than the actual borrower? Is that recommended?

What do you mean it's a third party and you're lending to them rather than the actual borrower? I don't quite get that.

I don't either. It sounds a little—

I don't know.

We need, we need more information.

Are you saying because there's a broker in between or a connector? That's bringing the deals to you. That's why it's a third party. So you're not really lending to the third party. You maybe that connector or broker, you know, brings the borrower to present the borrower to you or the deal to you, and you lend— actually, you do lend to the borrower, but not the— it's a flip. I—

yeah, I guess why wouldn't you be lending directly? But Jenny, that is a good point. Maybe it's like a matchmaking thing or something. But yeah, generally I would think you'd want access.

Yeah. So even— yeah, I know there's a lot of like connectors or brokers that bring deals and present it to, you know, PML. I would— and if I'm lending for the rehab cost only Even the rehab cost is still lending to the borrower. So to me, I think it doesn't matter. You know, you need to talk to the borrower. So even going through a connector or someone else, you know, you need to make sure you see or even talk to the borrowers. The connectors, they need to like— I know some connectors will actually organize like the huge folder that has everything, um, you know, and, and if you request, you can talk to the borrowers. If they prevent you from talking to the borrowers, I would not go into that deal because doesn't matter. You need to talk to the borrowers and, and kind of get a feel of who they are. Some of them would do a Zoom call and share that report right? At least you can see that person in real life. I mean, I don't want to say, oh yeah, this one is Joe Smith, but there is no Joe Smith out there, right? It's just an AI. So right now I'm an AI, actually. So I mean, yeah, you really want to, you know, make sure that you, you, you know, you talk to the borrower, or at least see that borrower your face. Yeah, paid a contractor instead of the borrower. Oh, I think they're talking about contractors. You sometimes you pay the— are you doing draws? Or you sometimes you paid a contractor instead of the borrowers. But I think Maddie was saying lending, not just payments.

Yeah, yeah. I mean, that sounds like— yeah, I think it just goes back to knowing the deal. And yeah, like, I think if it feels a little uncomfortable or fishy, you're not— don't have all the information, it's probably something you need to dig into more.

Yeah, I wouldn't lend to another person that's not doing the deal themselves. You know, I would— I need to lend directly to the actual borrowers who's actually going to be doing that flip, you know. So I wouldn't be lending to another person to invest in the deal. Maybe that's the reason why, like, you know, like, like, Sean, I want to be a PML, but you don't have the money, you come to Jenny and ask for money.

And you can lend it to, you know, the person to do the flip.

You know, I do that.

Yeah, I know. Again, I think you really emphasize it, I think, is vetting the person and the deal, right? You can't really separate them, or you can, but that's at your own risk, right? It's— yeah, yeah. Um, okay. Um, well, and Jenny, I know you're, you're— how— if someone is like, oh my gosh, like, you know, so much I do— do you offer coaching, or how could someone kind of reach out, you know, to learn more, or maybe get— if you need some hand-holding, or what are you offering as well?

So basically You know, I'm just starting all this, so I'm still in the work of coming up, you know, with, you know, if there's any coaching program or what, but I'm still working on that. But I actually got a website on, so there's a way you can contact me. And so it's jennysa.com, very simple. So Jenny, TSA, just like the airport security, dot com. So yeah, awesome. So that website just finished like 2 hours ago.

Nothing like a deadline, right?

Yeah, so it's just fresh off the press, you know. And, you know, so, yeah, so excuse me if it's still a work in progress. So, you know, apologize, but I just want something out so at least people can reach out to me. But, you know, it's going to be for the refinements.

So yeah, no, I think it's great. And, um, I just think, yeah, ask for help. And again, there's no stupid question, right? Like, if you're new to PM, asking questions. And if you're not clear on something, just clarifying it, understand, getting help, guidance, right? Whatever that is— an attorney, a CPA, or whatever it is that you're protecting yourself, right?

Um, I think it's very important, you know, talk to a CPA, talk to an attorney. I think an attorney right? Talk to fellow real estate investors. You know, if you belong to a group, you know, start asking questions in that group. You know, I think there's people, you know, who will answer. Like, sometimes I answer, right? If I see something, it just happens that I will answer. You know, I'd rather someone go out and ask and get the help instead of like, oh shoot, I lend it out and they got burned. And that's a very expensive lessons, you know, than, you know, paying someone to help you, guide you. I think sometimes even, you know, paying an attorney $500 an hour, you know, to ask them a question, is still better than losing, you know, $100,000 or $200,000. You know, I've heard, you know, there's greater amounts that's been lost. So, so I think sometimes it's, it's better Safe than sorry.

100%. And I don't think anyone goes into this expecting for the worst to happen, but you need to understand what that means and how you're protected. Right. And for the borrower too, right? Maybe they need to tell me this is not a good deal. I don't know why you're doing— it has to work for everyone and everyone needs to be really buttoned up because you don't want to wait till things have gone south to figure out you didn't structure something correctly.

Correct. And I think, you know, sometimes the borrowers or the flippers, they, they sometimes they probably go into a bad deal that they didn't know because they're so like, okay, I want to get my first deal, especially those first-timers. I want to get my first deal, I will take on. Or sometimes some of the realtors just throw them— they think it's deal to them and they say, oh wow, this is a, this is a deal, this is deal, I just want to start the first one, I want to get in. But if you start asking for PML and you haven't gotten anybody to lend you money, maybe it's time to step back and says, is this really truly a good deal or not? If people are not lending to you or you, you have a hard time finding the money, then maybe you should rethink, is this really a good deal or not? So actually, I think it also helps. It's like a kind of a second set eyes to help you look at it, look at that deal.

Yeah, I mean, because a PML, it's their personal funds. An institution, a hard money lender, they're like just gonna sell you probably whatever package. Like, it's not as personal, right? It's not their money that they're lending.

No, no, but they knew, you know, sometimes these guys, you know, will ask for appraisal. Of course, getting appraisal, it's the best. Well, I would, I would say the best, but I think, you know, sometimes people say, well, the ARVs, they couldn't come up with the comps, you know. I think, well, getting a— if you have the time, should get— just pay for that appraisal, right? It's, it's a couple hundred bucks. I think it gives you as a borrower or the lender a peace of mind, right? And if it comes back, say, oh my God, this is really not what I think it's gonna have, you know, the as-is or the— and the ARV, maybe, you know, that few hundred bucks that you lost in paying for the appraisal, it's actually saved you know, hundreds of thousands, or your reputations.

Yeah. So appraisal, do they do as-is and like ARV? Is that— because I don't think I've done one on that, like a current—

I have seen appraisal that does as-is and ARVs. So yeah, so I have seen those before. So, so they will—

yeah, you can't— I mean, it just— they can't have enough data, right? I mean, yeah, that's That's a really good point. That's what banks do, right? They're not going to give you money until they get it.

Exactly. So like I said, you're a Bank of America, you are the, you know, JP Morgan Chase, you're a mortgage company, you're the bank.

Yeah, yeah. You know, it's got the banks that don't mess around, right? All right, Jenny, let's give your info one more time and I'll put it in the show notes too if anyone wants to reach out and work with you or has questions. Thank you for being so generous too.

Yeah, so it's jennysaw.com, very easy. J-E-N-N-Y-T-S-A, just like the airport security,.com.

Awesome. Well, this has been so much fun. I think we'll have to have you back for like a deal deep dive and really get into some numbers.

Like, all right, we'll look at your deals.