How to be a Better Lender in Handling Loan Accommodations

Hey, it's Mark Podolski, the land geek with your favorite niche real estate website, the landgeek.com. and if you've ever been frustrated with a borrower, they constantly want to modify their loans. They're late, waive my late fee. Can I pay on this date? I'm paid. You know, I'll pay in two months. Can I put it on the end of the loan? We are going to have all that solved after this round table boot camp. Joining me is Landon AI Harris, the aquatic investor. Landon, how are you? Well, Mark, good to see you. Good to see you. We've got Kirk no Fear parrot. Kirk, how are you?

I'm good, Mark.

Good to see you. I love it when you call me Big Papa. Hey, Litchfield. Hey. How are things?

Good. Excited for this topic. It's a good one.

It's a good one. Let's just delve right into it. Okay, here's the situation. I'm using a software program like GeekPay IO, which is a set it and forget it loan automation system. The whole purpose of this software is to make your life easy. So it's again, set it and forget it. Inevitably, what happens is a borrower wants to test the limit, the boundary of your set it and forget it system. So let's take Landon as a scenario. He puts 500 down on a piece of land. He gives me his routing number and his account number, and it's set up to automate coming out of his checking account every single month on the 15th of $290. It's going to also prorate his taxes, and we're going to charge him a note collection fee of $12 a month. So in this scenario, let's say his monthly fee all in is $315 per month. And then Landon gets paid on the 17th, and the next month he's like, hey, I'm. That money is coming out on the 15th is what you set it up at, but could we actually take it out on the 17th? And so what happens? We want to be good, right? We want to be nice. And we say, okay, sure, I can accommodate you. And what do we do? We modify the loan. Or Landon's late on his payment and he has a five day grace period that he put in GeekPay IO and he makes payment on the sixth day and he has a 25 late fee. And so he calls or he emails and he's unhappy. And he waived my late fee. I was only one day late. And these things occur again and again and again. Landon, what do you do?

Well, this has happened a few times, so we're pretty accommodating. We try to be accommodating. I'll say it that way. There's a limit to all of this. You know, if it happens once or twice, you know, we'll have that conversation. You know, we can work with you, but we can't have it happen too often. So we may modify it. Let's say they run in a little late and they just miss a payment. Occasionally we'll defer the payment to the back end. They just couldn't make it right. So we may defer the payment to the back end of the note so they don't miss the payment. We still can collect that payment. It doesn't affect anything as far as they're moving forward. Now we have to set a precedent. We have to. We can't just let it keep moving. So that's a one time thing with me. You don't get that often and you have to show that you have good credit with us. Basically you have made payments over and over and over. So we try to keep that, that kind of mindset. So we're working with people, but like I said, we just keep a limit to some of this because it can get out of hand really fast.

So.

So I think it's easier to kind of work with people than it is to just say, you know, forget it, move on. Unless they're just a pain in the butt.

Yeah, yeah. So Kirk has a really interesting philosophy on this. Kirk, what, what would you do in these situations where your borrow warrants modifications?

So I kind of like live by this, this idea that simplicity, scales and complexity fails. And early on in the journey when I, you know, had different types of customers and also was a different type of business owner who's really kind of hungry and needs to, you know, bring on as many people as possible and you know, really give everybody the super white glove treatment. We did accommodate a lot of folks and their, their requests like, hey, can we move a payment to this day? Can we change this? Can we change that? But after a while I started spending way too much time doing that and not enough time searching for quality properties, doing the county research, running my financials properly, training my sales team, and you know, really continuing to build up great services within the company. And so we started saying no. We really started pushing back because we went through the contract and made sure we had a really good contract and that it was fair. And every time anyone signs a contract there, we're super clear on the Terms. And that's the deal, plain and simple. We all agreed to it up front, and, you know, this is how it's going to operate. So now we really push back. We don't do many of those changes that people request, and if they really, really do want them, then it costs because it takes us out of our regular mode of operation and it actually prevents us from providing the best service to the next customer. Right? Yes, we want to provide great service to them, but we look at providing them great service as executing the deal that we have agreed to to the letter. Right? Like, when they're done paying it off, they're getting a deed within 30 days. So the road to paying it off is this is the day, pay it on this day. This is the amount, these are the fees. And if things start to deviate from there, well, there's a cost, plain and simple. And we have found that that has actually made us better in our operations. Because things are simpler. We're like doing less. One off this and one off that. Our team really gets to focus on the things that we think move the needle for the customer and really generate the most revenue as well. And it's definitely not doing a bunch of changes to a contract that we've all already agreed upon. So, yeah, we're a no. And actually, it turns out we get a lot of respect back from our customers when we tell them that. It's like, hey, sorry, man, this is the deal. This is what we have in the. These are the terms of the contract. And you know what? Rocket Mortgage doesn't change things for me. Right? So if I want to be like the best in class, you kind of got to do what the best in class do. So, yeah, that's our, that's our stance on it.

Let's say, for example, the borrower wants to change something. What will you charge as a loan modification fee?

DOT fee? It's a new contract.

It's a new contract.

So what, we charge our contract our doc fees. 297.

297. Okay.

297. So if they want to do something that significantly changes terms like, hey, Kirk, you know, we can't pay it off in this much time. Can we get an extra year? Well, if financially we can do it, then we'll make the accommodation. But it's a new contract, so that's a new doc fee. If they default and the property hasn't been sold, you know, that's a new contract. They want to get back into good graces. You know, our. Our Pledge is to do the best job that we possibly can with the deal that we have outlined. And that's, that's really clear in the contract. And that's what we're going to do.

I, I love that. And that's. You know, if you're listening to this, this is a new revenue stream for you as well. And I made a video about it as, as a strategy that if your borrower wants to modify their loan, you don't say yes, you don't say no, you say, okay, but it's going to cost this because it's a new contract and you're training then your borrower to think twice about making a casual loan modification request. And that should nip it in the bud. Now, the way the software works is a set, forget it system. So technically speaking, they should never miss a payment. But people being people, they don't have enough money in their checking account. They go into a late status, they have to pay a late fee, and if they don't get paid up, then it goes into default. After default, they lose their property. And what do you know, when they've lost their property, they wanted even more, so they catch up on their payments. But to Kirk's point, there is no catching up on the payment. You have a new contract. And so by, by establishing that you've, you're training your, your borrower, but you're also creating a new revenue stream for yourself and your team because there is labor involved. Even though it only takes you seven minutes to set up a new loan, it's still seven minutes. And you still want to train your borrower to not miss payments and not think, oh, I can just go back and forth and modify loans, but let's go to the guy who I know is like the electric company. Big Papa Tay. Litchfield.

Yeah.

I mean.

I don't know how to say this other than we're not really accommodating a lot of those requests. Like, plain and simple, we just not. I don't even want to take your money to do it. Why? It changes the process. It makes us do things that we're not experts at. It can be done. Sure. And, you know, there's, there's a unique situation to each loan and each borrower, etc. We're not heartless, you know, if something tragic happens, we'll accommodate you. But for the most part, those emails and requests kind of fall on deaf ears. The bill is due on the day you and I agree it's due. And I think the moral of all of this part of being a good borrower is explaining that process and the expectations up.

I mean, being a good lender.

Yeah, excuse me. Being a good lender is explaining those processes, those expectations up front, and then agreeing upon those terms. Right. If both parties agree to them, then we have a contract. Right. And that's what we're doing. We're setting up contracts. When one party starts changing things, you are technically going against the contract which you originally agreed upon. And that's not something we like to do. Right. Because you're expecting excellence from us. Why can't we expect that from you? That's it. I mean, I don't know really what else to say. We uphold the contract. Whatever you and I agree upon, when we make that sale and we're willing, we'll say to you. I'll say, landon, what day is going to be best for you to make your payment? Tell me. I don't care if it's the 1st, the 15th, or the. Or the, you know, the 23rd, you tell me what day works best for you. Because whatever day we put down, that's when I'm expecting to get paid. The mortgage company does. Does the same thing. They don't care. It's. They don't care if your payment's due on the 1st and you don't get paid until the 15th. Figure it out. Budget accordingly.

No 100%. I think this was a really valuable podcast. I think it really is going to highlight to people how to be a better lender and train your borrowers to be better borrowers, which ultimately, if you implement these strategies from this podcast, you will have less headaches and ultimately you will actually make more money because you will make modifications, but you will get paid to do so.

Mark, you said that Geek Pay can come. Become a profit center. It's always been a profit center.

It's always been a profit. It's.

This is nothing new. Everybody who's listening to this should be going, aha. Light bulb. No. Geek Pay has always been a profit center. If you know how to use it correctly. We're just helping you get up to speed. This is what the big boys and girls are doing. This is how we have perfected the art of lending. Take our advice or leave it. But the one thing that you don't want to do is end up in Kurt's situation where you're spending a whole bunch of time modifying loans that do not produce new income. That is a. That is a failure of an entrepreneur's time and resources. Don't. Don't fall into that trap, people. It's slippery slope.

I think I like this.

We have the podcast titled the Art of Lending. Landon.

No, I think I like it. I think I might readjust my principle on. We don't do it often, but I might be a little bit tougher. That's where we're going. Or you. Or you're gonna have to pay up. Might charge more than 297. It's gonna cost.

We, we have a bit of a saying internally and we use it externally too. Like our process is zero, you know? Yeah. And that's what that means. It means it on both sides. It's like we're not, you know, everything is crystal clear. Everything is really spelled out. And if you have any issues, let's discuss them before you. You sign on the deal. We want to be. We want to be in total agreement when we move forward. And then after we move forward, it's no BS after that as well. Like, you know, this is not hard. This is. This is really, really simple. You make your payments, you get land, you get the best asset on earth, literally, and you don't have to worry about coming out of pocket with a ton of cash to do it. So it's like, this is like, all you got to do is let's like make sure there's. All you have to do is just make sure there's money in the account.

Yeah, it's exactly. It's that. It's that simple. So I thought this was great. I do want to just remind everybody that this podcast has a sponsor and it's flight school. Learn how the next 16 weeks can transform your life. Go up that mountain of land investing quickly, safely and efficiently and start creating that passive income without any renters, rehabs, renovations, or rodents, and automate your payments in a set and forget it way as well. So just go to the land.comforward/training. Learn more. Get on a call with one of our land investing Experts, the land geek.com for slash trading. I know what you're thinking. What about the. What about the tuition and going to cost you nothing. Guaranteed you're going to make back that money 180 days or. Or less. Just show us that you did the work. Learn more training. Landon Harris. We're at that point now. What is your tip of the week?

So, all right, so I was going through some things and we were trying to figure out what's the least, a little less expensive place that we could use for apps. So we started looking for different apps and found this so website AppSumo. And basically, this has a lot of your popular apps that are out there but for cheap, and you can get them like Lifetime inscription for, like, 69, stuff like that. So something like, let's say we're using Zoom. You can find a less expensive alternative to using Zoom or even a free version of it that you can just sign up for a free subscription. So. But I found that the other day, thought, this is pretty cool. So we started looking, looking around, finding some of these other little apps and we could kind of use and implement into our systems.

I love it. So Noah Kagan owns AppSumo. I have been a big fan of AppSumo for years and years and years, and what I have discovered is I have spent thousands of dol on apps that looked really cool. And then I played the new toy, and I never implemented it, and it was not a good deal. So you need to be very judicious because those deals are so good and so irresistible that you're like, oh, that's really nice to have. And I would say I have only one app, actually. No, none of them now that I actually use. I was thinking, oh, yeah, I got Lifetime Description to Slide Beam. I don't even use it anymore. So just be cautious. Don't. Don't let your eyes be taken in your stomach.

Yeah, yeah, yeah. This was to replace systems that we were using. It's like, it's got to be a better way to.

Cheaper, way better way.

Yeah, yeah.

That's a great. That's a great tip. Kirk, do you use AppSumo?

No, I don't, actually. So I took this. This is a good tip for me.

Be careful.

That's the thing, too. Like, I do have. Sometimes I get into app addictions, you know?

Right.

And it's not. It's not like I'm addicted to one app. I'm addicted to the next new, shiny app. Like, there'll be a week where I'm just like, all of a sudden, I've got 10 new apps, and I'm starting to get frustrated because I don't know how to use any one of them.

The worst is, is all the new apps for AI.

Oh, man.

And it's just endless. It is just endless. And I'm playing with right now is. So. Yeah. So I mean, we could just really. We should do our next podcast on just the things that we're playing with. Oh, man. For AI because that. That would be a lot of fun. Very geeky. Anyways, we're at that. We gotta end, though. I got another meeting I gotta jump on. So I want to thank the listeners, remind you that the only way that I'm gonna be able to get the roundtable, you know, team back on, if you do three little favors. Follow rate, review the podcast, send a screenshot of that review to support@thelangic.com and I sent you for free a signed copy of Dirt Rich or Dirt Rich too. Depends on you. But just do it for yourself selfishly, because we get better guests as well, which will help you. So you guys ready to do this? 1, 2, 3.

Let's let freedom, freedom, freedom ring ring.

All right, thanks, everybody. Thanks for listening to the Art of Passive Income podcast. Are you ready to learn how you can start building a passive income without renters, rehabs, renovations or rodents? Schedule a free consultation@thelandgeek.com forward slash training. Let freedom ring It.