Boris Sanchez joins Jonathan on a fascinating episode of Real Estate Launchpad to explain how he uses hard money to finance multifamily deals at 100%. Boris is a broker, lender, and multifamily real estate investor based in the Houston area. He explains how hard money lending works, and how it differs from traditional bank lending in terms of how borrowers qualify and the amount of money loaned. He is able to share his personal experience as an investor and lender. If you have ever wanted to understand how hard money lending works, this episode is for you. Be sure to listen!
Financing deals at 100% with hard money
Boris explains how he was able to finance deals at 100% with hard money. Hard money is asset-based lending, where they look at the deal rather than your liquidity. This makes qualification easier. They look at your credit score, your ability to repay, and would like to see 10-15% of the amount loaned in your account to qualify, but not much more. Hard money loans will finance 70% of all costs – purchase and rehab. In many cases, this can cover the entire cost! Using hard money allows people to not bring a lot of money to the table and get into multifamily investing. Be sure to listen to this episode to hear Boris’ examples of how he was able to use hard money to finance deals at 100%.
Why having a relationship with a bank is important
Banks are important. Boris says that it is tempting to leave banks out of the picture, but they are vital. He shares an example of a friend who doesn’t do banks and has been very successful. He has 400+ units, but he needs a larger investor who will refinance all of his properties under one umbrella. He needs a bank. However, to do a deal of this size, he has to show a bank his banking history. Banks are not willing to finance a structure and a company that are owner financed. Boris suggests developing a relationship with a broker because eventually, you will need a commercial lender to take you to the next level.
Boris’ journey to real estate and multifamily investing
Boris began in the real estate industry as a residential mortgage broker. He quickly realized it was hard to make money and switched to commercial mortgages. He saw his clients’ profits, which piqued his interest in multifamily. He invested some in single family but realized there were many constraints on profits. When he bought his first multifamily unit, an 8-plex, his goal was to make $1k in rents per month. He put in money to do renovations, and his apartments were soon renting $100 above market value. He was able to refinance into a conventional loan, cash out money, and eventually sell. Listen in to hear Boris dial into the numbers and show how hard money loans can get you into the multifamily business and create cash flow.
Tips for those getting started in real estate
Boris shares several tips for those getting started in real estate investing:
- Don’t quit your job just yet – get a taste for investing by buying a 4-plex, or smaller apartment unit
- Find a partner who has experience – people lose in multifamily because they lack knowledge
- Invest in yourself – get educated on real estate. There are many blogs and podcasts out there with information
- You get what you pay for in rehabbing – don’t always pick the cheapest options or contractor. By investing in good quality finishes, you create a good product that tenants don’t want to leave and that other investors will want to buy in the future
In This Episode Boris Sanchez says…
- [1:45] Who he is and what he does
- [3:40] Hard money: how to finance deals at 100%
- [11:39] Working on both sides of deals – how his business is structured
- [18:00] Why having a relationship with a bank is important
- [22:28] Boris’ journey to real estate investing
- [30:23] Tips for those just starting out
- [43:10] Why his company chooses to self-manage properties
- [47:07] A real estate horror story with a happy ending
Resources Mentioned In The Episode
- Jonathan@MultifamilyLaunchpad.com – Learn to be an asset manager and Investor
- Bellwether Enterprise(sponsor) – contact Will Oldham firstname.lastname@example.org
Connect with Boris Sanchez
- Boris (at) SanmoreInvestments.com