How Convoy Home Loans Became a Top DSCR Lender for Real Estate Investors

Michelle Kesil (00:01.291)
Hey everyone, welcome to the Investor Fuel podcast. I’m your host, Michelle Kesil. And today I’m joined by some people I’m really looking forward to chatting with. We have Jonathan and Dustin, who have been making serious moves in the lending and private capital space. So we’re really excited to have both of you here, the founders of Convoy Home Loans.

And I really think our listeners are going to take something away from how you’re approaching the lending space, working with investors throughout Los Angeles in such a unique way. So would love to dive in with both of you.

Convoy Home Loans (00:46.83)
Thanks for having us on.

Michelle Kesil (00:48.605)
Yes, absolutely. think, yeah, our listeners are really going to get a lot of value from you guys. So first off, for those who may not be familiar with your company and your world, can you give the short version of what your main focus is these days?

Convoy Home Loans (01:08.236)
Yeah, so our main focus when we did start the company five years ago was trying to live up to the motto of being your real estate investor’s best friend, which can be a lot of different things such as, you know, fix and flip, ground up construction, but more so creatively finding a way to get the job done for real estate investors that don’t have all of the antiquated or worrisome underwriting processes of a conventional loan with

you know, no tax returns needed, no W-2s, none of that stuff, and still being able to get you at most of the times the same rate you would get on a conventional loan, if not better.

Michelle Kesil (01:49.717)
Yeah, absolutely. That’s really powerful. And you guys are operating in Los Angeles or are there any other markets you’re operating in?

Convoy Home Loans (01:58.477)
Yeah, we’re in LA. We have an office in San Diego, but we operate across the country actually in all 50 states.

Michelle Kesil (02:04.563)
Okay, amazing, yeah. So what caught my attention about you guys when we were just chatting a little bit before is how you mentioned that you’re really creative with your approach. So I would love for you guys to share that with the audience and expand on what that looks like.

Convoy Home Loans (02:24.033)
Yeah, so our, this product that we do a lot of called a DSCR loan, it stands for debt service coverage ratio. And what makes it so popular for real estate investors is the fact that you can get a loan done and you can get a process from start to finish a lot easier done by using simply the rental income that the property generates.

as the only income qualifier on the loan application rather than using your own personal income. And the reason why that’s so big is most real estate investors are either self-employed or maybe do it on the side, but their tax returns are a lot of the time is going to show a lot less on the bottom line than what they really bring in, right? That’s a very old game that a lot of people play in this space, but where conventional makes it hard is they look at that bottom line.

So you may be sitting cash heavy monthly, but when you go to a typical bank or lender, they’re going to look at your tax returns and say, hey, you don’t qualify. When we all know that most of the times on an investment property, the tenant is really the one making the payment. Now, yes, it goes from the tenant to your operating account or your bank account, and then you pay the mortgage company. But the way we approach it,

is look, if the property or the business, we’ll call the investment property a business, right, it generates income. If it can self sustain itself, then you have the ability to repay the loan that we’re making. So DSCR loans is where we have kind of stood out amongst our competitors. In the last two years, we’ve been ranked number two in the country for loan volume, so dollar amount.

We’re striving to be number one next year, we’re the number two biggest DSCR lender in the country as it stands.

Michelle Kesil (04:28.651)
Wow, amazing. That’s not easy, especially in this climate. Like, what’s been your key to keeping that running smoothly to be number one?

Convoy Home Loans (04:39.914)
I think for us, it’s having a pulse on the market, right? So Dustin and myself, we are the owners and operators of the company, but we also are constantly originating. So we’re not just in the back trying to command the ship from an outpost. We are actually in the front lines, getting our hands dirty, feeling where the market’s at. And because of that, we’re able to really maneuver to where the market needs are. So we were actually…

when we first started like five years ago, when everyone else was chasing conventional loans and FHA and the ones in 2 % range, we were one of the first brokers to bring DSCR to market openly, right? At the time when nobody knew what DSCR was, we were writing at the time 40-year fixed debt at 3.125%, which all of those clients that got into those loans are never refinancing again. But

we kind of were able to maneuver and feel, the market is shifting this way and we’re able to pivot, you know, our products and our baseline to wherever we needed to go.

Michelle Kesil (05:44.161)
That’s super important. I think a lot of people don’t know that or aren’t aware of that and Yeah, it’s really important to educate people. So How do you like prepare your clients for? Like these shifts and the latest that’s out there

Convoy Home Loans (06:04.725)
Well, what’s unique but also comes inherently as being a real estate investor is most of the times, they will have what’s called a real estate-owned schedule, right? So we’ll have their list of properties that they all own and be able to kind of curtail their future endeavors and goals based on what they tell us on, let’s just say, our initial call. So prepping them on the fact that this one, for example, for a certain client is

six months away from being finished and they want to be able to, you know, complete it, take the cash out and then buy another investment or buy two more investments. What does that strategy look like? Because ultimately those types of conversations that we have with investors are a lot different than you would have with per se a first time home buyer that’s just looking to maybe get a raise before they could get their new job or maybe they need

have a baby on the way and they need to figure out how they can afford a certain home in a certain area. So the conversations are a lot more business minded versus I’d say 95 % of the mortgage companies out there are focused more on the actual individuals like family and life goals.

Michelle Kesil (07:21.281)
Yeah, absolutely, that’s super valuable. Now, every operator I know has a moment when things felt real, maybe a deal went sideways, or a time that you just had to pivot fast. Would you mind sharing one of those moments for you?

Convoy Home Loans (07:41.643)
You’re talking about as a business or just specific deal

Michelle Kesil (07:46.195)
Yeah, I mean either one or you can share both.

Convoy Home Loans (07:49.596)
Yeah, I mean, as a business, mean, like I said, we initially made that pivot upfront when everyone else is doing conventional and FHA in the low rates to make the pivot to kind of an uncharted territory at the time. In terms of deals wise, we are constantly always saving deals that come from other shops and other brokers and lenders, either with liquidity issues, the borrower doesn’t have enough liquidity, meaning they don’t have enough cash in the bank.

but they have a bunch of properties, right? A lot of investors are property rich and cash poor. So in those cases, what we’ve done is we’ve been able to utilize the equity without actually refinancing those other properties and taking any loans that are on there, but able to kind of cross collateralize to use that liquidity that’s in the considered debt equity with the market and everyone else. We’ve wrapped that into loans to be able to save it.

to make sure that they can still make the purchase happen or refinance happen in some cases, because a lot of investors right now are in positions where they’re in hard money loans, right? They bought properties maybe a year ago, two years ago, or even six months ago, and the market was drastically different than what it is right now, right? They bought in more of a seller’s market, and then now it’s a buyer’s market. So because of that shift, what we’ve been able to do is kind of help clients navigate that.

and mitigate their risk by spreading out the loan leverage, cross-prilateralizing, using all these different avenues, even if it’s crypto or just their stock portfolio or whatnot, without having to actually sell it because you don’t really want to sell in this market if you don’t have to. So a lot of those clients, helped leverage those other aspects, other assets to be able to make the LTVs better on the deals to save them.

Michelle Kesil (09:37.953)
And yeah, that’s really important. People don’t talk about that stuff enough.

Convoy Home Loans (09:42.621)
Yeah, absolutely. And especially in this market where everyone really wants to show, think, and in general wants to show the good glitz and the glamour, right, with everything in the real estate world. But the reality of situation is a lot of people that, you know, are online kind of advertising or showing like, hey, look how much success we’re having with the real estate deals that we’re doing. They’re not showing the nine deals that go wrong.

to find the 10th deal that actually does go right. And we are a part of the nine to fix the nine so that we can make sure the 10th also is a good deal. So yeah, it is important that nobody talks about.

Michelle Kesil (10:23.883)
Yeah, for sure. And it’s like what separates people that dabble in the industry versus the ones here for the long-term vision.

Convoy Home Loans (10:32.764)
Exactly.

Michelle Kesil (10:34.495)
Yeah, so let me ask you this. What are you most focused on solving or scaling next?

Convoy Home Loans (10:43.411)
So in this current mortgage rate environment or landscape, we have been actively trying to get a lot of our clients just aware of all the different products and not just current clients, but prospective clients that we haven’t spoken to yet because you would be surprised at the amount of real estate investors that have impressive portfolios talking 10, 20, 30 properties that aren’t aware of

the types of ground up construction loans you can do or fix and flip or DSCR creative. They’ve just been so used to going the old school way of going to your retail brick and mortar bank on the corner of your lot and walking in and saying, hey, how do I get this done without realizing that those products are, like I said earlier, so antiquated with not only maybe the leverage that you can get, but also the flexibility of it in terms of

how long the term may last, how it’s amortized, whether it’s interest only or not, things of that nature that I think would make a lot of real estate investors that haven’t delved into this side of lending a lot more successful and profitable in the future.

Michelle Kesil (11:58.175)
Yeah, absolutely. That’s so important. And what would you say like the next big real goal is for your business right now?

Convoy Home Loans (12:08.742)
I think our goal is always, like Dustin said earlier, to be number one. We want to be not the largest because we want to be the most busy, but we want to be the largest so that we can help expand the most number of investor portfolios possible because we really truly believe in the power of real estate. We’re investors ourselves. So anything that we tell our clients to do, we are doing the same exact thing on the market.

I think being number one would really help solidify us in the marketplace with proof that we not only fund the most amount of deals, but we’re helping the most amount of investors out there. And I think that’s our biggest step up right now. There’s about like a $200 million volume difference between number one and us, but we are constantly trying to do more deals to help get to that position to help more people.

Michelle Kesil (13:03.849)
Yeah, that’s big. Amazing goal. What got you guys into this?

Convoy Home Loans (13:11.858)
So long story short, we both used to work at the same mortgage company down in San Diego, 10, 15 years ago when it started, maybe 12 years, I’m losing track. But we both grew up in Los Angeles and wanted to make our way back up from San Diego to Los Angeles. And we had lot of, let’s just say conversations with real estate investors at the time.

where our only option was to help them via a conventional loan. And we realized that, you hey, there’s a little bit of a niche in the market that we think we can take advantage of by offering more tailored solutions to real estate investors. And, you know, we had enough experience and had enough conviction in ourselves to be able to get something up and running that would be successful. And that’s ultimately what happened five years ago.

Michelle Kesil (14:07.297)
Amazing yeah, that’s exciting and as far as your own investing journey is that something that you just began to dabble in?

Convoy Home Loans (14:16.657)
I think we’ve aspired to invest a lot more previously, like previous to starting the company, but as we learned more about what’s out there, as well as our guiding clients, we’ve found a lot more opportunities to invest. And I think our portfolios have definitely shown that growth and diversity across the country. And I think that just being able to tell clients what to do, but also knowing that we’re not just telling them.

to tell them or just because we want a deal, we will tell them and we will also go out and do the same thing. Right? So I think that’s the biggest differentiator that has grown our portfolio the most just because we are literally putting our money where our mouth is, where a lot of people, unfortunately, will try to sell a course or do this and that to try to make it so that they’re not actually doing the work.

we’re actually out there doing the work while advising clients to do kind of the same thing because we know if it works for us and we know the pathway to get it done, we’d want them to be able to utilize the same products to grow their portfolio as well.

Michelle Kesil (15:23.007)
Yeah, absolutely, I think that’s so valuable and helpful when you’re able to be in their shoes and test it out yourself versus just be like, you try it and figure it out.

Convoy Home Loans (15:36.346)
Yeah, definitely.

Michelle Kesil (15:37.949)
Yeah, now I know a lot of people listening to this are either earlier in their investing journey or they’re just looking to level up and I think they’d benefit from hearing this when it comes to building your relationships and growing your network. What has made the biggest difference for you?

Convoy Home Loans (16:02.662)
in terms of, you know, the real estate investor community, not just locally in Los Angeles, but nationwide, if you will, it is a very tight knit community, right? Where I’m not just talking about, let’s say online blogs or podcasts like yours, or, any sort of, you know, social media, influencer that, people will follow, but the ability to, if you can work.

with one investor or one community and do a great job, the, let’s say spider web effect that you can have by that individual or real estate investor that may have worked with Convoy and then them mentioning our name to their meetups or in their blogs is a lot more powerful and a lot quicker than for example, if you did a good job for somebody buying their first home white picket fence.

the spider web effect isn’t really there. And that’s kind of part of the reason why we also wanted to start Convoy is that from business behind closed doors where we thought about it, it’s very hard to have a book of business when you’re only owner occupied type financing, as most homeowners rarely will do as many as deals as a real estate investor, right?

So the ability to grow your network kind of exponentially through any of the forms that we just said a couple minutes ago is what makes it so powerful.

Michelle Kesil (17:38.817)
Yeah, absolutely. And are you like have any resources for people looking to network or build those relationships? Like what could you recommend to those people?

Convoy Home Loans (17:51.365)
I think a lot of very good investing groups are on Facebook and Instagram. And there’s real groups out there, not with, I would say, like the communities that are 100,000 people large, but the smaller communities within certain markets. So if you’re trying to get involved in the Columbus, Ohio market, if you look on Facebook and whatnot, I’m sure there’s groups investing in that Columbus, Ohio market. And if you want to focus in there, then those are probably the groups that you want to get involved in.

Like the smaller members might be 100 members, might be 50 members, but those are kind of the groups that are really, really doing the work. And that’s the kind of groups of people that you want to be involved in. And obviously we’ve had a lot of good experience with, you know, YouTubers and, you know, like for example, One Rental at a Time, we know and we’re on their channel every single week. They’re a great channel that, you know, has a great network and I’m sure, you know, you have a good network as well.

People that are introduced within that network, think, probably the best way to plug yourself in to make sure that you can thrive in a market versus…

Michelle Kesil (18:56.201)
Yeah, that’s so valuable. mean, relationships are everything in this space.

All right, so before we wrap up, if someone wants to connect with you guys, collaborate, or just learn more about what you’re doing, what’s the best way for them to reach you?

Convoy Home Loans (19:16.165)
You can just go to our website, convoyhomeloans.com and there’s like a fill out or application or apply now button. And if you don’t mind mentioning that you came from Michelle’s podcast, that way it’ll get routed to either me or John. That would be much appreciated.

Michelle Kesil (19:35.713)
Perfect. Well, listen, I appreciate your time, story, and perspective. We need more people in this space who are doing things in this right and innovative way. So thank you again for being here.

Convoy Home Loans (19:49.166)
Thanks for having us. Thank you.

Michelle Kesil (19:50.921)
Yeah, absolutely. And those of you tuning in, if you got value from this, make sure you’re subscribed. We’ve got more conversations coming with operators just like Convoy Home Loans out here building real businesses. And we’ll see you all in the next episode.