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Why Smart Investors Are Moving From Fix & Flip to BRRRR in Today’s Market Shift

By February 23, 2026Real Estate Pros Show

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Show Summary

In this conversation, Andrew Shanti, a senior vice president at Optimus Capital Corp, discusses the nuances of hard money lending and real estate investing. He emphasizes the importance of relationships in lending, the misconceptions surrounding hard money, and the need for investors to conduct their own due diligence. Andrew also highlights the risks of over-improvement in properties, the current market trends regarding interest rates, and suggests a shift in investment strategies as the market evolves. He advocates for a buy-and-hold approach to build a sustainable real estate portfolio.

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    Andrew Shanti (00:00)
    And so if you historically have been a fix and flip investor,

    I would highly recommend that you move your approach into finding the properties that cashflow on the backside, because now you’re building that rental portfolio so that if you do get caught on the back,

    where you’ve got the lowering of the price, you’ve got enough spread where you could still exit that property and have a successful rental and you didn’t lose everything. Now you’ve got cash flow coming in. Now you’ve got an income coming in and you’re starting to build a rental portfolio instead of just trying to get that cash at the end of it.

    Dylan Silver (02:05)
    Hey folks, welcome back to the show. Today’s guest, Andrew Shanti, is a senior vice president with Optimus Capital Corp in central Florida, and he’s also a national hard money lender. You can find him on LinkedIn or online at optimuscapitalcorp.com. Andrew, thanks for taking the time today.

    Andrew Shanti (02:14)
    So, going turn

    Pleasure being here, Dylan. Thanks for having me.

    Dylan Silver (02:25)
    Now, when we talk specifically about the hard money space, there’s so many options that people have right now. I think in many cases, it’s almost option overload, right? And so when you’re looking at working with a hard money lender, if you’re a single family investor, what are the things that people should be looking for in their hard money?

    Andrew Shanti (02:46)
    Yeah, Dylan, that’s a great question. And first and foremost, I think the relationship is paramount. Right. So as you said, there’s a lot of options in the hard money space. And there’s also a lot of confusion as to what hard money means. Right. So a lot of people, when they think of hard money, they think that hard money is just simply bridge or short term debt that’s really expensive. And they don’t understand that the hard money industry covers all aspects of

    real estate investing. So hard money in itself is the real estate investment capital industry. Right. So it’s not strictly fix and flip money. It’s not strictly bridge. It’s not simply ground up construction. It covers fix and flip rentals, ground up construction and commercial real estate, short term rentals, medium term rentals, long term rentals, like whatever your investment strategy is in real estate. That is all encompassed in the hard money space.

    And so there’s this big misconception that people have in their mind that hard money is just your 12 % capital. And that’s simply not the case. So I remember like three years ago when interest rates were like 3.75, 3.95, I was doing 30 year DSCR loans at four and a quarter. I’m in the hard money space and I was doing loans at 4.25 on a 30 year fixed for a rental property.

    So you have this big misconception in the marketplace that it’s this limited field where I’m doing a fix and flip, I need hard money. And that’s not the case, right? So the hard money industry as a whole exists to service real estate investors on non-owner occupied investment properties, right? So yeah.

    Dylan Silver (04:26)
    When

    we talk specifically, I mean, that’s an interesting deal. I had no idea that that was happening. DSCR 30 years. That seems to be like a relatively uncommon thing. Is that accurate? Not everyone has that product.

    Andrew Shanti (04:40)
    So again, you’ve got both sides of the marketplace and you’ve got different lenders in the market that have their niche, right? And they usually do their niche well and then they don’t do the other side of the coin. And then you’ve got a few a few operators in the market to kind of cover both sides of it. And so you have your fix and flip guys that have really nailed down the fix and flip and they’re not super concentrated on the DSCR side. And then you’ve got operations out there that are like wholesale operations that sometimes you can’t even access.

    some of these operators except through a company like us. So I’m on the wholesale side of the industry with what we do.

    And we have both in-house capital and institutional capital behind us. So we really cover the entire breadth of the marketplace. kind of what I, the way I explain ourselves to people is if you pick up the phone call, if you pick up your phone and you just call your typical lender out there, you’re being put into a box, right? And the box is strictly those underwriting guidelines of kind of who you’re working with in the marketplace. Whereas if you give me a call,

    with how we’re structured, where we’ve got both in-house capital for our bridge programming, and we’ve got institutional money behind us for your long-term debt, I’m the ocean of money. So I have the ability to put together the deal that you need put together the way that you need it put together for you. And I’m not trying to put you into a box. I’m really exploring and trying to understand what your unique situation is, because every loan is a puzzle, which is one of the really cool things about this industry as a whole is,

    there’s not a single day where I’m doing the same thing day in, day out. So there’s not a lot of repetitiveness because literally every scenario is it’s kind of unique animal. And I’ve got to figure that out with relationship to the person, the deal, the cashflow coming in off of it, the profit, the credit. And if there’s one of those equations that doesn’t fit into our underwriting guidelines, I move it to one of our other capital buckets that does make it fit. So when you’re just calling the general marketplace,

    you have no idea what a company’s underwriting guidelines are. And so they’re trying to push you into their very narrow box and try to make that fit for you. And if it doesn’t, then you have no idea that there’s other options available to you. So because of how we’re structured, ⁓ mean, our numbers are spectacular. 11 years in business, 100 % five star views and a 90 % closing ratio and one of the lowest default rates in the country. And the reason behind those metrics is because

    we’re really focused on just giving the best experience possible in this industry for a real estate investor. So I’m not trying to push anyone into a box. really trying to understand who are you? What is your investment strategy? What are you trying to accomplish? Where are you trying to go? So it doesn’t matter to me whether you’re a first time investor or a seasoned investor. I’m going to dig in real deep to understand where you’re at right now and where you’re trying to go, whether you’re trying to do your first deal. We’re going to look over your back and make sure that you don’t, you don’t

    get taken out on your first deal. So we’re analyzing everything and making sure that what you’re getting into is a legitimate profitable opportunity. So it’s not that I can’t write a bad loan. I definitely can. It’s that I don’t want to. So I want to make sure that I’m taking care of the relationship. And if I take care of the relationship, the relationship is going to come back over and over and over again. So I’ve got people I did their first deal, their second deal, their third deal. They almost lost everything on their fourth deal and their fifth deal.

    but I pulled them back from the brink and basically pointed out to them like, hey, there’s some things going on with this deal that you’re not looking at and it could take you out. Don’t do it. Don’t do this deal. ⁓ One of the things that you see kind of with first time real estate investors is they’ve gone through all the courses. A lot of them have paid for very expensive education and then they just want to get a deal. They just want to do a real estate transaction and that’s a really bad mindset.

    Dylan Silver (09:13)
    Yeah, just.

    Andrew Shanti (09:19)
    because there’s a huge difference between a good deal and a deal. So if you’re listening to a realtor, if you’re listening to a wholesaler, you’re listening to marketing people that make their money based off of you just buying that property. So they’re not going to tell you that there’s problems with it necessarily. They’re going to give you a smoke and mirrors to make it look as good as possible. So there’s a term in real estate called puffery. So it’s a great term. So puffery means ⁓

    handyman special, you know, for the for the right investor, this is a great opportunity. And then you show up and the whole house is burned down with the exception of one wall. And you’re like, that’s a little that’s a little bit different than the description that you gave me right there.

    This is not a handyman special. This is a builder, right? This is a piece of dirt that I’ve got to clear the land because the whole property burned down. There’s nothing handyman special about this, right? Like this is this is a piece of dirt that you’re trying to sell me for way too much money. Right. So

    My job is to make sure that you’re not about to get yourself into a bad situation. and if you haven’t been in the industry for a long time or you’re not super seasoned. So real estate is a really interesting dynamic because you learn in real time, right? You learn deal by deal by deal in real estate. I’ve been in the I’ve been in the industry for 20 years and I’ve had a prolific career. So I’ve seen everything. I ran a commercial real estate financing company kind of leading into 2008. I was a conventional mortgage broker kind of

    before the 2008 market crash, I was an executive director of an off-market commercial real estate brokerage and alternative investment advisory company and I’ve analyzed hundreds of properties, probably even thousands of properties now. And that investment strategy and approach was I wouldn’t take anything that anyone gave me, I would run my own numbers, my own analysis and I would see with my own eyes what’s there. So for an investor that’s not doing that,

    and is just taking the information provided to them without using the resources that we have available to us, you’re taking a lot of risk. So if you’re just believing that a realtor is telling you that the after repair value on a property is $600,000, but you’re not running your own comps in the market, and I’m talking with even just a very basic Zillow search. So you can go in. ⁓ We run comps on all of our property, and my comp methodology is real basic. I go into Zillow.

    basically zoom in on that neighborhood. I exit of the property, I hit plus twice, you know, with Zillow on the map, and then I go into the filters, I bracket it by 500 square feet. And then I look at what’s there within two mile radius. And that’s it. So when you’re dealing with one to four unit residential properties, your value of a property is based strictly on market sales, right? And you’re typically looking within a one to two mile radius. So if you’re

    Dylan Silver (12:38)
    Right.

    Andrew Shanti (12:42)
    looking at a comp that’s three miles, four miles away, you’re not looking at the right property value, right? By the block, yeah.

    Dylan Silver (12:46)
    And they can buy the block too. mean, if you go one block over,

    you know, you could be even on the same block, right? I mean, if you’re depending on the grade of the flip that you’re doing, if you’re building on a street where there’s, you know, I was in a neighborhood of Houston last year where there’s, know, heavily distressed single family homes on the same street, you’ve got brand new townhomes. Well, you can’t compare apples to oranges on the same street.

    Andrew Shanti (13:11)
    No, can’t.

    No, you can’t. so you run into this situation where I’ll have investors that will come back in, especially like up in the Northeast. I love like the Boston, Massachusetts market. It’s a phenomenal real estate market up there. If someone’s not earning six figures on a flip up in Massachusetts, I tell them to go find another deal. Right. That’s that’s that market up there. And so I’ll see this I’ll see this situation frequently where an investor will give me a call and I will give them the value and they will tell me,

    Hey, my realtor told me that, you know, the, the F that, you know, the, there’s market comps for 750,000 and I’ll go look at that market. And I told them it was $600,000, $150,000 off in value. And they’re like, but my realtor is telling me this and I’ll go and I’ll be like, yeah, there are $750,000 comps in that market, but there are 350 square feet larger than your property. It’s not the same.

    It’s not the same that that guy that guy’s trying to convince you to give him a commission by buying a bad deal. He doesn’t care. He doesn’t care if you keep he knows he’s probably never going to see you again. He wants his 3 % or 4 % commission. He just needs you to buy. So if you’re not doing your own research and your own due diligence, ⁓ you’re you’re playing a dangerous game with your money. Right. And so that

    Dylan Silver (14:27)
    I’ll also add

    to that, as a realtor myself, I think I can say this, most realtors either specialize in

    working with investors and that’s kind of their bread and butter. Or you pretty much stay away from working with investors. Not that that’s carte blanche, the rule, but they’re different, you know, it’s different vernacular. It’s different language. Yeah, it’s a different type of person, right? I mean, some people don’t want to work with investors because they know that, you know, they might have an ego or so forth. I’ve certainly heard my fair share of that. And so if someone is talking like ARV, and if you go to them, okay, you got the ARV here, what’s the rehab? Like, do you have a item?

    Andrew Shanti (14:47)
    different breed of people. Yeah.

    Dylan Silver (15:05)
    what is going into that because that could mean so many different things to so many different people, right?

    Andrew Shanti (15:52)
    Absolutely. And even then, one of the other things that you’ll kind of run into is over improvement in the marketplace. you’ll see people have this concept where, if I go spend $150,000, it’s going to increase the value by $150,000. No, it’s not. And I’ll give you a perfect example. I had a client that called us up. And this was someone that we had done a fix and flip loan for.

    and he had listed his property and the note had come due and basically he’s in trouble. He called us up and I’m talking to him on the phone and I’m looking at the metrics of the loan that we did for him and this was in like West Central Florida. So I’m looking at the metrics of the deal and I said, hey, what’s your problem? You’ve got a lot of money sitting in this deal. Like I’m looking at the value of the property.

    I’m looking at what we gave you a loan for as far as like it was a fix and flip. I’m looking at your rehab budget. said, you’ve got plenty of room. So I said, what’s your problem? I said, I’m looking at what we did the loan, what the loan balance was and what the value is. said, you’re good. Just drop your property a little bit more and get out of the property. You’re still going to profit. And he goes, no, you don’t understand. I said, what don’t I understand? He said, well, I put in another $70,000.

    that I took out of my retirement account and I put in tile floor and I did all this luxury stuff to the property because the GC and the realtor told me that it was going to be a good idea. And I’m looking at the market, it’s a mid level market, it’s not a luxury market. And so there’s no comps for tile floors. There’s no comps for anything other than LVP, right? So this guy did high end finishes in a market that

    has no high-end finishes. And so he spent an additional $70,000 where there are no comps that have that level of work to it. So the value of his property was as if he never spent an extra $70,000 because there’s no comps in the marketplace. So it’s critically important to know what’s around you. So if you’re trying to build luxury in a non-luxury market, you’re just wasting your money because there’s no comps that support that.

    Dylan Silver (17:47)
    you do.

    finish.

    at it.

    Andrew Shanti (18:13)
    Right?

    Dylan Silver (18:13)
    Yeah.

    I mean, I’ve had this question many times, you know, what’s the value of this property? And someone over the years told me all the value of anything is what someone else willing to pay for it, right? It’s a simple thing, but that’s it speaks so true because how is it possible that I could sink 70 grand into something and not see it on the back end? Well, you know, people are looking at homes in this area. What are they comfortable paying? They’re going to pay an additional maybe 10 grand or 20 grand maybe with $70,000.

    and now you’re talking about somewhere around 1 sixth of the price of the home potentially, maybe more than that. Is that worth it for a lot of folks? Maybe not, certainly not if the market doesn’t demand it.

    Andrew Shanti (18:56)
    It’s not it’s

    not financeable, right? So it’s pretty your question, right? Or per your comment, the value of a one to four unit property is worth what the properties around that have sold for. That’s it. Right. So we’re not in this in this era right now. So we’re at the top of the curve as far as property values. And it’s starting to dip down. Right. So unless rates really start to slide significantly back into the fives. Right. So for all those people listening out there.

    don’t ever expect to see rates in the four again during your lifetime, right? Unless or the threes or the twos or whatever, that was a black swan event. And if you have it in your mind that, you know, that the interest rates are going to come back down to the fours, you’re probably never going to see that in your life again. Or if it does, it means that we’re heading into World War Three and you got other problems that we’re facing, right? So there’s this something is broken in the system.

    That’s why we ended up in rates that were there in the first place because we needed to stimulate the economy. So when you look at historicals on interest rates, interest rates historically have been in the 7%. Right now, we’re in the low to mid fives. And if I had to shake a magic eight ball as far as the year ahead, rates are going to dip down into the high fives. So floor rate in the market right now is like 5.99%.

    So if you’re real low leverage in the market on a rental, right, you’re going to be looking at like a five point nine nine is the floor in the market. That’s like as low as you can buy down an interest rate to right. Basically right now, ⁓ I expect that in the next year ahead, that’ll drop maybe to five point seven five, maybe five point six to five. Maybe. Right. So I don’t really expect it to see interest rates going much further or much lower than that.

    especially with all the volatility taking place in the market. People have this perception in their head of like, I have a 4 % interest rate in the market. Yeah, you have a 4 % interest rate on your mortgage right now, but you also have $300,000 or $400,000 of equity tied up in your property. So you got your property four years ago or three years ago, and now your property is doubled in value. You can’t get access to your money.

    Dylan Silver (20:52)
    people that smile.

    Andrew Shanti (21:19)
    Right? Your money is tied up or yeah, now there’s now there’s investment seconds where you can pull out, know, 250 to 500,000. But then you blend your interest rate. Now you’re looking at a 9 % interest rate on the second or 10 or 11 % interest rate on the second against your 4 % first. You throw them together and you’re like, oh, wait a second, I can do a new first at six and a quarter. And you have a cheaper payment than the first and the second, which are rated a four. So and so people have this perception in their mind of, hey, 4 % interest rates.

    We’re not there anymore. We’re still actually in a lower interest rate environment than the historic norm. So if you look at what was going on with interest rates like pre 2008, we were in the sevens. That’s where interest rates were. Historically speaking, that’s where rates have been unless we’re in a hyper inflationary environment as far as the economy.

    Dylan Silver (21:52)
    I see you.

    They were also giving those

    loans out like candy though. I felt like…

    Andrew Shanti (22:12)
    we sure were. We sure were. Yeah, you didn’t.

    There were the ninja loans, right? No, no, no income, no assets, no verification, right? You could be a ghost. And so long as you can sign a piece of paper, you know, pre 2008, we could get you a mortgage. And look, there’s a reason 2008 happened, right? And every mortgage broker, every realtor, every appraiser, every title company was part of the problem. And ⁓

    Dylan Silver (22:30)
    Yeah.

    You know, people aren’t going to walk

    away from so much money. mean, you could talk about down payment assistance programs that people have, sure. But if it’s a second or third property, it’s an investment property. You’re not going to walk away or you’d be less likely to walk away when you’ve got 20 % cash down to get into that property. you know, nowadays there’s a reason why we have the current situation that we have. It’s because, you know, we’re trying to avoid what happened back then.

    Andrew Shanti (23:03)
    Absolutely. So you can’t get in anymore with like no money down. Right. ⁓ When you’re at least not on investment real estate. Right. So there’s still programs out there when you’re buying a primary residence, which look, we don’t do anything with someone buying a home. That’s not our niche. That’s not our market. We’re dealing with real estate investors that are buying investment properties. And the thing that makes an investment property investment property is, is it profitable? Right. So when I’m running my analysis and I’m doing a deep dive with somebody,

    My whole metric is, does this make sense for you as a real estate investor, which kind of goes back to the first time investor just wanting to buy something to say that they’re they’re doing something with their education? No, right. Absolutely don’t do that. The whole purpose is cash flow and profit. So if it’s not going to make you money, if it’s not going to cash flow, if I can’t see how it’s going to make you money again, I can still do the loan potentially. I’m just probably going to tell you not to do it.

    because I’m not in it for my commission. I’m in it to make sure that I do right by you on a long-term basis so that you can do your second deal. So that you can do your third deal, your fourth, your fifth, your sixth deal and begin scaling up and change your life. So real estate investing is one of the few areas I’ve ever come across where you can actually see the amount of money that you’re going to make right up front. You can figure out what you’re buying for something. You can figure out what it’s going to cost you.

    you know, right up front, you can order inspections to see like what needs to be done on it. And you can forecast with a very high level of accuracy, what it’s going to be worth when you’re done with it. There’s almost nothing out there that you have that level of information to tell you, is this a good place for me to put my money or not. And you can run the numbers to see, I put in $50,000 and I’m getting back $20,000, you know, annual return.

    Dylan Silver (24:47)
    or not.

    Andrew Shanti (24:59)
    $20,000 on $50,000 input, that’s a great rate of return on your money. If you put in $50,000 and you’re getting $20,000 a year, good luck finding that in any other market that’s not pure speculation.

    Dylan Silver (25:12)
    Yeah, yeah. I mean, to your point, you know, you know where your money is when you’re you’re invested in real estate. It’s got an address, you’re paying taxes on it. Right. And so there is an element of it, which is more hands on. But of course, there’s the upside, which you’re not going to get when truly hands off investing. Right. We are coming up on time here, though, Andrew. Any new projects that you’re working on? And then also, what’s the best way for folks to reach out to your team?

    Andrew Shanti (25:19)
    You do.

    Yeah, so I mean, as far as new projects, right, I just want to say, Dylan, kind of what I see as far as the shift in the market, right. And I think this is important for real estate investors to hear right now. So if you historically have been a fix and flip investor, right, we are running into a depressionary market where prices across the US are starting to come down. Right. So we’ve kind of hit that price ceiling. And that’s not all markets, right, because market real estate is market specific.

    but for a lot of the country, you’re starting to see the price ceiling that we’ve hit.

    And so if you historically have been a fix and flip investor,

    you really should move your strategy, in my professional opinion, into BRRRRs So buy the property, rehab it, put a renter in place, and refinance the property. So I’ve got no seasoning period on cash out refibes. So if you buy a rehab property in a month, you rehabbed it, and you’ve got a tenant in place,

    I can give you full cash out value on that property, you know, as soon as you’re done with the rehab and you have a tenant in place. So there’s no restrictions for us as far as getting you into that rental property full market value, which is really important for the BRRRR process. So I, if you’re a real estate investor right now that’s, that’s doing fix and flips,

    I would highly recommend that you move your approach into finding the properties that cashflow on the backside, because now you’re building that rental portfolio so that if you do get caught on the back,

    where you’ve got the lowering of the price, you’ve got enough spread where you could still exit that property and have a successful rental and you didn’t lose everything. Now you’ve got cash flow coming in. Now you’ve got an income coming in and you’re starting to build a rental portfolio instead of just trying to get that cash at the end of it.

    And if you’re running your numbers correctly and you structure your deal correctly at the front, you’re basically getting all of your money out and you’re ending up with a free rental property.

    You’re not getting the profit, the 25 % margin that you built in, but you’ve got all your money back at the end of the deal and you can just go rinse, wash and repeat that process and start really accumulating a real estate portfolio. Right. I have this conversation all the time with guys that have been active flippers for the last 10 years. They’ll look back and they go, man, if I had just not sold those properties and I had held onto them, I would be in a completely different situation right now. And it’s not that they’re in a bad place, but they’re like,

    I would be sitting on a $30 million, $50 million portfolio instead of having $200,000 in the bank because I lost on two deals. The buy and hold approach or buy, rehab, put a renter in place and refinance, I really feel that’s where people should be sticking their approach to right now as we move into this deflationary environment and pricing. That’s going to give you longevity in the marketplace and make sure you don’t go bust.

    Dylan Silver (28:09)
    Yeah, buy it whole.

    Andrew Shanti (28:28)
    It only takes one bad deal to lose everything in real estate. And so it’s really critically important for people to realize there’s a shift in the market and you need to shift your mind to see that and really take advantage of that opportunity. As far as getting a hold of me, again, Andrew Shanti your Vice President of Optimus Capital. My phone number is 954-598-4564. That is my cell phone number.

    Dylan Silver (28:28)
    Yeah.

    Andrew Shanti (28:53)
    I’m here to help you grow and scale in whatever way that I can. And our whole business model is just to take care of you as a real estate investor on a long-term basis. So kind of what I tell people is, whatever I tell you on that first phone call is what you should expect to see at the closing table. No surprises, no bait and switch. Just someone who’s really got your back and looking out for you to make sure that you’re crushing it in the real estate game as hard as you possibly can. And just doing right by you as a real estate investor so you keep coming back and keep coming back and keep coming back. And it’s not just me. That’s how I’ve created our whole company to be.

    Right?

    Dylan Silver (29:24)
    Andrew, thank you so much for coming on the show today. Thanks for taking the time.

    Andrew Shanti (29:28)
    Thanks for having me, Dylan. Great being here. Thank you.

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