Bank Said No? How Self-Employed Real Estate Investors Can Still Get Financing

Alejandro Szita (00:00)
So it’s human nature. It’s human nature. And then I have this discussion sometimes with clients, you know, that want to improve their sales. And they want to send all this Facebook advertising and AI and say, look, you look for money, right? Who’s going to give you the money? A complete stranger that you’ve never spoken to before? Or a client that has already bought from you and already trusts you? Who are you going to call? Don’t waste your time in trying to reach people you’ve never spoken to before. You need to improve yourself. Call your customer base. They already trust you. They already know you.

Cody Crabb (02:03)
Welcome back to the Real Estate Pros Podcast by Investor Fuel. I’m your host, Cody Crabb, and today I’m talking with Alejandro Szita. Alejandro is the co-owner of Prosperity Lending in California, where he helps investors and business owners think beyond transactions and build long-term financial relationships. Alejandro, welcome to the show. Thanks so much.

Alejandro Szita (02:22)
Thank you, Cody. It’s great to be here. Thank you for inviting me.

Cody Crabb (02:26)
Glad to have you. We appreciate your time. So before we started recording today, you said something that kind of caught my attention, which is you described what you do in a way as—you used the term relationship banking. I would love for you to kind of give our audience—what is relationship banking and how does that relate to what you do with the lending that you do?

Alejandro Szita (02:55)
Relationship banking is when you have someone that you can see in person and you can call and you can talk to him in an informal way, the same way that we’re talking right now, and you can brainstorm your next financial move. Let’s say you need a loan for real estate, or you need a personal loan, or you are thinking about a particular project and you’re thinking about how to finance that project. Relationship banking is when you have a banking executive that’s at your disposal pretty much any time of the week, from Monday to Friday, from 9:00 to 5:00, that you can see in person—maybe you need to make an appointment and he’s there for you. He’s not answering another phone call, he’s not answering another email, he’s not an AI machine, he’s listening to your project. He already knows who you are, he already knows how much you make, he already knows your line of business, and he knows your personality. He has a sense of what you want, what you dislike, and what your appetite is for. And then based on that, and based on what you tell him, he freely discusses with you how it could be done with the tools that he has available. And then once you give him the go-ahead, he has the forms ready and he starts the process with you and he advises you throughout the process to a successful outcome. And whether the loan request or the process is small or big, he treats you equally deserving. That is relationship banking. I experienced that when I was 18 and a young man. And I thought that it was normal. I thought that that was what everybody had or should have. And then I was shocked to find out that that was not the case, unless you have a minimum of five million dollars today. You can’t have that.

Cody Crabb (04:43)
Hmm. Yeah, and so what is it that you think is missing? Is it just like more and more like people are busier than ever? I mean, why has that as a service kind of just not become the standard?

Alejandro Szita (04:57)
Because of the way banks work. You know, in the past, people already knew more. Something with the schooling system changed. People of the past, of the ’60s, of the ’70s, even of the ’80s, had an actual education that, in my opinion, was better. They were able to read a book. They were able to write a letter without the assistance of AI. So when then they applied for a job at a bank, there were many things the bank did not need to teach them. The bank could basically throw on them a manual this big, the applicant could read it and could have an understanding, and people were easier to train. You know, their level of understanding was superior to today. So therefore the cost that the bank needed to spend on an employee to train him was lower. And therefore, the bank could afford to have 10, 15, 20 people in a branch just to talk to people and do what I am describing. But as the educational system continues to actually deteriorate, and as people become harder and harder to train, then banks start to switch to what I call an automatic model. They started to switch to a model where they can pick anybody from the street regardless of their education, and with tech and with different tools like technology tools, they could basically supplant the missing education. And that works from an employment point of view, that works from an organizational point of view, but what happens is it decreases what the one person can do. So now they cannot afford to spend the time and the training in having one person like we just talked to you and brainstorm with you. They have to have systems. Once the banks started to implement the systems, they realized that with less cost and less personnel, they could handle more people. And that basically made them right—made them right that they should invest in more systems and they should invest less on personnel. So today they can grab anybody from the street, they can put them in a box with minimal training, and they make more money in their eyes, you know, than if they followed the traditional system. However, the traditional system or the new system doesn’t work for high-net-worth people. High-net-worth people, five million or ten million and above, still use the same system that has been used for hundreds of years, since banking existed from the earlier Roman times, that has not changed. Except today it’s only available for the people that have a net worth of five or ten million dollars or more, because then the bank can afford to train someone to the level that is required.

Cody Crabb (08:42)
Mm. So okay.

Alejandro Szita (08:43)
And then all these systems—sorry, and then just to finish—all these systems like FICO, AI, you know, and so on, what happens is they work for 90% or in my opinion, 90 to 95% of the people. It works. So that 5% to them is worth it to drop them out of existence, because with the amount of money they are making on the 90 to 95%, they can afford to drop the 5%. They basically can take anybody from the street and there you go. And what we do, we specialize in that five percent that gets dismissed by the banking system.

Cody Crabb (09:19)
Sure. So okay, so this is what I was gonna ask. So you are not a banker or you’re not a bank—that’s not what you do—but you really like this philosophy of this kind of personal touch. So tell me how you—what you do and how you kind of incorporate those values with your clients and in your business.

Alejandro Szita (09:37)
Okay, and there is one more thing that I forgot to say. We are mission-driven. We don’t do things only for money. Of course, we need the money to pay the bills, we need the money to grow, we need the money to actually scale and hire people. But that’s not the main motivation. We are mission-driven. Like for instance, before this podcast, I’m helping a lady buy her first home. This lady doesn’t know anything about financing, anything about mortgages. We are not going to make much money out of this transaction, but that’s part of our mission. You know, most of our public and clients are business owners and entrepreneurs. We spend the time to find out what they want to do because it’s rarely the money. An entrepreneur or a business owner rarely creates a business only to make money. They have a vision and they have something behind it. We wanna hear what that is, and within our means, which is on the mortgage side and on the real estate side, we find ways to support that vision.

Cody Crabb (11:12)
Yeah, so I think that’s a great way to frame this because sometimes I’m imagining that someone walks up to you and starts talking to you about this. They sit down and they start telling you what they want to do. And what they’re telling you they want versus what they actually want are different things sometimes. Do you run into that often?

Alejandro Szita (11:35)
I do run into that often, and that’s why you have to listen very carefully. In that sense, we’re similar to what Investor Fuel does, you know, because from the information that I’ve read about your company, you also have a mission, you know. And the mission is not motivated only by money.

Cody Crabb (11:54)
Yeah, exactly. Yeah, and I think Investor Fuel is all about the kind of connection and education and all about that like “the rising tide lifts all ships.” So like if we lift someone up, then that’s lifting everybody up and it’s not gonna hurt us to share what we have and what we know.

Alejandro Szita (12:12)
Yeah, and you mentioned something very important, which is the relationship, because even though we have all these tools like AI, you know, Zoom that we’re having right now, when you really make a deal—when you really make a deal where you make hundreds of thousands of dollars—it’s not through text, it’s not through email. It’s in person. Even today, with all the technology tools that we have, the real deals, the deals that make the difference, the deals that allow you to scale, those are still done in person. And they still depend on relationships. And I think that that will never change because it’s been like that since time immemorial. You know, I am a big fan of history. You know, I love history. And there is a guy—many, many years ago, at the beginning of the 20th century, they deciphered the actual clay tablets of the Babylonian Empire. And to their amazement and astonishment, what they found on those tablets were contracts, agreements, pricing data, you see? Yeah. So we’ve seen the same, and that was six thousand years ago.

Cody Crabb (13:12)
Have you heard of that famous customer complaint where he complained about the grade of copper he received or something? Yeah, that’s a famous one ’cause it’s like one of the first pieces of writing we have and it’s someone complaining about customer service. So it’s just something that’s always existed since humans have, you’re right.

Alejandro Szita (13:31)
So it’s human nature. It’s human nature. And then I have this discussion sometimes with clients, you know, that want to improve their sales. And they want to send all this Facebook advertising and AI and say, “Look, you look for money, right? Who’s going to give you the money? A complete stranger that you’ve never spoken to before? Or a client that has already bought from you and already trusts you? Who are you going to call? Don’t waste your time in trying to reach people you’ve never spoken to before. You need to improve yourself. Call your customer base. They already trust you. They already know you.”

Cody Crabb (14:02)
So one question I’d have is a lot of people would say, “Well, yeah, I would love to build this network, but I don’t have that right now. Like I actually just don’t have a network right now.” What are the first steps someone can take to start to build relationships in an authentic way? Because the authenticity I think is really important. You don’t want every relationship to feel like, you know, “If you do something for me, I’ll do something for you.” You want them to be real relationships, of course.

Alejandro Szita (14:29)
And that is an excellent question. And I’ll tell you how I started and how other people can do it too. Because I like writing, I started writing. I found this local publication, and then I called them up and they said, “Yeah, we can run the ads for you.” I said, “I don’t want any ads, can I just write?” They said, “Yeah, but we’ll only give you 500 words and we’ll charge you the same as an ad.” I said, “I don’t care, and I don’t care about the ad. Let me write 500 words.” That was back in 2005. Only writing 500 words once a week, I built my first customer base of 200 people. Now I know another young man that likes to do videos. Videos are not my forte, you know, but he likes to do videos. So he does videos every week and he’s promoting his customer base through videos. However, the best way to do it, and the way that I also did it, is go and meet people face to face. Go and find yourself excuses to go and see people. That’s what I did at the beginning. You know, I went to my church, I talked to my church members, I told them what I did, and then automatically people said, “You are the loan guy, right? You are the real estate guy, right?”

Cody Crabb (16:17)
“You need to talk to my cousin ’cause he was just looking for someone.” Yeah. They’re all looking for you. Yeah.

Alejandro Szita (16:22)
Yeah, so in addition to writing, in addition to making videos—I’m not saying that you don’t do any of those things—but in addition to doing that, you need to become a member of something that you have some affinity for. Some people like to go to 7:00 in the morning breakfast. I’m not an early person, so that’s not for me. But some people love to do that. You can become a member of the Rotary Club. The Rotary Club is excellent. I had a client who was a member of the Rotary Club and they have excellent programs. You know, you can go and be a member of your church. You know, if you’ve never been to your church, go meet people, talk to them. And this is really the secret: the videos, the writing, the AI, the Facebook will work as long as you have a base of real people that supports it. If your strategy is only to be online and nothing else, you better be famous.

Cody Crabb (17:22)
Because you’re competing with everyone in the world if you do.

Alejandro Szita (17:24)
Yeah, if you’re a famous artist, if you’re a famous musician or you wanna be a musician or an artist, or you are a stand-up comedian and you’re good at it, maybe that would work. But in the world of business, I seldom find that to be a business model that you should follow.

Cody Crabb (17:39)
Yeah, well and I’ve heard this a lot, especially because of real estate. I mean, the physical location is what you’re buying. And that’s physically where you are, theoretically. Not always, but a lot of times people are investing where they live. And so yeah, it makes perfect sense that you would want to go find people in person near you that also do what you do.

Alejandro Szita (18:00)
Yeah, and the other thing is that if somebody’s watching this, probably they are thinking about joining Investor Fuel. You know, I’ve seen some of the videos that you have on your website and you have these big conferences that have hundreds of people. What a better way to really get out, meet people, and get a feel, get a sense, you know, because what happens also is as you meet people and as you talk to people, your business model changes. You know, you start to see what people really want. You start to see face to face, you know, what is your niche? And then you define your niche. And that’s another thing: you need to go and talk to people in real life, and then also you need to define your niche. If you don’t have your niche at the beginning, that’s okay, just pick something. And little by little, by trial and error, you’re gonna start to define your niche. It’s better to have a specific niche than be broad.

Cody Crabb (18:45)
Yeah, you think, “If I do everything, then I could be—anybody can be my customer.” But what really happens is nobody can be your customer because you’re too broad. Then you’re competing with everyone in the world, like I said, if you don’t do something specific. But the more you narrow down—I always use this as an example: my background is in podcast production and video editing and stuff, and I was talking to someone who potentially wanted me to edit for them. It didn’t end up happening, but their podcast was about Pez dispenser collecting. My God. And I thought, how many people in the world could possibly listen to that? And they had 800 listeners that every month were like—they knew who they were and they were in communication. They were like the best 800 listeners ever. I would take that over 10,000 faceless people always. So that just goes to show. I mean, the more specific you are, you really can find an audience for anything, really.

Alejandro Szita (19:48)
Yeah, and the more niche you have, the less competition you’re going to have because people are doing business because of you, not because of the product.

Cody Crabb (19:57)
Hmm. Yeah. Yeah, I can’t tell you how many times I bought something just ’cause I liked the guy that was selling it to me. So okay, this has been really interesting. I’d love to hear a little bit about—so who are the types of people that come to you? And what are the exact problems you’re trying to solve? You said that you work with entrepreneurs and business owners. What problem do they bring to you that you can help them solve?

Alejandro Szita (20:23)
Usually they have been denied by their lender. Usually they may have had a relationship—like this is an extreme case, and that’s why I’m referring to this, but this is not unique. This person has a very successful business, sells tens of millions of dollars per year, had a 20-year relationship with his lender, a big bank, one of the major banks. And one day he asked them for what to him is a rather insignificant mortgage, you know. We’re talking about in the millions, he wanted a mortgage for a few hundred thousand. His account executive says, “Yes, of course, no problem for you all day long, just sign here.” And it turns out that they denied him. They denied him because he had a small blemish on his credit report. Now, we’re not a credit report fixer or anything like that, but many, I would say most, self-employed and business owners, even though they make money, even though they’re successful, the credit report leaves a little bit to be desired. And by necessity, we’ve become very good at correcting that. So we just did that. We just corrected his credit score. And in the process of correcting the credit score, we became friends. And then he ended up giving us his business that he could have given the bank. Now, could the bank have done this? Yes, all day long. Why they didn’t do it is because of this culture that in my opinion is wrong—you know, the culture that “I only do this. And if I have to do a little bit outside of the box, that’s not my purview. Sorry, we don’t do that.”

Cody Crabb (21:57)
Yeah, I think you’re hitting something that’s really important because if you just pulled the numbers, that’s probably what they did. They printed out the sheet and they ran it through the formula and it said, “Nope, we should deny this one.” But a person, a human being looking at that closely, would have thought, “Well, obviously this is a client we want to keep and we’ve had a relationship for a long time, he’s high net worth.” It would have been a no-brainer to say yes to that. And so, like you said, I think that the human aspect in some of these cases, it would be so obvious to someone like you who looks at all the factors, but a formula can’t do that.

Alejandro Szita (22:42)
Yeah, so the main reason people come to us is because they run through the system, the system rejects them, and then somebody, a friend or somebody, says, “Hey, why don’t you try these people?” You know? That’s the main reason they get to us.

Cody Crabb (22:56)
Yeah. All right. So you’ve kind of given us a picture of what you do and why you do it and how you do it. I would like to know, for somebody listening who has also been told no by a bank, whether you’re helping them or not, what are the first few steps that someone should take to maybe find someone like you or even just start improving the situation?

Alejandro Szita (23:23)
I would say that the first thing to realize is that a no is not a no. A no means no right now because of this. You can always change the circumstances. This is what we do, you know, even when we occasionally get people that we cannot help right away. Instead of dismissing them, we say, “You know what, we cannot help you right away for this reason. But if you work with us and if you do this and this and this, in two months, in three months, or next year, you will qualify and we will help you get there if you want to work with us.” So the first thing I would do if I was in that situation is probably talk to a friend or a relative or somebody that I know, somebody that I trust, and say, “Look, you know, I went to the bank or I’m trying to do this project. They said I don’t qualify. What do you recommend?” It’s very hard to find this on the internet. I’ve tried to search for me, and I have like five or six entries, but the reason we do not pay for keywords is because it’s almost impossible to find the keyword that will lead you to us.

Cody Crabb (24:23)
Yeah. When you are searching for somebody through SEO, through search engine optimization and AI optimization, you’re finding the person who’s best at search engine optimization, not the person who’s best at the thing that they do.

Alejandro Szita (24:39)
Yeah, and have you noticed right now that when you make a search, many search engines, the AI gives you like a summary? Like DuckDuckGo does that, you know? You search for best podcast hosts, and instead of getting the websites that you can look for, now the AI gives you a summary. So now you don’t even show up on the 10 or 20. Now you have to please the AI. The AI has to like you to even talk about you. Yeah, it’s becoming harder to find the correct resource.

Cody Crabb (25:11)
Absolutely. So is being in person and making those relationships the best, the only way to do that, or are there other ways to do that?

Alejandro Szita (25:20)
You know, we’ve tried every single way that you can imagine, and believe it or not, what works for us is physical media. So we send articles, physical articles, postcards. Postcards work really well, by the way. And then once we have a customer base, we send them physical mailings. We send them a card for their birthday. We send them a Fourth of July card. We send them things physical in the mail. And because there is so much tech right now, there is so much AI, reverting back to physical is for us—maybe for you it’s different—the only thing that works.

Cody Crabb (25:56)
Yeah, that’s interesting. ‘Cause I think sometimes you feel like that’s too old school or whatever, but now you’re not competing with the digital stuff. So that’s a whole other thing. So yeah, I think the lesson that I’m taking away from you is the personal touches, the old school stuff is still worth it in a lot of cases when you’re starting out. The in-person meetups, the actual relationships with people is gonna help you more than just kind of learning about it only.

Alejandro Szita (26:33)
And it depends on your business model. You see, our business model is to find that five percent that is being rejected by the system. Now, if you are a guy that can go through the system and you can get your mortgage approved by the AI in 10 minutes, and then the whole loan is done in the background by a system or a machine, why not? You know, then you wouldn’t necessarily need us per se, although we’ve done those loans too. But maybe you don’t need us. But if you’re part of the five percent, if you’re like a self-employed, an entrepreneur, like a gig worker or somebody that has the wherewithal but can’t fit into the system, that’s the best fit for us.

Cody Crabb (27:10)
Well, that’s a great way to put it. We talked a little bit before about how the best way to do business is finding a good fit, not necessarily convincing somebody to do business with you, but finding someone where you’re both kind of winning in that situation.

Alejandro Szita (27:28)
Correct. One way to phrase it is like, you know, the big banks are for the one percent—you know, the one percent, the one that can have the five or ten million dollars. We are for the five percent. We are for the other five percent that they reject.

Cody Crabb (27:41)
Yeah, I love that. I love that. Well, thank you so much. If someone wants to find out more about you, work with you, where do they need to live? Because I know you don’t operate everywhere, and where should they go to find you?

Alejandro Szita (27:54)
We are licensed in the state of California, in the state of Florida, Tennessee, and Oregon. You can go to the website, which is prosperitylending.us. And then you can make an appointment, you can send me an email, or you can give us a call.

Cody Crabb (28:14)
Fantastic. Well, thank you so much. I think everyone got something out of this one because it’s not just about the actual financial decisions. Sometimes it’s about who you’re making those decisions for and who you’re making them with and what your goals are. And sometimes it takes that personal touch to know what those answers are. So we’ll make sure to put a link to Prosperity Lending down in the show notes so people can find you easily. Alejandro, it’s been a real pleasure. Thanks so much for taking the time today. And listeners too, thank you for your time as well, and we’ll see you on the next episode. Alejandro, it’s been great. Thanks so much and we’ll see you later.