DSCR Loans Explained: The Underrated Financing Strategy for Long-Term Rental Investors

Kevin Dureiko (00:00)
We call it the spray and pray method.
They know what they want to accomplish, but they haven’t done any of the research to figure out where they need to go So they put 15 lenders in an email and they hit send it Wastes their time it wastes our time if you just spend a little bit of time figuring out what a Particular look not everybody’s gonna be a one lender fits all so you learn two or three nuances of a lender you figure that out and you just drill into that one and you’d be surprised at how much time you save and how much you can accomplish.

Scott Bursey (02:03)
Welcome back to the Real Estate Pros podcast powered by Investor Fuel. I’m your host, Scott Bursey. And today we are injecting a massive shot of strategic financing fuel into your investment business. Our guest has mastered the critical path of debt and capital in real estate, ensuring pros like you can access the money that you need to grow. Even when the market gets tight. We are talking with Kevin Dureiko of Birch and Dobson who brings the fuel

to lending certainty and financial clarity that we all crave. Get ready pros because we’re about ready to unlock some serious leverage. Kevin, welcome to the show.

Kevin Dureiko (02:41)
Thanks for having me, Scott.

Scott Bursey (02:42)
It’s wonderful to have you here and for our listeners who may not be familiar with your journey, please tell us how did your career begin and what is your main focus now?

Kevin Dureiko (02:52)
Well, the career was a bumpy one. My father had always owned investment real estate since I was born.

Um, and it was way before it was cool to be an investor. So I got to learn the ins and outs, the nitty gritty, the dirty stuff when it came to having to take care of tenants. And, um, you know, long story short, we get to, know, I’m an adult, he’s looking to retire and he was like, Hey, would you like some of these properties? And, know, my wife and I were like, Oh, we’re going to Florida, man. We’re not, we’re not going to manage these properties and 1200 miles away. Um, and I said, you know what? I think I’m going to keep doing.

the private money space and he decided like, okay, like that makes sense. I don’t understand what you’re doing exactly, but we’re going to go there. So I started doing interviews with other private money companies, ⁓ learned that it was a walled garden and very, very hard to get into any capacity of like a loan officer. And so I decided to start my own shop. ended up working with a small shop that hired me as a loan officer. And I kind of learned a little bit of the inside and the out.

And I approached him and said, Hey, would be, what do you think about this? And he said, I just, I just want to do what I want to do. I don’t want to go out, raise money. want to, I already have my client base. And I said, well, I think we’re leaving a lot of money on the table here. And that’s basically the antithesis of how we went from me doing these little side deals for almost 20 years to now we’re here and we’re doing, you know, upwards of $200 million.

So we’re trying to figure it out still. Okay. I haven’t figured out everything, but we’re getting there, Scott.

Scott Bursey (04:24)
That’s a fantastic journey. And Kevin, what really caught my attention about you was the way that you’ve been able to streamline and simplify the often complex process of securing both institutional and private debt. know, consistently delivering funding certainty for serious landlords and investors.

Kevin Dureiko (04:44)
it’s, that’s a hard one to grasp. Cause if you have no insider industry knowledge, you, you’re basically starting from day one. And as a, I’m not a big business. That’s kind of what my power strength is. that.

If you call me, I’m going to answer the phone. I don’t have to go through a couple of officers, a VP. don’t have to do with any of those things.

um, which makes it harder, but also easier at the same time. We don’t have to go through those stages of trying to figure out, you know, how this is all supposed to

Scott Bursey (06:02)
Absolutely, and it’s time now to flow some fuel, Kevin. Let me ask you this, real curious. What is your strongest internal process for mitigating loan risk in underwriting today?

Kevin Dureiko (06:15)
Experience, really. If you’ve done it before, chances are you can do it again. Not to say that we don’t work with new investors, because we do all the time, but we’re using compensating circumstances. know, they got some cash laying in the bank, if something goes wrong, they can figure it out. ⁓ Maybe a good mentorship that they’ve gone through. ⁓ We take the whole picture and we try to paint a better one on the end, is basically what we try to do.

Scott Bursey (06:42)
That’s some laser focus and that makes all the difference in the world.

And kinda on that note.

Kevin Dureiko (06:46)
It does, and

when you…

Scott Bursey (06:48)
was going to mention that what is the biggest time sync or internal friction point in the current loan organization ⁓ process in your view?

Kevin Dureiko (07:00)
It’s getting documents back in a timely fashion. We love working with people that can respond to an email timely and getting the right third parties is, is we can be ready to close, but if the third parties and the documents aren’t there, we can’t do it.

Scott Bursey (07:15)
Execution and process efficiency are everything in it. That’s kind of what I’m taking away from from what you conveyed.

Kevin Dureiko (07:24)
It’s the process and efficiencies. We can only work as fast as our borrower will give it to us.

Scott Bursey (07:28)
Yes, yeah, if you can streamline the documentation, you speed up the deal and that saves money.

Kevin Dureiko (07:35)
for all of us and it makes a lot less aggravated people.

Scott Bursey (07:38)
And what new private lending product or niche financing is currently the most undervalued opportunity in your eyes?

Kevin Dureiko (07:46)
The DSCR space, specifically the long-term, the 30 year notes, ⁓ we are transitioning to try to help the older generation understand that this product is available and it’s not the wild west like it was in the past. ⁓ That is a constant focus for us to make sure everybody understands that this product is available. The newer generation understands it. The older generation is having a little bit of a hard time realizing that this is a Fedstash product.

Scott Bursey (08:13)
That makes sense. What potential regulatory change in the lending environment is keeping you most ⁓ vigilant right now?

Kevin Dureiko (08:21)
⁓ There’s people that are putting forth legislation that don’t understand the private space. They’re lumping us in with regular home lending and it’s not even close to that. ⁓ And I am for more regulation. I don’t want to think we need to be back in the wild west. I think we need, especially with data and privacy, we need to have a little bit more regulation. So we got to find the middle ground, certainly.

Scott Bursey (08:45)
Absolutely. The middle of the road. So Kevin, if someone’s listening and they’re thinking to themselves, this is someone that ⁓ I like to learn from. What would you like them to know first about ⁓ your organization?

Kevin Dureiko (08:59)
oh you can visit us at LoansforLandlords.com. It’s a very simple process. You just fill out the application. It’s not even an application. It’s just a, I’m interested. And then we have a conversation. You won’t be put through a whole bunch of forms. We’re going to talk. And if it makes sense for the both of us, we can see what we can do together.

Scott Bursey (09:15)
Absolutely. How long does the process normally take?

Kevin Dureiko (09:18)
From somebody reaching out to closing, we could do as little as 10 days. And that goes back to your point of, you know, what’s the streamline? It’s the documents, it’s getting things in a timely manner, and it’s working with third parties like title companies, insurance agents that actually want to work and get the deal done as fast as they can.

Scott Bursey (09:35)
That’s working efficiently.

Kevin Dureiko (09:36)
very efficient and we pride ourselves on that.

Scott Bursey (09:39)
And efficiency is the name of the game and you should pride yourself on that. And let me ask you this, no business is perfect. What’s one thing that you’re still trying to figure out or working around recently?

Kevin Dureiko (09:53)
I have to get better at social media. ⁓ I’ve never been the social media guy and everything has completely changed. It’s no longer brick and mortar. Referrals can only get you so far. So

getting out in front of more eyeballs is the name of the game. I think it’s not just for us, it’s for everybody.

Scott Bursey (10:43)
What do you feel is the biggest opportunity in the private lending sector now?

Kevin Dureiko (10:48)
I think one of the largest opportunities is going to be the refi once these rates get down a little bit more. And I believe a lot of the Spanish market and the female market is underserved. And we really need to spend some time to earn the trust of those people and get them into the investing space.

Scott Bursey (11:06)
Makes sense. How do you feel that you may go about that?

Kevin Dureiko (11:10)
Well, first I’d probably have to learn Spanish, ⁓ but mostly just trying to get more information out there and show that this product isn’t for the good old boys anymore. And that real estate investing is open to everybody and making it more accessible at any age, any bracket and just the right information and the right education.

Scott Bursey (11:31)
Yes, and how do you feel that social media may play a role in that for you?

Kevin Dureiko (11:35)
That’s the hard part because social media puts you into a box. If you’re offering credit or housing, you’re not allowed to target a specific demographic. as safeguard as they make the internet or they try to with social, they’re also hurting a lot as well.

Scott Bursey (11:50)
can imagine any challenges that you’re watching closely, you know, like maybe market risk or competition, things of that nature.

Kevin Dureiko (11:58)
There’s plenty of room at the top in the DSCR space and the private money space. ⁓ It’s definitely the regulatory environment around rates because the Bank of America rate and our rate are not the same. Just because Bank of America goes down does not always mean that private money goes down. It’s two different systems. So people need to understand that and we need to be better at teaching it.

Scott Bursey (12:21)
Education is everything, isn’t it?

Kevin Dureiko (12:23)
It is.

Scott Bursey (12:23)
Kevin, if a pro is listening and they’re thinking to themselves, hey, ⁓ I’ve got a high leverage deal. What is the single biggest red flag on their personal balance sheet that makes you pause?

Kevin Dureiko (12:38)
Foreclosures, bankruptcies, Deed in Lieu, the big three really. We need to know why. It’s not always a deal killer, but we need to know upfront. Like we were discussing earlier, I can get over most problems, but if they’re surprises, it’s gonna make me think twice.

Scott Bursey (12:54)
Addressing things up front is the key.

Kevin Dureiko (12:57)
Honesty is the best policy, right?

Scott Bursey (12:58)
And Kevin, this is where you supply the high octane fuel. It’s called the money question. For a real estate pro looking to scale by consistently using non-bank or specialized debt, what is the most critical mistake they make when trying to establish a strong long-term funding relationship with a lender?

Kevin Dureiko (13:18)
We call it the spray and pray method.

They know what they want to accomplish, but they haven’t done any of the research to figure out where they need to go So they put 15 lenders in an email and they hit send it Wastes their time it wastes our time if you just spend a little bit of time figuring out what a Particular look not everybody’s gonna be a one lender fits all so you learn two or three nuances of a lender you figure that out and you just drill into that one and you’d be surprised at how much time you save and how much you can accomplish

Scott Bursey (13:50)
Time is money, so being streamlined is the key.

Kevin Dureiko (13:54)
It’s the key and you’re a professional. You should treat this like a business and that’s what we’ve always been doing. you know, learn a little bit about what you’re trying to accomplish on our side too, because it makes everything so much easier and smoother.

Scott Bursey (14:08)
Couldn’t agree anymore. Kevin, you’ve given us some really good advice. Is there anything else that you’d to leave with our listeners today? Any golden nuggets or words of wisdom when it comes to lending?

Kevin Dureiko (14:21)
give you a little inside baseball. So if we get an email that has, just like we were talking about, a little bit of due diligence on the lender.

And it’s packaged nicely. has the address with the zip code. It has what you’re trying to accomplish, what you think you can buy it for, or what the re the payoff amount is. The less friction you give us upfront, the more apt we are to respond to you faster. It’s not to say we don’t want to work with everybody, but if you give us homework, I have 50 emails in my email box. If you want to go to the top of the list, treat us just like you want to be treated. Give us the information we need.

and we will be right there for you.

Scott Bursey (14:58)
That is some phenomenal advice.

And for those of our listeners that would like to follow your journey or collaborate with you, what’s the best way for them to reach you?

Kevin Dureiko (15:07)
Definitely on the website for sure, LoansforLandlords.com. It’ll go right to me. And it has all our social links, but you can find me @KevinDureiko on almost every social media. I have a weird last name, so it easy to get that one.

Scott Bursey (15:20)
Kevin, thank you so much for joining us today.

Kevin Dureiko (15:23)
Thanks for having me, Scott. I appreciate you.

Scott Bursey (15:24)
It’s been a pleasure. And to our listeners, we appreciate each and every one of you. If you got value from today’s episode, please subscribe. We’ve got a lineup of exceptional guests, just like Kevin, who are making huge moves in the market and assisting people with lending. Until next time, keep your standards high and your vision clear. We’ll see you on the next episode, everyone.