Faster Way to Get Real Estate Loans | Josh Lahr, Corevest Finance

Kristen Knapp (01:31)
Welcome back to the Real Estate Pros podcast. I’m Kristen and I’m here with Josh Lahr of Corevest Finance and we’re gonna break down how the right financing can make or break your next deal. I’m excited to get into it. Thank you for being here, Josh.

Josh Lahr (01:43)
you’re very welcome. I’m excited to be here. for having me.

Kristen Knapp (01:45)
So let’s just go back to the beginning. What got you into the lending game?

Josh Lahr (01:48)
⁓ man, what got me into the lending game? So I started, my first job ever was in industrial manufacturing. Quickly learned I didn’t like that. So I ended up getting into construction or as a project manager for a commercial real estate or commercial construction company. So we were a very large subcontractor. We weren’t like a general contractor, but we were a very large subcontractor and did everything but steel and concrete.

Once steel and concrete was up on a building, we came in and did the rest, finished it out. So I enjoyed the construction side, the management side of it, know, materials. loved it. Unfortunately, it was during COVID, things weren’t happening. It’s tough as a project manager as well for the amount of work you do the long days. And it just wasn’t worth it for me in the long end, in the long run.

So what I ended up doing, ended up really wanting to focus on the residential real estate side. So my father-in-law and I actually started a residential construction company and he is a modern day genius in himself. So he was a big engineer and I was, you know, the work and labor and project manager. We love doing that. And then from there, I kind of got into the wholesaling thing. And so that’s really where I got into the numbers and I’ve always been really good at numbers, but I loved construction.

Kristen Knapp (02:42)
nice.

Josh Lahr (03:01)
And then I’ve always been great with numbers, even at the job I didn’t like. So I kind of married those two things together and got into private lending in the real estate world. So it’s been a joy for me to work on construction side by side, help people who may not have been in, but also know the number side as well. So that’s why I really enjoy what I do. yes, exactly. It was a lot of fun. It was tough the first few months and even year, but

Kristen Knapp (03:20)
That’s amazing, little family business. That’s fun.

Josh Lahr (03:28)
It was really enjoyable and I learned a ton.

Kristen Knapp (03:31)
Amazing. And then can you explain to people who maybe are getting into lending for the first time or maybe have made some mistakes, what separates private lending from, you know, the typical institution like a bank?

Josh Lahr (03:41)
Yeah, so private lending, the difference between us and a traditional bank is going to be the underwriting process. The underwriting process with us, we’re like asking for bank statements and really we’re looking at the numbers of the property. We obviously want to make sure you have enough money to do the deal and to be successful throughout the length of that loan in your investment. As for a bank, they’re going to ask you for W-2s, they’re going to ask if you’re an entrepreneur,

they’re going to ask for profit and losses of your business, you probably two years tax returns, et cetera. So it’s a much intensive underwrite from a bank. And even then they be giving you less leverage than we’re able to. So the from a private lender, it’s more faster, quicker. We are more asset based. But with that being said, we are institutionally backed. So we’re backed by the money that maybe a bank might be backed by as well. But we have the easier process up front.

And again, we have people experienced like myself and others within our company who know what it’s like to be a real estate investor.

Kristen Knapp (04:41)
Yeah, I can imagine that access to capital makes people feel very secure working with your company.

Josh Lahr (04:46)
Absolutely. Yeah.

And that’s a big thing that I push because people at the end of the day, a private lending and lenders generally offer the same stuff. I’ll probably be able to beat most of them on rate. But again, they’re going to offer the same leverage. at the end of the day, there may be some, like I mentioned earlier, that just kind of drop out. They may not have the money to fund your deal and no investor will ever have to worry about not receiving a draw or not receiving funds.

And that’s the plus for us. And we can do stuff quickly. We’re always here to work with them. So I think that makes us a little bit easier than a bank. Because a bank, if you don’t check their boxes, they’re like, no. Go away. Go find something else kind of thing.

Kristen Knapp (06:12)
Yeah.

And then you mentioned rates and leverage. Can you just talk about the importance of vetting that and what people should be looking for?

Josh Lahr (06:22)
Absolutely. Yeah. So everybody always wants the top. But the biggest number I would say that matters is it can be called ARV. So after repair value or it can also be referred to as LTA RV, which is loan to after repair value. So what that number means is every private lender is going to have their loan amounts capped by 70 or 75 percent of the completed value of the property.

If our top leverage works under that, then you’re great. But it’s really that ARV number, the completed value of your project. You really want to have that honed in. Because some people can have unrealistic expectations of what their property is going to be worth once completed. And whether it’s single family homes, you you don’t want to rehab a home or increase square footage in an area where

Every home is, you know, maybe in the three, 400,000 range and you’re looking to maybe do an ARV of like six or 700,000. You’re not going to, it’s going to be tough to sell a home in an area that has much higher value because the type of person who would want to either buy it or rent is going to be a very different profile depending on the value of that. So I think that’s very important is really completed value, having those numbers solid. And we help with that too. We always do do appraisals on

all of our loans. So you’re going to have an appraised value done by a licensed appraiser so you’ll have confidence in that number that you’ll be able to meet that when you’re done.

Kristen Knapp (07:48)
Yeah, so upfront you kind of know what you’re getting into essentially.

Josh Lahr (07:52)
Exactly, yes. And that’s where our loan terms are always going to be based off of the appraised values and even market rents from an appraisal as well. So you can kind of hone those things and be confident in your numbers. And then obviously you want to make sure you’re staying within your budget, not going over budget because that can also kill your profit or just cash flow in a deal as well.

Kristen Knapp (08:13)
Yeah. And then what are some maybe misconceptions? Like what is a misconception of, you know, first time borrower might have about, you know, borrowing money?

Josh Lahr (08:23)
Sure. Yeah,

absolutely. A misconception would be a first time borrower wanting the max leverage, right? It’s tough for a private lender to lend on a profile of someone who hasn’t done any work, which we’re not trying to penalize them for it, but we want to help them grow. But we’re also not going to be able to provide the max. So what we’ll do is we’ll provide kind of lower leverage. So you’d need to have, you know, maybe a little more cash to invest.

as well, but at least that way, we’re not over leveraging new borrowers at max leverage and because they’re going to have more of, there’s more of a chance that they may not know what they’re doing, not saying that they don’t, but there’s more of a chance if they don’t have the experience certain, there’s all kinds of nuances with real estate investing in flips, whether it’s, getting permits, you know, making sure you’re making your monthly interest payments, if you miss it, then

That’s not great either, but, and we’re always willing to work with them. So that’s the biggest thing is I understand that everybody wants us to give them the most money so they can use the less, but for a beginner, we’re going to make sure you’re not as over leveraged. So you’re not going to put yourself in a bad position in the long run. But at the end of the day, there are other lenders out there that don’t, that don’t care and they’ll give you full leverage for your first time too. So it’s all up to them, but for those kinds of lenders, they’re going to,

be paying much more rate and points. So it’s a cost of capital at the end of the day.

Kristen Knapp (09:46)
Right, so there is a push and pull, essentially.

Josh Lahr (10:24)
Correct, and for me it’s finding out what’s most important to them, right? Because someone who wants the most leverage, a beginner wants the most leverage, wants all that. I’ll be honest, I’ll hey, I’m probably not gonna be your guy. I can maybe put you in contact with someone that I do know, because I have a huge network of people, brokers, et cetera. But I’ll also explain the advantage of maybe not having higher leverage, but they’ll be able to rely on us. They’re not gonna be over leveraged in the long run, you know, if they need to refinance out. That loan amount’s lower.

than normal. So if they refinance out later, they’ll be able to pull more cash out. And it’s easier for the numbers, the refinance numbers of the property to work for that exit.

Kristen Knapp (11:01)
Yeah, and I think that’s an important thing to highlight that, you know, probably a lot of your clients are very unique and have different interests and ways to borrow money. How do you kind of navigate that with new clients, like figuring out exactly what’s best for them?

Josh Lahr (11:11)
Right.

Yeah, so we are going to look at where we want to make sure you have the money. At the end of the day, you got to have the money to do a deal. You got to have cash reserves because you don’t want to be out of money in the middle of a deal. And then you’re stuck on a project that you can’t finish. And if you can’t finish, you’re not going to get your return or sell. So we’re always going to make sure that there are other options out there.

like EMD lenders or they call it kind of transactional lenders. There’s all kinds of terms for it, but it’s really like down payment assistance, which we actually don’t allow because in some of those or most of those situations that whoever they’re getting that down payment assistance from or closing cost assistance from that investor or whoever is lending them that money wants a second lien position on the property, which we unfortunately don’t allow. But people can also

Partner with somebody. Partnering with an experienced investor that may have the money or investment experience, you can include them on an LLC and you can do kind of a JV or JV agreement with them. So you can do the project together. You’re running it with somebody that has the experience, maybe have the money while you’re also gaining experience and knowledge. So partnering I’d say is usually the best because you’re not just getting money, you’re also getting the knowledge and experience of that person. And again.

Kristen Knapp (12:30)
Yeah.

Josh Lahr (12:30)
It all depends on what’s most important to that person. And that’s in my opinion, the best way, even in I have people coming who want to do new construction as well, because I get it. There’s a lot of value and profitability in new construction, but we’re not going to lend anyone who hasn’t done that. But if they have a builder that they know or friends with that is willing to partner with them, create an LLC together, we can use that builders experience in the past to determine the loan terms, which

Typically, if they’re partnering with somebody, we can get them the max leverage because that person has their experience. So that’s a really good way for money and or experience stuff to for a first time investor to get started is doing some kind of partner.

Kristen Knapp (13:10)
I think that’s a great idea to give people, because I think that’s a good way to start anyway. think just partnering with someone who really knows what they’re doing and learning from them, it’s probably more beneficial. You probably make a lot less mistakes starting out.

Josh Lahr (13:15)
Really.

Exactly, yes. And that’s the entire benefit. Yes, the money is always good, but knowledge is sometimes more important than money. And that will help them guide their investment. The nuances, the ins and outs of flipping, of managing subcontractors, of having the network of people to get a job over the line is kind of… You can’t put a number on it. Right.

Kristen Knapp (13:44)
Yeah, yeah, and you

guys work with a lot of different types of builds and for people who are trying to flip or hold or whatever, you guys do a lot. I know you love working with ground up with builders. Can you kind of go into that?

Josh Lahr (13:55)
Exactly.

Absolutely. Yeah. So we do all speak a little bit on everything that we do. So we are a direct lender ⁓ backed by institutions, but operate quickly and better than a bank. Everything we can do, we can do fix and flip. So that’s purchase and rehab of a property. We can do bridge refinances. If you have a complete project, need more time to sell market and sell that property. We can do that as well. And then we can do ground up construction on single family homes. We can do spec homes.

Kristen Knapp (14:03)
Yeah.

Josh Lahr (14:25)
and small to mid-sized developments. So if people are looking to do multiple homes or multiple townhomes, or even duplexes, triplexes, kind of a small little development, we can help fund those as well.

And then on the flip side and long-term side, a lot of people who do fix and flips, or even builders now, as they’re getting very popular, build to rent. So builders will build properties and then they’ll want to rent out, you know, 12 or 25 of their completed project. So we can do long-term permanent financing.

and rental loans, and those are called DSCR. And that means debt to service coverage ratio. So all that means is we’re just looking at the income of the property versus what it is to pay for that property at a 30 year amortized rate. And we also offer long term permanent financing for multifamily products. So we can get into the 30, 40, $50 million range on larger multifamily products for stabilized that are already rented out, you know, at least 90 % occupied.

And then we can also have lines of credit. And lines of credit is almost a whole other conversation in itself, but the most common thing that that’s used for is builders needing to refinance completed inventory or large institutional aggregators. And what that means is people who are looking to acquire a large amount of properties across certain states or in one state, whatever they would like.

and depending on their business plan, but we can basically approve them for a line of credit and they can pull off this line to acquire and rehab properties. And that process is a little bit quicker, especially if you’re looking to do, I don’t know, 40 to 50 in six months. So we have the gamut of it all. that’s the plus about Corevest is we have it from the short term stuff to also your long term strategy. So we kind of cover all the residential investment strategies that are out there.

Kristen Knapp (16:39)
Mm-hmm.

Is that typical for a company to cover so many things or is that really special to your company?

Josh Lahr (16:57)
It is not very typical at all, especially on the large balance stabilize of multifamily properties or large portfolio acquisitions or refinances. That is pretty unheard of. Most lenders will just offer the short term stuff. So you’re fixing flip, bridge, ground up construction. A lot are doing DSCR as well, but that’s the only long term product they may offer.

Kristen Knapp (16:59)
Yeah.

Josh Lahr (17:19)
So we have the whole gamut and yeah, it is hard to find outside of a bank. Even banks don’t offer both. So yeah, it is pretty unheard of to have all of those products under one roof as well. But to speak on on ground up construction, I love it because I love working with builders in my background in construction. So I just I enjoy it a lot. I know where they’re coming from. And it’s just fun to me to see nothing.

become something beautiful and see their project come to life. And then it’s obviously our country needs housing in general. So I love working with builders, regional builders. We’re obviously not going to be the lender for a D.R. Horton or Lennar Homes of the world doing hundreds of homes and developments, but we’ve actually started even doing takeout loans for them because they need.

they’re getting into the build to rent space. Even the big guys are starting to get into the build to rent. They’ll build these communities and then hold them as rentals as a company. And we can do those takeout financing for them. But ⁓ that is why I love new construction. Because of my background, that’s what I was passionate about. And I just happen to be good at numbers and I like helping people. So this was just a perfect marriage of an occupation for me, I think.

Kristen Knapp (18:29)
Yeah, I mean, it’s great to have all of that knowledge from being on the other side and you know exactly what questions to ask and you understand everything intimately. And from what I understand just about Corevest in general, a lot of the lenders are also investors and kind of understand that other side, right?

Josh Lahr (18:44)
Exactly. 100%. I mean, I would say more than half of people like me at our company invest themselves. My director has millions of dollars of property. ⁓ He’s a big time investor himself. So we know we have a pulse. We understand where people are coming from. We can operate with that common sense of things because some lenders are very red tape or some lenders even outsource a lot of underwriting.

to overseas, which I understand from a business perspective and growing, but you lose a lot of that common sense underwriting things, knowing the situation for an investor or builder. And then that can even vary by state. Because for example, in Texas, you don’t need a GC license to be a builder. You don’t have to be a licensed general contractor in the state of Texas, but other states you do. And we understand that. And some lenders may be like, I need…

architectural permit sign, need your GC license, and it’s like, well, you don’t need any of that in Texas. And so we’re very understanding. And again, that common sense side, we get it from not just a fix and flipper, but also a builder as well.

Kristen Knapp (19:49)
That’s amazing. I mean, that’s such good, rounded experience to have when choosing somebody.

Josh Lahr (19:54)
Absolutely. And that’s, that’s what our goal is. And that’s what I push. Cause at the end of the day, there is commodity, right? Lending is a commodity. What we can do is a commodity, but what, what makes us different is, the product and portfolio that we can offer from the front end to your long-term strategy. And also you’re working with people who know what we’re talking about. We’re not, we’re not just these people who were like spitting out numbers of

marketing material and things like that. We’re actually going through them describing what is, how does our draw process really work? What does the interest mean? Going through those details for them and making them comfortable and understanding the lending process because it is so much out there. There’s all kinds of jargon and acronyms, LTV, LTC, all these things and people can get overwhelmed. But at the end of day, it’s just explaining what we can do.

and I’m always fighting for them as well. I may work for a company, but I’m also fighting for my clients, for my investors, and everything that they’re doing. And I like to tell people, the more ammo you can give me to go fight my team and fight our company to get what you need and to make this run smoothly, that’s what I’m here for. And I’ll tell you, I’ll be straight up. I’ll tell you whether we can’t do something or what we can do.

Kristen Knapp (20:57)
Right.

Josh Lahr (21:09)
And that’s also half the battle too. There’s a lot of lenders can drag people along for weeks and then they tell them, no, I can’t do this. No, I’ll tell you yes or no. And in five minutes, if I can’t tell you in five minutes, I’ll tell you in an hour, cause I can make a call directly to my, to my director or capital markets team. And that’s the other thing with us is we kind of have direct access to the decision makers to make things happen as well.

Kristen Knapp (21:28)
That’s amazing. mean, seems like Corevest is such a great company to work with for just such a variety of people. So where can people find you?

Josh Lahr (21:36)
Absolutely. Yeah. I have well, you can find our company at Corevest, Corevest finance dot com. But if you would like to not just have a generalized information, I’m your guy. I can be contacted. I can share my personal cell phone, my email. I have an Instagram as the Texas private lender. I was lucky to get that name, but you can find me there. I know I couldn’t believe that I got it actually when I created it, but ⁓ that’s my Instagram.

Kristen Knapp (21:56)
Yeah, that’s a great name. ⁓

Josh Lahr (22:03)
So I’m available on social media. can, you know, reach out to me on LinkedIn. However, we can share my details as well.

Kristen Knapp (22:10)
Amazing, yes. I really encourage everyone to go check him out. He has a great social media presence, answers a lot of questions that you might have. So you can get a lot of information just from his Instagram and then yeah, definitely reach out.

Josh Lahr (22:21)
Absolutely.

Kristen Knapp (22:22)
Awesome. Well, thank you so much for doing this. This has been wonderful. I think people learned a lot.

Josh Lahr (22:23)
Okay.

Of course, and I love doing this stuff. I love talking to people. This is my first podcast. So I really appreciate you having me and breaking my first time podcast time. But I enjoy it. And this is what I like to do. I like to talk about and help people. So I am always available for any. I tell my clients I’m available 24 seven. I’ll answer the phone at midnight if you have a question or whatever it is. If I don’t answer, I’ll shoot you a text. But I’m always available for you because I know investors work around the clock.

Kristen Knapp (22:35)
Yes.

Yeah, awesome.

Okay, great. Well, thank you so much again, and everyone else, hope you enjoyed this episode. And please come back for more. We’ll see you next time. All right. Bye.

Josh Lahr (22:56)
You’re very welcome.