How a DSCR Loan Saved a Real Estate Deal After the Borrower Lost His Job

Jonathan Ferrante (00:00)
Gave me a call, instead of hiding it, which was the biggest thing that gave us enough time to get it done, we just moved the loan to one of our other investors, showed the rental income from the property, qualified for it, same down payment. I did a s— took a small hit on my commission to give them the exact same rate. Nothing changed. The guy had a sign— one extra set of documents took about three minutes to tap and sign digitally. Whole new loan, approval on one day, kept the same closing date, closed eight days later.

Joseph Crooms (01:56)
Hey everyone, Welcome to Investor Fuel Real Estate Pros Podcast. Today I have a very special guest. I am your host, Joseph Crooms. Today I’m joined by someone I’ve been looking forward to chatting with. His name is Jonathan. I’m gonna let him say his last name because I don’t want to mess up anything, so— and he can give a better understanding of his name and pronunciation than I can. He’s been making serious moves. He is an investor, but he has a very creative and in-depth perspective of how he’s watching businesses. We’ve had a chance to talk prior. So, Jonathan, say hello to everybody.

Jonathan Ferrante (02:39)
Hey everybody. It’s Jonathan Ferrante. It is an Italian last name. I’ve been looking forward to hopping on the podcast as well. You— you guys discuss some great topics. I’m— I’m excited to be involved and hopefully add some val— value to— to the show and to all the listeners out there and make sure everyone knows I’m a resource.

Joseph Crooms (02:57)
Think our listeners are really going to take away from how you’re approaching the investor side, the— you’re how you’re operating, looking at the market, but also how much education you’re bringing, and I’ll let you explain how you utilize that in your industry. So let’s dive in. So first off, for people who may not be familiar with your world, give us the short version. What’s your main focus these days? What— what— what market are you operating in?

Jonathan Ferrante (03:25)
My main focus days is more consumer-focused, is it’s my residential and commercial lending business. So home loans, mortgages, development financing for new homes, and investor lending to help b— people basically create value with real estate, more of an old-school way versus the more the newer trendy way. And really coaching people up so they have the right information, the right tools and weapons to go out there and attack real estate. And still maintain their lifestyle with their current job because, you know, you don’t need to quit your nine-to-five to go invest in real estate. Personally, I believe it’s the opposite. Real estate’s there to make money with while you maintain your nine-to-five and set and forget. So you know, it’s twenty twenty-six, social media has taken over, one of the largest— Instagram is one of the largest real estate platforms in the world right now. It’s not usually considered that, but that’s how it is. And just like anything else, you know, you go type something into Google, you’re probably on page two or three before you get to the good information. So that’s my main focus is cutting through some of the— the bad information, the scary stuff, myths, and getting to the good stuff that not only builds wealth, but protects that wealth after you generate it. And I— I think that’s what people struggle with nowadays is not just investing in real estate. People have really conquered the fear of getting involved, but it’s maintaining it— managing it and maintain— and being able to keep that lifestyle without taking losses.

Joseph Crooms (04:52)
Love it. What caught my attention about you was the way you were able to handle— you use the term QMs and how that’s really come to light in the present day. Can you elaborate a little bit more on that for our— for our audience?

Jonathan Ferrante (05:05)
Yeah, I believe you say what, QM?

Joseph Crooms (05:07)
I— I think— I think you mentioned something about the QMs.

Jonathan Ferrante (05:09)
Yeah, the non-QM loan product. So QM is qualified mortgage. That stands for Fannie and Freddie. They want to make sure you fit in their bucket so they can insure the loan. Them insuring the loan allows other lenders to offer less than twenty percent down options, the lower rates, all of that. That secondary market is what creates more affordability when it meets those requirements, which is why everyone wants you to fit in that Fannie Freddie bucket. That’s your standard home loan. But what’s emerged over the last five to ten years and really grown significantly in the last five is the non-QM, non-qualified mortgage, meaning outside of Fannie and Freddie’s guidelines. That’s where you hear those new topics of bank statement loans, you know, asset depletion loans. DSCR is a big one, which stands for debt service coverage ratio. And DSCR is as simple as, “Hey, the rental income of the property is more than the mortgage payment. So you get the loan because it can pay for itself.” So it’s really streamlined the approval process and underwriting process for a lot of these investors. You don’t need your tax returns. Doesn’t matter if you’re taking a loss on your self-employed business, it’s all hyper-focused on the one property, the one deal. So that can free up some stress, paperwork collection, a lot of the pain points that we see some of these new investors or self-employed people getting into the game. And what’s exciting is even though rates on the conventional side have continued to increase, we’ve watched the gap between these non-QM and QM loans bridge a lot over the last two years because normally it was one to one and a half percent higher to do one of these non-QM loans because they weren’t doing their due diligence with tax returns and all that, so the risk was higher. Well, now they’ve realized that this might be a better way of underwriting if the property can pay for itself and we know you’re making some kind of money in your real life over there. Now we got two ways of paying these bills and we’re seeing less defaults on these non-QM loans. So the— the rates are coming down along with the risk. So when we see a conventional investment property loan only 0.25, a quarter percent better than a non-QM and eighty percent less of the paperwork and work, why wouldn’t you take that loan? Close the loan in fifteen days, not have to provide your tax returns or jump through the— move money around to make the underwriter happy. So it’s really opening up the door for some of our more established and stronger creditworthy people, self-employed borrowers, to get into the game. because self-employed investors have always been beaten up in their industry because of the lack of uncertainty. But I think you can— your business can go underwater if you’re owning it or you could get fired just any random Tuesday. So you have just as much chance of losing that income stream. So I think it’s really exciting that we have— we’re moving away from some red tape, government red tape, allowing people to get loans when they just make sense. and I say it all the time, especially with Fannie and Freddie and HUD, there’s no logic in lending anymore. And the non-QM space really brings that back. And that’s what’s exciting.

Joseph Crooms (09:03)
Thank you for sharing that, Jonathan. So how do you educate both the— say, the traditional conservative one who’s coming in, “No, this is the way I want to do it”? How d— you know, what does that conversation look like? And are you getting— how do you bring the new investors that are interested in— in coming into investment with this knowledge? “I just made— I didn’t know that.” How do you do that?

Jonathan Ferrante (09:26)
So as far as dealing with some people that are set in their ways and want to do it their way, I’m not here to force anyone to do it my way. I’m always a big advocate that when people get successful in a unique way, it works for them. Doesn’t mean it’s gonna work for everyone else. That’s why I’m not out there selling a course. Because my personality blended with the way I built wealth, yours might not. And I’m not gonna try to make you pay to learn a way to do it that doesn’t fit you. So for the people that are set in their ways, if I believe they’re making a wrong decision, I’ll let them know. Normally, and this is why I love lending and finance and numbers, is the numbers never lie. Laying out the scenarios in front of them, showing the number difference, is usually as easy as it gets. “Hey, you can give up this money and this is your return, or you can listen to me and maybe make a couple more grand here.” And when they see the numbers, it’s usually an easier conversation. I explain to them how we got there, all that good stuff. And then for the new people, it’s addressing the— the lies we tell ourselves. “I can’t get approved because of this. My credit’s not good enough. I don’t have a large enough down payment. I don’t show enough money on paper.” You know, even invest— non-QM loans, you know, 15% down on an investment property. you don’t need to show any income. Some people— you don’t even need to have a job with these DSCR loans because it’s about the property paying for itself, not you paying for it with your paycheck. So addressing some of those myths and pain points that they already had in their head or seeing online or on the news is usually— turns their— changes their mind very quickly, gets them involved very quickly. Because there’s no uncertainty about making money in real estate, it’s just getting started. And we’ve seen it for a hundred years. Real estate’s just always going up. Does it dip? Yes. Does it get challenging? Yes. But the beautiful thing about real estate is you can just hold through the downtime. If you can make the payment, you can wait till the value comes back. And that’s what’s really cool is being able to hold till you’re ready. so my job is to educate people the best I can so they feel confident and comfortable about taking those first steps forward and getting in the game as soon as possible, because you can’t win unless you play.

Joseph Crooms (12:09)
And the numbers don’t lie. So I agree with you on that. So— so Jonathan, that’s not easy though, especially in this climate. And you say the news is not— or is reporting what they think is important, more conventional, but they’re leaving out this nuance that’s— that’s— that’s— that seems like jumping live, especially for investors. What’s been keep— what’s been the key to keeping your machine running smoothly?

Jonathan Ferrante (12:37)
Can I? Can I method? Constant and never-ending improvement. I’m always buying real estate myself, going through my own process with my own staff, learning what the pain points are for my clients to make it easier from start to finish. So once they decide they’re gonna make the decision to move forward, then it’s not a question if they’re getting approved, it’s just moving through the— the motions. That consistency has kept us afloat— good, bad, and ugly, rates high, rates low, because we provide a service. We’re not just providing the— the loan products. we meet with self-employed borrowers, we meet with their CPA. Most of my investors I have in that first conversation, especially if they’re self-employed, even if they’re not, that’s okay. We’re buying half-a-million-dollar homes here. That’s the size of your average small business. The average small business has a board of directors or professionals; you should have the same. When you’re investing in real estate, you have an advi— you have a— a lender, you have a financial advisor, a CPA, a realtor, an insurance guy. Every one of those people makes money when you buy property. So let us all come together, get us all on the same page, and do all the work for you. It’s our job to make sure the finances work that we can get the loan. The realtor’s job to make sure that the market value is gonna be there and the sell— and the rentals there. Insurance gonna protect you. So, you know, we’re gonna go spend five hundred thousand on investment to a million. You know, you’re the CEO. The buyer is the CEO. It’s our job to bring together the whole table, the board of directors, to make sure everything else is taking care of you. And that going above and beyond on the service level has really made the difference. along with we can go get the lower rates, the lower fees that match anybody else. So real estate’s weird. People struggle to understand that in real estate, the better service, the better professional usually comes with the lower price. As when you’re a hustler in real estate, you’re a hustler and lender, just like the buyer, we’re focused on getting more business. So the more business I get as a lender, the lower my rates are. The more loans I do, the better lender I am. So as I grow, better service comes with the team. I can hire more staff. The more deals I get, the more money I make, the lower the rates are, the more people I hire. So in, you know, you go out for most services, you know, you— you— you get a coupon, you get a discount, you’re gonna get crap service. In real estate, a good realtor isn’t gonna hesitate to discount a little and just do the deal. Because the time it takes to negotiate isn’t worth their time. Just do it, move on, close that deal onto the next. Same level of service, whether it’s ten million dollars or five hundred thousand. And you— you mentioned it is a machine. We create a machine that we are involved in, that we run, that we are. And the more we pump into it, the more deals flow out, the bigger the machine gets. We can get better parts for it, all that kind of stuff. So always when you’re looking at real estate, the person that needs to make every penny off of you to keep their business going, that’s— that’s a red flag. I don’t know how many times I’ve had to do a loan for free because it comes down to either I get paid or you get your house. And that’s crazy because if I say no, like, “I can’t waive my commission,” then you don’t get a house and I still didn’t get paid. And now everyone thinks I’m a jerk. So it’s— it’s a weird place to be sometime as a lender, you know. but when you start realizing what you’re doing at someone’s home, whether it’s a primary residence or an investment property, because they’re gonna rent it to someone, you take that very seriously. And a commission or a couple thousand dollars should never stop someone from homeownership. And that’s how we’ve always taken it. And we make way more money than the people that are like, “Absolutely not, I don’t discount, I know my worth.” and time has proven that.

Joseph Crooms (16:53)
Thanks for sharing that, Jonathan. That was— that was real. Now, let me ask you this. Now, every operator I know has a moment when things just get real— maybe a deal that went sideways or a time that you had to pivot fast. Would you mind sharing one of those moments for us?

Jonathan Ferrante (17:13)
Well yeah, I mean, the— the— the tough part of my industry is that’s a monthly experience. no matter how many times we coach our clients, everyone thinks they know better about their situation, which they usually do, and what they want to give us. So a lot of times buyers will hide things, misrepresent things, and it all comes out in the wash. We look at everything. so we’re always making pivots based on some of that. Real estate things happen, you know, appraisals come in low, you know, people lose jobs. So we’re constantly having to be creative to make something happen. I recently had a borrower that was buying an investment property, doing a normal conventional loan, lost his job. He has three other jobs lined up, like he’s very skilled, very in demand. He will have a new job within 60 days. He will not have that new job before we close on the loan and on the house. So lending problem. Well, the non-QM, just like we were talking about, bailed this guy out. So we were a week before— ten days before closing, job, woke up to no job. Gave me a call, instead of hiding it, which was the biggest thing that gave us enough time to get it done, we just moved the loan to one of our other investors, showed the rental income from the property, qualified for it, same down payment. I did a s— took a small hit on my commission to give them the exact same rate. Nothing changed. The guy had a sign— one extra set of documents took about three minutes to tap and sign digitally. Whole new loan, approval on one day, kept the same closing date, closed eight days later. So that those two days of making the changes, I know the guy was going through hell. Not only did he lose his job, he’s worried about losing his deposit because we already passed our financial commitment. Twenty-thousand-dollar deposit on the line, no job, wife and kids. Stressed out. Like, the guy’s head is spinning. Kids are out from— in on summer vacation and he’s trying to figure all this out. It took us eight hours that first day of stress and stuff to get it all cleaned up. But after that, it was signed, sealed, and delivered. He went right back to the interviews for the new job. Ended up securing the new job the day before closing. So he— when he signed it, when we bought the house, he felt good about everything. The rental income was gonna c— start cash flowing from day one, but went from absolute disaster to huge win. And ninety-nine percent of the time, a lender gets that call and they just withdraw the loan and it’s over. The creativity, the willingness to hold it together as long as the other client— my client wants to, is what makes us different. It’s been eight years since I started a loan that we did not close. A hundred percent close ratio for eight years is my biggest flex in the industry. The average right now is, you know, sixty-two percent, which means lenders out there are not closing thirty-eight percent of their loans. That’s just crazy. To be told that you’re gonna get a loan and a week or two before you’re supposed to close on your home they say, “Nope, it doesn’t work out,” and then you never hear it from again.

Joseph Crooms (19:56)
I know whoever finds you, Jonathan, it will be grateful because you’re— you’re a tremendous guy, man. Okay, so this is— this— that’s the kind of stuff people don’t talk about, right? You know, and honestly, what separates the folks who are just dabbling from the ones who stay in the long term? Let me ask you this. What are you focusing on solving or scaling next? What’s the next real, you know, goal that— what’s the next real goal you’re working on?

Jonathan Ferrante (20:22)
Yeah, I— my partners at my lending for Blue Water Mortgage are outstanding individuals. They’ve been doing it twenty years before I’ve done it. so probably always gonna stay with them. And the— always the first question I get, “Why don’t you start your own?” because that’s not what I— I— my passion is. I love being a lender, loan officer. I don’t wan— wanna have to run the company and take time away from my clients. so the next growth stage for me this year is building a couple of different teams. I— I’ve had multiple loan officers I’ve trained underneath me that have turned into investors, realtors, and are still lenders as well. but probably going to turn that back on and start training some new loan officers that like to be investor-focused. So no— not only are we teaching them how to write loans, service clients, all that, but to use that expertise in their own life to— to— to build a portfolio for themselves. So everything I do as far as mentoring is the same thing I received—it’s free. If I find someone that wants to work or wants to grow and learn and is willing to put the time in, it’s worth my time. I don’t charge for mentorship, I don’t charge for coaching, I don’t charge to buy my course. For me, that’s just how it’s always been old-school business is if someone’s willing to put some legwork in and help out— help me grow my business, I’m gonna teach them everything I know so they can grow their own one day too. So if— if you are listening and you’re interested in real estate investing or lending, you know, feel free to reach out anytime. I will talk anyone through, whether you’re in a state I’m not licensed in, you’re working with another lender and you just want to hold them accountable, it does not matter. If you’re— wanna talk real estate, that’s what I enjoy. It’s my job, it’s my hobby, it’s my passion. So anytime, I’m always just looking to get in front of more people to— to help them with the right information. Like we mentioned with, you know, you go on Google, it’s a scary place to not know if it’s true or not. So if I can get in front of more people, that’s the value I can bring.

Joseph Crooms (22:22)
So I know a lot of people listening are early in their journey and leveling up. I think they’ll benefit from hearing this. When it comes to building relationships and growing your network, what’s the biggest difference to you? What advice can you give?

Jonathan Ferrante (22:36)
Go everywhere, go to everything, talk to everyone, be kind. It’s real estate sales, lending sales, creating those relationships can be the— the easiest thing in the world. And I know we’re in a world— I’m a— I don’t come off like it, so you have still have to trust me. In my personal life, I am an extreme introvert. My dream day off is a dark room staring at a wall with no one around me. But you’re not gonna make any money that way. So the energy, the positivity, that’s all because that’s what makes people feel good. People that feel good do business. That’s how I feel, at least. And starting a conversation with, you know, “I hope you’re having a great week,” or, “I hope you’re doing fantastic,” and— and being— bringing that energy, bringing that passion changes how everyone looks at everything. We’re in a negative world where most people want to be left alone and not interact with people, but that makes the difference. Is that’s what builds the relationship. So go to a networking event and don’t hide your insecurities or your weaknesses. Lead with them. You know, tell people— what— that’s the best way people are gonna make you feel confident and comfortable as you walk in and say, “Hey, this is my first event. I’ve never done anything with real estate. I’m— I’m scared, you know, so bad. I’m, you know, I don’t even know what to do. But I told myself I was gonna walk in, walk up to the first person I saw, and I introduced myself, and youre that person.” The way that person responds is gonna be— it’s gonna lighten you up because unless they’re a horrible person, they’re gonna be so embracing, they’re gonna introduce you to other people. That’s just how the real estate community is. So go in, make sure you’re you’re gonna give 110%, because if you’re not, everyone’s gonna know it, no one’s gonna want talk to you. So you just gotta be ready to give it your all, be positive, and be willing to learn. I always say the people that are real— really ready, like my dad always said, is you got one mouth and two ears. So you should listen twice as much as you talk, especially at the beginning. Then once you filled your head with all the information, can plug the ears up and let it all spew out, knowing it’s all good stuff, not sales stuff, not wrong stuff, just the good stuff. so yeah, I mean absolutely communication is key. Create as many relationships as you can and dive in head first.

Joseph Crooms (24:41)
Jonathan, thank you for that. You know, I’ve asked that question a— a thousand times on the podcast. But you— you gave your weakness, you made it into a strength when you come so transparent. So I appreciate that. I hope our listeners really grasp onto that. That was fantastic. So let me— so— so, you know, you can’t freak— fake relationships, especially in this industry. Sorry, before we wrap up, if someone wanted to reach out to connect with you and maybe collaborate, as you were just speaking about, or learn more about what you’re doing, what’s the best way to reach out to you, Jon?

Jonathan Ferrante (25:18)
I would say— and— and most people don’t do this nowadays— it’s— it— text. I mean, I’m just like anyone else. I live and die by my phone. It’s in my hand all day. Text is usually just the first thing that stands out a little bit more professional than like a social media, so I— I get back to them immediately. (813) 267-4369 — my Instagram I’m very active on, jonathan.ferrante.mortgage. all of my lending and real estate tips and videos I do on there. So either one of those is most direct ways. both of those will also— if you search through my number or my Instagram, it’s gonna tie you into my website, my applications, my email. So Instagram or text is going to take you to everything you need to get a hold of me or at least learn from the stuff I’ve already put out there.

Joseph Crooms (26:03)
Hey, Jonathan, let’s hit rewind. Tell me one more time.

Jonathan Ferrante (26:05)
(813) 267-4369 or Instagram jonathan.ferrante.mortgage.

Joseph Crooms (26:13)
Perfect. Well listen, I appreciate your time, your story, your perspective, and your philosophy, Jonathan. We need more people in this space to doing the right thing. thanks again for being here. And for you tuning in, I know you got some value from this. Make sure you subscribe. You got more— we got more conversations coming with operators just like Jonathan. Say the last name, Jonathan. Just like— who are—

Jonathan Ferrante (26:37)
Ferrante.

Joseph Crooms (26:41)
—are out there doing and building real businesses and doing real business. We’ll see you on the next episode of Investor Fuel Real Estate Pros Podcast. See you soon. Say bye, Jon.

Jonathan Ferrante (26:53)
See you guys.