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Show Summary
In this conversation, Craig Melton shares his extensive experience in the real estate industry, discussing his journey from lending to short-term rentals. He emphasizes the importance of understanding the financial aspects of real estate, building strong relationships, and adapting to market changes. Craig also provides insights into the short-term rental market, innovative lending options, and practical advice for new investors looking to enter the rental space.
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Investor Fuel Show Transcript:
Craig Melton (00:00)
I had a mentor, a soccer dad that was a really ⁓ wealthy land developer and a builder. And I wanted to learn real estate. I wanted to learn a lot of stuff. And his advice to me, and this was back when I was 18 years old, helping his son get better in soccer and training him. said, well, if you want to learn real estate, he goes, start where the money is.He goes, because everybody needs money. And so if you can learn the money behind real estate, then you can learn real estate because no real estate gets done without the money.
Dylan Silver (02:03)
Hey folks, welcome back to the show. Today’s guest, Craig Melton, has been active in real estate for over 40 years. He’s been active across multiple segments, including lending, mortgage banking, new construction, short-term rentals, and fund management. He’s now building real estate portfolios to offer long-term wealth and income. Craig, welcome to the show.Craig Melton (02:27)
It’s awesome to be here. Thanks for having me.Dylan Silver (02:29)
Thanks for coming on today. Thanks for taking the time. And gosh, where do we start? You’ve got the history across so many different segments of the real estate space. Was lending the way that you made your entry point into real estate or were you an investor first? How’d you get into real estate?Craig Melton (02:45)
Yeah, I had a mentor. I grew up coaching soccer andI had a mentor, a soccer dad that was a really ⁓ wealthy land developer and a builder. And I wanted to learn real estate. I wanted to learn a lot of stuff. And his advice to me, and this was back when I was 18 years old, helping his son get better in soccer and training him. said, well, if you want to learn real estate, he goes, start where the money is.
He goes, because everybody needs money. And so if you can learn the money behind real estate, then you can learn real estate because no real estate gets done without the money.
So learn the money first. And so that was really good wisdom. And so that’s what I did. I actually got in the mortgage banking business and, and, and went to where the money was and where people had to look for money to buy real estate. And so I learned the real estate mortgage banking business at a real early age.
Dylan Silver (03:35)
Yeah.Craig Melton (03:39)
And then from there dealing with realtors, dealing with builders, dealing with financial planners, dealing with everybody buying and selling real estate. just, you have to learn it if you’re financing it. And so that’s how I got into it.Dylan Silver (03:52)
The lending portion, I think, even still is understated today. And I often think that, I wonder if I got into this game on the wrong side of the business, because I got in as a wholesaler and then later became a realtor earlier this, well, now last year, 2025. And of course, as you know, once you go talk to a realtor, if you’re a prospective buyer, what’s the first thing they’re going to do? Go talk to my lender, right? Got to get you pre-approved. And so that’s where the deals, you know,start and end right there is no talking until you’ve got the lending portion squared away. I actually want to dive in a little bit into that specifically because of course lending has changed massively over time and being a lender mortgage ⁓ loan officer right has changed over time as well you’ve seen the peaks you’ve seen the valleys you’ve seen fast money you’ve seen the industry dry up for periods of time.
Craig Melton (04:34)
Yes.Dylan Silver (04:47)
Do you have any advice for folks who may be just starting out in the lending space?Craig Melton (05:39)
Yeah, you know, there’s three main buckets to lending and I don’t care where you go work, you’re going to work in one of these three buckets. But when you do, you need to learn all three, whether you’re in them or not. What I mean by that, there’s the typical mortgage broker where they work for a mortgage broker firm. And that just means they’re, you know, a middleman with the broker. And so if they’re a broker, they really need to be really good atat picking three or four or five good wholesale lenders that they work with and know the system so they can really do the chain of command the way they need to throughout the loan process. The second bucket is a mortgage lender. These are the lenders that actually have an internal team of processors and underwriters, and they might fund the loan, they might not fund the loan, they might be a delegated or non-delegated lender, and that just depends on how much assets they have or the ownership of that
that firm has and that decides whether they’re a delegated or not delegated lender when they sell loans to Chase, Truist and all the big banks. And then there’s the actual mortgage banker, the mortgage person that actually works for the bank. And then the advantage to that is they have a whole team at their disposal. They might have portfolio lending for the bank.
They might be able to do construction loans. might be able to do lot loans and they might be able to do that whole system tighter. Here’s why I say all this for a new mortgage person getting in the business. I don’t care where you’re in. If you’re in the banking firm or you’re just a mortgage lender or you’re a mortgage broker, I don’t care what bucket you’re in. You should know the process of all three because that’s going to make you an expert in the field.
Because that’s how you’re going to know your competition. And that’s way when you talk to realtors or financial planners or CPAs, you’re going to really express your knowledge of the business. And the more you knowledge of the business, the more they’re going to trust their clients to use you. And mortgage lending is all about lending peace of mind. It’s all about giving somebody a comfort level because we’re basically doctors. We give them a full, full diagnosis. And what I mean by that is
You know, we’re going to know your credit. We’re going to know your assets. We’re going to know your debt. going to, you know, we got to get this bank statement. We got to track this large deposit. get it. It’s just that regulation has changed and it’s crazy. And it’s really hard for us to do alone. And for us to do alone, we really need to collect a lot of documents. so clients need to be able to know you like you and trust you.
Dylan Silver (08:02)
Yeah.You know, it’s interesting to talk about how lending has changed, know, post Dodd-Frank, for instance, right? Because it seems like right now people need like a blood sample and the name of their next of kin and, you know, good faith, right? In order to get approved for a loan, especially younger people. And when we talk about how things have changed over time, it hasn’t always been the case, right? So you’re in Florida. And when I talk with folks,
throughout the country, but Florida specifically, I hear these kind of war stories from like pre global housing crisis, where it was so fast and easy money, right? And so you had mortgage loan officers doing tremendously and then overnight just things evaporated, right? ⁓ That can be difficult, right? To go through and then also to
Know that hey at any point in time something similar could happen. It might not happen now or in five years But 10 15 years down the line there could be a downturn you’ve you’ve survived a couple of these How have you been able to to weather the storm and what pivots did you make to get through that?
Craig Melton (09:19)
Yes.Yeah, that’s a great, because I, you know, in 98 we had the dot com bust and then 2001 we had the terrorist attacks. And then 2008 we had the biggest housing crisis. And I’ve lived through those, those ebb and flows and then, you know, mortgage rates up and down. And so I think it’s just the relationship building I have with my network partners.
⁓ you know, money can come and go rates can go high, high up and down. ⁓ but at the end of the day, your relationships remain strong and we’re in a peer to peer, ⁓ person to person business. And if you don’t have those relationships in your network and your referral partners, you don’t have anything. And so that kept me afloat. And, know, I don’t mind to say it. I also had to grind and had bad years and, and that’s what, you know, got me into real estate and diversified and other things as well.
And so ⁓ at the end of the day, you just got to get stuff done. There’s not one mortgage person, one real estate person, one entrepreneur, one business owner that doesn’t go through ups and downs. And so at the end of the day, you got to get through your relationships and be just willing to work really hard during the down times and do things that you’re not willing or comfortable doing sometimes to get through it. And so at the end of the day, you got to just get through it.
Dylan Silver (11:18)
You justgot to get through it. And I think, you know, the people that have had staying power have been able to weather the storm, have been able to make the pivots. You know, it doesn’t matter what segment you’re in, in the real estate space, you can’t use the same strategy, you know, 10 years ago today, in most cases, you got it, you have to pivot either due to market conditions, competition, know, changes in the law, right? You’re in the short-term rental space. When I was living in Dallas, right, they,
eliminated short-term rentals. So everyone who had Airbnb had to turn it into 31 day furnished housing, corporate housing, something like that. And so you have to be able to pivot. I do want to ask you about the short-term rental space because this is something I think that a lot of people are interested in. A lot of people would love to have an Airbnb. so first, what’s the scope of your short-term rentals? How many doors do you have in the STR space?
Craig Melton (12:11)
So right now I have a company called Flip-Flop Living, which is basically short-term rentals along beach towns. And so that’s why we call it Flip-Flop Living. And we have four doors that we rent short-term.at New Smyrna Beach, Florida. It’s a really cute little beach town caught between Cocoa Beach and Daytona Beach. It’s a really good local beach for a lot of the central Florida people that go to the beach. I’m from the Outer Banks in North Carolina, Kitty Hawk, North Carolina. And the funny thing is, is ⁓ over 95 % of the lodging in the Outer Banks is all
has always been for its entire life, week to week Reynolds. People check in on a Saturday and then they check out on a Saturday and then people check in on a Saturday to the next Saturday. And so I grew up in that space, know, being a young kid well before Airbnb and VRBO. So when I moved to Florida and then…
It was never a thing here. I’ve said, people rent houses for a week at the beach. They go, they stay in hotels. And that was weird to me. So then when Airbnb and VRBO came, I was like, wow, this could be a perfect storm. And so what I did is I found a couple of places and the way we did is we took over one property and remodeled it and created two doors, beach duplex. And then the last one we just built from scratch, we bought land.
And then we built it from scratch. was about a year and a half project. So it’s a brand new beach home, about 150 yards from the sand. And so ⁓ we have a website, www.flifffloplivingnsb.com. so that’s where our four houses are, our four doors there. And so that’s how I got into it because lending.
Dylan Silver (13:41)
Wow.Craig Melton (13:57)
has got into that too, because you talked about the involve of lending before the housing crisis, it was easy to get a loan. Then it became hard to get a loan. And then why we won’t have a housing crisis of 08 anymore.is because most people, if you don’t show a lot of documentation now, you have to put a lot of money down, 20, 30, 40 % down now. And if you do that, nobody’s going to walk away from that loan. We’re back prior in 2006. You could get a home ⁓ at 100 % financing. So if that house value went down, you could walk away from it because you had no equity in it. It’s easy to walk away from something you have nothing in.
But now they have what’s called non QM lending, non qualified mortgages and a non QM DSCR loan, which stands for debt service cover ratio. A lot of there’s a lot of non QM lenders that do that loan for the short term rental space where the appraiser goes out and takes the average rents for the week or the weekend or the whole year and lenders now wholesalers, private equity funds.
They will buy loans strictly based on the rental probability of that property. And an investor could come to somebody like me and get a loan and not show a tax return, not show a bank statement. And we can give them a loan with 20, 30, 40 % down depending on their credit score based on solely the rents, whether they’re monthly rents, yearly rents, or short-term rents.
Dylan Silver (15:20)
Yeah.Craig Melton (16:08)
And so that has now evolved in a lending space, which has evolved in our real estate company, because now we’re able to build these properties and sell them to other investors. And then we’re able to lend to them. And so that’s how I’ve gotten involved in owning, building, building to sell or building to keep. Why the entire time keeping my mortgage banking job.because now if I build these and sell them to another investor, I now can do that loan to another investor as well that buys. And so that’s got me into a whole new space of lending in this short-term rental space because I know it as an owner, I know it as a builder, and I know it as a lender. So ⁓ it’s really given me a niche in my marketplace because I can be an expert in it because I know what everybody’s dealing with.
Dylan Silver (16:58)
Yeah, and when we talk about DSCR, it also offers an opportunity for maybe newer investors to get involved as well, because you’re looking at the cash flow of the property versus that investor. For newer investors who may be trying to find a way in, ⁓ of course it’s gonna be different with every lender, but what advice, what feedback would you have for folks who may be looking at ⁓ DSCR to take down their firstrental property.
Craig Melton (17:28)
That’s a great question. So the best knowledge and wisdom I can give somebody is this. It’s like a seesaw. The more experience you have, the less you have to put down. So if you want to just start though, you better have good credit and you better have more money down. So if you don’t have any history of owning a short-term rental property orany type of rental. DSCR loan could be any rental. It could be just average rents as well. An average 12 month rental. Doesn’t have to be short term. But the lender, the requirement on underwriting is what is their experience? How many other properties do they have? And so if it is your first property, they do treat you based on your expertise. And so you…
If you don’t have the expertise, you better have good credit. And if you have good credit, you better then have a little bit more money down. So like, if you came to me this was your first one, you might have to put 30 to 40 % down and have a 700 credit score. Where somebody else, if this is their third or fourth, they might be able to only put 20 or 25 % down ⁓ because they’re more experienced. And then that…
that person buying that loan, it’s not as risky for them because they know that person has experience. I would just set the safe at your first one, get your numbers right, really get your numbers right and give yourself a little leeway because you don’t want your first one to be bad one for you as an investor. And so what I tell people is if the appraisal comes back that it’s going to rent for $3,000 a month.
Dylan Silver (18:53)
Mm.Craig Melton (19:00)
Try to get your numbers where they work at $2,800 a month ⁓ and not three. Try not to stretch it. Try not to give yourself a bunch of stress. ⁓ And make sure you have enough money to put down. And if you don’t, make sure you can borrow it from mom or dad or a good friend or get a partner. The good news is with these loans too, two people can do it together. So like you could go in and be a co-borrower and two people can go in and get a DSCR loan if they have good credit.Dylan Silver (19:20)
Yeah.Now, when we talk about short term, in many cases, beach towns, right? You’re looking at something that’s maybe seasonal or very seasonal in some cases. ⁓ Florida, maybe sunny year round, right? So you don’t deal with that as much, but some places I know a short term rental investor in like Yosemite National Park. I know STR investors in the Carolinas, right? ⁓
that can sometimes be tricky. And there may be some of that in Florida as well, because you may deal with like a down season. But also generally I’ve seen, you know, kind of the opposite be true. Shocking to me, but that if you have long stretches of time where there is not a booking, someone could come and book your short-term rental for a couple months, right? So what’s your perspective on like placement of Airbnb’s? Should it be closer to a major Metro? Should it be in a
Craig Melton (20:01)
Yes.Dylan Silver (20:21)
you beach destination somewhere or should it be close to, know, where you the owner lives?Craig Melton (20:26)
Yeah, that’s a great question. Why I did my first couple ones here in New Smyrna Beach, Florida is because we have the best of both worlds. ⁓ We really don’t have a down season. The ironic thing is even when it’s hot here in the middle of summer, people still come to Florida. And that’s when everybody’s off and the kids are off. And so even all the locals go to the beach a lot. Then when it comes to spring break in March, we have so many spring break seasons since Florida is so hot.our high school and college spring breaks are early on in February. But yet up north, Virginia, North Carolina, Georgia, all throughout the East Coast where people take spring breaks to Florida, theirs go deep into Easter. They’re all through March, April, some of them, and then colleges get out again at the end of May. So in Florida, we have a really cool niche. We have like a three month spring break season. It’s kind of crazy. And then,
Dylan Silver (20:58)
That’s right.Craig Melton (21:21)
we have what’s called snowbird rentals. So in the winter time, we get people from Chicago and New York and people from Canada, and they’ll come down and rent our place for a month or two months. And so then we don’t even get a weekly or a weekend rental. We block it out for two to three months. And so that’s why I picked Florida to get a little bit of all of it. The locals that want to go to the beach in the summer.the spring breakers up and down the East Coast for a two to three month window. The snowbirds that want to come from up North and January, February, and March when it’s freezing up there and they want to come down here where it’s 75 degrees and sunny on Christmas day. so, that’s why I picked that. That’s just me. But you’re right. There’s niches like in the Outer Banks of North Carolina. All your rentals are going to be between Memorial Day and Labor Day. Mainly it’s going to be
you know, the summertime. That’s when everybody rents places up. And then you could, then what you could do for the people that now live down there full time, you can break up your, short-term rental. And then you can rent that for six months to all the locals down there that want to share it. And you could probably do what’s called house sharing. And then like five or six people that all work in the restaurant industry down there can all get a bedroom. And then they can all pay like six, 700 a month to rent the bedroom.
Dylan Silver (22:12)
Yeah.Craig Melton (22:38)
And then for six months, you can rent your place there in the off season. So you can get really creative. If you’re going to be a real estate investor, you’ve got to be creative to the marketplace. And you got to not have, like we said before, you got to be able to pivot and you got to be able to try new things. Some things work, some things don’t. But at end of the day, the house is the asset and how much revenue can you bring in by having that asset? And it’s all about bringing in revenue to, to support your asset.Dylan Silver (23:06)
Yeah, you when we talk about, you know, you mentioned, you know, divvying up the rooms, maybe like a pad split situation, right? So, you know, that those summer months, you know, Memorial Day to Labor Day, you can, I’ve heard it in some cases, those summer months can be so profitable, right? But then you also have to weather the winter months, unless you’re in New Smyrna Beach, right? Or some area like this. We are coming up on time here though, Craig, where can folks go to reach out to you and maybe learn more aboutCraig Melton (23:26)
Yeah.Dylan Silver (23:35)
your business or how can our audience get in contact?Craig Melton (23:37)
Yeah, could just, anybody can Google Craig Melton. My bank, my mortgage company that we work for is One Presidential Mortgage. And if somebody were just to Google Craig Melton, One Presidential Mortgage, I’d pop up everywhere. ⁓I’m on there. The other thing is if you wanted to learn more about short-term rentals or rent any of our properties or get some consulting where I help people do the short-term rental market or help with lending, Flip-Flop Living, if you just Google Flip-Flop Living, ⁓ Craig Melton or Flip-Flop Living New Smyrna Beach, our website pops up everywhere and our properties pop up. It’s really hard not to find me online at just Craig Melton, Flip-Flop Living or Craig Melton One Presidential Mortgage.
and my websites will all pop up.
Dylan Silver (24:26)
Craig, thank you so much for your time today. Thanks for coming on.Craig Melton (24:28)
All right, I appreciate you having me. Have a great day.
