How Real Estate Investors Use DSCR Loans to Build Cash-Flowing Rentals Nationwide

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Show Summary

In this conversation, Michael Pankow shares his extensive experience in the real estate and mortgage industry, discussing his unique advantages, market opportunities, and the importance of discipline and fundamentals in achieving success. He emphasizes the significance of educating clients about DSCR loans and building strong relationships within the industry. Michael also outlines his future goals and aspirations, highlighting his passion for helping veterans and seniors in real estate.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Michael Pankow’s Phone Number: (916) 296-7765

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Michael Pankow (00:00)
  Well, you know, let’s just speak real quickly to investors and investors that have done this for a while, they’re going to know this already. But for the first time, investors think, how do I get into a property? Let’s talk real quickly, real high level about the DSCR loan, which is a debt service coverage ratio loan, which is really popular. There’s two components to it is the reason why they’re so popular is because you as the borrower, they don’t look at your job. They don’t look at your income. They want to know what your FICO score. OK.

  And they want to know, do you have the cash in the bank necessary to make the down payment? Those are the two things they’re going to look at on your side.

  Quentin Edmonds (02:04)
  Hello everyone. Welcome to the Real Estate Pros podcast. I’m your host, Q Edmonds. And you know what I like to say, I’m excited. I’m excited today about my guests. Very knowledgeable in what he do. I know you’re gonna definitely get great value out of their perspective. And you know what I like to say, I love looking at other people’s perspective, looking at things through their lens because they are the expert at what they do. And so today is no different. have someone.

  to understand the nuances of what he do and he does it very well. And I’m excited for you guys to meet Mr. Michael Pankow. Mr. Michael, how you doing today?

  Michael Pankow (02:41)
  I’m good Quentin. How are doing?

  Quentin Edmonds (02:42)
  I’m doing good,

  sir. Doing good. So listen, I’ll be honest with you. I want to dive right in. I feel love for you to tell the people what’s your main focus these days. If you want to give us a little bit of an origin story of how you got into what you do, we love origin stories, and then tell them what part of the world you’re in, man. So Mr. Michael, sir, you got the floor.

  Michael Pankow (03:02)
  Okay, so you know what, I’ll keep it quick, because know we’re short on time. So I’m here in Sacramento, California. I’m on the West Coast, and I’m a veteran of 12 years. And I got into the mortgage industry kind of by accident. I was a manager at CBS radio, and I went on a sales call to a group called Nehemiah. That was a down payment assistance program. And one of the guys that I had met with that day bought a house right down the street. Well, we became friends, and then he said, hey, we want to start our own gift fund program. We want you to be a partner.

  I didn’t know anything. All I knew about mortgages was that I had one at that time. And I said, okay, so I took a leap of faith. I left my $110,000 per year job back in 2001 and dumped my 401k into it. And between year one and year three, we drew it to like 12 guys. And then FHA came in and changed rules. Well, then I jumped into the mortgage side, became a top producing originator. And then I went to get back into leadership. And then from 2006, seven-ish, I got back into leadership.

  and was a mid-level executive for the next 15, 20 years basically. And since that time, starting in 2023, I’m now originating again, which I’m actually really enjoying, because I don’t have to manage much people. I do have a branch. I’m actually technically a branch manager at Texana Bank. So that’s a federally chartered bank. I’m licensed in all 50 states. And I really like that, because I can work with my clients all over the US. And it’s fantastic to have that flexibility.

  Quentin Edmonds (05:13)
  was great, Mr. Michael. Thank you, man. Appreciate that. So 12 years veteran, leadership in an asset, branch manager. So I like, I say, I have this saying when I say destiny has no wasted moments. Meaning like as we, different stops in our life, different stops in our journey, we acquire things that we just hold onto and kind of make us who we are today. So I want to ask you, what are some personal skills

  and even some business skills that you’ve developed just throughout your journey that you don’t continue to help you as maybe you reinvent yourself as you find new success. What are some core values that you hold close and core strategies and systems that you hold close that you know helps you out?

  Michael Pankow (05:56)
  Yeah, you know, and I share this with my folks too. I’ve led everybody from, you know, 175 employees, 110 plus I’ve been a, was a commission officer in the military, but really what it boils down to is I think discipline and routines. It’s what time you get up in the morning. It’s what time you go to bed. It’s what you do before you go to bed.

  It’s what you do while you’re on your job. It’s not getting distracted, right? I mean, it’s really about the discipline. I always say that the best made plan not executed, it’s never gonna happen, right? People talk about writing a business plan, but if they don’t actually execute on it, it doesn’t matter, right? It doesn’t matter. So it’s the daily grind. It’s the fundamentals. When you think about basketball or sports, the athletes or the coaches that stress the fundamentals, whether it’s shooting, dribbling, hitting the baseball,

  throwing the football, whatever it might be, it’s returning phone calls to clients. It’s going beyond beyond with the text message that you send them. It’s not just a, hey good morning. It’s a, hey good morning. And then you go into the detail of what it is you’re looking to accomplish. It’s the follow-up, right? It’s really, for me, the fundamentals. And again, I shared that I’ve just got back into originating, but I bring to that originating, I bring that executive level leadership and the follow-up and the level of communication with it. And what I’ve recognized is that people are like, okay, this is different. This is

  refreshing, right? And I’m 58 years of age, but if you’re my client, Clinton, I’m going to call you sir. And I’m you sir, as it is, right? And so people, people appreciate that. And so it’s, I think it’s, it’s about the discipline. It’s the follow-up. It’s the basics. Yes, you can have AI. Yes, you can have your CRM. Yes, you can have your, yes, you can have your, your go high level. And I use all of those things, at the same time though,

  Quentin Edmonds (07:21)
  Come on.

  Michael Pankow (07:40)
  it’s that personal connection. I think that’s my strength. That’s my personal connection.

  Quentin Edmonds (07:43)
  Gotcha. No, man, I love how you said you still call people, sir. Like I call everybody, sir. I call everybody, ma’am. call my by myself, call my son, sir. Sometimes I’m like, thank you, sir. Like you like it’s just some things that kind of just ingrained in you. Right. And it’s just a level of it’s a level of respect, but also a level of letting the person know, I value you. I see you like you are valuable to me. You’re not just a transaction. You are a person.

  who deserve value and deserve respect, no matter who you are, where you are. And so I’m with you. And I love how you talked about the, this is how I synthesize what you said, planning and execution. There’s a point when you plan, you got everything that looks good on paper, but then there’s a point where you gotta come out and you gotta execute what you plan. And so when you said that, I think that made a lot of sense to me, a lot of sense to me.

  Michael Pankow (08:35)
  Yeah, it’s about taking action. It is about taking action.

  Quentin Edmonds (08:38)
  There you go. Absolutely. Let me ask you this. So as you was found a success, you know, going through the different journeys of your life now, you know, to where you are now, has it been easy or have you rubbed up against some difficulties because there are times things go sideways. There’s a time when you got to pivot fast in business, pivot fast with deals, pivot fast, you know, with these interactions. So has things been easy or have you faced some adversity?

  Michael Pankow (09:39)
  faced huge diversity. I mean, I was I’m not afraid to share this with you, but I was a high six figure, couple of times seven figure guy was a mid level manager, right? I’m not even close to that now. So I’ve had to pivot with my career, big time from being a guy that never originated for 15 years to now I’m originating again, but I’m enjoying it, right? with that, though, comes the ups and downs of your income. With that comes the rebranding of who you are. And I’ve had to rebrand myself for the last two

  half years and it’s finally starting to work. And again, I shared with you when we talked earlier that my three niches that I really like working with is the investors, the DSCR loans, right? And the parts of the country where I’m really networked. I’m working with veterans as I am a veteran and working with veterans to build a real estate wealth as well. And then also I’m a subject matter expert on reverse mortgages. I’m on the board of directors for the national agent in place council. I’m a certified senior advisor. So I focus on reverse mortgages as well. So those are the three areas that I really like to work in because it really has a huge impact.

  the the senior, and the investor.

  Quentin Edmonds (10:40)
  Yeah, I love it. Love it. Man, thank you for the gift of your vulnerability. I appreciate that. That’s what I say, you know, when somebody shares something they didn’t have to share, didn’t have to share, but they get real transparent. So I say, thank you for your gift of your vulnerability, because there’s moments like that, that stick with other entrepreneurs, stick with other execs, stick with other investors, because we all hit the ebbs and flows of life, you know? And so I appreciate, you know, again, the gift of your vulnerability.

  And let me ask you this, what is the next real goal for you? And I’m gonna ask you two ways as a person and as a businessman, like what are the next real goals for you?

  Michael Pankow (11:18)
  Yeah. So 2025 was more of a stabilizing for me. I was stabilizing in 2025 because I started originating again in mid to late 2023. So it’s been hard the last two years. So 2026 now is for me really to get at it. Now I have the lay of the land. I’ve got to put a network.

  bank, Texana bank is fantastic. Again, having that 50 state license is powerful. really is. I mean, when I do a podcast like this, you can hear this all over the world, right? So I’ve done, I think I shared this with you, done seven, eight podcasts, I’ve done two radio shows. And some of those have generated opportunities where somebody is in Hawaii, they check out the YouTube video, and they give me a call to do a reverse mortgage in Hawaii. I’m doing lots of loans in New York right now for investors, right? Matter of fact, I’m in contract on a property in New York right now as an investor. And also doing

  something in Houston tied to a $40 million project for a good friend of mine who’s trying to sell it. So I’m trying to help broker that view. So I have the flexibility to do whatever I want to do and I love that. I love it. So again, 2026 is my really growth. It’s my growth year. It’s to really sink in with those three areas. VA loans, reverse mortgages, and investors.

  Quentin Edmonds (12:31)
  Man, I love it. I’m telling you, for me, it’s refreshing to hear you say, listen, I’m doing whatever the hell I want to do. Like that’s, that’s refreshing because when we can get to the position, when we get our time back, when we get our freedom, when we can make decisions that make us happy, you know, yes, they may make us money, but more importantly, like you saw about stabilization, I’m stable, I’m happy, I’m at peace, and I make the decisions that I want to make. I mean, that’s, that’s winning. That’s really, really winning right there. And so,

  I love it, man. I love it. So I heard you making connections in Hawaii. You’re making connections in New York. You nationwide. So I want to ask you about relationships. Because obviously, you’re making different relationships in different parts of the world. So how do you value relationships? Is relationship making important for you in business? Has it served you well? What is your perspective on relationship building?

  Michael Pankow (13:25)
  It’s served me very well. It’s served me huge. And this relationship and this partnership that I’m building in New York with this property manager who’s also a real estate agent, right? What I’ve found out, know, in California, things are expensive. So here it’s more of an appreciation play. We have much better appreciation. But you go to like an area like Fort Drum, New York, right? Where I’ve got lots of contacts and doing lots of transactions. And matter of fact, I have three going right now there. Is that it’s you can buy property for one hundred fifty thousand dollars. It’s a duplex and it cash flows.

  with a 25 % down payment of cash flows for $600 a month. Now that’s not every property, but they’re going to cash flow, right? To get $600 a month here in California, you better put a lot of money down, right? A lot. maybe in Ohio, I’ve got connections. As matter of fact, I have a transaction going on Ohio right now. Texas is a great market to do the same thing, right? Although property taxes were higher there. So relationships have allowed me to network and do loans all over the country that I couldn’t do before.

  Quentin Edmonds (14:23)
  Yeah, I love it. Yeah, I think relationships are everything in this space. And I love how you said it best, like relationships afforded you the opportunity to be all over the country, to plant your seed in people’s mind and plant your, you know, relating with other people in different, you know, spaces all around pretty much the globe. I know that may sound big, but that’s really what it is all around the nation, all around. And so I absolutely love that. And so Mike, I want to ask you, is there…

  Any subject that we haven’t talked about just yet that maybe you want to talk about it maybe has been on your mind, like is there any words of education, inspiration, motivation that maybe you want to give to the audience that you feel like that will be worthwhile?

  Michael Pankow (15:45)
  Well, you know, let’s just speak real quickly to investors and investors that have done this for a while, they’re going to know this already. But for the first time, investors think, how do I get into a property? Let’s talk real quickly, real high level about the DSCR loan, which is a debt service coverage ratio loan, which is really popular. There’s two components to it is the reason why they’re so popular is because you as the borrower, they don’t look at your job. They don’t look at your income. They want to know what your FICO score. OK.

  And they want to know, do you have the cash in the bank necessary to make the down payment? Those are the two things they’re going to look at on your side.

  And really the great point is 680 and above is really where you want to be because you’ll get a better rate. I was just quoting before we got on the call here, one of my good friends, and actually it’s somebody I’m working on his deal in Houston, that’s a $40 million apartment complex he’s trying to sell and I’m trying to broker the deal for him And his Biclospore took a little bit of a hit because he went for it. Anyway, long story short, I want to give the particular

  Quentin Edmonds (16:40)
  You’re right.

  Michael Pankow (16:41)
  It

  took a little bit of a hit like nine points, 11 points and that changed from him going from a 70 % on a cash out DSCR from 75 to 70%. So it changed by 5%. So we qualify the borrower based on FICO score and do they have necessary funds to make the down payment? The property though.

  right? We look at, what’s the value of the property? Okay. What kind of property is it? A single-climber residence? Is it a duplex? And then there’s going to be an appraisal that’s done on the property. So if we’re buying the property for 150,000, does it cop out at 150? And then you do what’s called a rental survey. And that rental survey says, okay, if there’s a duplex and they’re renting it out a thousand dollars a side, what are the other comparable duplexes in the marketplace? Same size, room count, right? What do they rent for? Okay. Does it come out that

  So when you get a DSC on loan, it’s not so much about Quinton making $200,000 a year to qualify. It’s does Quinton have the $50,000 for the down payment or the $25,000? And does Quinton have the FICO score to get a better interest rate? That’s it. That’s all we want to see on Quinton’s side. The other side of that is what does the property look like? Because again, it’s a debt service coverage ratio. The property pays the loan.

  Right? So how that works is, is if, if you’ve got a $2,000 a month coming into rent, your mortgage payment is a thousand dollars a month. That’s better than a one to one ratio rent to mortgage payment. Right? So that’s going to get you a slightly better rate. And then you can get a slightly better rate by extending the prepayment penalty. You can get a slightly better rate by having a higher FICO score. You can have a slightly better rate by, having a, what they call a one to one to 0.25 or one to 1.5 ratio, meaning I’m collecting a hell of a lot more rent.

  than the actual mortgage payment. So they’re going to give you a little bit of improvement there. So for first time investors, don’t be afraid that you’ve got to show your income tax returns, W-2s. With a DSCR loan, you do not. That’s I love them as a loan officer, right? Because I don’t have to get into all that mess. Okay, what’s your FICO score, Quentin? Hold that and then you got $50,000 in your Bank of America account. Beautiful. Let’s roll.

  Quentin Edmonds (18:48)
  That’s it.

  Michael Pankow (18:50)
  That’s it. Right now, your

  credit profile, know, have bankruptcy, this and that. But if you got a 720 FICO score or a 680 FICO score, it’s going to drive your interest rate. And you have the necessary funds. I’m really high leveling this, but that’s kind of at end of the day, what a DSC RLN is really all about. But that’s a lot of to get into these properties they never thought they could get into.

  Quentin Edmonds (19:12)
  Now that’s, that’s, I mean, I think that’s great information that you’re giving. think someone that’s listening that right there has really kind of probably shift their perspective. Maybe, when they was looking at, moving forward, I think you’ve given somebody something really, really to think about. And so Mr. Michael, listen, I thank you, sir. Listen, if someone wanted to reach out to you, connect with you, learn more about what you’re doing, how can they get in contact with you, sir?

  Michael Pankow (19:37)
  So I think the best way is to call me, right? Or to text me is actually the best and say, hey, I heard you on a Quentin show and on the real estate pros, right? So it’s 916-296-7765. That’s 916-296-7765.

  Quentin Edmonds (19:58)
  There it is. Well, this is Mr. Michael Sir. Thank you so much, man. One, thank you for your time because time is our most precious commodity, right? So thank you for allowing us your time. Definitely. Thank you for your story. Again, thank you for sharing with us some authentic, honest and a knowledgeable, intelligent place about what you do in your life, your journey. So thank you so much for that. And definitely again, thank you for your perspective. Thank you for the way you think and bring it at mindset to this podcast. Because like I said,

  I think you’ve given somebody enough where they might had a mind shift around something that they were trying to deal with or thinking about pursuing. And so thank you so much. really appreciate you being here.

  Michael Pankow (20:35)
  You’re welcome. And you know what? Thank you so much, Quen, for having me on. really appreciate it.

  Quentin Edmonds (20:39)
  Yeah,

  absolutely. But listen, y’all can’t tell me y’all didn’t get the value from that. can’t tell me you couldn’t get the nuggets from Mr. Michael. So definitely connect with him. Listen, he can get you connected all around the world. So connect with him. But definitely make sure you are subscribed here. You do not want to miss out on the amazing conversations that we’ll continue to have, just like we had with Mr. Michael. So sir, thank you again. And to everyone else, we’ll see you on the next time.