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Show Summary
In this conversation, Nate discusses the importance of understanding the structure and financing of investment loans, particularly in transforming dilapidated properties into deliverable ones. He emphasizes the need for confidence when engaging with potential investors and leveraging personal networks to discuss real estate investment ideas.
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Investor Fuel Show Transcript:
Nate (00:00)
Yeah, so I was a bit lucky here because I started five years ago, but before that, I bought property and I actually wanted to remodel and do things myself. So I kind of learned that phase of things when you’re looking at properties, all of the ins and outs of a home. So I learned that myself.And I would say if you’re going to try to switch your business over to doing investment loans, really got to know the structure, the bills, and the different things for how to make a house go from dilapidated to deliverable. that way, when you’re talking to investors, they know what they trust you. They know what you’re talking about. You got to do your homework on it for sure.
Dylan Silver (02:19)
Hey folks, welcome back to the show. Today’s guest is a mortgage broker in Texas. He’s been involved in conventional and is now focusing on business purpose loans. Please welcome Nate Costa. Nate, welcome to the show.Nate (02:35)
Hey Dylan, how’s it going? Thanks for having me on.Dylan Silver (02:37)
Absolutely, it’s great to have you on here. We were talking a little bit before hopping on. I do think what you’re involved in is unique in a sense because oftentimes people have really focused exclusively on conventional and that’s all of their knowledge base and experience or they may be doing business purpose. But I very rarely, if ever, have seen someone that has overlap in both.Walk me through your background in the space and then also how you got into business purpose.
Nate (03:06)
Sure, so I’ve been doing mortgages now for about five years and originally got on with a retail lender and after that I decided to kind of make my own way and hop into the broker space. I enjoy it. It’s, you can, you got a wide range of products that you can work with different, all types of different clientele with. I originally started, kept going with the conforming type loans, FHA, VA, conventional.It seems like it’s you know, as it gets a little tougher with those loans, I did make a pivot to try to learn more about the DSCR, hard money and investment type product space. So that’s that’s kind of where I’m at now. Do do all the above and and kind of work my team that way so we can go ahead and cater to everybody.
Dylan Silver (03:49)
I want to ask you…specifically about making that pivot. think a lot of people may dabble with DSCR, right? I’ve seen a lot of conventional do DSCR, but then to work and to pivot the business in large part to working with investors is a tough switch to make in a lot of ways because it’s two totally different worlds, right? You may be dealing a lot more with people buying properties off market. You’re dealing a lot of times with distressed properties that wouldn’t qualify for a conventional. And so it’s
Different clients. It’s different underwriting. It’s different systems walk me through Maybe some of that learning curve and then also really how you went about making that pivot
Nate (05:19)
Yeah, so I was a bit lucky here because I started five years ago, but before that, I bought property and I actually wanted to remodel and do things myself. So I kind of learned that phase of things when you’re looking at properties, all of the ins and outs of a home. So I learned that myself.And I would say if you’re going to try to switch your business over to doing investment loans, really got to know the structure, the bills, and the different things for how to make a house go from dilapidated to deliverable. that way, when you’re talking to investors, they know what they trust you. They know what you’re talking about. You got to do your homework on it for sure.
I would say it took me a while to be able to feel confident, to reach out to my buddies because I was in the business world before mortgages and asked them about their portfolios and their real estate investment ideas and then be able to talk to them about it and show the knowledge that I have from looking at a property that’s listed off market or on market and saying, hey, if you do this, this and this, we can get it here.
I can get you this kind of financing for it so you can keep your money in the bank, things like that. So it is a long process and all I would recommend is really getting to know the ins and outs of a house because a lot of mortgage brokers, a lot of real estate agents don’t know that. And if you are a lender, a broker, you can actually add value to your real estate agents that way and their clientels.
Dylan Silver (06:36)
Right.I’m on board with all of that. mean, you mentioned understanding a house, right? Being able to identify what type of work is needed. Is this truly rental grade or is this going to have issues imminently? Right? Or if you’re looking at flipping it, which business purpose loans a lot of cases, that’s the result, the exit strategy. What is going to go into it? Right? So it’s difficult for most people in the conventional space to make that pivot because they haven’t swung a hammer. They haven’t
managed teams, they’re not a GC. So for them to make that pivot, it’s a whole other skill set. I actually want to back up a little bit and ask you about the investment side. You mentioned that before you got into, it sounds like business as a mortgage provider, you had had experience in remodels or in flips. Walk me through some of the deals that you did before getting into the space.
Nate (07:23)
RightYes, so mainly just personal investment. So, you know, was in the restaurant business and finance and marketing world in the auto industry, actually. So I was able to save a little bit. you know, when I got into real estate investing, what I would do is I would we would buy a house. live in it, you know, and and and remodel it ourselves because we wanted to learn me and my wife I’m talking about. And and we wanted to learn.
We want to get to the spot where I’m at now. We kind of had a goal for this, you know, and so, you know, we bought the house. We know I needed some work. We took all the pains and it’s a lot of sacrifice to do it the halfway, but you do get firsthand knowledge. So that’s kind of how we went about it. You know, making a bunch of mistakes, redoing things over and over again, finding out, you know, when you put a budget of 10,000, it’s probably going to cost 20,000. So we did it a hands-on approach.
Dylan Silver (08:28)
Right.Nate (08:38)
It’s not for everybody, but that’s how we did it. And I feel like, you know, if you’re really wanting to get into the DSCR world, you know, maybe not buy a home and live in it, but buy a home that you know you can afford there and you have time and the capital to fix up and get in there and do it yourself. up the floors, take off the siding, you know, look, you know, do it all yourself because that’s the only way you’re going to learn. That’s the only way you’re going to tell somebody else how to do it.Dylan Silver (09:05)
You know, I have experience actually in demo teams in DFW and that was invaluable for me because I knew in my mind, hey, I want to understand homes a little bit better. And I was thinking, you know, maybe I need to learn about plumbing. You maybe I need to learn about foundation, roofing. I need to, I don’t know where to start, right? You know, what types of heavy machinery that I’ll need for different types of jobs.Nate (09:29)
Right.Dylan Silver (09:30)
But what I ended up learning on these demo jobs was that once you peel back one layer of an older home, you see like five more problems that come up. And the home could look decent from the outside. Like someone could have just been living there, but you pull back that layer. And so that’s when it becomes an issue of, okay, well, now you know that there’s an issue. So now if you go to resell it, you have to disclose that, right? So then you really do have to be careful, especially right now when you’re looking at, you know, flips, you have to know what’s going on.Nate (09:37)
yes.All right.
Dylan Silver (10:00)
And then for the folks who are the finance and the lending on these deals, they’re underwriting it as well. So they have to be aware of all that can come up in any type of rehab.Nate (10:10)
Sir.No, exactly. And you don’t want to waste time and money of yours or your clients too. So that’s what I’m big on, you know, as far as learning about what you need to do because and to be real big asset to your referral partners. If you can get an idea of what their clients need to say for what they need to have as, you know, available capital.
Everything the needs for just you know for the for the events like you were talking about where you pull back one layer and there’s more to it. You don’t want to put somebody in a bad position. You know you want to be the somebody that they can trust and they know what you’re talking about and you’ll lose a lot of business really quick. You’ll get a bad name if you don’t if you if you’re just selling dreams but not actually putting down a foundation for your client and help them get to that dream.
Dylan Silver (11:29)
Yeah.I want to pivot a bit here, Nate, and ask you about a space that I see is very much expanding. have institutional money flowing into it, but then you also have individual, maybe mom and pop investors who are looking into the space. And I’m talking about ground up construction, new builds. And this is tricky, right? Because you have maybe folks who may be more familiar with fix and flip or light remodel, light value add, taking something from like maybe high rental grade to something that would
Considered HGTV level but then a ground-up construction is different and then acquiring that is different because you’re looking at maybe fire damaged or Infill lots or you may be looking at multiple plots of land. You may be looking at rezoning I’m curious to get your take on this in Texas I know that there’s so much new construction happening everywhere and especially too since you do have that conventional experience There’s a lot going on with new builds that are really appealing
Nate (12:20)
Sure.Dylan Silver (12:31)
for both investors even and then also the general public.Nate (12:34)
Yeah, new builds are great actually, especially down here. You know, we’re based out of central Texas, but you know, I work all over Texas and there’s plenty of places that, you know, if you want to try to buy some property and put it together, you can. It is a bit tougher though to find that clientele that can actually do it. I know you’re saying about moms and pops, but for financing on new construction, you know,fix or flips kind of deal that you want to do. You gotta have a background. And if you don’t, I did a deal the other day where a buddy was trying to, he wanted to sell his property, go build, actually he actually wanted to do part of it at a restaurant and then his house on the other part of the land. But he had no background, no experience in building homes, right? So he had the money, but he just didn’t have the, on how to do that.
Dylan Silver (13:03)
Yeah.Hmm.
Yeah.
Nate (13:26)
You know, he got he had a buddy who had it was a general contractor. So we got them together with Ray and LLC put that together and and but that that’s that’s tough to find, you know, so if you don’t if you’re not already building homes and you’re not already doing that kind of thing, it’s kind of tough to do the the new build construction without being a GC and having some experience under your belt. But there are ways about it and it is a great if you can if we can get to that space.Dylan Silver (13:36)
Yeah, sure is.yourself.
Nate (13:50)
you know, maybe you have a couple of remodels or we get you there, you know, get some experience under your belt where a lender and an investor will trust you, you know, because they have to trust you on these kind of deals. They got to know what you know what you’re doing and then we can get you there. So that’s that’s another way about it.Dylan Silver (14:48)
I want to ask you about folks who may be scaling in the mortgage space or in the business purpose loan space, right? And they may be either starting out or they may be getting some steam, but they’re looking at scaling and they’re thinking, you know, do I focus on building out a team underneath me? Do I focus on finding the next deal? Do I focus on marketing? Do I focus on leads? How do I divvy up my money? Do I have a hot 100 list? There’s so many different ways to go about it. And frankly, a lot of information.I’m curious how you scaled and then also what advice you would have for folks who may be on a similar path.
Nate (15:18)
Yeah. Sure.Yeah, there’s so many paths, so much information out there, so many videos. I know watched them all before I was coming outside. I know there’s a lot of ways to do it. Personally, like to know what I’m doing before I go to the next level and know how to teach it, know how to live it, I like to experience it. So that way, before I go to the next level as let’s say, okay, I want to do…
Conventional loans. I want to start sort of business doing that so I learn all about that grow it and then as I as I get to where the point where I need help I go ahead and Get that help start them from the bottom and I can help them train up because you know I teach them what I what I what I know and and it helps them helps me and then that’s kind of how I do it is ground ground up approach I
You gotta know what you’re doing before you move to the next level, but you do have to start delegating at some point or you’re just gonna be stuck in the weeds. You can’t move forward. You gotta have a good team around you, good processing team. You gotta be able to delegate when necessary for sure.
Dylan Silver (16:29)
We are coming up on time here, Nate. I have a question that I thought of when you were mentioning that. When you talk about delegation, you talk about training people up, I’m a realtor, so I’m thinking about it from the realty side. Folks are almost hesitant in a way, because they’re like, I’m going to train this person up, then they’re going to leave. And so I’m going put in all this effort, and they’re just going to go. There’s nothing holding them here.Nate (16:45)
Yep.Dylan Silver (16:50)
Do you see a lot of that in the mortgage space, in the business purpose loan space? Is there anything that people can do to combat that?Nate (16:58)
To me, honestly, there’s nothing to combat it, but what you can do is trust the process, right? Because me, I’m happy when, I’m not happy, but it’s good when I can train somebody and they go and they become their own mortgage broker. We’ll get another one. We’ll start it again. It’s not a bad thing. It’s good to be able to say, if you’re that good where you’re teaching people how to do everything on their own and they go ahead and flourish, well, you did a good thing.You can’t be worried about that. If you’re worried about that, you’re worried about, well, I got you this and this is mine. You owe this to me. Nobody owes you anything. So if you teach them something, do it out of the good of your heart, of course, but also it’s for your money too. You’re trying to get this person to help you make money. That’s for sure. But if it leads to better things for them, then congratulate them and then you try it again. It’s a never-ending process. It’s never going to stop. So if you think, I got to start again and you’re a kind of person that…
can’t handle that, you know, think about something else maybe.
Dylan Silver (17:53)
Yeah, building a team might not be the niche for that person.Nate (17:56)
Yeah, that’s ait happens man. It happens and it’s all good. Yeah
Dylan Silver (18:00)
Weare coming up on time here, Nate. Where can folks go if they’re looking at deals, maybe they’re in Texas, maybe they’re outside of it, or they would like to reach out to you, maybe they’re along a similar trajectory and would like your feedback based on what they’re going through.
Nate (18:14)
Sure, well on Facebook and Instagram, it’s CostaMortgageN, the letter N, and Realty. Or just CostaMR, that’s C-O-S-T-A-M-R.com, as in CostaMortgageNRealty.com. You can go there. I got all my information on there, phone number, email. You can reach out to me. And my team responds quickly. So if you need anything, never hesitate. We’ll be there.Dylan Silver (18:38)
Nate, thank you so much for coming on the show here today.Nate (18:41)
I appreciate it Dylan. Have a good
