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Show Summary
In this conversation, Demar Chapman, a mortgage professional and real estate investor, shares his journey into the real estate space, discussing various investor products, market dynamics, and the differences between mortgage brokers and lenders. He highlights current trends in new construction and multifamily investments, the importance of cash flow, and the growing interest in cross-state investing. Demar emphasizes the significance of communication and trust in underwriting deals and offers insights into the evolving landscape of real estate financing.
Resources and Links from this show:
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- Investor Fuel Real Estate Mastermind
- Investor Machine Real Estate Lead Generation
- Mike on Facebook
- Mike on Instagram
- Mike on LinkedIn
- Demar Chapman’s Website
- Demar Chapman on Facebook
- Demar Chapman’s Phone Number: (704) 690-1772
Listen to the Audio Version of this Episode
Investor Fuel Show Transcript:
Demar Chapman (00:00)
And I’ve actually turned some away because I just felt like they were a little bit, um, on the unethical side, I’ll say. So what I do is I’ll analyze it. I look at the deal.Because I don’t turn away the deal automatically. I always look at the deal and see if I have anybody. Because that’s the difference between being a mortgage broker and a mortgage lender. Because as a mortgage broker, I can shop with over 100 and something investors that we work with compared to just having one place where I get my money from.
Dylan Silver (02:08)
Hey folks, welcome back to the show. Today’s guest, Demar Chapman is a mortgage professional who helps real estate investors secure funding through DSCR loans, fix and flip financing, bridge loans and other investor focused products. Demar, welcome to the show.Demar Chapman (02:25)
Thank you for inviting me and I greatly appreciate the opportunity to be here with you today.Dylan Silver (02:30)
Thank you for coming on. I always like to start off at the top of the show by asking guests how they got into the real estate space.Demar Chapman (02:39)
got into the real estate space by mistake because I’m not only just a loan officer, I’m actually a real estate investor. And my first property was actually in my neighborhood. It was two doors down. HOA foreclosed on the property and the HOA president called me and said, if you can come up with 40 something thousand dollars in less than two weeks, the house is yours.Dylan Silver (03:06)
That’ll do it.Demar Chapman (03:07)
So yes, will, especially whenever you know that the retail value of the house is 150 or more.Dylan Silver (03:10)
And so.At that point in time, did you start thinking heavily about real estate and maybe this was a potential career path for you? Or was that really, hey, let me just see how this one investment goes?
Demar Chapman (03:26)
It was something that I’ve always looked into. But then whenever she made that offer to me, I said this might be my out because I was at that time I was in law enforcement. So I was like, well, this might be my out from law enforcement.Dylan Silver (03:41)
Now, Colleen, where you’re based out of, we were just talking before hopping on the show here. This is really kind of like a waypoint to a lot of other areas in Texas, but also it’s a huge market in and of itself. Is a lot of your business based out of the Colleen area or are you looking at all across Texas and all across the country?Demar Chapman (04:00)
I have Ohio, ⁓ I work in Texas, I do North Carolina where I originally started at. But most of my business and clientele is in North Carolina. I’ve branched out to Georgia because I’m licensed in multiple states.Dylan Silver (04:18)
Now, when we talk about these investor products, ⁓ typically, you you’re looking at ⁓ folks who are doing, you know, some type of 90-day flip or something along these lines. When you started working with investors on the lending side, what was your network like at that point in time? Was it very much, these are people that you’ve already previously worked with? What was that initial growth portion like?Demar Chapman (05:33)
My initial growth was being in the real estate investor community because ⁓ it was ⁓ the Charlotte RIA group that I was a part of. And I basically made the offer. said, hey, look, I started doing this because on my first real estate deal, I got charged an extra-nominal amount for loan origination.Dylan Silver (05:46)
Okay.Demar Chapman (06:01)
the account recommended, why don’t you become a broker? And that’s when my eyes ⁓ saw the stars then. Because I just said, OK.Dylan Silver (06:13)
Now when we’re talking about these investor products, you DSC CER ⁓ Fix and flip loans, know hard money in general, right? It takes you know a very specific Type of I to understand. Hey, this is someone that I can trust but also too I like the deal enough where if I had to Buy it myself. I would what’s your approach to underwriting both the operators and the deals themselves?Demar Chapman (06:42)
Well, my thing is, is always about communication. I have found most of the people I work with, I’ve at least had a good 30, 45 minute conversation with them so I can get a feel for them. And I basically know that they’re going to be a solid, uh, client.And I’ve actually turned some away because I just felt like they were a little bit, um, on the unethical side, I’ll say. So what I do is I’ll analyze it. I look at the deal.
Because I don’t turn away the deal automatically. I always look at the deal and see if I have anybody. Because that’s the difference between being a mortgage broker and a mortgage lender. Because as a mortgage broker, I can shop with over 100 and something investors that we work with compared to just having one place where I get my money from.
Dylan Silver (07:35)
Thank you for that distinction. there’s a lot of people who may use those terms interchangeably, but of course being in this space, you’re acutely aware there’s a difference between those two. Do you encounter a lot of folks who may have a misconception as far as what the difference is between broker and lender?Demar Chapman (07:53)
Yes, I do. And I tell people, the joke that I make with people is a mortgage, I’ve always, was told before a mortgage broker is going to always be broke. A mortgage lender is always going to be solid. And apparently ⁓ with the market shifts ⁓ in the last couple of years, the mortgage brokers are becoming stronger than the mortgage lenders because we can actually, we can go to the same people that are offering the same product.and probably get it at a better discount because we’re not charging a lot more than your typical mortgage lender.
Dylan Silver (08:31)
Now when I am looking at deals myself as someone who’s worked with investors in the distress space, probate foreclosure, pre foreclosure, a lot of it is knowing, hey, this is the right person to assign this to in that regard. Like, hey, I have an investor, this fits their buy box. As a broker, are you looking at it that way as well? But in terms of people and then lenders, hey, this is the lender for this deal and this is the investor that makes sense.Thanks.
Demar Chapman (09:01)
Yes, sir. I do. That’s exactly the way I look at it. Because if you come to me one time you might come to me and I’m working with one lender or an investor. The next time when you come to me, I might tell you, hey, look, we’re not going go to the same investor that we worked with last time. So we might need or require more documents, but I’m going to get you a better deal this time because now you went from having only two deals to three deals. And ⁓ an investor or a lendermay give you better pricing and give you a better deal if you have experience compared to if you don’t have experience. So I’ve worked with anybody from entry level, from the first time that they flip in a house or buy in a house to I’ve got a client that I’ve worked with that’s closed over 40 loans with me.
Dylan Silver (10:30)
Now, when I think about like Texas versus the Carolinas, I know you were in North Carolina was where you got your start as an investor. I’m curious to get your perspective on maybe some of the similarities and differences between the two markets. I’ve heard a tremendous amount of great things about North and South Carolina.Demar Chapman (10:50)
Well, in North Carolina, well, North Carolina, ⁓ because I know the market as good as I do, it’s a little bit more easy and understanding than me. The only thing I have a problem with in Texas is the cash flow becomes a problem on a lot of deals because of, especially with the FCR loans. ⁓ It’s based off cash flow. So if you have a property like in Austin, that the property taxes one year, was $7,000.Next year is $9,000. That makes a big difference on your cash flow. ⁓ in North Carolina, like somewhere in North Carolina, I’ve been able to tell clients and work with clients and make sure they understand that. And in Texas, I have to do the same thing. I tell them, you know, right off the bat, it might cash flow this year, but if the taxes go up, you might be negative cash flow. And then I asked them what are their plans for that? Because at the end of the day, I’m working
I want to work with you long term and not short term.
Dylan Silver (11:55)
Do you see a lot of interest right now in new construction and in small multifamily or even mid-sized multifamily from folks who might have previously only been, let’s say, fix-and-flippers or something similar?Demar Chapman (12:08)
Yes sir, there has been an uptake on that and that’s because if they can actually, if they can actually right now with the market the way that it is established right now, most people are buying and holding or if they’re fixing and flipping, they’re switching over to a buying hole because the market’s not where it should be at for them to sell.Dylan Silver (12:34)
Now, how are brokers handling this? Because I know a lot of folks might not do the new construction or they might not do more than four units. Is there kind of a shift in the broker world for we need to offer more products in these other spaces, new construction and multifamily?Demar Chapman (12:52)
Yes, yes it is. And a lot more lenders and investors have responded to that as well. Because it used to be where your traditional lenders, some of them would only offer, or some of your investors would only offer, let’s say up to four units. Now you have some investors or lenders that are doing traditional loans saying, look, we will do five to nine or five to 12 units.They know that the market shift and they are responding to it as they see.
Dylan Silver (13:29)
When I think about some areas where there’s a lot of interest ⁓ for investors, both in state and out of state, of course, Texas, I’m a Texas licensed agent, you’re in Colleen, but the Carolinas as well, they’ve been very hot for quite some time. Are you seeing anybody who is saying, okay, I’m in New York, I’m in California, I wanna be investing in the Carolinas, or is that element that out of state investingstill may be an untapped goldmine as far as the Carolinas are concerned.
Demar Chapman (14:04)
Well, it’s not necessarily the Carolinas as well because you have some people in the Carolinas that are investing outside of the Carolinas because the properties might be a little bit lower or they may be, they may not be out of state, but they are out of the city because I know a lot of investors that are in like the Charlotte Metro area that are buying properties outside of the Charlotte area right now so that they can actually buy properties that are cash flowing properly.I’ve got one client that lives in California and he buys houses in Ohio. And I’ve got another investor that she works and lives ⁓ in the Washington DC area and she’s flipping houses and buying houses in Ohio as well.
Dylan Silver (14:53)
Now in the ⁓ investor lending space and brokering space, from what I understand, it’s more accessible to be doing deals across state lines. don’t have to get so much red. There’s not as much red tape in that world. Am I wrong in saying that? Or is it more common to see brokers and lenders going across state lines?Demar Chapman (15:58)
Ivo there is a difference because as with DSCR you can you don’t have to be technically licensed in the state. just might own most lenders only require that you’re licensed and some require no licensing at all. ⁓ And then you know with the traditional side that’s going to be different. It is going to be state regulated and federal regulated. So you would you can you can like.Dylan Silver (16:22)
I got you, I got you.Demar Chapman (16:26)
For me personally, I ⁓ carry seven ⁓ personal licenses. And then the company I work for, which is Bayard Financial, has 49 state licenses. So we’re licensed everywhere, I think, except for New York.Dylan Silver (16:43)
Now are you still looking at deals for yourself and your personal portfolio or are you 100 % focused on the investor funding and lending side?Demar Chapman (16:54)
⁓ I am always looking for deals. The one deal that I did buy, which was about a year and a half, two years ago, ⁓ I’ve purchased it by just a wholesaler sending me a text message and saying, hey, look, are you interested in the subject too? When I saw the deal, ⁓ she and I ran the numbers and it was a solid deal. The only problem is that I didn’t have anybody in the area that can do the construction work. So that did set me back for the construction work.But it was a solid deal that I was able to get and once again build my positive cash flow up so that I can build a passive income.
Dylan Silver (17:35)
Do you still have eyes to the North Carolina area? you looking at deals a lot over there? Or because it’s such a great distance, it’s a little bit more challenging to manage.Demar Chapman (17:45)
I do look at deals in North Carolina. ⁓ I’m actually ⁓ in North Carolina. My Pacific areas are the triad area ⁓ because it’s the markets not extremely high like it is in the Charlotte area or the Raleigh-Durham area, but it’s just in that median.Dylan Silver (18:07)
So you’re able to kind of thread the needle there. ⁓ As far as the SCR and some of these alternative loan products, I’m seeing some of these become very mainstream, even on the traditional side. Are you seeing that as well, not just with the SCR, but some of these other products as well?Demar Chapman (18:10)
Yes.Yes, ⁓ a lot of people and a matter of fact a lot of loan officers are switching over to the DSCR products and the non-traditional space because we also Under that you can offer a bank statement programs that we offer you have P &L which is a profit and loss statement that ⁓ investors ⁓ that use That use like for on their personal property. They have used those products as well, but you can also use it on investment properties
And that’s something that a lot of people don’t talk about because they use DSCR, but I’ve actually founded a niche too that that’s another product that is offered that most people don’t talk about.
Dylan Silver (19:11)
diving into that. We are coming up on time here though tomorrow. can folks go to reach out to you? Maybe they have a deal that they need lending on or maybe they have some feedback that they would like on a prospective deal that they’re looking at.Demar Chapman (19:25)
yeah, you can reach me at 704-690-1772. That ⁓ again is 704-690-1772. You can also go to my website. It’s damardoesloans.com damardoesloans.com. And I’m always willing to talk to a real estate investor because at the end of the day, we are all in this together. Cause like I said, I’m not only just a loan officer, but I’m also a real estate investor.Dylan Silver (19:55)
Demar, Thank you so much for coming on the show today.Demar Chapman (19:58)
Thank you, you have a great day. -
