Stop Chasing the Lowest Interest Rate in Real Estate Financing (Do This Instead)

Aaron Marsh (00:00)
From an investor community, I think it’s just the amount of options that’s open to them. And like when we talked about at the start, is every every single day as AI gets stronger and stronger and it’s a great tool out there, we also have to temper that excitement of AI to just make sure that we’re using it as a tool and not as the complete solution. Right. So a lot of the the relationships that seem to happen is it’s us on our side. The client or investor and then their GPT, right? Their chat. Right. And so we’ll do a lot of work on our side. We’ll give them a good recommendation on what is the best strategic fit for a lending loan product for them.

Michelle Kesil (02:16)
Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil. Today I’m joined by someone I’m looking forward to chatting with, Aaron Marsh, the founder of Marsh Lending, helping educate investors and buyers in real estate financing. So excited to have you here today, Aaron.

Aaron Marsh (02:37)
All right. Well thanks Michelle. I appreciate you having me on.

Michelle Kesil (02:40)
Great, let’s dive in. First off, for those new to your work, can you share what your main focus is?

Aaron Marsh (02:47)
I would say our primary focus is working with investment properties, right? So we we do a large amount of people looking to buy either a vacation home, a short term rental, long term rental, whether that’s just a single family residence or it’s a duplex or it’s multifamily. And then we also do commercial in terms of like commercial land with developers and some office space, but a lot of mixed use where it’s retail on bottom and lofts or apartments above, that kind of thing. But we work really well with the investment community because a lot of the partnerships that we have helps their underwriting process.

Michelle Kesil (03:30)
And do you work nationwide or in specific markets?

Aaron Marsh (03:33)
So we’re full service, great question. Full service in Texas, Alabama, and Florida. And then we do commercial and investment properties in like thirty six states.

Michelle Kesil (03:43)
And what do you feel are some of the main keys that allow your business to grow and run successfully?

Aaron Marsh (03:49)
I think a lot of it is our partnerships with our referral partners from the real estate community and wealth management community, and then also our partnerships with all of our different lending resources, right? So whether it’s capital groups, it’s private equity groups, it’s family offices, it’s private banks, it’s wholesale banks. So we have great relationship there. And I think from a s— from a service standpoint, we treat every single client, white glove service. you know, i everything that they could ask for, we try and answer up front and we try and, you know, make it a a true and calm client journey to to closing. Doesn’t always happen that way, but we always try and make sure that, you know, we we get you to closing the smoothest way possible.

Michelle Kesil (04:37)
What are some of the biggest misconceptions people have about real estate financing?

Aaron Marsh (04:42)
I would say one of the biggest misconceptions is everything hinged on rate, right? Rate, rate, rate. I want the cheapest rate. Everybody wants a cheaper rate, right? Then then you can get into races to the bottom. And as you get into those races to the bottom, then what happens is your strategic options in terms of the different types of loan terms, loan products, the financing rates and options as you’re just trying to chase rate, start to start to dwindle, right? They start to funnel down to if you’re just chasing rate, then there are some low rate options to you, but they may not be in your best interest. And what I mean is like if you’re trying to save an eighth of a of a point, but it’s a product that doesn’t really either has higher fees or either discount points to buy down that rate, or it’s got, you know, a a term that you don’t like that’s on attached to it. It may only be a couple of hundred dollars, but it may be where you get a better, more strategic property or loan product that helps you in the long run. And in, you know, there really isn’t like a whole lot of difference that you can put into that. So I would say rate chasing is like one of the biggest misconceptions. You want the right loan for the thing that you’re trying to do.

Michelle Kesil (06:51)
And what is the playbook that you use when working with and your investors?

Aaron Marsh (06:58)
when we work with our investors, and it’s a great question. We we we really do kind of put them through a process. There’s a discovery call that’s put together. What are you trying to do? We really listen in, right? We’re not trying to do a sales job, we’re doing a more of a listening exercise, right? So I’m not— never do we lead with something that, you know, we got a hot tip or a hot sheet and a lender came to us and said, Hey, push this product. You get yeah we’re we’re offering you know an extra you know quarter of a point off but you know it’s not that great of a product, right? So what we do is we try and listen so that way we’re not constantly trying to make the client feel like we’re putting the the square peg into the round hole or or trying to you know make you know make sure that everything that we do is with their best goals in in in mind.

Michelle Kesil (07:54)
And what are some of the biggest challenges or obstacles that you find investors face right now?

Aaron Marsh (08:00)
From an investor community, I think it’s just the amount of options that’s open to them. And like when we talked about at the start, is every every single day as AI gets stronger and stronger and it’s a great tool out there, we also have to temper that excitement of AI to just make sure that we’re using it as a tool and not as the complete solution. Right. So a lot of the the relationships that seem to happen is it’s us on our side. The client or investor and then their GPT, right? Their chat. Right. And so we’ll do a lot of work on our side. We’ll give them a good recommendation on what is the best strategic fit for a lending loan product for them. They’ll throw it into chat and then chat will give them back information overload. Yes, you can always get a better deal. Yes, go for a race to the bottom. Yes, you can do this. And then what happens is it takes them off of what they’re trying to do, which is get to closing, right? And get ownership of that property so they can start going and they get into analysis paralysis just because every single iteration that they keep asking chat, chat will always say yes and always offer 50 more or they’ll add tons of information to it that’s you know maybe irrelevant, but we have to go and answer all those questions, right? And it just delays the process. And it confuses the investor. I think, you know, there there’s sometimes that you need to to listen to the expert that’s helping you much more than you need to listen to what chat says.

Michelle Kesil (09:31)
Sure. And what are some creative lending strategies that you are using?

Aaron Marsh (09:36)
So on our side, where we differ from a bank is we partner with about a hundred and twenty different lenders. And then we also have curated for the past, I would say past two, three years, we’ve really curated a portfolio of, you know, you want to come to us and you wanna do a fix and flip. Well, we have fix and flip lenders now that they primarily do that. So you get all the expertise on that. Or you want to build, you bought a lot or a piece of land and you want to build, do a new build construction. So we have lenders for that. Or you want to buy a condo. Well, we have really great condo lenders, right? Because that’s one of the big things in the market right now is you know how hard it is to get banks and credit unions to jump on, especially if it’s a non-warrantable condo, they they have a hard time getting financing on that. We have a bunch of condo lenders. that alleviate a lot of that underwriting process. So you know, that that’s we we really kind of curate that and try and come up with the best solution strategically for, you know, all of our clients.

Michelle Kesil (11:16)
And what would you say you’re most focused on solving or scaling to next?

Aaron Marsh (11:23)
you know, I I read that I read the book that 10X is easier than 2X, right? And so that that’s a lot of people in my shoes have read that book. So it’s how do we get to 10x a business? But how do we do it without losing, you know, our the playbook that we use in terms of like the investment process, our client service that, you know, the standards that we hold for that. But how do we, you know, start to scale like greater than 2x? 2x just means you’re just working harder and harder and harder, just trying to double your efforts to get double your source. But when you make that that quantum leap to 10x, then you start thinking about what I can do on the front end of my process, right? Because I look at everything like it’s a glass pipeline. So I can see every, you know, part of the process, everything that’s in the pipeline, where is it? And and how do I loosen up? wherever there’s bottlenecks. Is it the bottlenecks in pricing? Is the bottlenecks in getting the deals in the door? Is the bottlenecks in underwriting? Is bottlenecks into waiting on information from our clients, like, you know, we need an updated homeowners policy or we need you know, another appraisal because this property is over $2 million. So we need to get that going. Right. And so the more that I can keep streamlining that, automating that, making it plug and play. The better it is, right, for the clients. And then we can just bring in the expertise and kind of put that layer on top of all that. So we have like this good running engine underneath with our expertise on top. That should be the biggest benefit for our investors. But that’s what we’re scaling to. Right. We’re constantly trying to get better.

Michelle Kesil (13:03)
And what should buyers understand with what’s currently going on in today’s market and environment?

Aaron Marsh (13:11)
I I think buyers and you know sellers should should think about this the same way. Buyers, hey, the rate isn’t now, nor may it will ever be again what it was in 2021. Right. So that was five years ago. It was two percent, it was three percent, but holding out thinking it’s gonna get back there, you know, you you may be holding out hope for something that’s not gonna happen. Same thing on the sell side, right? On the sell side, the buying frenzy that those rates created, where you’re getting multiple offers in one day, right? You you put your you put your property for sale, and that day you get 10 offers in, and now you got a competing process and everybody’s overbidding, right? That’s over as well. So everybody kind of hanging on to five years ago, we kind of need to— that’s great and that happened, but we kind of need to get what’s real and what’s today, right? You know. And in today’s rates are this, let’s understand that and let’s get comfortable with it. And let me help you get comfortable with it. And then today’s market prices are this. And there’s gonna have to be a little give, right? So you want to make the sale on the property that you have from a sales side, you may have to negotiate with the buyer a little bit just because things aren’t moving as fast, right? And the same thing on the buy side. If the seller’s willing to negotiate with you, then you need to pull the trigger. There are lot of people that kick tires, start the process, make an offer, pull out, thinking they can get weighted out and get a better offer. And I think if you really want to move the market and make the inertia start to happen, you know, the buyers and sellers kind of need to get together and you know, put 2021 in the past and start living 2026.

Michelle Kesil (14:56)
Yeah, absolutely. And what is the most important advice you’d give to investors today?

Aaron Marsh (15:48)
Think choosing the right partners on all sides. You know, do do a little bit of your homework. Make sure you get good referral sources for you know your broker partner in terms of like the real estate side, right? You know, make sure you they’re negotiating on your behalf, they’re writing good contracts. It is the best price that you’re trying to get. And then also do your homework on lenders like myself, right? So do your homework in terms of like what are the type of deals that they done? Where do they feel the most comfortable? Where do they have the most resources? Right. Do they operate in your price point? Right. So if someone that’s never done a deal higher than 250,000 starter, you know, dollar starter home, you’re not gonna bring, I want to buy a multifamily complex for $10 million to them if you didn’t feel comfortable enough that they could handle that or have the resources to help you with that, right? And I think, you know, just doing the homework on the on the upfront and really kind of getting in a good rapport and and working with someone that you feel really good about that has your best interest and heart, I think that’s that’s square one. That’s where you just start. And then from there, then you kind of feel good about your offer, you feel good about your approval letter, you feel good about, you know, the the closing percentage that this is gonna happen. Everything is gonna you know, kind of fall in line. You’re gonna rely on a lot of expertise that people are bringing to the table.

Michelle Kesil (17:10)
Yeah, absolutely. And if someone wants to build passive income through investing, how do you support them?

Aaron Marsh (17:19)
we support them in a in a a lot of different ways. So I tell everybody kind of the same thing. If you just do rough napkin math, if you buy a property that’s turnkey, right? So it’s a rental, let’s just take a single family home on the beach that’s in a high vacation rental market, right? So if you just buy the property, you’re paying market rates and it’s turnkey. And you really don’t have to do much, you’re not putting a lot of effort into it, then you will get that passive income. And you just kind of keep working with your property manager to make sure it stays, you know, well rented, you have high velocity in turn there, and and and everything is kind of managing along in your managing cash flow. Then if you want to make a little bit more money, it’s not necessarily passive, but it is a way to invest. Then you look at fix and flips. Where can you find something that’s slightly distressed? You may put in a little bit of money and painting pillows, and then you turn that within 12 months, right? And so then you can make a little— the typically the payback on that is a little better. And then if you have some real time to dedicate to it, then you find that property that’s in the desirable area that you want to get into. You work with a builder and then you do the build up, and then it’s basically like a spec home, right? So I’m gonna build this property and then I’m gonna be in a pre-sale process as it as the build is going on. And then I’m going to hopefully have it sold by the time I get my CO. So that’s really where you maximize your dollars. So if you look at from a two-year time frame for each one, right? Two years on the turnkey, how much passive income did I make? Two years from a fix and flip, what did I make on that? And then two years from a build. And those are kind of the three big chunks that investors kind of look at when they’re looking at investment properties.

Michelle Kesil (19:14)
Yeah, absolutely. Thank you so much for sharing all of that. Before we begin to wrap up here, if someone wants to reach out, connect, and learn more, where can people find you?

Aaron Marsh (19:26)
really two great places are start with our website at marshlending.com. Right. There’s a lot of good information on there. and there’s a contact us page if you want to, you know, reach out to us and and get more information. And then the other thing is our YouTube channel, we have a lot. We have a whole entire series, you know, long form, short form, just even quick hit videos. walking completely through the real estate investor process. So so we did it with one of our best clients. It’s a— that’s a long term investor. He gave a lot of good insights on questions. one of the the main brokers in our area that does a lot of investment properties. And then one of the top property management companies. So we kind of— and then I’m on there too as well, but we kind of really hit it from all sides. And so if you just kinda you know want to start there, it’s Marsh Lending on YouTube is a good spot too.

Michelle Kesil (20:22)
Perfect. Well, appreciate your time and your story. Thank you so much for being here.

Aaron Marsh (20:26)
All right, thank you so much. I appreciate you as well.

Michelle Kesil (20:29)
Of course. And for the listeners tuning into the show, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Aaron who are building real businesses. And we’ll see you on the next episode.