Traditional Banking Models for Investors

John Harcar (00:00.942)
All right. Hey guys, welcome back to the show. I’m your host, John Harcar, and I’m here today with Glendon Grose. And what we’re going to talk about is traditional banking models for investors. Remember guys, here at Investor Fuel, we help real estate investors, service providers, I mean, really all real estate entrepreneurs, 2 to 5X their business by providing tools and resources to build a business they’ve always dreamed of and allow them to live the life they’ve always wanted to live. Glendon, welcome to our show.

Glendon Grose (00:28.812)
Thanks, I appreciate you having me.

John Harcar (00:30.466)
Yeah, man, appreciate taking the time to come out and share some stuff. And I’m excited to talk about the traditional banking models because, like we mentioned off air, most investors think hard money, private money. So this will be definite another resource for them. But before we get into all that and get into the weeds about that stuff, tell our audience a little bit about you, kind of where you came from, your background, and what got you here.

Glendon Grose (00:51.98)
Yeah, yeah. So my background originally was in hospitality, restaurants for about 20 years, brief stint in the military and then got right into restaurants and pivoted from that to the mortgage industry about eight years ago. Worked for a couple different banks currently at Movement Mortgage. We are the, I think now six largest retail lender in the country. Huge company, does a lot of really awesome things, super

blessed to be there and I operate out of the Northern Virginia DC market but I am licensed in eight states on the East Coast.

John Harcar (01:30.498)
Got it. So you started out in restaurant. Did you own the restaurants? you manage restaurants? What did you do?

Glendon Grose (01:37.288)
I did everything besides own a restaurant and that was the decision was at some point I hit my head on the ceiling and was like either open your own restaurant or find something else. And so we got married and decided to focus on that marriage as opposed to marrying that business in the restaurant industry. So smartest decision I ever made I think.

John Harcar (01:40.002)
Got it.

John Harcar (01:55.406)
Right, right, So what, because there’s a lot of stuff out there you could have done. mean, what about mortgage interests you or got you interested?

Glendon Grose (02:07.67)
Yeah, real estate was super curious for me. So I was thinking about diving back into it. I didn’t want to start all over, going back to school or something like that and getting some entry level thing, working some nine to five. Didn’t want to be behind a desk, but also being a real estate agent wasn’t really appealing to me. So had a couple of guys that had transitioned from the restaurant industry into mortgage that were mentors for me.

John Harcar (02:28.974)
Mm-hmm.

John Harcar (02:36.544)
Cool.

Glendon Grose (02:37.334)
kind of guided me through and then one of those just kind of like make a decision and dive in headfirst and see if you can swim. And so did that right before 2017 and have been doing pretty well so far. It’s a great industry. There’s awesome information. Real estate in general, you know, I’m sure, you know, watching some of your podcast episodes, there’s the different directions that people can go and the niches that you can kind of dive into and building wealth, know.

John Harcar (03:00.568)
Mm-hmm. Yeah.

Glendon Grose (03:06.892)
From my background growing up, enlisted military family, not super wealthy, and then learning later in life just the power of real estate and building generational wealth and what it can do for veterans, those that may not think that they have an opportunity. It really can change their star. So I really love that aspect of it and have really fostered that kind of community of building wealth through real estate.

John Harcar (03:12.718)
Mmm.

John Harcar (03:34.658)
I love that and before I forget, thank you again for your service. So was there a family history of real estate within you or like, mean, was it just something that you kind of fell into? I mean, you mentioned the mentors and stuff like that.

Glendon Grose (03:49.28)
Yeah, yeah, no, wasn’t anything that I, know, if anything, I wish that I had learned about it earlier. You know, I think that passing on that knowledge to future generations is huge because, you know, I didn’t get started in real estate purchasing my own home until my mid-30s. And I wish that I done it 10 years earlier and I wish that I had 10 more properties by this point, you know. It’s one of those like, you know.

hindsight’s twenty twenty but not in you know my parents didn’t buy their first home which grew up in mobile homes book bar she bought about the first time i was a senior high school junior high school so you know and learning what i know now about you know just again go back to the better thing you know the power of the v loan how much time time they missed by not investing in that sooner you know things like that where house hacking could have existed

John Harcar (04:27.595)
Okay.

John Harcar (04:35.874)
Yeah.

Glendon Grose (04:43.904)
You know, you move up and my brother now is in the Navy and you know, he’s bought and sold four or five houses through deployments and things like that or, you know, new duty stations and changed again, changed his trajectory and his wealth status. So it’s huge.

John Harcar (04:52.013)
Nice.

John Harcar (04:58.942)
Now, well, that’s what I love about real estate is I think you said it earlier, there’s so many ways to make money in it. Are you doing, are you investing in real estate, buying properties now, or are you strictly just doing the mortgage side?

Glendon Grose (05:11.894)
Yep, so I’ve got one investment property now. We’re looking for a couple opportunities this year as well. My wife and I started our own separate company for real estate investing. We’re looking for a first fix and flip this year. We’re looking for a buy and hold and then we’re also looking for a Airbnb property.

John Harcar (05:22.059)
cool

John Harcar (05:31.788)
Are you going to use hard money? Depends on what your company will lend you. So you got one property. How did you find that one? What was your, how did you go out and did you do lead? Did you have callers? Did you buy leads? What did you do or did you follow?

Glendon Grose (05:33.666)
Depends. Depends on the situation. You know, exactly.

Glendon Grose (05:50.358)
Yeah, so we actually, we house hacked it. So we actually bought that as our primary first, and then within two years bought our next primary and just pivoted that one into an investment property, refinanced it into a lower interest rate right before we moved out of it and set it up for success. So.

John Harcar (06:05.186)
Got it. What have been some of your struggles as a landlord?

Glendon Grose (06:10.502)
Um, not a ton of struggles yet. mean, just the, you know, the basics of, know, replace the hot water heater. Um, you know, we’ve got some roof things we’re working on now. Um, we’ve transitioned now through a couple of different, uh, renters, um, you know, and just kind of learning the different, you know, uh, it was funny. The first renter we got, we wanted to be super safe. So we, got a couple that just sold a house and we’re like, okay, they’ve been homeowners before. Um, you know, and.

they actually ended up being a lot more difficult than the renters we have now that are probably just serial renters that will probably live there for a long, time. So they actually broke lease on us early because they decided they wanted to buy again. And so it’s kind of one of those where you think somebody is a perfect renter, but it’s not necessarily the case.

John Harcar (06:42.478)
Mmm.

John Harcar (06:47.34)
Right, right.

John Harcar (06:59.51)
Yeah, yeah, and the more you can keep long term renters, that’s obviously going to be the best. So where are you looking for these new properties? Same in Virginia, same area around you?

Glendon Grose (07:09.406)
depends you know our area stuff for fixing flips is not a lot of margin right now you know prices are high competition is high it’s a very educated market here so it will challenge himself i’m looking at you know west virginia you know that’s a lot of opportunity growing growing west and south of the dc market you know markets kind of expanding and so there’s opportunity there for some of these houses that have been you know

John Harcar (07:30.648)
Yeah.

Glendon Grose (07:36.906)
underutilized or haven’t been touched in years. Correct, yeah. So there’s opportunity there. For the Airbnbs, we’re looking for areas that we visit anyway, and just a way to kind of write that off or have a property that we can stay when we wanna go visit family or places that we…

John Harcar (07:40.226)
Deferred maintenance. Yeah.

John Harcar (07:58.125)
Smart.

Glendon Grose (08:00.898)
Again, one of those where I don’t really care if we make a ton of money off it right now, but just kind of getting in and getting into a pattern of it and practicing and maybe do it as kind of a learning opportunity.

John Harcar (08:10.464)
Yeah, build that generational wealth. Is your wife all on board with the whole real estate deal too? Sweet.

Glendon Grose (08:12.93)
Correct.

She is, she loves it. She’s dove in head first. She’s probably more into it than I am at this point. So it helps drive that.

John Harcar (08:23.054)
What does she do for the business for that part of the business?

Glendon Grose (08:26.786)
She’s very much on the, so her company is very big on admin systems and things like that, so she’s big on building up the system. She’s a spreadsheet, you know, with that kind of stuff. She also loves to hunt, you know, she’ll go and drive around and find properties that she thinks have, you know, or look up on the internet and just go through deep dives into areas, neighborhoods, know, air DNA, stuff like that.

John Harcar (08:37.216)
and valuable.

John Harcar (08:52.61)
That’s awesome. So what do you see as your plan for the real estate business? mean, are you gonna continually to, obviously you wanna scale that and then kind of get out of the mortgage game or what’s your plan for that?

Glendon Grose (09:06.033)
uh… at some point i guess you know i don’t think you know i want to get out of this anytime soon i’ve really been about eight years uh… but you know i think that the goal with with us and i think most people is eventually work less hard not grind through this as much uh… because of the way that i had kind of grown my career you know i don’t have the

John Harcar (09:18.797)
Yep.

Glendon Grose (09:28.386)
20 plus years from 20 to 40 where I built up a huge nest egg or anything like that. So real estate is going to kind of be my lean where hopefully I’ve got income coming in, residual income coming in that kind of is my retirement plan where we can have 10, 20 doors that provide a pretty steady source of monthly income that we can kind of use to plan retirement, things like that once we’re ready to step back a little bit.

John Harcar (09:35.747)
Yeah.

John Harcar (09:58.422)
Nice. Andy, you’re actively right now looking for your next flip, your first flip. Have you flipped a house before?

Glendon Grose (09:59.17)
Yeah.

Correct.

No, we have not. We’ve worked with some people on some, I’ve helped on the financing side of things. We’ve done some, you know, silent investing and put some things into some people’s hands to help them do it. But we haven’t actually been hands on ourselves yet. So we’re looking forward to it.

John Harcar (10:25.198)
Why do you want to flip it? Why not just maybe buy something that’s more turnkey and just have it more rental? Have it rental.

Glendon Grose (10:32.29)
Just the experience, you know, I want to see if I like it or not, you know, if it’s an absolute headache and it’s, you know, way too contentious for us, then it’ll maybe the only one we ever do, you know. But I’m a firm believer in try something, try everything one time, give it a go, you know, and see if it’s something you’re good at, see if it’s something you like, see if it’s something you’re terrible at, you know. Just a curiosity thing more than anything. I’ve got a couple guys up here that do both, you know.

John Harcar (10:34.669)
Okay.

John Harcar (10:39.18)
Hahaha!

John Harcar (10:53.378)
Yeah.

John Harcar (11:01.506)
Mm-hmm.

Glendon Grose (11:02.146)
And I don’t know if were at his name is Omni Casey. He does the cashflow breakfast club. I’ll connect you with him. He’d be a good podcast guest. He does a ton of stuff. And one of things that he taught through some of the communities here is, you know, sometimes you can use, you know, the flip to bot to, to finance your buy and hold, you know, and you can kind of keep moving the money back and forth. Great for tax write-offs, depending on the timing of it and things like that. you know, just kind of want to see if that’s something that we can do.

John Harcar (11:08.366)
Mmm, yeah, I’d love to have him on the podcast.

John Harcar (11:22.924)
Yeah. Yep.

Glendon Grose (11:31.674)
you know if not then yeah we just would you know most properties i’d look to hold you know again unless you’re looking to flip something to to get some liquidity for that next hole

John Harcar (11:43.544)
Got it, okay, all right. And then how many properties are you looking to buy? Like what’s your goal?

Glendon Grose (11:49.218)
So I’m 42 right now. I’d love to have 10 plus doors by the time I’m 50 Again a variety of units Airbnb buying holds multi unit Just kind of explore with that and see you know again some of the guys in the area that are getting into it or like you know Once you get to 10 getting to 20 is pretty easy and it’s one of those kind of games where you know, so

John Harcar (12:13.644)
Yeah.

Glendon Grose (12:16.022)
Try to get to 10 first, see how that goes, see what the portfolio looks like at that point, and then scale based off of resources available.

John Harcar (12:24.812)
Okay, so let’s talk about kind of what our topic was today. And as you mentioned, traditional banking models for investors, right? So now what most people are thinking, if you’re not going to use your own money, you’re going to either go get private money, right? Or hard money. So talk to us about some, know, how the traditional model is changing.

Glendon Grose (12:49.206)
Yeah, so I think, you know, I think the banking entities, you know, the investors of the world that aren’t private equity or hard money are seeing that they’re missing opportunity, you know, that there are a lot of people that are going through creative financing routes. And more importantly, there’s also people that have creative finances in general, you know, they don’t have the typical nine to five W-2 salary income qualifying. So

John Harcar (13:12.418)
John Harcar (13:16.802)
Right.

Glendon Grose (13:18.518)
they had to kind of scale and spread their opportunity for their portfolio to maintain margins and to maintain equities and to bring in more business. And so you’re seeing, I’m sure you guys have talked about it here, but DSCR would be probably the most talked about program that exists for that. And the layers of that.

John Harcar (13:30.35)
Hmm.

John Harcar (13:35.602)
yeah.

Glendon Grose (13:42.966)
because again, you’re non-conventional, know, it’s a non-QM loan. It’s got its own parameters based off of investor appetite and risk. The sky’s the limit. You know, we have some, I think I told you gangster was the word I used, programs through some of our investors like Goldman Sachs. Who else do we got? SG Capital, E-Resi. I mean, just some of these companies that are really making, you know,

some of these terms really palatable for investors where we’ve got, you know, no prepayment penalty. We’ve got lower risk as far as points and fees go, lower interest rates, you know, where it’s like you’ve got a hard money guy that’s going to hit you with 12 % and two points and I can do seven and a half, which is almost as good as conventional with a point and a half and no prepayment penalties. And the only thing that qualifies, right? Yeah, I mean.

John Harcar (14:23.95)
Hmm.

John Harcar (14:35.532)
Yeah. Where do I sign? We’ll talk afterwards about a property. real quick, before we get more deeper into it, just explain real fast to our audience that might not know what is DSCR loans, et cetera.

Glendon Grose (14:40.866)
some really interesting stuff, you know, where it’s like…

Glendon Grose (14:53.974)
Yes, so DSCRs, the acronym is Debt Servers Coverage Ratio. And so what essentially that means is the property qualifies the mortgage. And so as long as the rents and the property itself cover the mortgage payment, there’s really only a couple of other factors that we consider. We look at credit score, business credit score, personal, depending on what you’re applying. We look at…

Reserves so they want to make sure that you’ve got enough reserves for you know, six months three months If you’ve got multiple properties reserves for your other properties, make sure you have the cash And then beyond that it’s just based off the ratio. So it’s a debt service coverage ratio. So DSCR Usually is one-to-one or better, which means that if the mortgage is three thousand that the rent covers three thousand give or take, know And then it usually scales up or down

John Harcar (15:42.84)
Mm-hmm.

Glendon Grose (15:45.25)
based off of that ratio. if the ratio, for example, is 1.25 as opposed to 1.0, you actually get better terms. And then again, each investor has their appetite. So some of them will require a three-month prepayment or three-year prepayment penalty, where if you pay it off within three years, you do have a bit of a balloon, five years, things like that. Some of them, none. And then again, just like hard money, most of them do have…

John Harcar (15:52.888)
Yeah.

Glendon Grose (16:11.988)
at least a point or two associated with it depending on the program.

John Harcar (16:16.182)
What are the pros and cons versus a traditional loan, hard money loan or DSCR loan?

Glendon Grose (16:21.376)
Yeah, so I mean the biggest pro obviously is that we don’t look at your tax returns. We’re not looking at your income at all. You can do it under an LLC, whereas with many other conventional loans, it’s tougher to find LLC financing, which again is why most people immediately go to the hard money thing where it’s like, okay, I can just join the business. No one’s gonna get in my world. No one’s gonna be dissecting my finances with a fine-tooth comb. Whereas now there’s some opportunities to do that in traditional banking.

John Harcar (16:40.162)
You’re

Glendon Grose (16:51.266)
So that’s the biggest one. It also allows, if you are, let’s say you’re an investor that has been going the traditional route, like we talked about a little bit earlier where you’re house hacking, right? And you bought and moved four or five times. And so you’ve got five or six traditional Fannie Mae or Freddie Mac loans. At some point when you get to eight or nine, they won’t lend you anymore. And so then you have to go like a DSCR route. And so a lot of the DSCR,

John Harcar (16:52.258)
Hmm, okay.

John Harcar (17:12.846)
Mm.

John Harcar (17:17.399)
Right, yeah.

Glendon Grose (17:20.738)
programs have no limits on that. The other thing is that we have DSER programs that are 85 or 90 loan to value. Whereas if you’re going traditional investment, you’re probably having to put 20, 25 % down. So after you put less down, as long as again the rent comps qualify it, you’re golden.

John Harcar (17:29.902)
Hmm.

Yeah.

John Harcar (17:40.91)
So if the property is 100 grand, the rents have to be a grand.

Glendon Grose (17:46.882)
It depends on, yeah, mean, it would depend on the interest rate and things like that. But, so yeah, yeah. I mean, if it’s a hundred grand at 10 % and a thousand dollars a month, you know, whatever it breaks down to, as long as the rent covers it on a one-to-one. We even have some programs that go down to 0.75, which means you could actually be losing money. You just are paying a higher interest rate. for those, you know, and I’ve had some guys do that with, with like, let’s say a long-term flip where it’s like, Hey, this is going to take me.

John Harcar (17:46.99)
Basically.

Yeah, yeah.

John Harcar (18:07.788)
Yeah, okay.

Glendon Grose (18:16.962)
eight months, know, traditionally hard money, you know, and on our end, traditional investment loan, you like you have to have it for six months or more before, to avoid that prepayment penalty. But if you’re doing a long flip, it’s kind of the same as doing a hard money interest only for a year. You find the one with no prepayment penalty, but you’re paying 8 % instead of 12%. And you, you know,

John Harcar (18:17.954)
Mm-hmm.

John Harcar (18:32.929)
Right.

John Harcar (18:44.203)
Yeah.

Glendon Grose (18:46.412)
could be juicy. So it’s all circumstances, just like all these things, but there’s definitely a lane there that I think that investors should explore. know, most banks either have some sort of DSCR program, some sort of, you know, we call it non-occupied, no income programs, you know, or bank statement or 1099.

John Harcar (18:48.342)
Okay.

John Harcar (19:00.747)
Mm-hmm.

John Harcar (19:07.97)
Mm.

Glendon Grose (19:14.87)
limited review, things like that. there’s options out there that you don’t have to go straight to the hard money guy that’s been giving you 12 % and two points or three points every time you go around taking this pound of flesh out of you, you know.

John Harcar (19:25.6)
Yeah. Okay. Cool. What advice should you give someone that’s maybe going out, starting to look for loans, starting to, you know, and, you know, get into their investing journey?

Glendon Grose (19:39.264)
Yeah, I would say, and this is something that most, especially lenders in my language wouldn’t tell you, but shop around. Different programs benefit different people. I’ve got quite a few investors, they use me and they’ve got three or four other guys and it really just depends on, you kind of build a community in a portfolio that way where it’s like, not one size fits all. There’s no one.

Just like there’s no one property that’s perfect, there’s no one lender that’s perfect, there’s gonna be different scenarios that benefit different people at different times. And then, it changes. So just because a year ago, you had a really good program with one guy or your hard money guy was the man last year, his appetite changes, his investors change, his capital to deploy changes.

John Harcar (20:06.403)
Mm-hmm.

John Harcar (20:21.934)
Yeah, exactly

Glendon Grose (20:29.088)
You know, and that’s the same in the banking world too. You know, it’s based off of margins and where things are. know, Wells Fargo may jump in and then, you know, another investor may jump in. know, a truest might have a really, really, really awesome program for a while. know, last year I think it was, who’s the Berkshire partner? PenFed, PenFed.

John Harcar (20:46.862)
Mm-hmm.

Glendon Grose (20:56.266)
you which you wouldn’t think from a credit union, but they had some really interesting investor programs for a while. Short term, it was only a couple months, they had an appetite for it, they filled their bucket and then they were out, you know, and if you don’t ask about that kind of stuff, you’ll just never get the opportunity. So.

John Harcar (21:01.955)
Huh.

John Harcar (21:07.598)
Is that out there?

John Harcar (21:11.662)
All right. OK. Well, very cool. Well, here’s a quick minute for you to give a little plug about why should folks give you a call and talk about this and what makes you different than all the other companies out there.

Glendon Grose (21:24.416)
Yeah, so again, Movements, the sixth largest retail lender in the country. We’re in all 50 states. I don’t own the company. It’s a huge company. It’s a Fortune 5000 company, I think it is. But one of the things that I personally, my website, glenandgross.com, super easy to find me. Glenden is a very unique name. It’s pretty easy to Google and pop me up. But one of the things that I provide, again, is resources. I have several hard money lenders.

John Harcar (21:44.64)
Mm-hmm.

Glendon Grose (21:52.854)
I have several resources that I like to share. I think I’m one of those rising tide raises all ships type of people. So I can’t help you. I’m going to try to find someone that can. And I think that that creates a good community of communication where we just help each other out. And so if anybody has questions that wants to just talk through things, I’m not in Idaho or out west, but I can definitely connect you with some people out there that may, whatever state you’re in.

John Harcar (22:01.096)
Love it.

Glendon Grose (22:22.519)
there may be an opportunity there that you may have just not know about that we can connect you with.

John Harcar (22:28.174)
Cool. Well, Glendon, man, I appreciate you coming on here and sharing all that stuff. And guys, if you have any questions on some of these different models now for investors, because there’s a lot of stuff that we see coming out. The DSCR, like I we’ve seen that. And I think that banks are getting more, I don’t want to say loose, bending and adjusting to maybe more of the investor world.

Guys, I hope you had a great show. Glendon, thank you again. I’ll put all your show notes or all your contact stuff in the show notes. So guys, if you want to reach out to Glendon, you’ll have his contact information there. And I hope everyone enjoyed the show as much as I did. Glendon, thank you again. And we’ll look to see you guys on the next one. Cheers.

Glendon Grose (23:06.722)
Thanks,