Unlocking Real Estate Wealth: Frank Collo on Diverse Lending Strategies

Dylan Silver (00:01.759)
Hey folks, welcome back to the show. I’m your host, Dylan Silver. And today on the show, I have the president of NDM Commercial, works with real estate investors, business owners to fund rentals, flips, commercial properties, Frank Collo. Frank, welcome to the show.Frank Collo (00:18.52)
Thank you so much, Dylan. I appreciate you giving us the opportunity to be on the podcast.Dylan Silver (00:22.705)
Absolutely. you know, before hopping in, we were talking a little bit about moving out to Colorado. So you’re in Colorado right now. Are you in Denver? Which part of Colorado are you in?

Frank Collo (00:34.05)
We are based out of Colorado Springs, so we’re about two hours, what about an hour and 45 minutes south of Denver.

Dylan Silver (00:40.033)
What’s it like out there now? I’m imagining it’s probably nice, but it’s probably not scorching hot, is it?

Frank Collo (00:46.574)
You know, it depends on where you are in the state. You know, it gets pretty high, the temperature up here. It can go up to 100 degrees. So, but Colorado, as we all know, has very unpredictable weather. So you can have hail, rain, a tornado, and 100 degrees in the same day. it is.

Dylan Silver (01:02.207)
That’s a lot of inclement weather. I want to talk about the lending space as a whole. There’s so many different ways where people can acquire lending. You’ve got hard money lenders, you’ve got brokers, you’ve got lenders. You do commercial, I believe, flips, rentals. When people are getting into the space, how would you describe yourself with NDM commercial?

Frank Collo (01:28.511)
That’s a great question. There’s so many different, you know, titles or different lenders out there.

It really depends on the project. So we’ll direct lend for certain projects like ground up construction, rehab loans, long-term rentals. And then we have the ability to broker out deals as well, which gives the investor a lot more options. So if it doesn’t fit into our bucket, we have investment banks that would fund projects up to $20 million. So there’s really a lot of options as we act as a lender and as a broker.

Dylan Silver (02:01.643)
I didn’t ask you this before, hop it on. How did you get into the real estate space? What was the origin story?

Frank Collo (02:07.694)
Well, I spent about almost 12 years in the auto industry doing loans. And so I was a finance manager there for many years and opportunity came about for me to get into the mortgage space. So I started my career in the residential side.

for many years and then moved up in that business and became a branch manager. In my heart I always wanted to expand and do commercial and I finally got the opportunity to do so and so I’m following my purpose now.

Dylan Silver (02:38.431)
I want to talk about you pause for a minute there and talk about were you F and I in the automotive world?

Frank Collo (02:44.738)
Yes I was. I got into it at a very very young age and that was why I was able to get in. I was making more money than my friends in college at that time and they used to make fun of me but yeah I spent many years doing FNI.

Dylan Silver (02:54.401)
Yeah

Dylan Silver (02:59.153)
I think for people who don’t know, that’s finance and insurance. When you’re going through the dealership and then it’s the last person kind of the, what would you call it? The gatekeeper to all the documents and everything, the last shield of the dealership. But I know those guys work long hours, because I was in car sales and they work some long, long hours. Were you at a dealership where you worked some long hours?

Frank Collo (03:22.168)
I did, I mean as I grew in that industry I was able to get much better hours honestly, I negotiated that as I moved up. But yeah, I put a lot of work and a lot of time.

Dylan Silver (03:29.323)
Yeah.

Frank Collo (03:35.566)
into that business. it kind of that’s where I was able to, you know, do with loans. I started doing loans at 21 years old. started doing car loans. actually really helped me do, you know, residential lending and commercial lending. was really, I’m grateful for the opportunity.

Dylan Silver (03:48.48)
Yeah

Dylan Silver (03:52.757)
You know, when I think as I came from automotive too, I was on the sales side working for Nissan. When I think about it, I think about how there’s so much that I learned that I still I kind of consider myself a car dog even still today, even though sometimes people don’t like hearing about the stories. But I think one of the interesting things about it is it’s it’s actually a for me, at least it was a big transition because you’re going from people coming to you, to you having to find your own clients. And even though they’re both potentially 100 %

commission based or you eat what you kill, so to speak, I think also real estate is a totally different game. And so when I when I think about the skills that I needed in the automotive space, and the skills that I need as a wholesaler or as a being able to underwrite deals as an investor, it’s a whole different like skill set that that I’m working with still grateful to those to those skills though.

Frank Collo (04:43.66)
Yeah, I’ve been out of the auto industry now going on 13 years. However, some of the same principles of what we use even today is something

that it still is part of what we do in terms of how we review and structure everything. But we have a joke, if you can sell a car, you can sell anything. So you have so much opposition. So if you can do that, you are a great sales freak. Grant Cardinal will probably hire you.

Dylan Silver (05:11.409)
That’s true.

Dylan Silver (05:16.833)
I want to talk about NBM Commercial and how you got involved with the president with NBM Commercial. Talk to me about scaling and building a business and then also what was it like going from the automotive industry into real estate.

Frank Collo (05:35.758)
Well, it was hard to get into at the time because nobody wanted to hire me because I had no experience. And so the biggest challenge for me was to get my foot in the door in a company because nobody wanted to take me. So I went about a year and a half without.

getting a job. And so finally a company on Wall Street opened up the doors for me and we kind of hit it off. The guy was from, you know, from where I was from and we kind of, you know, we’re very similar and he gave me the opportunity to get in. So I just needed someone to give me that open door to start the lending side on residential. And so I started just like from the bottom. So I was co-calling 60 to 80 people per day. I worked on Wall Street with some, some interesting individuals.

Dylan Silver (06:16.011)
Wow.

Frank Collo (06:22.634)
However, they were some of the best top mortgage originators at that time in the country. So I started out just getting coffee and calling a lot of people per day. So that’s how I got into it. one day somebody gave me an opportunity to go on the broker side after being on the banking side. And I took that opportunity. so it allowed me to see the broker side of the business. So instead of looking at it as a mortgage lender, now I had this whole

Dylan Silver (06:23.029)
Yeah.

Frank Collo (06:52.524)
new world about brokering it and I was attracted to it so that’s when I kind of went down the path of on the broker side.

Dylan Silver (07:00.461)
Talk to me about MDM Commercial. How did your involvement with them and then also, you you’re involved in so many different verticals. I think it’s, I wouldn’t say uncommon, but it is less common for sure. I wouldn’t say rare entirely, but typically a lot of people will focus in on, we’re going to do commercial, we’re going to do residential. You guys do quite a bit. So how was it like scaling with that business and how did you get involved with with MDM Commercial?

Frank Collo (07:26.828)
That’s great question. I knew somebody who was a director for SBA in Manhattan. He was a director for a bank for SBA lending. And one day he asked me, he’s like, hey Frank, let’s go have coffee. So I’m like, all right, let’s go shoot the breeze. was actually my neighbor. And he goes, you know what, Frank?

and

of my neighbor to help us launch it is where we started. So we actually started with SBA lending first. We started brokering SBA 7A’s, then working our way up through the different type of commercial properties and now we’re doing alternative to SBA lending and so forth. So it was all because somebody came and saw the, just wanted to start something with us and we took the opportunity.

Dylan Silver (08:23.329)
Hmm.

Dylan Silver (08:41.981)
Now, have you, know flips, because I work with lot of flippers and I wholesale in distressed real estate and then having a real estate license I say is great, but it’s also a different world. You ask them, unfortunately or fortunately, depending on how you look at it, you ask most real estate agents about, you know, what’s the value of this property and it’s a fix and flip type deal and they might kind of be like a fish out of water telling you what the value of the property is, you know, because there’s so many different things that go into it.

But also as a lender, working with flips versus MLS ready properties is a different game entirely, having to underwrite these deals. What was the learning curve like looking at the flips? And had you had any previous experience working with these type of loans?

Frank Collo (09:30.348)
Yeah, yeah, so.

One of the things we always really encourage our client is do your due diligence. Be a student of what you’re investing into. And so we want our investors to be successful. Ultimately is you’re not just a number to us. Other lenders, you’re just a number in their software. But for us, listen, if you’re successful, you’re going to come back to us. We want to help you grow your portfolio. So we’re going to come alongside that investor and provide the support that they

need to make a sound decision. there’s some cases they don’t want to have, they’re going to continue their way and they may not take your advice. However, we’re going to support them either way. But when it comes to the ARB, one of the things we always look at their track record, hey, so what type of experience do you have? Right? Where are you getting your comps from? Are you getting it from different third parties? Have you consulted with a realtor? Are you a realtor yourself? Never just rely on one source for your value.

you want to do your due diligence and you always want to be conservative because they always want to go a little higher than what they think they can get. However, we always recommend to be conservative just so they’re safe on their ROI. With the rehabs, you mentioned about the rehabs, what our investors like to do with their rehabs is that they’re taking what we offer as a fixed to rent essentially. we’re taking that they’re acquiring it for a lower price because it’s very competitive to buy something off MLS. We’ll give them a rehab loan.

Dylan Silver (10:55.137)
Mmm.

Frank Collo (11:02.338)
no prepayment penalties, and then we’ll convert that loan into either a short term rental loan, which is very popular because it’s a very lucrative, you know, just right now, very lucrative depending where you are, or we can convert that into a long term rental. So the majority of the rehabs that we funded are for investors that want to buy and then hold. Buy and hold.

Dylan Silver (11:14.891)
Sure.

Dylan Silver (11:23.465)
Now, when I think about this space, I want to get a little granular, Frank, and talk about the lending space and sort of what it takes to get these loans. I’ve looked at doing fix and flips myself. I don’t have any track record with fix and flips. I’ve worked with people who’ve done it, but I don’t have a track record myself. So when you’re underwriting not just the deal, but also the individual, are you asking like, what are the addresses? What were you entering and exit? Did you pull permits?

questions that you’re going for when someone looks at this.

Frank Collo (11:55.192)
And it’s.

Yeah, so we call it a discovery call. We want to get to know the investor. We want to document their goals and what they’re looking to acquire. And so with us, in certain products, you’re not going to need a track record. However, we’re going to cut the leverage back because, of course, this is going to be your first project. So we want to make sure that we’re doing a risk assessment on it and say, OK, can we fund this loan? What is the strength of this bar? And that’s part of our discovery call process.

and really getting to know them and looking at their PFS and looking at, you what do do for a living today? Where are you getting this property? Is it from a wholesaler? Is it from, you know, so we’re going to do our due diligence and make that decision. But we’re going to give them the opportunity to invest. So we don’t need a experience with long-term rental, short-term rental. We don’t need it for also rehabs, but we’re going to come back to leverage on it.

Dylan Silver (12:53.237)
I also want to talk about new builds and ground up construction. So I’m in Dallas, Texas. You’re in Colorado, but these are, I would say more common now. A lot of people specifically out here in Dallas are looking more at the new builds because fix and flip is getting harder and harder to do. People are losing money on the flips. You have to buy the deal, right? But then also if you’re putting this much effort in, you might look at the new builds. So know a lot of flippers who have gone from being flippers to also new builds. And I know you had mentioned new builds before.

Hopping on to the podcast here when you’re looking at these development Deals and looking at someone who’s potentially doing a new build. What are the factors that come into play? You know new build versus fix and flip and so on and so forth

Frank Collo (13:38.574)
Yeah, that’s a good one.

where there’s multiple factors. However, we want to look at where they want to invest. Does the investor live in that geographical area? Because if they live in Dallas and they want to do ground-to-construction in Durant, Oklahoma, well, that’s not going to work. We’re going to look at, are they close to the project? And who’s going to manage that project? Now, one of the things is that there’s something called a look-back. And a look-back just means we’re going to look at the last three years. Now, here’s the cool thing.

If you’re a licensed general contractor or a licensed real estate broker, there’s, we’re going to consider that as experience and bump you up into a tier. So in reality is you don’t have to have any ground of construction experience. However, we can look and say, okay, do you have a license or your licensed broker or your licensed general contractor? In addition to, say for an example, contractor, we want to bump up the tiers. We call them tiers because there’s different leverages based on tier is that if you

show us proof that even though that you weren’t the built up you weren’t the That if you were the contractor that pulled the permits on that project and you build it for someone else We’ll take that into consideration as well and add that to the track record so to answer your question Dylan you don’t need experience if you’re a Licensed general contractor or if you’re a licensed broker, however, we want you to be in the geographical area and this goes for most lenders It’s very risky to do something unless you are a tier five and

you have you know 100 units and okay we know we understand that you have that so also too is we’re gonna look at your project itself you know we’re gonna give you a hundred percent of the renovations however we’ll look back and be having put in more equity injection on the front end so you’re not gonna do with ten percent down however right we’ll look at fifteen to twenty percent down and we’ll give you a hundred percent of the construction budget but we always want to make sure for those new investors out there that are looking to

Dylan Silver (15:14.539)
Sure.

Frank Collo (15:41.8)
do ground up construction. We’re looking at 30 % ROI. That is the key right there as well. That’s an additional factor. We want to make sure that you’re going to make money because you always need a 10 % contingency on your on any of your deals. should always have a contingency plan if things don’t work out the way you want it to work out. We see it all the time but our scope of work, you know, the builders always changing and revising their scope of work and it never goes down, it always goes up. So keep that in mind.

Dylan Silver (15:50.549)
Yeah.

Dylan Silver (16:03.329)
Sure.

Dylan Silver (16:08.212)
I mean that’s why bridge loans exist, Because people’s game plan doesn’t pan out, right?

Frank Collo (16:13.762)
Yeah, that is true. But our goal is to really avoid that. We want our investors to have a great experience, but also, again, going back, we want them to be successful. If they’re successful, we’re successful, and they’re going to continue growing their portfolio and using us.

Dylan Silver (16:28.107)
Frank, want to ask you about, you’re talking about direct lending, also broker deals, you’re involved in fixing flips, rentals, commercial properties, new builds, a lot to be involved in, but also a lot of adaptability and versatility as well. Are you finding that a lot of your clients who might go in one realm, might be looking at rentals might then also come back and look at flips as well because they’ve established the relationship there? Are you seeing a lot of people

really stick to one vertical meaning if they’re a flipper they’re going to stick to flipper and so on and so forth.

Frank Collo (17:02.669)
Well…

I believe we’re the solution to people’s problems or investors’ problems. The commercial deals that we’re running up today, like retail centers or your mixed-use properties, are investors that were denied by a different bank. And because with those federal-leisurely banks, they’re going to be more strict in terms of what they’re going to land. And another thing is that if you’re an investor that wants to reposition an asset, you know there’s opportunity with a strip mall, let’s say, and the vacancy

Dylan Silver (17:18.454)
Yeah.

Frank Collo (17:33.408)
doesn’t apply to let’s say another lender. Well guess what? We could do a bridge level for you. You could reposition the asset and then refinance. I feel like we’re just the alternative. Listen, if you’ve been denied somewhere else, give us an opportunity because they might be a product out there for you. It’s not what you know is who you know. That person might be the person that has a product for you that’s going to work for that time. In terms of what are investors doing? I just feel like investors are keeping their options open. We’re noticing that a lot of

Dylan Silver (18:01.856)
Yeah

Frank Collo (18:03.312)
long-term rentals want to do short-term rentals and vice versa. we’re seeing a lot of the, you know, there’s opportunity because of the inventory shortage in America. We’re starting to see more rehabbers come in if they could get the deal, but then it convert them into long-term rentals or short-term rentals. So that’s what we’re seeing right now with our investors.

Dylan Silver (18:05.526)
Ciao!

Dylan Silver (18:22.817)
I’m thinking it’s great for them because I know a lot of lenders where they do basically one type of deal, right? And so if you need hard money, you need a construction loan, well, that’s them, but they’re not going to loan you on a commercial or a new build, right? So they’re able to go to your company and address all those. I also want to ask you about, we were talking a little bit, I don’t want to butcher that explanation here, so I’ll let you explain it, about…

instances where people can get approved based on you know, profits and deposits and what came to my mind was like DSCR loans and in single family, but on a commercial scale, I wasn’t aware that something like this existed.

Frank Collo (18:58.126)
Oh yeah, mean there’s so many, well, we don’t have enough time in the podcast at any event, but there’s so many different options out there. And the bigger the projects are, the more options they are, believe it or not. You throw somebody a $20 million deal, they’ll make, there’s an equity firm that’ll structure it for you as long as the financials look good. So really,

there’s alternatives to your traditional commercial lending. And so let’s say for an example, that you’re a business owner, right? And you want to buy a commercial property and you want to occupy it, right? Well, you have a few options. You either go SBA 7A, which is very hard to get. A third of all SBA applicants based on their last report are denied. And so how do you still purchase that for your business? the other issue is if you go the traditional commercial route is that they’re going to want to see your two years of tax returns.

going to want to see your up-to-date business income and listen any entrepreneur would tell you that they’re going to take any type of adjustments or reductions to lower their tax burden and so that makes going to look at their tax returns say hey you made 10 million dollars however your net is too low for you to qualify so now they’re denied now a company like us we’re going to take them we’re going to look at your PFS of course but we’re going to be based the approval

Dylan Silver (20:15.423)
Right.

Frank Collo (20:24.208)
off of a profit and loss or we can base the approval based on a bank statement program. So we’re going to look at 12 months of your bank or your business deposits and we’re going to determine if you could qualify for that loan and we’re not going to look at your net income we’re going to look at what you’re depositing and we’re going to back out what is called an expense ratio and it’s you’re right Dylan it is a DSCR calculation because we’re going to look at it and say okay does he have at least 15 percent of income. Now we can do one for one but any business that

Dylan Silver (20:53.12)
Yeah.

Frank Collo (20:54.198)
going to buy a building we want to make sure that you are you know that you can afford the debt in case you’re carrying costs go up. So yes the alternative products Dylan is a bank statement program and a P &L program which you can get at your traditional commercial bank.

Dylan Silver (21:07.925)
That’s pretty, I would say, I mean, I’ve had some, I’d say it’s fairly uncommon what you guys are doing in the commercial space. It’s great to hear that these finance vehicles and tools exist for people because of course we’re real estate guys, so we’re gonna find ways to reduce our tax burden, but then when you do that, the flip side is well now you have no income that you can use to justify getting larger and larger loans, and so what do you do? Now you have to go with DSCR, and I wasn’t aware that there was

something in commercial. it’s great to hear for those folks who are in the commercial space. We are coming up on time here, Frank. Where can folks go to learn more about your company as well as maybe to reach out to you?

Frank Collo (21:48.686)
Yeah, I mean, you can visit our website at NDMCommercialLoans.com. You can give us a call as well. You know, we always prefer that we do have a conversion funnel as well there. But yeah, you can reach out to us or you could visit our website and schedule a discovery call with us and get to learn more about who we are. can visit our Facebook page. We’re always posting stuff on there as well. And yeah, it’s a free discovery call. We’re here to provide information.

and helping investors as much as we can.

Dylan Silver (22:21.557)
Frank, thank you so much for coming on the show here today.

Frank Collo (22:25.218)
You’ve to thank you, Dylan, for having us. Have a great day.