Unlocking Wealth: 7 Powerful Real Estate Investment Strategies

John Harcar (00:01.022)
Hey guys, welcome back to our show. I’m your host John Harcar and I’m here today with David Crantz. And what we’re going to talk about is his journey in the mortgage business and how his company can help real estate investors. Remember guys, at Investor Fuel, we help real estate investors, service providers, really all real estate entrepreneurs, two to five extra business. And we do it because we provide tools and resources to grow the business they’ve always dreamed of and live the life they’ve always wanted to live.

So, hey David, man, welcome to our show.

David Crantz (00:32.033)
Hey John, how are ya? Great.

John Harcar (00:33.516)
I’m good, man, how are you? I appreciate you coming on here. Excited to talk about your journey and talk to you about the mortgage, the help that you can give investors. But before we get into all that, why you just give a little background on you and how you got into the mortgage business and what got you here.

David Crantz (00:50.999)
Yeah, it’s kind of a joke, John. I started out in Michigan back in Detroit where my family owned a couple hundred inner city houses and apartment buildings. And I was always traveling with my mom and dad and watching them work. on the Saturdays, I would go out and play with my friends. I would watch my dad go into the inner city, buy what they called hud houses back then, houses owned by the government of the city, the inner city houses that you buy for tax, buy for literally $500, $600 back in the day.

John Harcar (00:59.072)
Mm. Mm.

David Crantz (01:19.169)
fix them up, them out, amass several hundred houses. The joke I always tell people is when I became 16 years old and got a car, it wasn’t the Chase Curls, it was the Chase Rent for my mom and dad. It’s kind of a joke I always tell people. I really kind of grew up in the real estate business, but I grew up on the rougher side of it.

John Harcar (01:30.67)
Hehehehe

David Crantz (01:41.131)
led me to consumer lending over the years and I ended up as a young teenager moving with my family to Scottsdale, Arizona where I was very active in consumer lending and became one of the largest consumer lenders in the state of Arizona and moved over to commercial lending for the 15 years of my life I’ve done.

David Crantz (02:04.372)
say having just a lot of volume of commercial lending, private money or hard money commercial lending. I’ve always been in private.

David Crantz (02:16.566)
trustees all over the country and dealing with nothing really but private investors and private lenders.

John Harcar (02:23.032)
Okay, how come back in the day you didn’t, you chose the lending path versus, you know, having and buying the hud houses and, or picking up hammers and rehabbing.

David Crantz (02:30.218)
You know, it’s a great question. Yeah, great question. I don’t like toilets and tenants. I’d rather sit in the banker’s seat, honest to God, than own, than own, than I have in my career owned many properties I’ve owned by osmosis because I’d rather take them, not to sound like a vulture, but in the business I’m in, in the private money business, you’re able to lend money at such a low, what we call low into value.

meaning the property’s worth a million bucks, you’re only lending $550,000. And not to sound like a vulture, but quite frankly, John, you can sometimes get these properties back through foreclosure at a lot less than what you’re buying them retail for, or even think you’re buying them at a foreclosure auction for, is a lender can get them back a lot cheaper than you can even get them back at an auction block, number one.

Number two, want to sell, I believe in selling them. I don’t like owning toilets and tenants. I like lending my money out. I get a high yield. I can turn my money quicker. You know, you get fees when they’re a little bit late sometimes. And I just know how to make more money with.

John Harcar (03:37.26)
Right? How?

David Crantz (03:38.272)
I don’t like the late night.

John Harcar (03:41.272)
How did you make that money to make more money? mean, were you using your own money? Did you start off with somebody else’s money? How did you get going?

David Crantz (03:48.993)
Yeah, most people start out brokering the deals like I still do today. I create more opportunity. People need more. I have more people standing in line to borrow my money than I do my own money and even my investors’ money. You know, we create a very good marketing program. We have mortgage brokers throughout the country that bring loans to us as well as a lot of social media marketing. And we’re just really well known throughout the industry. Throughout the trade rags, I…

wrote some articles for the trade racks throughout the years. We’re just, you well known throughout the industry, our company, and we get a lot of mortgage broker business as well as a lot of business through retail business. So finding good quality loans is not really our problem. I run out of my own personal money over the years. We, we broker these loans out to individuals, people that have IRA money sitting in their IRA accounts.

People that want to earn a 12 % yield sitting at 50 % load to value get a monthly payment We lend the money out for a one-year term And it’s just a real good way for people to sit back and collect the monthly payment in my opinion

John Harcar (05:01.366)
Right. Yeah, that makes sense. Now, just for folks that might be a little bit newer and don’t know the difference, explain the difference between private money and hard money and the benefits or pros and cons of each.

David Crantz (05:17.972)
Okay, the terminology of hard money, private money, private credit is really the same thing. It’s all really the same terminology. What a hard money loan is, what a private money loan is, what a private credit money loan is, is all your duties are borrowing the money from usually a private individual.

Hard money.

David Crantz (05:43.479)
somebody’s charging 10 % and two points and somebody can go to a bank and get it for 6 % and zero points the guy who’s in it for 6 % zero points thinks oh my god 10 % two points that’s hard money or you know we charge 14 % and more than two or three points you know people one guy said oh my god are you from New York yesterday which was an insult to me because you know we can warrant charging that kind of interest rate when

John Harcar (05:56.323)
Right.

David Crantz (06:12.65)
the loan is a weird kind of a loan. Okay? We get those kind of interest rates and it’s competitive. Now some of your listeners out there may be falling off their chairs when you hear that you can get 12%, 13 % on your money and you hear that we were able to charge a 14 % interest rate on a good real estate loan. That is competitive. That is what hard money lenders are able to charge throughout the

John Harcar (06:14.723)
Right.

David Crantz (06:39.668)
Not so much on the coastal areas like a Florida, New York, or like a California.

John Harcar (06:45.676)
Mm.

David Crantz (06:47.366)
That’s a competitive interest rate. And you’ve to remember these are short-term loans. People are only borrowing these monies for a one-year period of time. Okay, so there’s no real difference definitively in the definition of a private money or hard money loan. They’re typically loans that are borrowed from private people or a mortgage guy like myself that sells a loan to a private individual like one of your listeners. That’s really the definite, no definitive difference if you will, John.

John Harcar (07:16.056)
Got it, okay. And are there specific asset classes that you lend on or don’t lend on or what is your kind of loan program look like?

David Crantz (07:29.11)
Yeah, we’re fairly open to looking at anything that makes sense. And I think that’s pretty much industry standard. think if you talk to a lot of people, they’ll look at things that are things that make sense. There’s things that a lot of guys in my industry will do that I will not do that I’m just not anxious to do.

fix and flip loans. Or I will not do grown-up construction loans. There’s a lot of my industry brothers that will do those loans. They’re not my…

David Crantz (08:06.006)
and construction loans and a great lot of a lot more risk in fix and flip. You could be left with a hole in the ground a lot easier, you get ripped off from your subcontractors, your borrowers will absolutely absolutely get bigger trouble on those loans than any other loan and it’s a whole different type of management system you have to look at when you’re doing construction loans and fix and flip loans and you typically typically have to lend higher than

your 50 or 55 % loan to value on those loans. So that’s why I really, throughout my career, stayed away from those loans. I’ve made them successfully, but very few throughout my career, which has been a

John Harcar (08:37.41)
Right.

David Crantz (08:47.734)
Show my age of 36 years here. Not 36, I wish I was 36 years old. I’ve been in the career of 36 years now. As far as, we were pretty open. We’ve done some crazy stuff. We’ve lent out a strip club in Atlanta, Georgia that’s on our books right now. And it was a big money maker. Cash, obviously. Can’t show it through the bank, but I sure looked at the audio, through the video tape of a watch.

Friday and Saturday night of everybody paying. Hey, that’s how they proved it to me, you know, and the equity was there and the thing was literally in the downtown area. was a low-rush.

John Harcar (09:19.886)
Right, hey, proof is in the pudding, right?

David Crantz (09:31.958)
So for the amount of money we gave the guy, compared to what you can do if you ever got it back, he was just so safe. And he still had our books paying. Most of our stuff’s pretty straightforward. Retail, lot of single family, non-owner occupied homes. The thing we will never let

David Crantz (09:56.151)
So that’s the other thing we will not lend out

David Crantz (10:02.844)
But never never individual trailers if you will never the individual home itself And those are the three things that come to head on land. We’re not a big land person We just don’t do land unless it’s a infill piece. We did a piece on Melrose place Place that’s the show where you did a place on Melrose Street in LA and he crossed it with another piece in Vegas It was just too good to pass up Yeah, no, no, no, no, no,

John Harcar (10:06.104)
Got it.

John Harcar (10:27.809)
Nothing like rural.

What about like, and I had one gentleman who was looking for financing for like boarding houses. You know, he does have rent by the room type of deal. Some of the other lenders that we’ve looked at won’t.

David Crantz (10:42.177)
no, we’ve done those successfully. We’ve done those. Pointing house are great. Because the reason the pigs don’t like them is they’re cash typically, they’re daily, they’re hard to manage. But they make a lot of money. have to have the

John Harcar (10:47.019)
Okay, yeah.

John Harcar (10:51.767)
Mm-hmm.

John Harcar (10:56.408)
Yeah, this guy’s got a, this guy I mentioned, he’s actually up in Northern California, but he’s got a lot of a lot of boarding houses, rent by the room type of things, but he just couldn’t find financing for it. So, I’ll, I’ll turn them on to you. so tell us a little bit more about like how you can help investors, right? Like what, what, what separates you guys? What makes your programs great for investors versus, you know,

other traditional either know bank loans or other harder private money loans.

David Crantz (11:32.183)
Well, I think it depends on what aspect you’re asking for. mean, if you’re talking about us having investors invest with our company, buying our trust deeds, we’re going to protect them with our paperwork. Number one, our paperwork is unlike anybody in my opinion, the industry. are always, always changing our note for the better, studying other notes, using and spending money with different attorneys across the country. Always. my

brother in the business. They got crazy for doing it, but I do it consistently.

David Crantz (12:13.302)
We use, in my opinion, crazily expensive attorneys, the best attorneys in the country, to do loan documents. I’m the few that I know of companies that will use an attorney on every loan, whether I’m closing a $100,000 loan

David Crantz (12:33.246)
same attorney every time to do the loan documents just to be that set of eyes. So I protect the investors that way. Obviously we do get title insurance for the big three title insurance companies whether it be Stewart, First American Title, or Fatco.

David Crantz (12:51.062)
What I say fidelity first American and Stewart our typical title companies will use We don’t ever ask the investor to give us the money will always use a third party So when I say hey you like this deal mr. Investor the money goes to one of the three big escrow companies Title coming to purchase the transaction and then when it comes time to make a monthly payment the investor the borrower pays into a third party title company or

John Harcar (13:20.896)
a servicing company.

David Crantz (13:21.224)
Servicing company so this service is gonna pay the investor directly And then when there’s every God forbid a foreclosure or a collection that’s handled by our company I have a whole back office in Phoenix, Arizona that does all the collections All the phone calls all the hard work for the investor. It’s a very passive investment

John Harcar (13:43.97)
Mm-hmm.

David Crantz (13:46.07)
investment for the investor when it comes to letting the money is a great you know coupon you know a 12 % return it’s like it’s like clipping coupons in my opinion

John Harcar (13:57.88)
Based on the stuff that obviously you’ve seen and you’ve helped investors, what mistakes do most people make when they’re going out trying to find money?

David Crantz (14:09.952)
being prepared.

John Harcar (14:11.822)
How so?

David Crantz (14:17.716)
You have to know your collateral piece and you have to really know your value. will tell you, 80 % of the borrowers that walk in my door…

retail side will think that their values are significantly more than what they’re worth. I sit back here and you know my office out west dealing all over the country I have to take them at face value so Joe Bauer walks into my office and said or my office gets on my call and says hey Dave this property and my retail center is worth three million bucks you know we do a little bit of research beforehand

we got to take him at face value. He spends money on appraisal and then it comes back, you know, half that value. He’s not doing his research upfront. To the hard money lenders, if you’re looking to borrow…

John Harcar (15:03.416)
Right.

David Crantz (15:09.152)
So it’s done.

going to bite you, as these appraisals will bite you. Because people are very careful if your lenders do their due diligence, they’re going to use the right appraisal account to do their due diligence.

John Harcar (15:26.498)
Okay, any other mistakes that you see people make besides not being prepared?

David Crantz (15:30.39)
Well, if they’re doing a DCSR loan, a debt service covered ratio loan, or they’re trying to get a out of the bank again, then it goes to being prepared.

Spend the money on your CPA. you’re trying to get a loan at a quasi bank or a non-QM loan, I’m assuming you’ll listen to our familiar

David Crantz (15:49.983)
Almost worth the money, I swear to God, to have your accountant prepare you for what that guy’s gonna be worth. And use a good mortgage company, spend a half a point to it with a mortgage broker to get the deal done. I have a list of good guys that I know that.

send my mother to. That’s the key and took me years to find to find a couple that I the list that I have you know that’s that’s the key and be prepared.

John Harcar (16:13.239)
Okay.

John Harcar (16:22.862)
Are there any specific trends you’re seeing in the lending business or going on right now or down the pipe?

David Crantz (16:27.37)
You gotta remember something. You know, John, my expertise, I look at my career like this. People ask me different things about the mortgage business all the time. And I’m gonna put it to you this way. It’s kind of, I don’t know how you wanna take it, but look at it this way. I look at all these mortgage guys, it’s stupid, but put it out like this way. Take a doctor.

y’all go to medical school but then you all branch out okay you take one guy goes to do commercial loans do like these good these people that are trying to get 10 million dollar 20 million dollar office buildings that have perfect credit and you’re selling them to insurance companies he’s a specialist in that fine he puts his blanders on he’s in the mortgage business then you got a guy a buddy

nothing but consumer loans, high you know 10 million dollar plus houses out here in Newport Beach California or five million plus houses. He’s a specialist just that won’t touch anything less. Then you got a guy that specializes in the FHABA you know they stick to what they know. I personally am a hard money guy. I stick to what I know. When people say our rates going up rates going down.

My business is only going to be affected when prime hits another hits up by three more points and the banks are paying more. What affects my interest rates is what my competition comes from when CDs, what CDs paying right now. I got to pay four points above CDs. So CDs are probably paying like three right now, three, three and half. So I pay 12, 4 % above what a CD will pay. So I can advertise, hey, don’t put your money in the bank, put your money with me, earn four times more.

John Harcar (18:05.067)
I’d you.

David Crantz (18:06.4)
That’s what I base my rates on. So as far as trends go, and the only trend that I’m looking at is where the real estate market’s going on commercial loans. We see strength, okay? But the other thing that you gotta remember is I believe that we are so well protected. My personal company and the way we look at our loans are so well protected. Not that some…

David Crantz (18:32.95)
gloom and doom, but we would have to have seen a crash of 50 % of real estate for my company to be hit. And if we see 50 % hit in real estate again, you know, I’m going to bed now. I’ve got other issues.

John Harcar (18:46.466)
We got issues. Yeah, I bigger problems. Yep.

John Harcar (18:54.274)
Well, I mean, I appreciate you coming on here and sharing a lot of this stuff. Let’s say there’s any mention, you have some projects that you’re working on. You may be looking for investors. Do you have anything that you want to kind of plug and talk about how they can get in touch with you and maybe invest with you?

David Crantz (19:08.854)
Sure, I’d love to. We always have great deals available. Just to give you an example right now, we’ve got a property that I’ve paid for, believe $800,000. It’s a dentist that has been living, not living, I take that back, that has been running his own practice in the place. So it’s a dental practice on a lot next to him. He has another building that’s rented out as a retail center, not center, retail little shop. He is on the building.

since 2002 he’s been it since 2002 small deal he’s looking to borrow $350,000 if that’s too much for one person or they want to get used to it they’ve never invested before we could break it up you know put a couple people in it pays 12 % it’s a one-year deal the loan to value is like I said 40

about 41 or 42 percent loan to value. Nice starter deal and then we have a couple more other opportunities and we can always get a hold of me I’m assuming through your job or would it be a my former?

John Harcar (20:15.074)
Yeah, yeah, we’ll put all the information in the show notes. We’ll put your website, the link. I mean, if you want us put your phone number, we could do that. yeah, they’ll be able to get in touch.

David Crantz (20:23.668)
be great I would appreciate it. Okay I appreciate it. Listen John I appreciate you having me on. I hope that I was able to give something to you today.

John Harcar (20:30.05)
Yes.

John Harcar (20:35.34)
Yeah, I mean, you gave a lot of good information, right? And I know there’s folks on here that somebody picked up something. So guys, I hope you took notes. And if you do have any interest in maybe talking with David and maybe learning more or working with his organization, please, you’ll have the contact information. Please reach out. And I hope you guys enjoyed the show. We’ll see you guys in the next one. Cheers.