Why Real Estate Investors Should Work with a Mortgage Broker

Michael Braswell (00:00)
Yes. I’m starting to see more investors to maximize their cashflow on that rental property that they own. They’re renting it out by the rooms. you know, so, and the main reason for that is number one, it’s more profitable to rent out room by room. If you’ve got a four bedroom house and you can rent out that room at $150, $200 a week. And so you’re getting, you know, $800 a week for a four bedroom, $3,200 a month.

Skyler (00:00)
Alright.

Michael Braswell (00:27)
⁓ That’s very attractive to investors, but also ⁓ I’m starting to see more investors do it because it’s addressing the housing crisis that’s taking place.

Skyler (02:08)
Hey, everybody. Welcome back to the Investor Fuel Podcast. I’m your host today, Skyler Byrd and I am joined by Michael Braswell. He is a mortgage broker. I’m very excited to speak with him. I’ve definitely got some questions that I’m interested in getting his takes about. ⁓ So Michael, thank you very much for hopping on the podcast.

Michael Braswell (02:27)
Thank you for having me, Skyler.

Skyler (02:28)
No, absolutely, absolutely. So I guess just to get us started, okay, can you give everybody a little bit about your background, how you kind of came into lending and everything that way?

Michael Braswell (02:38)
Okay. So I’ve been in the real estate business about 20 years now. Got started in 2005. I won a number of different hats, real estate agent, did that for almost five years. And then I got into being a mortgage banker with a major international bank. Had a lot of success there, originating loans. And then I decided to get into the private lending space. ⁓ So I got into a private lending space with a…

DSCR only lender at that time. We only did rental loans, learned the business. And then after a year of that, I decided to start my own company, Unlimited Funding, in 2017. so we’ve been providing business purpose real estate loans since.

Skyler (03:19)
That’s awesome. All right, so you get to start your own company. You’re going to go from being a success, you know, working for somebody else, going out on your own. I always love those stories. So you started that in 2017. So you kind of started at the end of kind of the end of lower rates, right? And you saw probably a huge shift, you know, after COVID. So how did that affect the business? What did that look like for you?

Michael Braswell (03:44)
Well, as far as the business goes, it definitely slowed things down because I mean, I’m here based in Atlanta and I the world shut down. Nobody was buying, nobody was selling, right? We were all shelter in place. so yeah, for 2021 definitely took a hit. I just tried to focus on, you know, doing what I could and I’ll be honest. Luckily I had some, you know, money saved up and all that from the good.

the good times when money was flowing easy. And so I was able to utilize that to kind of weather the storm. then toward the end of 21, beginning of 22, things pick back up pretty quick in terms of the business after a two year hiatus. And so we’ve been doing pretty good ever since.

Skyler (04:31)
Excellent. All right.

So I think a lot of people out there ⁓ may have preconceived notions about working with a broker as opposed to a direct lender. Tell me, why do you think it’s important for somebody to work with a broker and what situations that it’s really applicable to?

Michael Braswell (05:35)
think working with the broker, first thing I tell people is access to loan programs. It gives you greater access to a broader number of different types of programs, guidelines, pricing. Brokers actually make lenders, in my opinion, more competitive. And for a lot of people that don’t know, direct lenders probably get about 40 to 50 % of their business from brokers.

⁓ so brokers, you know, are, are a key part of the ecosystem in that we, as I like to say, help to keep lenders honest and lenders providing, you know, the best financing they can offer, the best terms they can offer because they know, you know, there are many other lenders out there that are also vying for the business. And so what we do is, and when I tell my clients, we utilize our relationships with these different lenders and

We cherry pick who we want to go with based upon the particular borrower scenario and the property that they’re buying to give them the best financing that we can find in the marketplace. And so that’s our job. We get you a solid loan program, high leverage, quick closing, and competitive pricing. And that’s why I’ve been in business for eight years, because that’s what I’m good at doing.

Skyler (06:42)
Absolutely. Not everybody, there’s no cookie cutter client out there. I everybody’s underwriting is just a little bit different, even though sometimes it doesn’t seem that way. There’s always little nuances. And I think working with an experienced broker can go a long way. you know your lenders and you know where you can take certain deals, ⁓ that makes your customer’s life that much better.

Michael Braswell (07:06)
It does. mean, I have a lot of repeat business because, you know, we do the right things by customers, you know, we get them competitive pricing, we do what we say we’re going to do, no bait and switch. And so we just rinse and repeat.

Skyler (07:16)
Excellent. All right. And Michael, who do you think like you what type of customer you working with mostly now is it you know just individual home buyers first time home buyers investors what does that look like.

Michael Braswell (07:28)
would say a good mix of people who are wanting to invest for the first time. ⁓ And then I have a lot of repeat customers that have been investing three, five, 10 years. So it runs the gamut from no experience to very experienced. I would say lately we’ve been doing more experienced investors who understand this market that we’re in and who have the experience and the capital to still be able to take down these deals. ⁓

So yeah, a lot more experienced investors. And I just say experienced meaning they’ve done, they purchased at least three properties in the last two to three years, whether it be fix and flip or buy and hold, you know, they’ve gotten their feet wet. They kind of understand how to evaluate deals, where to buy, where not to buy. And ⁓ they’re just a little bit more ⁓ understanding of what’s a profitable deal versus an unprofitable deal.

Skyler (08:22)
Absolutely. All right. And you’re based in the Atlanta area, correct? Okay. All right. And are you only servicing, you know, you know, immediate Atlanta area, Georgia? Do you span out throughout the country? What does that look like on your side?

Michael Braswell (08:35)
Well, we’re brokering loans in 47 states. would say the majority of our loans we close are here in the Atlanta metro area, because it’s just a lot of deal volume here. But, you know, we do loans in North Carolina. I’m doing a loan right now down in Orlando, Florida, Texas, California, are big states for us. So, yeah, we’re doing loans all over the place from the different marketing we do. We get people around the country. You know, as brokers, we’re not

tied to a particular state. So, you know, we utilize our lenders in that state, you know, to bring the best financing to the table.

Skyler (09:10)
Nice, I like it. Yeah, the more you can spread out, the more people you can help. And obviously when you have repeat customers, right, not everybody’s just gonna stay in one area. They’re gonna wanna buy properties ⁓ all across the country. So it’s awesome that you can help everybody there.

Yeah.

Michael Braswell (09:59)
Yeah, definitely

have more investors looking outside of their respective states because it’s getting so competitive in these markets. Like it’s extremely competitive here in Atlanta to try to find a good deal where the numbers make sense. And so my clients are starting to venture out into Texas. They like Texas. They like North Carolina. ⁓ Those seem to be two very popular states as far as what we’re originating that I see, in particular, Texas.

Skyler (10:25)
Well, yeah, Texas has been growing like crazy. That’s for sure. 100%. All right. And let me ask you, mean, you’re in the industry, you’re dealing with many different lenders, right, being a broker. What’s your opinion on what we’re gonna see rates do coming up here within the next year or two?

Michael Braswell (10:42)
think rates are going to be…

I’ll say persistently stubborn in that what a lot of people don’t realize is that interest rates are tied to the 10 year treasury. They’re not tied to what the Fed does. And so there’s been a bit of kind of irky jerky with rates and uncertainty there because even if when the Fed does cut rates, if the 10 year treasury is going up, then

you’re not going to really see that rate come down much. You may see it come down an eighth of a point, maybe a quarter of a point, but for the most part, you don’t see these wild swings in rate because of the overall economic conditions. so it’s kind of hard to say. It really just depends on, you know, economic policy and what the Trump administration does with tariffs and all these different things. But ⁓ I would certainly love for them to go lower. It would certainly help my business. ⁓

But I don’t think they’re gonna go as low as people are hoping because of competing economic factors.

Skyler (11:45)
No, OK. No, it’s a perfectly reasonable nuance to answer. It’s certainly not black and white. know that. All right, well, let me ask you, and I think this will be good for our listeners to hear, because we have a lot of people that are trying to get into real estate investing, ⁓ maybe even just purchasing their own home for themselves. So if you have somebody that’s inexperienced that might, you know, this might be their first deal, or, you know, again, they’re a new home buyer just looking for their own personal home.

when they’re going through the mortgage process like what what they should they be aware of what they should her she’s what should they be prepared for

Michael Braswell (12:19)
I would say, well, with the type of loans that we do, again, business purpose loans, I tell people, we only lend to the name of your business. So first thing you want to do is to get your LLC or your corporate set up properly, either in the state that you’re in, or if you want to use Nevada or Delaware or one of these other states that I see investors use, they give them more anonymity. And that’s a topic for a different time, but a discussion for a different time. I would say make sure your business entity is properly set up. I would say.

Also, work on your credit. ⁓ Credit is important in our business because it’s one of the main things that affects pricing. The rate that you get, the amount of leverage that you can get, leverage meaning loan to value, right? People always want the highest loan to value that they can get. And I tell people, the one way you get there in our industry is by having a good credit score. And there are different credit tiers. So focus on ideally having a 700 or better credit score.

That’s always going to get you the highest leverage possible, all other things being equal. Another thing that I see, make sure you have your finances together, right? You got to put down money for down payment, closing costs. We want to see reserves. Reserves are, you know, at least three to six months of interest payments saved up. If you’re doing a fix and flip, we want to see that you have at least 20 % of the rehab budget in reserves. So,

You know, it takes, you know, good about good bit of money to get into real estate investing, whether you’re doing a rental loan, which is 20 % down, or you’re doing a fix and flip. We want to see that you’re have sufficient liquidity for whatever type of deal that you’re looking to do. That’s the biggest thing I can tell people. Credit, make sure your money is strong for what you’re trying to do and make sure you have your business entity set up. And if you have those three things in place, and of course you find a good deal.

where the numbers work and we’ll certainly help you evaluate that. ⁓ I would say, you know, you’re in good shape.

Skyler (14:15)
Excellent. so, and I apologize, I didn’t realize you were doing strictly kind of the business lending side of things. ⁓ But so let me ask you, what are you seeing with like new formed entities, right? People that just set up their LLC within the past two years, right? Is that, does that kind of change the game for people a little bit? Do lenders want to see, you know, more time in business to give better rates and terms? What does that look like on your side?

Michael Braswell (14:41)
No, well, we don’t care how long you’ve been in business. We just want you to have a business set up. Because when we do that loan, we’re going to do that loan in the name of your business. So the good thing about our type of loans are the loan is in the name of your business. So it separates your personal assets from your business assets. So if you’re ever sued with that property that you own in that LLC, they can only go after the assets of that LLC. Your personal assets are protected.

That’s huge in our country, which is very litigious and people are always being sued for all kinds of things. The number two thing that’s important is that we don’t report any loan that we do on your personal credit. So it’s not gonna negatively impact your personal debt to income ratio when you wanna go buy that new house to live in, when you wanna go buy a new car, when you wanna go get that credit card. So I tell people the kind of loans that we do are very different from traditional loans in that.

The only kind of lending we do is on investment properties. We don’t care about the condition of that property. If we’re looking at cash flow, if you’re fixing and flipping it, is it profitable? If you’re buying and holding it for long term, are you collecting enough rent to pay the debt? Those are the things that we look at. We’re not looking at tax returns, W-2s, pay stubs. You can be self-employed, unemployed. It doesn’t matter. We’re looking for a

investors that have the money and they have found a solid deal that we can finance.

Skyler (16:03)
Okay, all right, interesting, I like it. All right, so what do people need to come prepared with? Obviously, I know you said, you know, make sure your credit’s right, make sure your finances are straight. ⁓ But as far as paperwork, what makes your job as a broker that much easier?

Michael Braswell (16:19)
Okay, so I’ll run down the list. pretty short. Loan application, your business entity documents, driver’s license, two months bank statements, an insurance policy, and that’s pretty much it. And a contract if you’re buying, of course. And a rehab budget if you’re doing a renovation. That’s it. No personal income docs whatsoever. And so that’s the beauty of what we do. A lot of people…

Skyler (16:33)
Awesome. ⁓

Michael Braswell (16:45)
get qualified through us because we’re not looking at a lot of the things that a traditional bank would disqualify them for.

Skyler (16:50)
Okay, excellent, yeah. And I asked that only because I know there’s new people to the whole process and when you can make the lender’s life a lot easier and come prepared, ⁓ the whole process goes that much better for you. So thank you, appreciate that, absolutely. Now, and when we were talking, just you and I a little bit earlier, ⁓ there was a type of rental that you’re…

Michael Braswell (17:06)
It does. I appreciate it.

Skyler (17:15)
that you’re starting to see more and more, right? Instead of doing just like a traditional rental or vacation, know, rental Airbnb type thing, that people are actually running, starting to run out individual rooms.

Michael Braswell (17:26)
Yes. I’m starting to see more investors to maximize their cashflow on that rental property that they own. They’re renting it out by the rooms. you know, so, and the main reason for that is number one, it’s more profitable to rent out room by room. If you’ve got a four bedroom house and you can rent out that room at $150, $200 a week. And so you’re getting, you know, $800 a week for a four bedroom, $3,200 a month.

Skyler (17:27)
Alright.

Michael Braswell (17:54)
⁓ That’s very attractive to investors, but also ⁓ I’m starting to see more investors do it because it’s addressing the housing crisis that’s taking place.

A lot of what’s being built, whether it be homes or apartment buildings, it’s largely unaffordable for most people. And so people need a place to stay. And so I’m starting to see more investors here in Atlanta ⁓ take advantage of the fact that there’s a lack of affordability and they compare that with the opportunity to increase.

the cash flow on these properties that they own. And so I’m starting to see a wave of that now. And the good thing is we can also finance those kinds of properties. You may call them boarding houses. Some people could say pad split because there was a company called Pad Split. They kind of pioneered that. But yeah, that’s been a very successful model that we’re starting to see. And not a lot of lenders will finance that. They want either the traditional 12 month rental lease agreement in hand or

It has to be an Airbnb vacation rental. A lot of them aren’t comfortable financing ⁓ rooms week by week or month by month because in their minds, it’s a riskier loan to make with less predictable income. From a lending standpoint, it is riskier to do that than it is to have a 12-month lease in place.

Skyler (19:11)
No, and when we talked earlier, when you mentioned this, was, this is the first I’m really hearing of it, that people, you know, opening up, you know, rental properties just for this purpose. I’ve heard of people doing it. I just didn’t realize it was, you know, an actual business model that’s out there. So that’s very cool that you have somebody ⁓ that you can actually get these type of rentals approved when it sounds like not many can.

Michael Braswell (19:35)
Not me, can’t. mean, they’ll rent all the, yeah, they haven’t kind of like, renting rooms is pretty new in the industry. And so, you know, lot of lenders haven’t gotten their guidelines around that just yet. Cause at the of the day, trying to mitigate risk, right? And so, but yes, we have a lender that will finance those all day. There’s no change in the amount of leverage that you can get. And so.

Yeah, I mean, we’re doing more of those in Atlanta, and I suspect that model is going to pick up in a lot of the other major cities around the country that are more expensive than the Atlanta market.

Skyler (20:11)
Yeah, no, no, no, absolutely. I mean, I’m to be on the lookout for it, especially when talking to people like yourself and others. See what I can find out about that, because that’s interesting. Like I said, I didn’t realize that was becoming a more prevalent business model. So I appreciate that. now, Michael, as we kind of come up on our time here, if somebody is interested in getting in touch with you, if they’re an investor looking for a loan, how can they find you?

Michael Braswell (20:37)
The best way to reach me is by phone. So my phone number is 770-854-2194. Also, you can check out the website at unlimited-funding.com. And my email address is mbraswell at unlimited-funding.com. So pretty easy to reach. You can call me, check out the website, send me an email, and I’ll be more than happy to help you.

Skyler (21:03)
Awesome. All right, Michael, hey, I know I learned a lot from you today. So thank you for coming on the podcast. Appreciate that. And for all of our listeners out there, if you’ve got something of value from this conversation, go ahead, hit subscribe. We have got more talks like this coming down the pipe all the time. And we will see you all on the next episode.