WS376: The Lowdown on Lenders with Rahul Patel

On today’s episode, we are joined by returning guest, Rahul Patel, who is both an expert attorney and investor, to talk about lenders. Not all lenders are the same, so Rahul talks about the different types of lenders, what to look for when choosing one and various other key aspects related to picking a lender.

Watch the episode here:

Listen to the podcast here:

There will never be a lender to fit all your needs on every deal, so Rahul does not give a definitive answer as to which lender is better than another. Rather, he provides a blueprint and some guidelines of things to look out for when making the decision about who to enter into debt with. This decision should not be taken lightly because the relationship lasts for the duration of the deal, which can often be several years. Like all parts of syndication, finding a lender is about building a relationship, which is why it is key to build as many strong relationships with different types of lenders as early as you can. If you can manage to do this, you will be in good stead. Rahul also provides a host of other incredibly valuable insights related to lenders. For all this and more, join us today!

Key Points From This Episode:

  • Most deals have strong debt components, so picking the appropriate lender is crucial
  • The three big steps to take when looking for a lender.
  • Four of the main spaces people are getting money for multi-family deals from.
  • Some details about conventional lending and its benefits.
  • Local banks are often overlooked, but they are great places to start for multiple reasons.
  • What determines when to look at a local bank as opposed to a larger one or credit union.
  • How Rahul built a relationship with his local bank to finance his building.
  • What small lenders can do to stand out from the crowd.
  • Why it is important to build relationships with a variety of lenders as soon as possible.
  • Let lenders know the reasons you have decided not to use them.
  • If shopping between lenders, transparency is key in order to maintain good relations.
  • Structure, terms, and searches are all important to keep in mind when entering into a deal.
  • How to access and build relationships with family offices.
  • Some of the benefits and conditions that come with non-recourse debt, if you can access it.

[bctt tweet=”Really make sure you feel good about what you are doing. — @rpatelhool” username=”whitney_sewell”]

Links Mentioned in Today’s Episode:

Rahul B. Patel

Rahul B Patel on Twitter

Patel Gaines

Patel Gaines on Facebook

Patel Gaines on LinkedIn

Patel Gaines on Twitter

Structuring Real Estate Deals – Episode 217

The Chicken or the Egg – Episode 294

How to Successfully Structure a Letter of Intent – Episode 332

About Rahul Patel

As Managing Partner of the fifth fastest growing law firm in the nation, Patel Gaines, Rahul B. Patel has a flair for delivering simplicity and superior client service. Over the last decade, he has developed a reputation for his innovative approach to commercial real estate and property tax litigation, where he currently represents over $8.5 billion in commercial property. Not only does Rahul lead the Patel Gaines team, but he is also a certified NBA Agent, a guest speaker for multiple organizations, and Professor of Hospitality Law at the University of Houston. Rahul was named the San Antonio Business Journal’s 40 Under 40 Man of the Year as well as a Top 100 Influencer in Law nationally. He has also been featured in USA Today, Forbes, Fortune, BusinessWeek, Texas Lawyer and many more. Patel Gaines has received numerous accolades, including being named a Best Place to Work by the San Antonio Business Journal on multiple occasions.


Full Transcript


[00:00:00] ANNOUNCER: Welcome to The Real Estate Syndication Show. Whether you are a seasoned investor or building a new real estate business, this is the show for you. Whitney Sewell talks to top experts in the business. Our goal is to help you master real estate syndication.

And now your host, Whitney Sewell.


[0:00:24.1] WS: This is your daily Real Estate Syndication show. I’m your host Whitney Sewell. Today, our guest is Scott Hollister, thanks for being on the show Scott.

[0:00:32.0] SH: Thanks Whitney, just a pleasure to be here.

[0:00:33.6] WS: Yeah, honored to have you on the show. I know I’ve seen your face all over the internet as well and your podcast, and different events, and unfortunately we haven’t got to meet directly, but I’m looking forward to this, and learning more about you, and getting to know you a little bit.

A little about Scott before he gives us some more details. He’s a full time real estate investor and agent. Host of The Book Club Interview, combining two of his passions of reading and education. Hosts bestselling authors on his podcast discussing business, real estate and life. Scott, thank you so much again for your time. Give us a little more than that about what your role is in real estate, what you’re up to, and then let’s dive in.

[0:01:10.1] SH: Yeah, sounds good. I was a Connecticut teacher for four years before leaving, I believe, two or three years ago. I think this will be my third year out of teaching. And stepped into three roles so direct lender, one of four, fix and flip capital.

I am a licensed agent in Connecticut, kind of helping house hacking, people that love that two to four unit, want to live in one, rent out the other units and third one is investor. What we’re up to lately – Just wrapped up a 64-acre subdivision in Connecticut that, kind of, took our whole time and the scope of things, but my wife and I are going to build our dream home – part of it – and keep a large chunk for our farm.

[0:01:45.5] WS: Wow, that’s exciting. Before the show, we were talking a little bit about – You have this creative approach, and I’d love to hear more about that, I’d love for you to dive in to that a little bit because I think that could help the listeners as well.

[0:01:56.2] SH: Of course. I think it really started as young age, problem solver, just trying to figure out things and then when I got up into becoming a teacher, we had a high ropes education course and we talked problem solving, goal setting. It all kind of led up to where we are today, and one of my first flips that I was doing in holding as a rental, I got stuck on the refinance.

And it was being too aggressive on my tax returns with previous rentals, all of a sudden, debt to income wasn’t good to refi out. Being just a creative person, I end up having to bring my girlfriend at the time on to boost debt to income. She got half the house. Luckily she’s my wife today – all worked out. But my mother worked in lending for 30 years and the last seven, it was hard money.

I was able to broker for her, bring deals through, see what investors were purchasing, see their construction, scope of work. Being a contractor myself previously and swinging a hammer, I could understand the property, the scope of work, the contracting, and then the lending side, so I could have conversations with people and talk about creative solutions, “Well, you haven’t thought about this. Have you thought about this?” Because, getting to the end of a deal and not being able to perform is the worst.

So, I try to think 10 steps down the line, what are we going to do, what are our backup options and –

[0:03:10.0] WS: Are there ways that you could help us to think like that? Think 10 steps down the line and have those backup options. Do you have any systems or maybe a system that you use that really helps you to lay those things out so you’re improving it every time?

[0:03:21.3] SH: Yeah, I think it’s more of sitting down – If you have a team or a partner, whoever you’re talking about, you know. Step one is obviously, “Let’s just throw ideas out. Let’s not judge them, let’s just throw as many as we can on a piece of paper.” And then the next step is “Okay, let’s sit down, really evaluate those top three to five.” And then, with that, let’s take a step of, “Okay, which ideas do we want to execute?” Then, put those into effect, see if they work. If not then you got to take a step back and reevaluate, and look down that list again to see what you have.

That’s kind of been my whole approach to trying anything in life, right? I think the biggest thing that I still need work on is that reflection piece of really taking the time to see what worked, what didn’t work, so we don’t waste time and money to try to solve these.

[0:04:06.0] WS: Yeah, is there a way that you document that? Like, you’re figuring out what works, what doesn’t work, that way you don’t repeat things that don’t work?

[0:04:12.9] SH: Yeah, I’m a big fan of journaling, learned that from Jim Rhon, one of my favorite teachers of all time even though I never got to personally sit in his classroom. I love just the reflection of what worked in the past and also trying to keep your main goal because if you’re heading down the wrong path of you know – Maybe you want passive income but you’re doing some type of thing that doesn’t lead to that goal.

It’s kind of like a braking system where like “Okay, is this lining up to my one major thing?” And then do my daily task kind of line up with that vision.

[0:04:42.6] WS: You have that one big thing in mind all the time, and you’re breaking it down all the way to just, every day, those little tasks. Do you have a process for that because it’s so important I think – If you don’t know where you’re going or if you don’t have that location out there, I mean – What map’s gonna take you there if you don’t know where you’re trying to get. How did you do that, how did you set those goals and build up to that?

[0:05:00.9] SH: The biggest thing for me was reading books. I love education. As soon as I stepped out of high school for some reason, didn’t like to read, and once I got out of college, still didn’t like too much, and then all of a sudden, the last couple of years, just been devouring as many as I could. It’s helped with the podcast of interviewing some of my favorite authors like Jay Papasan with The One Thing.

That book does a phenomenal job of allowing you to focus and get clarity, and I’ve looked at some of the best books out there and, taking the best from – Compound Effect was another good one. Basically it’s: what’s your main goal? And then I like the 12 Week Year was another phenomenal book about breaking your year up into quarters. And that three months, you’re going to have that one major goal as well but it leads into that yearly goal let’s say.

Then you break it down to monthly. And then you break it down to weekly. And then it’s your daily task. And you really want to focus on outcomes, because you could have a task but you can’t complete that task. It’s more of something specific. Let’s just say, I need to purchase a property in 90 days to give me $200 a month, passive cash flow. Each day, I should be looking at writing offers, something very specific, so it could be like, you know, execute three offers to a broker, and that’s just a task.

But the outcome, we can’t really solve day-to-day and I think that was the biggest thing stepping into a full time real estate investors. Its’ very hard to find success if you’re not purchasing something. In my mind, it was. Just being successful, executing tasks daily, I think, will help the long run.

[0:06:34.0] WS: How did your work on that, because I could relate to that too. It’s hard to feel like you’re being successful or you’re experiencing success in the real estate investing business if you’re not closing on something. You know, how did that change, or maybe your mindset changed around that.

[0:06:47.6] SH: I think it’s trusting the process, and that’s a very vague thing to say. I think we’re always going to struggle with it, right? The deals we do takes months and years to complete most of the time. I think if you really reflect and, it goes back to reflection and just understanding. If you’re doing the best you can that day, and really break it down to say, “Okay, I really only need to get three steps ahead or one step ahead.”

I know that is part of the process to get there. I remember talking to Gino about this. At the end of the day, talk about your wins. Write down three wins, and have a journal going. And so you can look back, like, “Okay, I didn’t just sit around all week. I executed these three things daily. Okay. Now, I feel a little better.” You can take a breath, enjoy the weekends.

[0:07:30.0] WS: Could you tell us about some daily tasks, a few that have been, like, instrumental to getting you where you wanted to be?

[0:07:36.9] SH: I used to be a health teacher, so I think the biggest thing is working on your health, mental, spiritual, emotional, physical. I think, if you have that, life just gets so much better. You can start from a strength position. You know, getting up early, working on yourself before you work on anything else, and that’s another Jim Rhon thing. You have to get yourself right because when you step out into the world, those businesses and everything else will just fall into place.

The biggest things that have helped me is having that good morning routine. Healthy breakfast, exercising, reading a book. When it’s silent out, there’s fewer distractions at, you know, five, six in the morning, and then once there’s – You’re going to sit down, evaluate your day, see what’s on your tasks, and just pick three things that you’ve got to just attack. And then, try to time block those things or protect them, you know?

If you got to put the phone on silent, put it away. Just aggressively go at it as much as you can, because, as you know, if we just constantly check emails, things like that, we become reactive instead of proactive. It’s this endless cycle of trying to catch up and really focus on our goals.

[0:08:42.0] WS: Yeah, email can just devour a day if you let it. It’s amazing how that happens. Or that and social media or something like that, that’s not going to get you very far, depending on how you’re using it, you know? That’s interesting morning routine and you know, that healthy breakfast. I liked how you said, starting from a strength position also. Focusing on your health so you’re starting from a strength position and – If you don’t feel good, it’s just going to be hard to perform at that level for one, and you’re just not going to feel like pushing yourself.

You’re going to feel like giving up easier too if you’re starting from an unhealthy position and not feeling good. But over your time now from, like, leaving the teaching position, was that a time of uncertainty? Like leaving a full time job, moving into real estate? Tell us about that.

[0:09:28.1] SH: Absolutely. I think the biggest struggle for anybody is, “Well, how am I going to get that consistent income?” Because you’ve been taught and the paycheck’s going to be there every two weeks. The weird thing about being a salaried employee is, for the most part, depending if you work really hard or don’t work at all, odds are, you’re going to get a paycheck. That’s a tough thing and that’s a tough comfort thing to leave.

I got a little kick in the pants to kind of get pushed to that next phase and I’m lucky it was because, I didn’t have the kids and I wasn’t married just yet. I got engaged just right after I left, probably about six months. So, I had a responsibility after, but, I think pushing yourself into a situation where you have no other way to succeed, it does amazing things because you won’t know until you try something, and then you have to step back. And what’s the worst that is going to happen? Do you really not have family or friends or someone who you can crash on a couch with? If you have a mortgage, can you go crash at someone’s house and rent out your house?

So you have to look at worst case scenarios and talk yourself backward. “You know, this is okay.” Go ahead and do it. And it is going to be tough. The first six months, 12 months, two years, whatever it is. It is going to be trial and error 100%. That is why I am such a fan of passive income, diversified across multiple doors, multiple properties. If you can cover that monthly base. Again, going back to a strength position, you are going to do so much better when it comes to being able to work for equity, instead of cash flow now, and that is where you really make your strides.

[0:10:55.9] WS: Yeah, it is difficult. We are all taught to obviously go to school, get a good job and then just wait 20 to 30 years for that special retirement day so you can go do whatever you want. Well, you know, during that time you miss so much. But I appreciate that. It is neat that you were able to do that before you were married because that definitely brings another aspect into that decision making right? Children and those things but yeah, congratulations to you for stepping out and making that happen. So what’s been the hardest part of this real estate journey for you Scott?

[0:11:24.7] SH: I think it is the three part series. It is either you have the time, the experience or the money, and rarely do you have all three. So, each deal presents its own unique opportunity but if you can look outside yourself, if you don’t have the third thing, you know, what is the best way to get across that and I think a deal comes up – Let’s say we’re looking for capital, we might be a little bit short, or we have the capital but do we have the experience in that market or that type of heavy rehab. It is the knowledge to know and start working on it now before the deal is under contract or vice versa.

[0:11:57.7] WS: Yeah, you got to have each of those three things don’t you? You know, do you have an example of maybe where you didn’t have one of those things and how you overcome that?

[0:12:05.3] SH: Yeah, a most recent deal. So that one in Connecticut. It was a seller-finance transaction, perfect terms, everything. Two weeks in, the seller decided to back out of the contract. I said, “Whoa, we’ll take it down.” Had to go hard with our deposit and had to close in 30 days. I ended up taking it down with hard money with a little bit of private debt, and that – It’s about – It costs probably five times as much to get the deal done but at the end of the day, is the deal still worth it? And, you know, making those sacrifices during that deal to keep that thing afloat and get it to the finish line.

[0:12:37.5] WS: Yeah, so you’re a creative. You made it happen.

[0:12:40.5] SH: Yep, a lot of phone calls.

[0:12:41.8] WS: Yeah, what was instrumental there to making that happen? Was it like previous network? Was it somebody that you knew? Was it – You know, that could help, or you know which element, the time, experience, money, that was a big part of what you have to have there that maybe had to reach out for?

[0:12:55.7] SH: Yeah, we were a little bit short on the capital stack, and then, right at the end – Things always happen the way they’re supposed to. I think, just having the trust and coming apart as an expert in the industry will get you past the intro of, “Here’s who I am and I have to explain it to you,” if someone really knows and sees you doing those deals, and you are being consistent, and you are doing what you say and following through. That is the biggest part.

I think that is step one, you know. Bet your whole farm, bet everything you have on yourself first, and once you start proving that, then start to play with other people’s capital. And that was the huge trust factor. Ended up being my father’s best friend’s wife who had the money in some account with getting two percent and I was like, “You know what? I will give you 10% fixed on your money, just, this is what the deal is. Do you trust it?”

Yeah and before she sent the check over she’s like, “Listen, I’ve got five grandchildren. This is their gift,” and I loved that because, if I am not willing to lose my capital, not just someone else’s, there is a reason behind each dollar, and that is what I try to keep in my forethought.

[0:14:03.6] WS: Yeah no pressure there.

[0:14:05.6] SH: Yeah, none. Yep.

[0:14:06.9] WS: Scott, what is a way that you have recently improved your business that we could apply to ours?

[0:14:12.3] SH: Getting out of the home office. That’s been the biggest one. I was working with a business coach, Joe Dunkin, before 5 AM. He has a phenomenal Instagram page, love it, and he was talking about how there is a separation. If you work in your home office and at the end of the day you have things on your thought and you’re just working, there’s really no separation to calm down and relax, and I think that was the biggest thing I was missing. So being able to step outside, get a physical office, something you go to tremendously helped, and I think the next thing for me is getting an assistant, and I’ve head just phenomenal things about that as well.

[0:14:45.2] WS: Yeah, we have done numerous shows about virtual assistants so I can’t recommend doing that fast enough, for sure. But that is interesting. So, you mean having an office outside of your home so that way you’re leaving the office, and now when you’re I guess at home or you’re with family, it is family time. Yeah, you are not still in the office, mentally I guess, as much, and I can relate to that as well. I’d love to know, you’re reading so many books now right?

And you have the Book Club interview podcast, you know, I’d love to know you top book for just like personal development.

[0:15:15.6] SH: Personal development. I think anything Jim Rohn will start with your basic foundation of who you are, what makes up your core, your morals, your beliefs and those things because I think if you are a good person that is just the good base, and I know that is another little vague statement, but if you know how to act and, you know, how to treat others, like the golden rule, how you want to be treated. I think that’s step one.

Step two, coming up with those books for personal development, the quick ones that come off the top of my head are Getting Results the Agile Way that is a very phenomenal book in terms of not having a rigid daily plan because it is going to fail you know? Life happens, things get jostled around all the time and I think that is a book that compliments the one thing very well, which is more of a ridge daily planner, but that is a phenomenal book to get you focused.

So Compound Effect is another good one, and that is where the big three came from. If you can really understand what those big three tasks that lead into your weekly goals, that lead into your monthly goals, that lead into your quarterly goals, yearly goals, and that brings me into the 12 week years, which is bringing it down into 12 week chunks. If you wrap those four up and you get a good daily planner, and all the good daily planner is, you start with your one main goal, your big three. And then your task that you have to complete, and then you wrap it up with some daily reflection or what to improve in, and that will get you to where you need to go.

[0:16:41.1] WS: It’s just implementing those things and like, we read those things, but actually implementing that and seeing some results, and, I mean, just starting a morning routine a few years ago was instrumental in me getting this ball rolling and doing larger properties and moving on. But what is the number one thing that’s contributed to your success?

[0:16:58.2] SH: Education. Education and networking. I think, going to events, you can see you as a person, leaps and bounds, and then with technology, it makes it a phenomenal to be able to connect with those people continuously. So I think if you are reading the right books, you’re going to the right events and then you’re learning to execute on those things. That’s that last final step that is one of the most difficult.

[0:17:21.1] WS: And before we have to go, tell us how you like to give back Scott?

[0:17:24.2] SH: A couple of charities that I love, Hole in the Wall Gang Camp in Ashford, Connecticut, Paul Newman’s Camp. They do a phenomenal job. Something to look up to. They are a great organization. The other one is Jamie’s Run in Connecticut for children’s cancer research, and those two are my phenomenal ones. I also love Habitat for Humanity. It is another good program to give back as well and it is always fun to swing a hammer, so it is a win-win.

[0:17:48.3] WS: No matter what age you are, it’s fun to swing a hammer right?

[0:17:51.1] SH: Yeah.

[0:17:51.5] WS: Tell the listeners how they can get in touch with you and about your podcast as well.

[0:17:54.8] SH: Yes, so I host The Book Club Interview, where I host bestselling authors, business, real estate and life. That is on iTunes. The best way is probably either Facebook or LinkedIn at Scott Hollister and last one, I would probably say the website, Yeah, those are the best ways.

[0:18:14.4] WS: Awesome, all right Scott. Thank you Scott.

[0:18:16.9] SH: Thanks Whitney, and I appreciate it.


[0:18:19.0] WS: Don’t go yet. Thank you for listening to today’s episode. I would love it if you would go to iTunes right now and leave a rating and written review. I want to hear your feedback. It makes a big difference in getting the podcast out there. You can also go to the Real Estate Syndication Show on Facebook so you can connect with me, and we can also receive feedback and your questions there that you want me to answer on the show.

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