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I'm absolutely thrilled that you're all here today and you

are going to be thrilled when you hear uh, from Glenn Barich.

He's with America's Mortgage Lenders.

He's lived in Sarasota, Florida since 1992, but is

originally from Toronto, Canada.

I'm sure he's quite happy to be in the warm weather.

Glenn entered the commercial lending field right out of college and

transitioned into mortgage lending in 93.

So, our topic for today is talking about helping self employed people build

a real estate investment portfolio.

So much great information here today.

So, welcome Glenn, we're thrilled to have you.

Yeah, Glenn, we are so excited to have you today, especially considering my

background is mortgage and real estate.

So, I have been really looking forward to this conversation.

So, welcome, welcome.

Thank you.

I'm glad to be here.

So one of the conversations that we had a while back, which is what kind of sparked

this interview for today is how so many business owners, so many entrepreneurs

want to invest in real estate.

They often consider real estate to be a part of their long term portfolio.

And I think a lot of that is because you can borrow some of the money.

It's not like you're just putting money away at a 401k or

getting a match by your employer.

You're often thinking about how you can strategically build a

portfolio of real estate that could help you with your retirement.

I also think because business owners are true entrepreneurs, they

obviously investing in other types of businesses is often important to them.

So what's your take on all of that?

Well, you know, I found through the years I worked with a lot of investors

and a lot of self employed customers.

And the big thing was, is that they found their business was

occupying so much of their time.

That they're trying to look for some other ways of making income,

what they call passive income.

So set up an investment property and get that going for you.

So they could look at a way of basically leveraging their time

better, leveraging their money better and create something that's going to

create income for a long time coming.

Yeah, I think it's such a smart move and I think what happens is business

owners are already risk takers, right?

So I think your general population of people that have corporate jobs,

they're more likely to follow that traditional path of investing because

again, owning investment properties can seem, you know, high risk for

a lot of people and, you know, for entrepreneurs, I think they love the risk.

They love the challenge and the reward can often be, you know, fantastic.

Oh, definitely.

Definitely.

And, and a big thing for them is they start creating some cash

flow and they're wondering what do they do with that extra money now?

Some companies have to put money back in, reinvest, but if they have extra

cash flow, this is a great thing to do is to throw it into some properties that

are going to generate income over time.

And I teach them how to build on that as well, how they can take one property

and make another and make another.

I think it's so smart.

And one of the things that's interesting is I predict we're going to start to see

more people who are not self employed.

But realize that we're living so much longer and that things have gone up.

And so maybe if you're a single woman or a single man in your sixties or seventies

or eighties, it may make more sense to own a duplex and just own a primary

residence because then you can help cover your expenses and your living expenses.

I think it's, I think it's not just going to be business owners

and entrepreneurs in the future.

I think you're going to have a lot more people realizing the value of

having one or two or three units.

I've chatted with a lot of financial advisors and it seems like the

biggest issue they have is people worrying about outliving their money.

And even that first big step is retiring, like really stepping away from the

job and saying, okay, my income is going to go from way up here to down.

How am I going to handle that?

And that's a scary part.

So as you're saying, as people are living longer.

They're trying to figure out how to manage their money and having a sort

of long term investment, you know, could be the perfect answer for them.

Absolutely.

I had my mortgage company through the fantastic crash of 2008 and

I stayed in business till 2013.

I always like to say we survived, but we weren't thriving.

We're surviving, not thriving, but a lot has changed since then because I

know everything really tightened up and a lot of loans went away, but there's

really some great loans coming on the market now that can really help.

Business owners, can you talk about some of those?

Yeah, sure.

I mean, I guess first I just want to talk about sort of like the entry,

how to get into your first investment.

So we kind of look at, there's sort of three steps.

Do you have the down payment for it?

So it can come from personal funds or business funds.

So we can work with that.

And then we look at credit.

Do you have some credit available, right?

And then besides that, income.

So one thing, the nice thing is, let's say you go out and you start

a business and you get a car loan.

But you get it through the business.

We can ignore that.

So that's, in a lot of cases, if it doesn't show up on your personal

credit, we're not gonna, we're not gonna look at that at all.

So that will help out.

So any sort of business loans you have in the company name, those

will get ignored in many cases.

So then we're going to look at their tax returns.

You know, do they have the income that qualify?

And the biggest thing is people think, wow, do I have to qualify

to buy this 300, 000, 400, 000 property, whatever the price range is.

And what we do is we look at the potential income.

So if you're looking to buy the house across the street,

it's going to become available.

You want to buy it.

It's not rented right now.

How do we look at it from the banking side?

So we'll have an appraiser go out and say, okay, it's worth, let's say 300, 000.

And we ask him a rent projected rent on that property.

So they look at the community, they look over here, they look

around and come up with a rent.

So you don't have to qualify the bottle 300.

You have to qualify for what the rent is going to cover up the

mortgage and the shortfall, or there might be a positive on there.

So if the rent is going to be, let's say it's 2, 000 and your payment

is 1, 500, well, then you're not qualifying to get a 300, 000 place.

You've got positive income, so you're actually going to look better after you

buy this property as opposed to worse.

But let's say it's the other way around.

Let's say you have a 2, 000 rent that the appraiser came up with.

Your payment's going to be 2, 500.

So there's a shortfall.

So in our view, you have to qualify for a 500 a month payment

difference, like a car loan.

So can you afford a car loan on top of what you have right now?

So that's what a lot of people don't see.

It's like, so if you can just we can get you approved for that extra 500 a month.

That's all we're looking for to get you in.

That's fantastic.

That's amazing.

Now, do you see business owners often buying single family homes?

Or do you see them buying duplexes or quads?

Or, you know, are there any types of benefits of buying an investment

property that you can also live in?

That's a great point.

So, in my view, typically, you're going to see as you buy a duplex

or triplex fourplex type of thing.

You'll get a better, you know, bang for your, so that's what you should look at

is what's my return going to be sometimes in another view looking at, should you buy

one 400, 000 property or two, two hundreds and the two, two hundreds probably gets

you a better rent than the one for 400.

So you need to look at those numbers and see what's going

to be your best investment.

I've had a client recently that sort of our first time home buyer, he was

talking about investing and wanted to figure out, and the best Avenue was.

You know, buy yourself a duplex for your first place, right?

So you buy in there and we're going to actually take some of

that projected rent on the other side to help offset the mortgage.

You're like, well, I can't afford that much.

We're going to use that rent on the other side to help.

So, and then you live in there for a year, maybe, you know what, now

we're ready for a bigger place.

The business is now in its third year or fourth year and it's growing

and I want to be in my own house.

So this was a perfect way to start because you bought that

as your principal residence.

With an extra unit with a rental unit.

All right, so we call that a principal residence on the banking

side So then a year down the road two years down the road.

I want my own place great rent out Where you were living in and buy a new

place now Maybe you have the cash me you don't have the cash if you have

the cash Let's buy you the place you buy the new place as your principal

residence You don't have to put 20, 30, 40 percent down, you can get away

with 5 percent down on your next place.

So not bad.

You put minimum down on the first place, minimum down on the next place.

And we're starting, you know, we're starting this accumulation of property.

Yeah.

It's so smart.

And then there's all sorts of ways with 1031 exchanges and ways

to work around capital gains.

And I think that's one of the things that business owners love is the

figuring out how to make it all work.

Right?

Great.

Thanks.

Yeah.

Yeah.

And the big key is having the people in your, you know, that are working for

you that you don't have to understand that a thousand percent, right?

You need to have a good tax accountant to meet with.

You need to have financial advisor, a loan officer, a realtor, all these

people together that understand.

And even, you know, shopping for a realtor that understands

the return on your investment.

You know, looking at what's going to be the best way.

As I mentioned, like the two, 200, 000 properties are the one for someone

that can look at that and knows about investing that understands where

you're trying to end up in the future.

Awesome.

So if you were giving advice to a business owner who is just now thinking about

investment properties, what would your number one piece of advice be for them?

Uh, I guess part of it would be, you know, so get with a loan officer and make, make

sure that you've got everything in place.

So it's looking at your, we talked about income before is income in the right spot.

You know, I've had clients where they're like, well, you know, this year.

I'm going to have a better year.

So maybe before they file their taxes, they review stuff with the loan officer

and go, maybe you shouldn't write off as much, and then you're going to qualify

better if you don't write off everything.

And maybe they can put it into another bracket somewhere.

And that's where sometimes it'll be myself, the tax advisor, and them

getting together to try to figure out what's going to be the way to work.

But if.

If their income is coming in low, we have some other programs.

Do you want me to talk about that now?

About some of the other new programs?

All right.

So these are pretty cool things.

So they're called the Debt Service Coverage Ratio, DSCR.

The Debt Service Coverage Ratio, DSCR, measures a firm's available cash

flow to pay current debt obligations.

The DSCR shows investors and lenders whether a company has

enough income to pay its debts.

The ratio is calculated by dividing net operating income by debt service,

including principal and interest.

I worked in the commercial field years ago.

So these look at debt service coverage.

You know, you're going to buy a new building.

Does the rent on the building cover the property?

So now they're looking at that on the residential side.

These are new sort, they're not Fannie Mae or FHA programs or new sort

of proprietary programs out there, but they're saying, listen, I call

it the don't even lie to me loan.

So on the application, right, you're not going to put Where you work, you're not

going to put how long you've had the job.

You're not going to put an income from your business or a salary.

We're going to say, let's look at this new property you're buying and does

the rent cover the mortgage payment.

And that's all we're looking for on it.

And we actually have some programs that if it is a little bit

short, we can still do the loan.

That rate might be a little bit higher.

So these are not your cheapest loans out there, but they're a way to get someone

in that might not otherwise get in.

Uh, they're going to need.

Typically minimum 20 percent down on that but it's a way of get someone

in that just says I always write off everything I've been writing off for the

last 10 years Make i've got great money saved up, but I don't want to pay any

taxes to uncle sam You're like great.

We can get you in some places and then we can just keep Repeating that

for the next one and the next one as you have more money to put down.

Yeah, I'm assuming those takes, those would take a little bit of

patience to find the right properties.

Was that, would that be accurate?

Yeah, so some will say, well, do I qualify?

How much do I qualify for?

Well, it depends on which property you look at.

So it's kind of a chicken and the egg, you know, trying to figure

out which one we're working with.

Um, so we also have other programs.

If you don't find exactly where property, we've got some, they're

called a bank statement loan.

And probably a lot of people heard of bank statement loans.

Bank statement loans are a type of non qualified mortgage loan that

allows you to qualify based on bank statements instead of tax returns.

The lender will require prospective borrowers to provide a certain number of

months worth of bank statements in order to prove their ability to repay the loan.

And to summarize those, what we'll do is let's say the business

is taking in 20, 000 a month.

Um, we take that number and depending on the type of business, let's say it's

tile installation or something like that.

They might say, you know what, there's a lot of supply

cost in there and labor cost.

So we might say, we're going to take 50 percent of that as your cost of

doing business and use, rather than 20, 000, we'll use 10, 000 as your income.

And that's the number we're going to use to qualify you to buy the next place.

So that's an interesting little program where we take, we'll take the last 12

months of bank statements, we might go back 24 months, depending on,

and then if we go back further, they might get a little bit lower rate.

So that's where you're using your loan officer as a consultant.

My job is to kind of go, where are they going to fit?

Give me all your information and let me figure out what I can use and what I

can't use and use that as our game plan.

Yeah, I feel like as a loan officer, when you're working with self employed

people, business owners, it's a whole different relationship, right?

Because they're looking at it as an investment.

They're looking at it and they kind of, they understand the game.

So, do you end up working with people and having a lot of repeat

business from business owners that start off with 1 property and then

go on to the 2nd, 3rd and 4th?

Yeah, because it's all about.

Working together, not just being an order taker, but trying to figure

out what's going to work best.

So what we have is after they buy their first place, I always use

the term with a lot of my clients is cash is king, cash is king.

So I had someone recently that was buying a place, but it

needed a lot of renovation work.

And my suggestion was, And this was going to actually be their first property.

So this was going to be their primary residence, going to live in it a year

and then rent it and buy the next place.

So, all right, you just have to put, you know, three or 5 percent

down on it, but we can finance some of the improvements in it too.

And they said, no, we're going to pay from out of pocketness.

I think you're going to regret that in the future because you're going to

use up a lot of money on the property where we can finance most of those

improvements and then you have money to buy the next place sooner than later.

So the cash is king.

I've always had my investors and oh, if I just, if I had the cash, I'd buy this one.

If I had the cash, buy that one.

My job is also looking at what maybe looking back to their

first or second property.

Can we do maybe a cash out refinance?

And pull out 30, 40, 50, 000 because maybe they bought it, fixed it up a

little bit running out and there's money to be taken out of there.

It's a team process.

It is, and it's so fun because it's long term planning, and I feel like it's

so much fun because I think business owners, they work so hard, right?

And it's not always easy to save money as a business owner.

You don't have all the perks that you have.

You don't have someone matching your 401k, so to speak, that you

would have in a corporate job.

So I think having these alternative ways to really start building

assets and building a secure retirement is really important.

Oh, definitely, definitely.

And there's even ways to work with their 401k.

They can pull money from that.

The self employed have a SEP IRA program where they can put in, I think, 25

percent of their income out of it.

So they can use that and start self directing where they're going to put

some of that money for investing as well.

Glenn, what areas do you cover as far as, you know, you are a

mortgage loan officer, what areas do you cover as far as making loans?

So, my primary area is the sort of west coast of Florida, but I

can do loans all over Florida.

And then our company can do in a couple of states.

We've got New Jersey, Pennsylvania, South Carolina, and Georgia as well.

So if one of my clients needs to do something in one of those other

states where they have a family member that needs help, I'll work in

conjunction with one of my other loan officers to put a deal together there.

So I'm not.

You know, not just hand them off.

I'm going to be involved all the way I, you know, when you give a referral, it

always kind of scares you a little bit.

But how are they going to treat my customer?

Right?

So I do like the bill.

We'll do sort of a team teamwork on work with someone in another state.

That's fantastic.

So if you are self employed and you have thought about real estate, even

if you're not 100 percent ready to pull the trigger, I think it's really

important to reach out to Glenn.

If you're here in Florida, because again, there is some, like he

said, some strategic planning.

And I think about this, like reaching out to a business broker.

You don't want to reach out to a business broker.

The minute you decide you want to sell your business.

You want to reach out to them 24, 36 months ahead of time so

that you can get your business in the best position to sell it.

And it's the same thing with someone like Glenn, reach out to him.

You may be able to buy sooner than you think, or he may be able to give you

some coaching and tips so that maybe you're ready 6 months from now or a year

from now, but you'll be able to start building your investment portfolio.

I think it's best to chat as early as possible because people will do things.

Let's say they have an issue with their credit.

You know, they start dealing with their credit on their own without

having the right information.

Like in some cases, let's say, you know, it seems like everyone's cable

company, when you moved from one place to another and had to give back the box.

Well, they never reported that you gave back the box.

So now there's a hundred dollar collection with the local cable company and it's

hard to avoid that and that happens.

So in some cases, we'll just say, just ignore it for now.

Because if someone takes a two year old collection and pays it

today, that could lower the credit.

So, it's best to chat up front, let's form a game plan.

And maybe they do things like, well, I'm going to pay off all my credit

cards first, and then I'll do that.

It's like, no, because cash is king, we're getting back to cash is king, you know.

A lot of cases like, no, let me tell you what to do with it.

So, we'll pull credit and say, you know what, maybe you do have to pay off one

credit card and everything will be fine.

But let's You know, find a product, let's pull your credit, let's see where you're

at, let's run the numbers, and have a game plan rather than just guessing.

You know, guessing is going to get you in trouble.

And, but do keep your tax accountant involved in it as well.

And, and let's do a teamwork on putting this together, but they might think

they have to qualify for a whole bunch.

Give us a call, find out, we'll use some offsetting income for, to

what you're going to qualify for.

And let's start that ball rolling so you can convert all that sort of.

Hard earned money into passive earned money and set up a

good future for yourself.

I love it.

Glenn, thank you so much for being here with us today.

We really appreciate it.

Oh, thanks for your time.

I, we, we always have great conversations and never seem to end, right?

I love it.

I love it.

I miss the business and you keep me up to date, so I really appreciate that too.

Oh, no problem.

I'll tell you all my woes.

Thanks for listening to the Six Figure Business Mastery Podcast.

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