Flipping America 566, Commercial CapitalFlipping America

Opening:

Commercial real estate is similar in many ways to residential real estate, but one thing is vastly different: commercial capital. We need an expert, and I have one for you today. Paul Winterowd is joining us on this episode of Flipping America.

Commercial capital differs not just in the amount of money but also in the complexity and the number of players. In short, the different components of capital deployed in a commercial deal are called the funding stack, or capital stack. Paul will explain further in just a few moments.

Paul is both an expert debt provider and an active multi-family practitioner with real world experience investing in multifamily assets both as a general and limited partner. Because of his experience on the investment side of the business, he has deep insight and empathy for his clients’ needs as he helps them navigate through the financing process. Paul has successfully sourced financing across the country for market rate and affordable apartment buildings, student housing, and seniors housing projects.

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Text WIT (upper or lower case) to 205-858-FLIP 3547, enter your email and you will be subscribed to the Weekly WIT (Whatever It Takes). It has the week’s real estate and Flipping America news, an investing tip, a joke, and a blessing. It’s usually about a 7 minute read, with some optional links.

News and Resources:

Get my ebook, “How to Put Skin in the Game When You’re Running Thin On Skin” for free: flippingamerica.net/skininthegame. I have a brief illustration of a typical capital stack for a commercial real estate deal.

Topic:

Listener Questions

Quote of the Day

Today’s Quote from Michael Scott of The Office:

“Society teaches us that having feelings and crying is bad and wrong. Well, that’s baloney, because grief isn’t wrong. There’s such a thing as good grief. Just ask Charlie Brown.”

Expected Air Date: Friday 10/28/2022

Guest: Paul Winterowd

paul.winterowd@stacksource.com

Transcript

[0:00] Commercial real estate is similar in many ways to residential real estate but one thing is vastly different,
Commercial capital.

[0:16] Music.

[0:31] That teaches you how to make money in real estate wherever you are, whatever your situation, there is an opportunity for you and now, here’s that flipping America guy, Roger Blankenship. Thank you, Kathy Curtis and hello, America.
Commercial capital differs not just in the amount of money but also in the complexity and the number of players in short,
The different components of capital are deployed in a commercial deal or called the funding stack or the capital stack,
Paul’s gonna explain further just a few moments. Now, he is,
An expert debt provider and an active multi-family practitioner with real world experience investing in multifamily assets both as a general and limited partner because of his experience on the investment side of the business he has a deep,
Insight and empathy for his clients need to see help some navigate through the financing process.
Paul has successfully sourced financing across the country for market rate and affordable apartment buildings student housing and seniors housing projects if you have a commercial.
In mind underway,
Or it’s a dream of yours. You’ve got to stay tuned and listen to this. Now, if you wanna get in touch with us here, we’re on Facebook, Twitter, and Instagram. Just look for flipping America. Youtube. Com slash flipping America. Be sure to subscribe and like some content there.
That’ll help us so much as we’re trying to get our YouTube channel kicked off.

[1:54] If you have questions about real estate or real estate investing send them to questions at flipping America. Net,
Extension one, leave your messenger question. Now, I’ve got another number for you too. Hey, to give you numbers right back to back but gotta do it. If you want our weekly newsletter, the wit,
You can text the word wit which stands for whatever it takes to 205858 flip that’s 205858,
3547 you enter your email you’ll be subscribed to the weekly wit it,
This has the week’s real estate and flipping American news and investing tip a joke and a blessing it usually takes about 5 to 7 minutes to read and it’s
Worthwhile. Lisa’s what the people who are writing me about it. Say so.
Skin in the game it will apply to what you’re about to hear from Paul who winter road.

[3:02] Music.

[3:12] Welcome to the show.
Hey, Roger. Great to be here. Thanks for having me. Thanks for joining us, man. I appreciate you and appreciate what you’re doing. And let’s get right into it. We were talking before we came onto the show,
You’re a business model reminds me of lending tree I don’t even know if they’re still in business but.

[3:33] Stack source. First of all, that’s a great name because people who understand commercial real estate investing and know that you’re building a funding or capital stack,
With a combination of debt and equity and all that blah blah blah.
They know where that name came from. So, that’s pretty cool. But your sourcing lenders and I like it, man. I’ve been on your website and I’m digging on this the next commercial property that I look at. I’m gonna be here,
And so tell us a little bit about stack source now came to be.
Our founders have roots in the technology space, Google, Facebook, and also,
Commercial real estate. So, I was.

[4:32] With the idea of,
Quickly realize that that’s impossible,
Business and needs the human touch.
Has has really.

[5:19] We’ve got out and built a lender database and this includes both debt and equity.
For all types of commercial real estate. We don’t do any residential when I say residential. I mean, the one to four single family dwellings. So, anything five units and above multifamily is commercial.
And so we build the database of over 1700 different lenders and loan programs for all asset classes all across the United States.

[5:53] For all types of loan could be land development.
And so when you go to our website,
You can enter in the parameters of your.
Hey you’ve matched with 12 lenders based on the location of the price point the desired leverage whether you want resource,
Your credit profile,
Make sure we pack a job,
And then we get that set out to those lenders and start engaging in those conversations to again not only bring you viable options but,
Assurance that your casting the widest net and get the the best terms possible in the marketplace. Yeah, one of the things I really like about what I was seeing on your site is you break down the range of interest rates from the different types of providers and whether or not,
A personal guarantee is required.

[7:15] I forget the technical term no credit scores not recoursing non recourse yeah sorry,
Get an old john blanks.
And now I was intrigued by something that you said though just now and that is it’s not just debt but also equity you’ve got some equity people out there standing by willing to look at,
Potential deals,
This is something that that I love about our company. We’ve got a team that actually sits in New York that has a global database of of equity investors that can come in to deals. Now,
Larger,
So even 10 1 million in above is a better number,
Smaller balance, equity checks, and we’re continuing to develop those but that’s a market that’s typically served.

[8:23] I’ll buy that friends and family syndicator model like if you need two three in evacuate that’s that’s tip that’s not real institutional at this point in time it’s more of a.
Raise capital from.
Not for business acquisition.
Okay,
And so when there is AA real estate component to the,
To the business and a lot of times there is there’s a lot of businesses that qualify we can we can help facilitate that as well.
Alright, that’s interesting. Now, so it’s a whole range of commercial types of properties and you and I talked about this a little bit before we start recording but I’m interested in branching out into golf course.

[9:24] I have a personal and.
It’s a good question. I don’t I don’t know 100% if our company does but I haven’t I have a little bit of a story that we didn’t touch upon. I do have a client that I’m financed an apartment project for.
That acquired AA golf course,
In Utah that’s that’s where I am that was was in a state of disrepair for for the the grand total of $one so we didn’t really need financing for that it just needed to open up,
It’s water.
Is there there were some some dead space and they were able to to move a couple. Polls around and they were able to create some,
Residential lots for single family homes and so that that became an opportunity they were able to maintain the golf or to capture some of that land.
Some housing there and became AA viable deal for them in a in a situation that was languishing. So there are opportunities out there but I I’m I’m more knowledgeable about playing golf courses than acquiring.
Well, for all of you who are listening that may have a golf course yourself for a dollar, I’ll take it.
Just drop me a line.

[10:54] Now, if I just wanna say this, some of you that are listing may not do anything with commercial and you may be a little confused about the funding stack.
I’m gonna give you a second to collect your thoughts on this Paul but I will tell you guys,
In my little book how to put skin in the game when you’re running thin on skin,
I talk about the funding stack from commercial properties and how I applied it to residential,
On a large scale some years ago and you get that book just by going flipping America. Net slash skin in the game if you do that but.
Pretend that I know nothing and our listeners know nothing and explain a little bit the concept of the the capital stack.

[11:38] Yeah so the the simple components,
Dad component and inequity component. There can be other layers,
And,
So it’s in that space where.
Folks selling coaching programs well so hey you don’t you don’t need any money to do this it’s no money down you can just.

[12:24] We’ll qualify for the financing of the property and that’s that’s not.
But they’re not real attractive interest rates you’re paying it premium for those.

[12:43] However the the coming coming back to your question about the capital stack so the the first piece,
Is is the debt so that’s what we help a lot of our clients put in place is the dad or the loan on the property.
And that’s going to be anywhere from usually 50 to 75.
The cost of the property and there’s different things that we look at,
Is is really a key factor to the sizing of the loan or how much loan you’re qualified for. So, there’s,
There’s a couple factors but what we find most often is,
Hope you also need a 125. Deck coverage ratio. It’s very easy for people to wrap their head around. Okay, I’m buying a one 1 million dollars property. I can get a loan for $750 thousand.
That’s saying the.
Needs to be 125% of the annual.

[14:03] It does. Yes. But that’s why we have construction loans or development loans. I was just gonna ask you. Yeah.
So
Hey make those loans based on proforma like projections,
And there’s a wide range of opportunities from.
A performer or where where we’re going in the future.
People just they need to go to stack source first.
That’s our goal. We.
For Gamma.

[15:05] Music.

[15:13] Hey, are you ready to learn this business for real,
It includes 25 home study courses inclusion at all weekend training events for life group coaching calls for life and monthly one on one calls for a full year,
Invest in yourself and be a part of my flipping America family for life flipping America. Net forward slash.

[15:44] I wish Paul Winter Road here on Flipping America and Paul and I have been talking about commercial funding through,
Stack source and it’s a stack source. Com right yep that’s it stocks. Com now Paul I am going to just go out on a limb here and and imagine I’m gonna bet that when you were a kid,
You were not sitting in the fifth grade dreaming of 1 day being a commercial loan broker.

[16:10] Take Rick.

[16:18] Oh that’s it. That’s a great question. I,
I probably wanted to be a professional golfer.

[16:40] My my thing about golf is I don’t know why they make me pay a green fee I hardly ever hit off of anything green.
Or a woods fee. Yeah.
Alright. Anyway, so a professional golfer. Well, that didn’t work out for you, I guess.

[17:05] I did play collegiately that’s as far as I went with my career so I’m I’m right around the scratch golfer still which my boss
Thinks I’m golfing more than I should but,
Or this is number two actually.

[17:32] Certainly certainly a big influencer interest rates are a huge component of our business,
I would say.
Usually a 5 year tournament place so there’s something’s always got to occur so it’s it’s there’s business to be done but it’s definitely the current climate especially,
Has made things more difficult.
Alright now I’ve got to lay the ground rules for the rest of these questions but here the ground rules are we we have 10 more questions to go through and three 4 minutes to do it so that means,
Talk fast. Here we go.

[18:33] George Washington.
Really paramount.
Alright. Yeah, I can see that. What are the business or economic trends you watch most closely?
Us treasuries.
Alright, that’s that’s interesting. Where are they today?

[19:19] 10 year the 10 year treasury is the one we follow the most it’s right around four got little over four I think we’re.
Right around four. Is there,
Is that why you’re watching it?
Hey, it’s a little wavy but it’s close to Straight. Okay.
On the index and that confluate as the indexes go out sometimes the spreads tighten to make it more viable,
That’s good. Now, the reason I’m bringing up these questions about creativity in this next one are people say these things are really required for entrepreneurs and I’m I say not always.
The next question is there is a lot of talk about pursuing your passion in our circles what role does passion play in your life in business.

[20:20] A bird. I’m very passionate about what I do. I’ve been in the industry about 8 years. I wandered around.
I love what I do. I know this is what I’m doing. The rest of my career. I feel very blessed. To have found that.
But I will say passion is not enough. You’ve gotta have a hard work ethic.
Despite loving and being passionate about what I do.

[20:55] 3 years 1 to 3 years.
If someone walked into your life and said how can i get started doing what you do.

[21:08] Find a way in the industry whether it’s through an internship.
Apprenticeship.

[21:23] You’re not gonna go to college to to figure it all out. You need to get real world experience. Can you get a college degree in commercial real estate? I don’t even know.
There is there are what they call unread programs masters of real estate development it’s the closest thing that I’m aware but a lot of schools will have a,
Seems to me.

[22:04] Yeah, very relative. I,
Okay if you were picking someone to model your business after who is alive and in business today who would it be.

[22:22] I think you stamped me.

[22:34] You know, there’s there’s a syndicator that comes to mind. He raises capital and does projects. Very automated. It’s named Neil Bawis. Built a very.
A great business grow capitalist.
Great mind and and.
Great use of.
That’s cool. I think I’d like to meet him.
Well, that various butt.
Spending time with myself or I’ll jump into my just jump into my work. Right away. Depends on the day.

[23:45] Last question what does it mean to you to be truly wealthy.

[23:50] It’s far more than just money. Certainly.
The relationships that are formed and so.
Is is having rich and full relationships with family.
That.

[24:27] Having having the resources that kick off.
Incoming to facilitate your desired lifestyle
Paul winter road you have completed the random round table of questions here I’m flipping America congratulations,
Get involved in a commercial real estate deal.

[25:06] I would say if they’re if they’re new to commercial real estate there’s there’s probably some questions and some conversations that need to,
To be had first we’re happy to,
Have those intro calls to help explain what what’s good when it’s gonna require to get it done,
We can help I’m I’m putting it down the right path as far as what you’ll need to qualify.
Some information or trying to to find a deal. It’d be helpful to understand what you’re looking for and how to get that finance unless unless you just fold the company and you’re sitting on a pile of cash and,
It does really matter. So, they need to go to.
What’s the website.

[26:13] Right?
What are winter than OWD?
Yeah. Alright. Now, one last question.
9 years ago.

[27:05] Hey you know a short term.
And then,
Finance that loan,
I’m telling you 9 years later I’m still getting people who call me and act like they’re my best friend from yesterday,
Who had they got money for me I get offers for capital,
Every day via text message and phone calls it’s so much that a few years ago I finally just quit answering my phone to any number that’s not in my book already.

[27:53] Guys gonna do that to me? You gonna sell me to those people?
We’re not selling you that any wine or or anything. Yeah. I feel like I knew the answer to that. That’s why I ask you.

[28:03] Let me send you an email or two to keep your far but we we really.

[28:10] Value putting out useful content and educational information keep you informed but yeah we don’t,
You know we keep your your information,
Close to the vast and and don’t even share that with our lenders. Okay, that’s that’s good and that’s really where I was going with that because you may connect me with a dozen lenders but you’re not necessarily providing my personal details to a dozen lenders.
Where in my phone’s gonna be blowing up and so forth,
And we get the same thing every time we go shopping for car insurance or whatever. We they just blow up our phone. People are selling their numbers.
So if you’re ready to get some commercial funding you need to go to bit. LY,
But Dad LY slash stack source.
Paul, thank you so much for joining us today. Thanks so much, Roger. Appreciate it. Be sure to check out the blog for all of the show notes and make sure that you go to flipping America funding. Com for all of your funding needs including
Now a part of flipping America funding. Com through Stack Source again thanks Paul for joining us today and here’s our Michael Scott quote for the day,
Society teaches us that having feelings and crying is bad and wrong. Well, that’s baloney because grief isn’t wrong.
There’s such a thing as good grief just as Charlie Brown.

[29:34] Deep thoughts from Michael Scott and here’s a thought from your host Roger.
You’ve been listening to flipping America real estate investing for everyone. Listen three times a week on stations across the country or on the flipping America app free in the app store
Find and follow us on Twitter and Instagram and keep your eyes open.

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Flipping America 566, Commercial Capital