Buying Unlimited Properties with Scott Dillingham

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Podcast Transcription

Dave Dubeau [00:00:09] Everyone Dave Dubeau here with another episode of the property Profits Real Estate podcast today zooming in all the way from beautiful Windsor, Ontario. Scott Dillingham, How are you doing today, Scott? I’m doing great, Dave. How are you? I am fantastic, so I’m excited to talk with Scott because he’s one of those rare individuals who is a mortgage broker and a real estate investor, and he focuses on working with weirdos like US real estate entrepreneurs who are doing multiple mortgages. And we’re going to be talking today about how to really dial that in and actually buy unlimited properties. So I really like that idea. So, Scott, why don’t we start with, you know, what are some of the biggest issues that you’re seeing real estate entrepreneurs having these days when it comes to getting financing for their deals?

Scott Dillingham [00:01:01] Yeah. David, that’s a great question. So the biggest issue that I find is people, they’re either being maxed out by one of two things. They’re either being told they have too many properties, they can’t move forward or they’re being told their debt ratios are too high. They can’t move forward. So we’ve got solutions for both. So for the maximum properties, right? Yeah. Every lender has their own rules and criteria for what they’ll support. And we’ve sort of made a map. No, it’s not a map that we share because it’s, you know, nobody can do kind of what we can do, at least that I’m aware of. But what we do is we’ve mapped out the lenders who does what, how many properties. And ultimately, we’ve created the roadmap to get investors unlimited properties. So it doesn’t matter if you have five, you have 10. We help the realtor in Toronto ninety five and we helped him to keep growing. So it’s quite easy for us now for the debt ratios. What we do is we’ll partner up with the different lenders, so most banks and the starting lenders, they’ll only use half of the rental income. So then we’ll keep looking for alternative lenders that are still lenders great rates, but they’ll use anywhere between 80 to 100 percent of the rental income. So then when it gets. Yeah, so that kind of gets the client passed the debt ratio threshold. And if that still doesn’t work, then we can look to the commercial end because we’ve got a commercial division as well.

Dave Dubeau [00:02:32] All right. Very cool. So, Scott, I mean, I know you’ve got a lot of years in the trenches, if I’m not mistaken, you used to work exclusively for one of the big five banks in Canada. Since then, you’ve become a mortgage broker. What’s the difference for a real estate investor working with a mortgage broker versus working with his local friendly bank that he’s the bank with? Yeah, she’s been banking with us for the last 20 30 years.

Scott Dillingham [00:03:00] Yeah. So I mean, I think the big difference, there’s a couple of them. So the first difference is choice, right? Because your lender could say, OK, I’ve got you pre-approved up to 500000. But if you’re having a hard time finding a property at five hundred thousand, then that person should call a broker who has access to multiple lenders because then we can partner you, like I said, with a lender that’ll do 80 to 100 percent. And now your pre-approval DAX up to maybe seven or eight hundred thousand as opposed to five. So that’s something that people don’t realize, right? Their lender will say, this is what you can get and they think that’s it, but that’s not always it. So that’s one of the things, but also policy, right? The big banks are always changing the policy. The lender that I started, that was unlimited properties when I was first starting. Then they went down to 10 properties and then they went down to five. So that’s what I had to leave. It just it wasn’t working for my clients, but that happened over a span of 70 years. Those changes, so it happens to all lenders all the time. So if a lender changes their policy, when you’re dealing with a broker, we’re aware of those policy changes and then we’ll just substitute or swap different lenders. That’s all. So we’re always getting the client the solution as opposed to shaking their heads and seeing see later. We can’t help you anymore.

Dave Dubeau [00:04:15] Right? Yeah, that makes a huge difference. So, Scott, if I’m not mistaken, do you focus more on people who are in the single family home space all the way up to duplexes, triplexes for Plex’s? Or do you go into commercial as well?

Scott Dillingham [00:04:32] Both. So me personally, I do up to eight units or less as residential because we’ve got a lender that’ll do up to eight units. OK. So that’s what I focus on. And then anything above that I was doing all the commercial deals myself, but then we’ve hired a full time commercial rep, so we’ve got them all trained up, plus a different experience from the business finance background. And he’s been doing that stuff for years like equipment leasing and stuff like that. So it’s a great fit. So I trained him on what I knew, and then he took off and reached out to all these lenders and built up a huge pool of investors and what they used. So we do both. But me personally is a units to us. All right.

Dave Dubeau [00:05:12] So Scott, I know you work a lot with real estate entrepreneurs. That’s your main focus. But I’m not mistaken. It’s not the first time homebuyer trying to get their first mortgage. It’s more people like us that are looking to buy revenue properties. So what are some of the biggest mistakes you see us making when it comes to trying to get financing?

Scott Dillingham [00:05:36] Yeah, I would say the biggest mistake that I see investors make is not analyzing all the expenses properly. They’ll look at the cash, the mortgage, the taxes, and then they determine they’re going to make $700 a month. But in reality, when you really look at the numbers, maybe it’s only two hundred a month attorney. So if they ran the numbers properly, would they have still bought that $200 a month? Stolen property, or would they have tried to find something different? So that is the biggest mistake, is not doing the proper due diligence on the numbers.

Dave Dubeau [00:06:08] And any suggestions on how people can then understand how to do that due diligence better or have a better tool for doing that?

Scott Dillingham [00:06:17] Yeah. So one quick tip that I have my clients do, that’s super easy because numbers don’t lie is ask the previous owner for his tone general. So his tax return, he can wipe out his social insurance number or whatever but send us the numbers on that property and you can clearly see the expenses that are in that property and then you use them forward to run the numbers.

Dave Dubeau [00:06:41] So you’re thinking they’re not fudging their numbers so much when it comes to the tax man.

Scott Dillingham [00:06:47] Probably, I mean, you could still people still do, but when you leverage that strategy, it’s going to be pretty accurate.

Dave Dubeau [00:06:54] Yeah, now that’s a very good, very good tip. Excellent. So, all right, so we’ve covered a little bit about what some of the bigger mistakes are. What about when it comes to your clients actually applying for financing? What are, you know, because my experience has been that over the years and over the decades, it’s become much more onerous. The amount of paperwork has gone from this to this, it seems for each deal that you want to be doing. What are some of the other mistakes people are making, whether they’re trying to get this financed?

Scott Dillingham [00:07:25] I think some people, they try to leave out information because they don’t want it to hurt them, or sometimes it can help them. So for an example, say you’re going to a bank that only does five properties. They might leave out their sixth property that they bought. And then when they switched to us, let’s say they’ll still leave out that property and we’re like, No, no, no, that will help you. That one has good income like we want to see that. So I think some people leave things out thinking it will hurt them. But in reality, the more information that we have, the better we can paint the picture even getting creative, right? I’ve seen some clients that have chosen super quick mortgage paydowns with very short amortization on rental properties hurting their cash flow in their future borrowing ability. So we’ll suggest to them, Hey, you know, you might want to extend your amortization over their lower your payments and increase your cash flow. And if your lender won’t allow you, maybe we can swap lenders to one that’ll give you a brand new 30 year term to help optimize their portfolio and their financing capabilities.

Dave Dubeau [00:08:28] All right, which makes sense. Perfect. So, Scott, any other tips for people when they’re let’s look at it this way, let’s say it’s somebody that’s just getting their first or their second rental property. They’re thinking about getting it another property under their belt. Any other tips or suggestions when it comes to getting financed properly?

Scott Dillingham [00:08:51] Yeah, I think to make it easier for someone, it is best to try to stay with your one broker or one lender as you grow, because what will happen is we can recycle documents. So like you said right now, there’s a lot of documents. It’s cumbersome to apply for a mortgage, but if you’re with the same person and they can help you to grow, it’s easier to update. Other than that, it’s hard to see every client is different and everybody’s scenarios different. So we like to at least run their cash flow first before we give them a yes or no. But then from there, we can make recommendations on their portfolio and give them suggestions to make it easier.

Dave Dubeau [00:09:33] All right. So if somebody is kind of watching this, they’re not getting started or they’re not sure who they should be going with as a mortgage broker. I mean, obviously you want them to go with you. But I mean, what? You know, you’re in Windsor, Ontario. Let’s say somebody in, you know, tucked to the Northwest Territories, something like that. They want to find their own local mortgage broker. How would you recommend they go about finding a good one from a real estate investor point of view?

Scott Dillingham [00:10:03] Yeah. So I would ask them if they’re if they had asked their broker if they’re an investor as well. I’m so if they say no, it’s probably not a specialty of theirs. But the other thing has just too quickly asked them how many rental properties they can finance. My neighbor and I don’t want to say any names or anything, but he’s a mortgage broker as well. And before I got into it, he told me the maximum that he can do is four. I was like, what? That’s crazy. And I worked at the bank, so I didn’t want to leave because I’m like, I don’t want to go from five to four now. But really, it came down to that’s his pool of lenders. Every broker has their own pool of lenders that they work with, and you have to qualify for a lot of the different lenders. You have to commit to so much volume. And if you don’t do that, they say sayonara right and you don’t have access to them. So it just comes down to what type of business they get and if they’re qualified to work with those lenders that do rental properties.

Dave Dubeau [00:11:00] Yeah, now I’ve known a number of mortgage brokers over the years, Scott, and you know that focus on working with real estate investors. And you know, I think, correct me, if I’m wrong, the vast majority of mortgage brokers really focus on mom and pop homebuyers, right? So first time homebuyers are just regular people buying a house every, you know, moving every whatever five to six years and is very, very few mortgage brokers that really are specialized with real estate investors because even on the surface, it seems to make a lot more sense. It’s actually it can be a lot more work in certain ways for you. So in some ways, just regular homebuyers is easier to deal with then than a real estate investor. So. It’s finding that mortgage broker that ideally has experience investing themselves, and B has a lot of experience working with other real estate investors. Yeah. Yeah. OK, very good. Now you guys, you’re based in Ontario, are you able to work with people across the country or you have to just stick with folks in Ontario?

Scott Dillingham [00:12:08] We do so our licenses in Ontario, but we’re part of dominion lending. And through doing your lending, there’s a platform called Access Desk. So we still pick the lender, we still pick the underwriting. But the kind of piggyback someone on the application. The client never speaks to them. Never does any of that stuff. But because they’re piggybacked on the application, we’re able to lend in all provinces.

Dave Dubeau [00:12:30] That’s good to know. So. So somebody can work with you and they don’t have to be in Ontario. They can zoom in, right. You can get all the stuff you can get. All done is just not going to be your signature on the final documentation.

Scott Dillingham [00:12:41] Yeah, exactly.

Dave Dubeau [00:12:43] OK. Very, very cool. Awesome. Scottish people want to find out more about you and your company. First of all, land city, right? That’s I like the name of your company.

Scott Dillingham [00:12:52] Yeah. Yeah, thank you. Thank you. Normally, I’m told that normally they don’t allow unique names like that. But I know at the time, Jim and your lending wanted me from the bank and we work things out and I was able to use it. It was pretty cool, but yes, it’s LendCity is our website. So through there, you’ve got a Rogers or phone number. If you want to apply online, all of that’s there. And then we also offer a unique product called lifestyle mortgages. So every mortgage that we do kind of comes with fun, like we have events in person and online that people can have access to courses, but real estate investing in different things. Nothing like what you pay for it. Just like the basics to get somebody started. But we’ve got all of that in there and it’s a lot of fun

Dave Dubeau [00:13:37] actually and very good. And for real estate investors, you also have very interesting educational platform as well. Why don’t you tell us a little bit about that, Scott?

Scott Dillingham [00:13:45] Yeah. So it’s called the Canadian real estate network. So it started off as just a basic blog multiple years ago. I think it’s been four or five years now, and I had the goal of setting creating a new article every two days. So we’ve been able to maintain that to this day. So we’ve got nearly 600 articles about almost every topic I can come up with about real estate investing on there. So for somebody who’s looking to get started or get more information, just even learn about it, that is a great resource for somebody just getting started.

Dave Dubeau [00:14:20] Fantastic. Awesome, Scott. There’s been a lot of fun. Appreciate your time and your insights.

Scott Dillingham [00:14:25] No problem, Dave. Thanks for having me. It was great.

Dave Dubeau [00:14:28] All right, everybody. Take care and we’ll talk to you on the next episode. Bye bye. Well, hey there. Thanks for tuning into the property Profits podcast if you like this episode. That’s great. Please go ahead and subscribe on iTunes. Give us a good review. That’d be awesome. I appreciate that. And if you’re looking to attract investors and raise capital for your deals, we invite you to get a complimentary copy of my newest book right back there. There it is the money partner formula. You got a PDF version, an investor attraction book dot com again. Investor attraction, book dot com. Take care.

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