Table of Contents - Unlimited Property Financing, Mortgage Penalties & More With Scott Dillingham
George El Masri [00:00:01] Thanks for joining, it's George Elmasry, the host of the Laugh podcast, I interviewed Scott Dillingham today, who is a mortgage broker with Lend City Mortgages. Nice guy, at least out of Windsor, Ontario. It was one of my first time is actually interacting with him. He. We spoke in the past. He works with a lot of real estate investors, which was really cool. And we talked about different strategies, including how to finance unlimited properties with Ellender rates. So we discuss how to do that. We talked about lender cashback for four mortgages, which I didn't even know existed, to be honest. So your down payment, cashback. And we kind of talked about that and you'll have to tune in to find out what we did, what we discussed. We also talked about credit unions with great rates. We talked about the current market. We talked about discharging your current mortgage. So the fees that you have to pay your penalties. I had an experience where I was quoted a certain penalty and then the actual penalty ended up being much higher when when I refinanced. So we discussed how to avoid that. Lots of good things in here. I hope you'll enjoy. And if you guys are looking again, I may have mentioned this once or twice in the past, but if you're looking for four to six unit buildings in the Golden Horseshoe area, I'm your guy. Come talk to me, reach out to me, go to well-off Dossie. Either we can do something together or I can get you in touch with some aftermarket opportunities. So reach out. I look forward to hearing from you guys. Make sure to subscribe if you're watching on YouTube and make sure to like this and leave a review on iTunes. Thank you. Enjoy the show. Welcome to the podcast where the goal is to motivate, inspire and share success principles. I'm here with Scott Dillingham today, who is with Glen Citi Mortgages. He started his own kind of little sub brokerage there, and he helps thousands of investors or has helped thousands over the span of ten years. And they focus on rental property financing. He's also got free education for investors. He's he writes tons of articles there. And he also has this really cool thing where he creates an unlimited investor property purchasing roadmap, all with lenders, which I'm curious to hear about. So, Scott, welcome to the show.
Scott Dillingham [00:02:22] Yeah, thanks so much for having me today. I really appreciate it. I'm excited.
George El Masri [00:02:25] Me too. Me too. So let's get started by asking I always ask about your childhood. Where did you grow up? Tell me one or two things you remember from your childhood.
Scott Dillingham [00:02:34] Yeah. So my childhood was different. Actually, my mom and dad, they split up when we were younger, so we moved from the States to Canada. And I've been here since, I think five ish. So we we grew up here and I don't know, I just always knew that I wanted to be an entrepreneur. I knew I wanted to own my own business and do my own thing. So I got into trouble a little bit when I was little because I hated authority. I hated being told what to do. I always wanted to be my own boss. And, you know, I grew out of the trouble stuff, but I managed to be my own boss. So I did what I always planned to do. So it worked out awesome.
George El Masri [00:03:10] Oh, that's great. Where did you live in? In the States?
Scott Dillingham [00:03:13] Well, I was born in Maine, so it's in Maine. And then again, we moved here when I was little. I don't remember much. Obviously, I remember it now when I visit family. But yeah, it's growing up. It's I just mostly remember Canada.
George El Masri [00:03:25] Do you know why your your family moved from Maine?
Scott Dillingham [00:03:28] Yeah. My dad. He or my stepdad. Sorry, he he was an announcer. So there's a local racetrack and they, he did suffer like non popular wrestling companies and he would he would be the announcer. So then they hired him. So they sponsored our whole family to move down here so he could announce at the raceway.
George El Masri [00:03:50] Wow. Interesting.
Scott Dillingham [00:03:52] Yeah. So he he went on and started doing more professional stuff. So obviously I moved out of the house, I lost track of what he's doing and he separated with my mom. So but he kept announcing and doing well and we just stayed there.
George El Masri [00:04:06] So did you ever look into announcing yourself?
Scott Dillingham [00:04:10] No, it wasn't my thing. Now it's interesting, but yeah. Not my thing.
George El Masri [00:04:16] OK, OK. All right. So your base, is it Windsor that we're based out of? OK, but you work with people all over Ontario. Pretty much,
Scott Dillingham [00:04:24] yeah. So from Windsor to Ottawa, we have it down pat like we've got the appraiser's property managers, we've got the whole team sort of set up from here to there. Yeah.
George El Masri [00:04:33] So how did you start working with people that were in, say, Oakville or Toronto or Mississauga or whatever the case might be?
Scott Dillingham [00:04:41] Yeah, we started I started with this company. They were called down payment assistance and they were owned by the Archil partner. So these guys they set up to and we had a program at the bank that I was working for where a borrower could borrow their down payment. So we. We still have that program available as a broker now, but what was different was that the lender that I was working at, they allowed. So you needed a five percent down program or a down payment? Sorry, but the lender would give you five percent cash back. So I met up with them and I'm like, hey, you guys are doing this down payment loan assistance program. I can get your money back because they were borrowing it from private investors and stuff. And I'm like, I can get you your money back right away if you work with us and send us your clients and spread from there. And then they introduced me to some realtors. You know, I had an office that I used to work at and then it just grew from there and it just kept going and going and going.
George El Masri [00:05:38] So that's cool. So this was probably only for owner occupied homes, right?
Scott Dillingham [00:05:43] Yes. Yes, right.
George El Masri [00:05:45] That's interesting.
Scott Dillingham [00:05:47] It's still available. The flex, but the cash back now at that three percent is the most that we have access to where before it was five. So we can get the client the whole down payment back to them.
George El Masri [00:05:59] OK, so is this with an elevator that you're talking about really? OK, can you tell me more about that?
Scott Dillingham [00:06:07] So it's called the program. It's called CMHC Flex Down. OK, so it allows you to borrow your down payment from any source. OK, which is great, but the thing is, is if you're borrowing your down payment and then you're borrowing for your house, sometimes those payments can be hard to make, right, when you have all these payments. So we would give the client the cash back mortgage so they could pay off where they borrowed their down payment from interest. So so the cash back, that sort of gone the full amount. But the ability to borrow your down payment to qualify is still there if you've got a six hundred eighty credit score or higher.
George El Masri [00:06:49] OK, so just to kind of clarify to make sure I'm getting this right, the CMHC flex down. So it's a CMHC product. Is that in combination with bank a bank loan. Yeah. OK, yes. So you get a mortgage from the from the bank and then the CMHC product allows you to recoup the three percent of the down payment that you put on.
Scott Dillingham [00:07:13] Sorry. Sorry. Let me elaborate. CMHC allows the borrower to borrow their down payment, but if the lender that has the cash back. So you got to do this program with a preferred lender, with cashback so you can prepay or pay back most of your borrowing for the down payment. So they even a gift, like normally a gift is not allowed to be repaid or so that, you know, so they say. But with this you can say, my dad's giving me the money, I'm going to pay them back after closing and it's fine under this program. So CMHC, they do charge an increased premium. OK, because if it's qualified under there, they call it nontraditional down payment program. So the CMHC fee is just a little bit higher.
George El Masri [00:08:01] So is that just on the small portion of the down payment that you're getting a cashback on the premiums, or is it on the entire mortgage? On the
Scott Dillingham [00:08:09] entire mortgage?
George El Masri [00:08:10] OK, slightly higher premium. Are the rates a little bit higher with that program as well?
Scott Dillingham [00:08:15] No. Know, you can you can get a regular mortgage if you want the cash back. The rates are higher at that point. But when you look at it in hindsight, what are you going to pay if you charge your down payment, say, to a credit card versus your mortgage? So it'll be better to have the cash back in the mortgage versus 19 or 20 percent credit card payment. Right.
George El Masri [00:08:37] So who would what kind of person would benefit from this program?
Scott Dillingham [00:08:42] It would be somebody more than likely a first time buyer who's got great credit. They just lack the down payment. Which is anybody out of school, right, you get out of school, you've got these bills and so you're saving. So that's that's who this is probably best for.
George El Masri [00:09:00] OK, so what you're saying is that with this program, you end up paying only two percent of the purchase price as opposed to a minimum of five percent as a down payment.
Scott Dillingham [00:09:10] Yeah. So it's still going to be five percent down as a whole, but they allow you to borrow it. So technically, you're borrowing your whole house purchase. OK, OK, so down payment and the purchase price.
George El Masri [00:09:21] OK, so it's not so I must have had it confused with the other thing you mentioned about three percent cashback. That's not the case here. It could be the whole five.
Scott Dillingham [00:09:30] So that's. Yes, you can borrow the home exactly, and you borrow the whole five percent, but the cash that comes into play, if you borrowed the funds from, say, your your credit card. Yes. Because your credit card is going to have a higher interest. So then you get the cash back on the mortgage and pay the bulk of that off.
George El Masri [00:09:47] OK, so it's kind of like two separate things. I know I'm asking a lot of questions about this, but it's almost like two separate things. One is a program that allows you to borrow your down payment, and the second is the program that gives you cash back on the borrowed down payment.
Scott Dillingham [00:10:02] Well, it gives you cash back on your mortgage to pay back the borrowed down payment.
George El Masri [00:10:06] OK, so you're going to be at 100 percent loan to value in that case.
Scott Dillingham [00:10:10] All right. Well, the mortgage is still technically 95 percent loan to value, but as a whole for what? You actually own the house? Yes, 100 percent.
George El Masri [00:10:19] Interesting. I had no idea. I've spoken to a lot of mortgage brokers, had no idea this existed.
Scott Dillingham [00:10:25] Yeah, that's how I got started. That was my initial program. And it just it worked really well. And that's how the network spread so far. But then I just you know, I'm an investor and I just like investing. So I just naturally flock to that. But, yeah, that's where I got started.
George El Masri [00:10:40] Cool, cool. We might as well get into the like the meat and potatoes here, because I was wondering about your unlimited investor purchasing with Alejandra's. Can you tell us a little bit about that?
Scott Dillingham [00:10:53] Yes, so, you know, just being in mortgages, we would get referrals from brokers all the time saying we can only do X amount of properties or else we've got to go to a private lender. So I was a little leery when I left the bank to the broker channel because I was like, they're working with me, you know, how am I going to get this done with clients? So I was a little concerned, but I really dug some some deep digging into lender's policies. And so that's a pretty common approach to many brokers in the beginning in the sense that we're going to make sure that with the big banks and nontraditional banks first and then from there, there's a couple of odd lenders that will do two or three properties, regardless of how many that you have in total. Still a lender's lending rate. But then from there, most brokers that I've seen now this is maybe not obviously all of them, but just from my experience, they would then send them to be lender to continue to grow. But we don't have to do that. We have access to some credit unions who will do this, the lending rates that will do unlimited rental properties. And we even have some non bank lenders like we've got. One lender is is offering a 10 properties, another lenders offering 12, so we just smacks the client out on those lenders first and then we end up going to the credit union, because the only thing with the credit union is they have a twenty five year amortization instead of a
George El Masri [00:12:26] right instead of a 30. OK, so these lenders that you said that will go to 10 or whatever, are they do they offer hillocks as well and that type of stuff?
Scott Dillingham [00:12:36] Not really. They do, but for owner occupied homes, not not for the rentals. So that's why you want to you want to get those products on the first group. Yeah. Like the first five to 10 properties. You want to get those lines of credit there.
George El Masri [00:12:49] OK, and how long are the terms typically with these lenders? Are you getting a one year term or a five year term?
Scott Dillingham [00:12:55] The other five years. So we just did one. It was the client's 12th property. There was a five year fix at two point thirty nine. So it's a little higher because the rates are around two percent right now for big banks financing. So it's a little bit higher, but it's still there. It's it's amazing rates in comparison to to be lending. Yeah, definitely.
George El Masri [00:13:16] OK, that's going up. And then I guess your option would be to refinance it if you need it. Are you able to do that to these lenders that you could just help you pay the penalty, whatever the case might be?
Scott Dillingham [00:13:29] Yeah, exactly. With covid, some of the lenders have scaled back from 80 percent to 75 percent. Not all of them have, but some of them have right now, just because they're trying to make sure that the market is not going to crash or anything like that. But I suspect you don't want to. Deferrals are done and they really have the data on on who is late and you know what the losses are. I think if it's not nearly what they thought it was going to be, I think it will resume more to lending, as usual.
George El Masri [00:13:58] OK, what are you seeing right now? Because obviously there's a lot of uncertainty. We're in October now. At the time of this recording, there are some uncertainty with lenders like Scotiabank. Isn't allowing for my understanding you to use your help for the down payment? I think they're the only lenders so far, major lender that has made that decision. Am I right?
Scott Dillingham [00:14:21] To my knowledge, yes. So they stopped that maybe a couple of months ago, actually. Yeah. So I think they were getting because the same thing happened when I was that I was at CIBC and when I was there, policy changes happened and they scaled back their program. So I think the same thing is happening with Scotia. They probably got their market share in rentals was probably too high. So the governing body said, you know, you've got to scale that back a little bit. So I think that's probably what they're what they're doing because I've seen that happen like with other banks.
George El Masri [00:14:52] Yeah. Is that also the case for owner occupied? If you're getting a mortgage through Scotiabank for your primary residence, you're also not able to use a hillock in that case, right?
Scott Dillingham [00:15:03] That is a great question. I honestly don't know that because I don't do much Owner-Occupied. Mainly rentals. So and for owner occupied, we would generally work with there's a, you know, a few other lenders that we we prefer. So that is a great question. I will find that out for you, though, and let you know for sure.
George El Masri [00:15:21] What is it about, just out of curiosity, for owner occupied, why is it that you prefer other lenders over overcaution? Just out of curiosity?
Scott Dillingham [00:15:32] So I try to get the clients the best rates possible, and that's not always the case with the big banks. Sometimes it is, but I'm going to say 80 percent of the time it's not. And then secondly is mortgage like flexibility. Their mortgage prepayments and stuff with the non bank lenders are better and the mortgage penalties tend to be smaller. From what I'm finding, I don't want to name names and upset lenders, but there are many nonbank lenders where the penalties are half or even a quarter of what a big bank would be charging them. So it just depends on the investor. But some people say, you know what, I only want to work with a big bank. And then, you know, then of course we do. But if they don't carry out, it's we prefer the not not not a bank.
George El Masri [00:16:18] So what are you seeing in the market these days? What are your thoughts on what's happening and what's what's it like in Windsor, too? What's the Windsor market like?
Scott Dillingham [00:16:27] Windsor markets on fire. On fire. It's it's definitely a seller's market. There's a lot less inventory than buyers. I see the market cooling as a whole, like there's less listings and less activity. But on the flip side, I see a lot of the buyers that wanting to get something in the spring and summer that they couldn't because of all the bidding wars. I see them finally securing properties now. So it's really hard to say what will happen. But normally this time of year, like pre covid, it's always a little bit slower, maybe a month after back to school and then it picks right back up Christmas time. It might dip down a bit because. People are on holidays and stuff, and then right after that, it's busy again, so yeah,
George El Masri [00:17:08] definitely, yeah. We're in Toronto while specifically in North York we were looking at a place. So my wife has a condo there or my wife to be very soon. Yeah, thanks. She has a condo there that she had rented for about twenty three hundred a month last year and it was furnished so it's a little higher and now we're seeing the rental rates and not building are closer to like 1758 hundred for the same same type of unit. Wow. And the prices have dropped by about 40 or 50 grand, which is interesting to see.
Scott Dillingham [00:17:45] Yeah, that's huge. That hasn't happened here for sure. But this year was different because Winzer we were behind Toronto and you guys had appreciation for years. Winzer didn't until maybe two or three years ago, winter started to get some. So I feel like we lag probably three or four years after you. So I think if you're starting to see a downturn, we probably will in a few years.
George El Masri [00:18:08] Well, I'm not saying like I only see that in the Toronto area and I don't really do too much in Toronto. I know I own some real estate like Hamilton and St. Catherine's and Whelan's, and those are doing fine. Things are going well. But we're just starting to see, like, the core. It's kind of like the core. Toronto is starting to slow down a little bit, possibly. And then I don't know. We'll see what happens. It might just be a short, short blip.
Scott Dillingham [00:18:32] It's hard to say. Plus, I saw and again, I don't follow the statistics too deeply and closely because whoever writes them, usually they're biased in one way or another. But yeah, I just saw a thing about all this extra inventory in Toronto. So maybe that's that's part of it.
George El Masri [00:18:47] Could be. I'm curious about WINZER. What is it that would what's drawing investors in? Is it mostly for student housing or is there anything else? Are there like any major manufacturers or anything like that that people are going to Windsor for?
Scott Dillingham [00:19:03] Yeah, there's there's a lot going on here now as opposed to before. So students. Yes, that's one. But generally, overall, the cost of living here is a lot less. So you're getting someone that's selling a small home in Toronto where they might get a million, million and a half here. They can get the equivalent home for two fifty to three hundred. Yeah. And they're banking the difference. So we're seeing a lot of people come here for that. But yes, we're we're getting two new bridges. So we have one bridge in one tunnel that goes to the states. We're getting two new bridges. We're getting a huge mega hospital. We pretty much the city. I kind of say it's kind of like a golden horseshoe scenario with Toronto because you've got the water around us on the one side and then you have surrounding municipalities around Windsor on the other side. So there's no room to grow out. So now, like two years ago, a new condo, you would never hear of a new condo coming up. There was no cranes here, but now we have like fourteen different condo projects going up. So it's the emigrations here, like, things are really starting to happen here. So.
George El Masri [00:20:06] Yeah, cool. Interesting. Yeah. So so from from a lending perspective, what are you seeing. People are focusing on a lot right now. The investors that you're working with, are they buying a lot of single family homes, student rentals, multis?
Scott Dillingham [00:20:21] It's a good mix. It's definitely a good mix. I'm seeing a lot more flippers than we used to before, especially because the appreciation now right now makes sense. But it is a mix of everything because we do residential, commercial, like we do it all. So we we see it all like we're refinancing a two hundred unit apartment building here in Windsor. The guy wants to build another one like. So we're doing all kinds of different things.
George El Masri [00:20:45] OK, so you don't you're not really seeing a trend toward one thing or another. It's it's just a mix.
Scott Dillingham [00:20:51] Not not so much. Yeah, I my focus would be on the regular homes if I'm going to invest in the area because there's no more land, it's all spoken for. So regular houses are starting to really go up in value here.
George El Masri [00:21:07] OK, what advice do you have for someone who's building their portfolio? I know I've heard from other brokers that you need to, like, max out certain banks first. We kind of touched on that a little bit. I'm curious to know your take. Some brokers will say you need to max out this bank first and that bank and then you go on to this bank so that you can get as many properties as possible. What are your thoughts on that?
Scott Dillingham [00:21:32] Yeah, no, that is exactly what we do. It's the same type of process, but it depends on the scenario. Right, because some lenders only use half of the rent. So if we need to use a lender that uses eighty percent or one hundred percent to qualify the client based on their income, even though this lender, we might normally hit up when a client has eight or ten properties, maybe we have to use them on this guy's first property because of his debt to income ratio. So it fully depends. But yeah, you always Maxo with the big banks and non bank lenders first and then work your way out.
George El Masri [00:22:02] Sure. Some banks, like, for example, if you are in the process of evicting a tenant and you're having issues and they haven't paid for three, four or five months, some banks will just say, hey, sorry, we're not going to finance you because the impacts are ratio's, whereas other banks will use market rents.
Scott Dillingham [00:22:22] Yep. We we like to work with the lenders that use the market rents for sure. That's something that I'm used to from being at the bank. So I was already comfortable with doing that. So to work with a lender that doesn't do that, it's a sticking point. So we we always work with the lenders that will use the market rents, because even when a client is buying a vacant like sometimes they're not going to have a lease. Right. Because it's a vacant property. So you want a lender that uses fair market rents. Absolutely right.
George El Masri [00:22:48] And what about refinances right now? What are what are you guys seeing from that? And are they being a little bit tighter because of the Syrian situation or are they still evaluating properties like usual?
Scott Dillingham [00:23:01] Yeah, it's tighter. One of the things that I really noticed that they're doing now is now they want the clients and this is all the lenders mostly they want the client bank statements to confirm that rental income is coming in. OK, so that's a new thing that was never before they would use the leases or the T1 generals to confirm income, which they still want. But now they also want bank statements to confirm that they're not impacted by that. So that's a new thing. So hopefully that doesn't last too much longer. But yeah, that's that's real. Yeah.
George El Masri [00:23:32] OK, that's interesting. What about interest rates? What are you guys I know, like you don't really have insider information, but what are your thoughts on where the interest rates are headed?
Scott Dillingham [00:23:43] It's still heading down. Yeah, I actually had a call a couple of days ago with one of the lenders and he opened up to me and he said they had some board meetings and they're discussing the bonds and the rates and he said it's going down. So he said for owner occupied, he said rental will follow you, but owner occupied, insured with CMHC, they're always the best. He's saying we're going to see below one point five this year.
George El Masri [00:24:03] So are we talking about the prime rate going down or just kind of like the bank rate?
Scott Dillingham [00:24:08] Well, I'm not sure per say, but lender specific. They said that they had board meetings and talks and they're lowering below one point five and we should see it within a month. And this is on a five year fixed rate. So I think other lenders you're going to see follow. So it went pretty crazy.
George El Masri [00:24:28] Yeah. Have you ever seen anything like that before or is this the first time
Scott Dillingham [00:24:32] this time of year they're always going up, right? If they're seasonally adjusted, that's good. Usually the rates will go up in the fall and winter, but now it's just weird that it's going down. Yeah.
George El Masri [00:24:44] So what do you what do you make of all this? What should people do if rates are dropped below one point five percent?
Scott Dillingham [00:24:51] I would definitely switch whether it's a rental or owner occupied. Find out what your penalty is. Yeah, look at the new rates. See if you're going to save money, if you will take advantage of it. The Bank of Canada, before this happened, they wanted to raise rates and they still want to raise rates, but they can't. So if you're in the higher rate, like early this year, they were mid threes was a good, good rate, like three and a half, which was a great rate. Yeah. So now you get mid ones. I would do it like pheno your penalty if it makes sense to it. But look at the numbers. If it doesn't make sense, like it's not worth it.
George El Masri [00:25:27] Well how do you how do you determine if it makes sense. Like I can give you an example. I have a property that I got a fixed mortgage on, which was a mistake obviously, but I think my rate was three point eight, nine percent and I still still have a while left on it. So how would you determine if it makes sense?
Scott Dillingham [00:25:46] OK, so what we do is we first have you find out your mortgage penalty and then we determine how long you have left of your term. We can calculate what your interest expense will be
George El Masri [00:25:57] for the rest of your term. Can I stop you for a second that just to interrupt. So I've done that before where like, I had a mortgage with I went into the bank and they go on their computer and they're like, hey, this is your your penalty. So I write it down and then I end up refinancing the property and the mortgage. The penalty ended up being like three times more than what they told me. So how do I how do I know if there's no way for me to know what my penalty is other than to ask someone, how am I supposed to know?
Scott Dillingham [00:26:27] Well, one of the tricks that I learned, it's a great question. One of the tricks is when you get a quoted, your penalty, don't get quoted as of today. That's what everybody does. Yeah. You want to get quoted as of 30 days from now, OK, because the penalty changes daily. So if you have them quote you in advance. Like they'll do even your lawyer, right, if your lawyer requests a discharge statement, he sets a date, they calculate it and set it, and that's what it's set for. So usually if you're just going into the bank and saying, what's the penalty as of today?
George El Masri [00:27:03] So higher tomorrow.
Scott Dillingham [00:27:05] Yes, could be lower tomorrow, too.
George El Masri [00:27:07] How does that make sense?
Scott Dillingham [00:27:08] It's all based on the yield and all the different calculations that each lender has. They all calculated differently. So I couldn't tell you the exact. But I do know that from working at a big bank, it's based on the day. So we would always calculate a month out because a normal refinance takes about a month. And so then you know exactly the rate that you're being given and you can ask them like, say, give me a discharge statement for 30 days from now. And then it's official. Like it's not a quote. It'll be fully official.
George El Masri [00:27:37] OK, so I can just give them that document and just say, hey, you guys told me this, you need to honor this penalty here, not give me. You've charged me three times more.
Scott Dillingham [00:27:48] They may not because they only quoted you as of that day. But if you say, like, I'm selling in 30 days, give me my discharge statement for 30 days from now, it will be accurate.
George El Masri [00:28:01] OK, OK, so that's one way. OK, sorry. So I cut you off. You were saying you need to check your penalty and then.
Scott Dillingham [00:28:09] Yep. And then so we checked your penalty, we checked your interest that you're going to pay for the rest of the term and then we look at the new rates and we match up the term. So if you have four years left, we run it over four years and we see your total savings. So when you factor in your interest that you're saving and the penalty, if it's a positive number, then it makes financial sense to move forward. That's a pretty if it's black and white, you can see if it makes sense or not.
George El Masri [00:28:37] Yeah, yeah. It'll make a pretty substantial difference if you're getting like two, two and a half percent percent lower on your rate.
Scott Dillingham [00:28:46] So I had a client, they were at three and a half. Now, every mortgage is different based on the size. But I think it was a small mortgage like 200 grand. They were a three and a half. And we saved them, I think was like 20 grand over five years of interest just by switching to a new new term.
George El Masri [00:29:03] So in that case, in that case, are you refinancing the property or are you like if it's with the same lender, let's say, is there is there some other way to change the rate without refinancing and getting a brand new five year term, for example?
Scott Dillingham [00:29:19] You can do that, but the lenders are going to charge you a penalty. Yeah, if you do that. So we've got some lenders that if you're just transferring the mortgage, they'll pay you. So I'll call you one of the lenders. Right now, they're giving three thousand dollars to cover any mortgage penalty. And then they've got a rate that I believe it's like one point eight right now, maybe it's one point eighty four. So they'll do the complete transfer and pay three thousand of your expenses to switch. Cool. But that's only a switch so that you just transfer your balance. If you add money to it, then it's considered to refinance and that promotion goes away. But that the lenders all across Canada, so most brokers have one. So your client can visit the broker that they work with and get access to these these lower rates go.
George El Masri [00:30:07] Do you have any other tips for investors now in the current environment or maybe even just general tips that can help investors?
Scott Dillingham [00:30:17] It's it's really hard to say because there's so many different investors. There's so many nations where we're personally really starting to get into commercial. If you're ever in the area, you should come to our identity. It's it's kind of like a we work. So we set it up with for the basement. We have different realtors and real estate related companies that all rent our basement. And that is what I love, is the commercial space, because any every dollar of rent that you increase, your value goes up approximately ten bucks. And it's hard to get that on residential, but you got to start somewhere. So we start up with residential and then we convert it to commercial. And it was the best thing that we did.
George El Masri [00:30:59] So you guys do commercial loans as well? Yeah. Yeah. Interesting. OK, so your advice is start looking into commercial.
Scott Dillingham [00:31:07] Yeah. Like I would start like this one. I could get buying multiple houses. You're like, OK, what next. I want something bigger and better. So as an investor, when you hit that stage then I would start to look at commercial. Absolutely.
George El Masri [00:31:21] Just just random question. Are you allowed to do your own mortgages?
Scott Dillingham [00:31:26] I believe I am, but I never have.
George El Masri [00:31:28] OK, OK. No, that's like a barber who gets his hair cut by his friend.
Scott Dillingham [00:31:34] Yeah, for sure. We have to let the lender know like this is my home mortgage, whatever. So they do extra due diligence. But yeah, I never have.
George El Masri [00:31:41] OK, so probably a little bit easier to get someone else to do it.
Scott Dillingham [00:31:45] I think so. Yeah. OK, I think so.
George El Masri [00:31:49] All right. Sounds good. I know I've got a list here of questions. One of them was what financing options do full time flippers have access to and why should they avoid big banks?
Scott Dillingham [00:32:00] So the issue with the banks is if you flip multiple properties of the bank, they're going to stop lending to you. They're not in the money. They're not in the business to lose money. And one of the VPs at my old bank, they said, like, it cost about a year for the bank to set up a mortgage, a year of interest payments because they have to pay the underwriter. They have to pay the originator. Right. There's all these fees to set it up. So if you're a flipper and you sell that home after three to six months, the bank is losing money. So they'll do a one or two times. But if you keep flipping, they cut you off. And then on top of that, there's potentially mortgage penalties and I know some investors will go variable and stuff to minimize it, but if it's a lender that you want for a great low rate mortgage, you should never use them as a flipping lender because they'll cut you off. So our suggestion is to get an open private mortgage because an open mortgage, you can pay it off at any point in time. So I'll give you an example. Say it's nine point ninety nine percent annually, but it's open. Right? If you divide that nine point ninety nine divided by 12 months, you're only paying point eight five a month. So if it took you two months to flip, you're paying one point six percent interest, whatever set up fees that they have. Like, obviously there's they do charge fees, but that's it. So the interest rate can actually be less and it's quick. They don't care how many times you do it and you're you're good to go. They don't look at debt to income ratio as much as a bank does, and it's a lot easier.
George El Masri [00:33:35] OK, so just go back to what you said about banks cutting you off if you're flipping constantly. How does that work? Like do how do they what do they do to identify you as somebody who's breaking the rules?
Scott Dillingham [00:33:48] Well, so I've never seen the internal system, but I've seen it happen. So they just make a notation on the file of that client's file deep within the bank records. So whenever you do a mortgage for clients at the bank, they open the client's file and every lender has their own name for it. But in there, there's an alert that will come up and say, do not lend mortgages, professional flipper or whatever that whatever they like. If they literally put notes there. I even had a client where they said don't flip for five years so that client could go back for five years. But yeah, they literally make those notes on the on the customers file.
George El Masri [00:34:28] That's so cool. Yeah, it's kind of cool to see that banks, in a way, are kind of just like the give and take with you. If you're if you have a file like especially if you have a good broker, then the broker can make certain things happen, whereas they might initially say no for for whatever reason.
Scott Dillingham [00:34:49] Yeah. Yep. And I would honestly, too, like, if you're considering a big bank, I would have your clients go through a broker to the big bank, if that's what your client wants, whether it's a flip or whatever, because you're going to get that better knowledge than going to the bank directly. Some of the bank's stuff are excellent. But, you know, just from working there, I know that that position where someone walks in and gets a mortgage, that's their entry level. You can get out of high school and work in that position. Yeah. So you risk being someone's very first mortgage client, you know what I mean? Where if you deal with the broker that works with the bank, then you get that experience, but you still get the bank to work with. So, yeah,
George El Masri [00:35:30] I had a client, a lady who is probably like in her 50s and she was looking into moving. So I wanted to introduce her to a broker, but she just kept telling me I'm uncomfortable with that. I've always walked into a bank and and just like I speak to someone there and I just feel comfortable with that. And I was trying to understand it because to me, I've never been that kind of person that would want to just walk I and deal with the first person I see, because I've dealt with a lot of really bad people in the bank that provide terrible customer service. So what do you say to someone who has that kind of fear?
Scott Dillingham [00:36:07] Yeah, I find mostly it is the big banks. I think people, especially the older generation, they've heard stories of the lenders calling back their mortgage money and stuff like that. And I know that did happen with lenders a long time ago. But the thing is, is. I think if they realize that they have access to banks through through the broker, but then you get that expert level of knowledge. The other thing, too, is a lot of clients think brokers charge fees. And obviously, if it's a private or something unique, there will be a fee. But the banks, they actually pay us. So a broker should not be charging a fee if you're working with a bank because the banks pay us.
George El Masri [00:36:49] So there's none of that kind of a separate question. But through private lending, I know it's possible sometimes to get borrowed funds for the down payment. So let's you get a private first for 80 percent and then for the other 20 percent, you get another private or promissory note or something like that. So you guys have access to programs like that. Just kind of curious. Yeah.
Scott Dillingham [00:37:19] Yeah. Like, it's it's harder, of course. Right. When you're borrowing the full amount, it's harder for approval. But yes, there's lenders that allow that. Even Whitby's if there's a 20 percent VTB, we just get the numbers of what that cost is, whether it's per month or balloon payment or whatever it is. And we just let the lender know and we say this is what's happening. And usually the move forward now with
George El Masri [00:37:42] the president, you're talking. Yeah, yeah, yeah.
Scott Dillingham [00:37:45] OK, yeah. The big banks are not going to want to see that.
George El Masri [00:37:48] Yeah. Big banks will not. Yeah. For sure. They don't do any VTP anymore. Right. Big banks like they won't.
Scott Dillingham [00:37:54] Just in the commercial. Not on the residential.
George El Masri [00:37:56] I think in the past they used to allow it. Yeah, yeah. Yeah. Just not anymore.
Scott Dillingham [00:38:02] Not at least not for inclusion. Not that I've seen a while.
George El Masri [00:38:05] Yeah. OK, fair enough. All right, Scott. So before we jump into the next section, is there anything you want to add or anything you want to share?
Scott Dillingham [00:38:13] No, I think just just do your due diligence. That's the most important thing. And build the correct team. Right. That's why I'm sure you're doing this, to educate people and have them learn about you. And I think that if they work with investors, I'm speaking of if they work with people that specialize in investment properties, because no matter if it's a lawyer, insurance broker, whoever, the success rate of that individual client is going to skyrocket.
George El Masri [00:38:39] Definitely. OK, so let's go to the random five. I'm going to ask you five random questions and you just tell me the first thing that comes to mind. And some of these questions are weird. I didn't create them. I just take it so seriously. You know, what's the most interesting thing you could do with four hundred pounds of cheddar cheese?
Scott Dillingham [00:38:59] Four hundred pounds of cheddar cheese. Well, the first thing that came to mind, which is a weird one, but just make a giant fondue and have some cheddar cheese dip.
George El Masri [00:39:10] I was thinking about a cheddar cheese hot tub.
Scott Dillingham [00:39:12] Nice to be fun.
George El Masri [00:39:15] Yeah. I don't know if it would be fine, but that's what came to mind. What what animal would you most like to eat?
Scott Dillingham [00:39:22] Oh, my goodness. Chicken, I guess I like chicken.
George El Masri [00:39:26] Yeah, OK.
Scott Dillingham [00:39:27] Yeah, that one. Yeah. All right.
George El Masri [00:39:31] What problems will technology solve in the next five years and what problems will it create?
Scott Dillingham [00:39:39] Oh, that is a good question as far as creating the problems, I think there's going to be a lot more identity theft because more stuff is going online. But as far as what it will create, I think more. I don't know, I could see creating more jobs. I know a lot of people are scared of A.I. and they're thinking it's going to take their jobs, but they still need people to program stuff. They still need people to fix. I don't know. I can see it opening up a whole new slew of jobs for people.
George El Masri [00:40:09] Yeah, OK, cool. What odd talent do you have?
Scott Dillingham [00:40:13] I can blink my eyes really, really fast. Can you.
George El Masri [00:40:16] OK, let's see.
Scott Dillingham [00:40:17] Honest here. It's so weird. I feel weird doing this for you, but
George El Masri [00:40:24] I don't think the camera can capture all faster moving. Just kidding. All right, cool. What success principle do you live by.
Scott Dillingham [00:40:36] My thing that that I believe in, it's not an official quote or anything, I just think if there's something that you want, whatever it is, just put your mind to it. No matter how big, no matter how small, you will always get it. If it is your dedication, that is what you want, you'll get it.
George El Masri [00:40:52] Awesome.
Scott Dillingham [00:40:53] It's been my life and I always wanted to be an entrepreneur. And I just that was my focus. And Harry are so great.
George El Masri [00:41:00] Good. Good advice. So I think that concludes things. How do people reach you and what services? Which is pretty obvious. But what services do you offer?
Scott Dillingham [00:41:10] Yeah, so obviously mysel we're online city. So Lenn City Seet is our website. It's really cool. You should check it out. Actually, the way we've animated the site and stuff, it's really, really unique. But if you want to apply for the mortgage, you can do it right there. If you want to contact us and have a consultation, cashflow analysis, that type of stuff, we'll do that first. Then obviously we do mortgages, the residential, commercial, we even actually do business finance. So we're helping like we have one client who's buying an international bank. We have access to private equity. We're selling one client is selling their real estate portfolio to Arete. So we take care of that. No, not me, actually. I have a guy that manages and runs that division. But, yeah, we we do a lot of private equity stuff.
George El Masri [00:41:55] Awesome. Awesome. So I'll put a link to your website in the show notes. I appreciate you doing this, Scott, and thanks for sharing your story.
Scott Dillingham [00:42:03] Yeah, no problem. Thanks for having me. It was great. I really appreciate it. All right. Take care. Yeah, you too.
George El Masri [00:42:10] Thanks once again for listening to another episode of the Well Off podcast. Just want to remind you that if you do appreciate the content, all I ask is that you comment. Maybe like it if you can, on the platform that you're listening to it on and finally share it with friends and family. I'd love to get the message out there and it would mean a lot if you can share it. And finally, I just wanted to offer you as a valued listener, a free copy to the roadmap to real estate investing, which is a document that I've put together which helps you identify what strategy would best suit your needs at this current time. You go over certain things that are included in this document step by step, and it'll hopefully provide you with some clarity. So have a look. You can go to w w w well off Dossie Forward Slash guide to download your free copy.