USDA and SBA Loans Explained: How to Get 80 to 90% Leverage for Rural Deals with Jordan Blanchard

Welcome to the real estate investing school podcast on your host, Joe Chinson. Our guest today is Jordan Blanchard. Jordan is a rural finance expert with over 35 years of experience in government guaranteed lending, specializing in USDA, SBA, and infrastructure financing. He's the co-founder of X Caliber, rural capital. Throughout his career, Jordan's facilitated over $2 billion in government guaranteed loans across rural America. I'm excited for our conversation today, Jordan, see what we can learn from him. Well, thanks, Joe. I had a chance to listen to some of your podcasts and I think it's going to be a great fit and I hope to add something to your content. Yeah, man, this is exciting. So you, I think it's an interesting niche. I was looking to learn more tricks of the trade and things you can do into, especially in today's market. I feel like you got to be more and more creative to really make it work. So why don't you explain briefly to the listeners a little bit about what these government guaranteed loans are that especially specializing the rural stuff? Sure. Let me start with the small business administration loans because that's what people are mostly familiar with. So an SBA 7A loan can go up to 5 million in the companion programs called 504 can go to 10. And it's only for owner occupied. So let's just kind of use that as a base. If we expand a USDA, one of the benefits of USDA is that it can go to 25 million instead of 5 or 10 and it can be used for non-owner occupied in producing properties or owner occupied, meaning a small business wants to buy or build a building. But we could also use it for community development, water and infrastructure, renewable energy. So the uses are just foreign-rater. But in general, obtaining government-enhanced credit provides what I'd say is the following benefits. Number one is leverage. You know, you can get anywhere from 80 to 90% versus conventional as 70 to 75%. Two is the ability to lend on projected income. So most conventional lenders don't want to lend to you unless you have the historical debt service coverage to show that you can repay the debt. And then another big advantage is these are fully amortizing loans. So for the USDA debt, it's generally 25 years. So those are some of the key benefits. And that's why somebody would gravitate towards a government-enhanced loan versus just a conventional. Yeah, essentially. So I think a lot of people don't know a ton about these. People who do a lot of real estate even, you know, because they just do their conventional or DSCR, you know, even me. So like, the BSA, you know, I thought that was more for businesses, but it is, is it, I want to dive into that. But also the USDA, I always just imagined like buying some rural house in the country. You get a USDA loan. I didn't know it was for business investments, non-owner occupied. You can get $25 million. Can you do US, let's talk about USDA for a little bit. Can you use those for like non-Q stuff like mobile home parks or RV parks or anything like that? RV parks, yes, but not mobile home parks. And the designation is residential. So let me just first say that you're absolutely right. Most people here are USDA and say, oh, you make farm loans. Well, we do, but not really with the USDA product. USDA has a subset that's for rural economic development. So I think commercial and infrastructure, they also have a program for owner occupied residential housing, which we don't play in. They also have another program for rural multi-family, which we don't offer. But for the products that we can offer, they're your brokerage company. Yeah. But this is why it's confusing because the USDA has a lot of different programs, but they're very siloed. So the programs that we operate in, you can think of them as business and infrastructure. And they do not allow anything that's residential. So we are not allowed to finance homes. We're not allowed to finance apartment buildings or multi-family. We could finance mixed use as long as the commercial component was greater than the residential. Interesting. So why don't you guys do any of the residential stuff? There's a lot more rules and regulations around lending to consumers. And so we just choose to avoid that altogether. Gotcha. But there are brokerages out there that can do that with these tools. For sure. Yeah. Awesome. So given some examples then, you know, of what the average investor could do with these kinds of loans, BSA or USDA, you know, because not everybody's going to be going and building, you know, utility infrastructure systems for the whole city or whatever you do with these, but what are some examples that the average investor might be able to utilize these kind of loans for? Yeah, let me start with SBA because that's a little bit easier to wrap your arms around. So like I said, SBA is for owner occupied. What does that mean? If you were going to buy a building, your business has to occupy at least 51%. If you're going to build a building, you're supposed to occupy 60% or greater. So it's only for that small business. And the classic use case is somebody's in a 10,000 square foot building, they're doing really well. They want to expand and buy a 20,000 square foot building. Well, they don't have the historical cash flow because they need the increased space to generate more revenue and profit. So in many cases, they will provide projections to the lender. So that is kind of what the SBA is. For USDA, again, it's more varied, but there's a couple of things to consider. So number one, it's the same type of benefit. If you want to buy or build a building for your business, okay, great. But, you know, there are transactions out there where somebody is built a building so that FedEx can lease it or the US Post Office can lease it. So you can use it to build or buy for non-owner occupied. A really big advantage of USDA is the ability to pair with other programs. So a few weeks ago, I mean, you probably recorded a long time ago, but a few weeks ago, you released a recording for the guy that did commercial and AI. That was the subset. And he had a theater in Dentons and he used historic tax credits. We can pull historic tax credits in. We can pull new market tax credits in. We can pull in commercial pace, which we can talk about. And then you start stacking these programs and you get to larger transaction sizes. That's really the big difference between USDA and SBA. That's cool. That's cool. The, let's talk about the business. So some is like, hey, I own a business. I'd love to get some commercial property, rent out 49% of it, make some money. What qualifies as a business? Can it just be like, hey, I have an LLC that I do my flipping business with. Can I go buy a commercial building and say and use 51% of it for my real estate wholesaling, flipping rental business or like what kind of business does it need to be? It's a good question. So I'd say it boils down to three things. One, it has to be an active business. It can't be passive income or speculative. So you can't, I mean, you could buy a business. This is more for SBA. Because USDA allows you to do non-demaroccupied for SBA though. As long as your business with Joe Jensen properties is an active business that receives regular revenue from brokering or what have you, just flipping and selling would be a little bit too speculative of a business. But, you know, if it's all, if it's vertically integrated for sure, that would work. And then you'd go and say, I can, I can occupy 51% at least out 49%. The SBA is unique in that it will allow up to 90% financing. So when I was doing SBA loans, I don't anymore. I focus on USDA. When I was doing SBA loans, I would call it the small business owners 401k. Go buy a building, put up a little bit of money, the amount of principle that you're repaying goes into your savings account. And the building should appreciate over time. And if you can lease out 49%, you probably are covering two-thirds of the operating expenses. I don't know why every small business doesn't do that. Yeah, no, 100%. It's just like, it's like house hacking, you know what I mean? Like, but instead of for your houses, for your business, but it doesn't need to be an active business with regular income. You can't just go create an LLC and be like, Hey, I have this LLC, but they're going to want proof of regular income on the business. Yes. And how long does that last? Let's say you buy one and then I want to switch to USDA because that's your specialty, but while we're on SBA, how long do you need to occupy? Let's say you buy it, you're running your business out there for three or five years or something and then you're like, Hey, we don't need this big of a space anymore because we've streamlined things. Can you then rent out 100% of it, 90% of it? Are they going to come pull the loan if you drop below 51 or what's the follow-up? There's not a defined time frame, but I would equate it to getting an owner occupied home loan. So when you check, I'm going to occupy it, you must occupy it. Now for how long? Who knows? Is it a year? Is it two years? Is it three years? But what the USDA would do is come in and they would investigate that in very rare cases, let me say, but they would investigate and they would look at the totality of the fact. Did you actually move in? Then did you have have some sort of problem in the business such that you had to lease it out just to survive. The SBA would much rather you continue to pay the loan than you stay in and occupy it just because it was supposed to be your own or occupy. So it's really about intent. Okay, so as long as you intend to run your business out of there, then you're good. And that, whether that lasts one year or ten years or whatever, but you're not stuck to that for the whole 30 year. Are these 30 year loans? 25. 25. You're not stuck to it the whole 25. No, and there are examples of people that have grown their business such that they've gotten purchased and used SBA for two or three loans. And so when you go to apply for the next one, you're already telling the SBA, "Hey, look at, I'm going to lease out building number one so I can buy a building number two." And it's a disclosure issue. And you can do multiple SBA loans at the same time. It's not like typically FHA loans. You can usually have one. I guess you can actually have more than one at a time, but it's very rare. But there's not, you can have multiple SBA loans at a time. You can. It's up to the caps. So the more popular of the two SBA programs, it's up to five million. So you can have five one million dollar loans. It's the same for the USDA. It's actually a little bit more lenient. So for USDA, for SBA, it's basically per individual. Each individual can have allocated to them five million. For the USDA, it's actually per borrower. So if you created a business, real estate brokerage of business, then that could qualify for 25 million. If you created a development business, that could have 25 million. So again, as we go through the discussion today, USDA is more lenient than SBA, and USDA is also a program that very few people even know about. So for SBA, there's probably 50 billion a year that's financed. For USDA, it's probably less than two billion. That's why it's just not very many people know about it. And it's the one that's more flexible. It has more money to go around and more options, but it's just less than two billion. That's true. But let me say, we haven't touched on it yet. The critical requirement for a USDA loan has to be in a quote rural. So then the question is, what's the definition of rural and how do you know what is considered rural? So the definition is a town or city census tract of 50,000 or less, not contiguous with the more populated area. So for example, if you were in Texas, this town is 30 and that town's 40, they're not eligible. But if they're right next to each other. So that's the first test. And then the second, well, that's the test of rural. And then the USDA has a map, an eligibility map, that you go to and buy program. Because I said they have lots of different programs. You click on the program you're interested in and it'll spit out a map. It'll tell you if you're eligible to apply. So this USDA, it can be used for businesses or personal or just businesses. Well, it has to have a business function. But like the SBA, the USDA would allow you to own it personally and then lease it to your business if you so chose to do that. So you can't use a USDA loan to just go buy a single family house in the countryside. That's right. That's right. You have a business element. So if you're doing a farm that has agricultural business or some sort of farming business, then you can do the USDA. But if you just want to buy a house in a rural area, USDA wouldn't. If you wanted to buy a house to lease, USDA wouldn't work. If you wanted to buy a house to own, then the USDA has a program to do that. That's not us. If you wanted to buy a farm, USDA has a program for that. That's not us. So for our program, we're commercial and infrastructure. Okay. So USDA, you can do it for just single family. If you're going to live in it. Okay. Suppose an SBA, like that's just businesses. There's no like a branch that you can go get an SBA loan for your house or something. That's for businesses. USDA has a couple different branches. Like say you specialize in the commercial stuff. That's right. Our residential, single family, multifamily stuff options as well. Correct. So what's the kind of maybe you could give us some examples of the kind of things that a normal investor might be able to buy a, use a USDA loan for? Yeah. If you're talking about investors, so there's true investment is what I would call it and there's quasi investment. So true investment would be what I described earlier. Someone's going to buy a building or even build a building and then lease it out to some third party. It could really be any type of third party as long as it's legal, which means not cannabis. But again, I gave the example of a FedEx, but you could build a 10,000 square foot building for at least to a machine shop that wants to occupy it. That's just an example. So it's any commercial enterprise that needs a place to lease. You could lease it to them. Or could you do it? You don't need to occupy 51% of it on the US. Now that's only an SBA requirement. You could lease out the entire thing and have a triple net lease for 10 years and not occupy one square foot of it ever. Yeah. And I want to clarify, a USDA is a little bit more stringent in the credit requirements than SBA. So for SBA, you could generally get up to 90, but you've got to occupy it. For USDA, you can generally get up to 80, but you don't have to occupy it. It's kind of like a home loan. For a home, if you're going to buy a home, you can get 90% plus. If you're going to lease out the home or if you're buying it for rental, then you've got to put more money down. It's a little bit similar vein there. Okay. That's cool. I know I was going to explain that kind of quasi investment. So I look at hotels that way. So for we do a lot of financing for hospitality. And so somebody will come to us and they'll want to build a hotel that's going to be a Hilton or Marriott brand, something like that. But then they're going to hire a third party management firm. So that's really a passive form of income, but both the SBA and the USDA consider that to be an active business. So that certainly qualifies. And then just kind of everything else you can think of. The USDA has some exclusions. We can't do golf courses or racetracks or finance, movie production and some things like that. So there's really any sort of, there's 10 to 12 things you can't do, but that means there's thousands of businesses that you could do where you could benefit from this financing. That's cool. And so you need to bring in like 20% down typically on USDA commercial loans like this. Yes, but so there's two aspects of that. So it's 20% down on the real estate, but because it's a business, you likely are then going to need probably another 5% for working capital, startup expenses, what have you. So you should think in terms of 25% neck weight. Kind of one exception and that's commercial pace. And again, I'm happy to explain what commercial pace is to your listeners if you'd like me to, but what you could do there is get something like a 70% USDA loan from me and then a 15% commercial pace assessment financing to get to maybe 85%. So you can boost the leverage a little bit. Okay. Yeah, what is the pace financing? Sure. So, pace stands for property assessed clean energy and it was created in Berkeley, California as a way for people in the 70s to finance solar. So if you think about it, it was quite expensive back then and there was already going to be a senior loan. So no one was going to do a junior loan that was going to be greater than the value of the home. So in Berkeley said, well, how about if we get people a chance to put a tax assessment on themselves. So for example, if the solar system costs $30,000, they could form their own self tax assessment, go to the county, have it recorded, go to that lender and say, advance me the 30, the county is going to collect it and then they're going to pay you. It's really no different from any other property tax, including school property taxes or Meloroo's for development expenses when a developer goes to develop a property. That kind of morphed into what we call commercial pace. So commercial pace is the same thing. It really is only for ground up construction because it is supposed to be for energy reduction and energy savings. And so you need maybe a little bit better window pain or wall construction. It's nothing crazy. Nothing that somebody's not ordinarily going to do because they already want the savings of the energy anyway. So then it's the same thing. You go to the county and say, this group over here is going to advance me a million dollars so that the envelope is going to be more energy efficient. And because that's a tax assessment, it's not debt. It's non-recourse. It's not on the borrower's balance sheet. It's not acceleratable. It's just a property tax, like any other property tax. So you compare that with the USDA loan and again, generally get the higher leverage. That's cool. Now I know you don't do the residential yourself, but aren't some of the USDA residential loans like a zero percent down potential? - I think so. I don't, like you said, I'm not sure what the multifamily programs offer, but I think that might be right. - Cool, cool. That's awesome. Are these loans, what is the process? Are these a nightmare to get these USDA and SBA? You know, can people actually qualify for these? Are they pretty simple? Or is it like really, really hard? You gotta, you know, give them your firstborn child to pull this off? - Yeah, I think so. - Somewhere in between, but let me, let me go back. So I've been doing government guaranteed, like you said, for about 35 years. And so back in the day, when I was selling SBA loans and underwriting and managing groups that funded them, people would say, "Oh, an SBA loan takes too long." Oh, it doesn't. It's the bank or the lender you went to, probably didn't have the high enough level of expertise to get the loan through the process. And now SBA is relatively efficient, primarily because the SBA has taken themselves out of the mix. So in general, when you go to a bank for an SBA loan, that bank has the right to underwrite you and approve you on behalf of the SBA. So an SBA loan is gonna take 90 to 120 days. The USDA hasn't caught up with that. So wheat as lenders must submit a transaction to the small business, the USDA, and that they will individually review. And now you have a bureaucratic lag time. So we tell people plan for at least 120 days, and it may be five or six months. You might say, "Well, man, "most people aren't gonna want to wait around for that." I'd agree, except when it comes time for construction. So construction projects by their very nature take longer because we as a lender have to wait for the bar to develop a full set of plans and get a full set of construction bids so that we can get an as proposed appraisal. It doesn't for a construction deal, it doesn't matter who you go to. It's a four to six month process. So it doesn't really take that much longer for USDA. So let's say, no, that's good to know. So you know, three or four months for SBA, four to six months for USDA. You know, these are definitely longer timelines than a conventional loan. You know, you're not looking at 30 days. Let's say someone's like, "Hey, I live in a rural area "or I know a rural area, I could go build some infrastructure. "I know they need it." You know, I could go build a 10,000 square foot warehouse and lease it to whoever, right? So they're gonna go do that just to build an asset and make some money. Are they running these numbers like a DSCR to make sure it's gonna cash flow based off the projections? Like, you know, you normal DSCR lender for residential. Though, I hate, if it's not gonna cash flow, it hits a certain ratio, we're not gonna touch it. Which I think is cool for the investor, especially the newbies, because it kind of protects them, right? If they think it's cool, but the lender's like, "No way, this won't cash flow. "We're not gonna give you the money. "It protects the lender from, or the borrower "from doing something they might regret." Is it similar with these USDA or SBA loans? Are they gonna look at that cash flow and make sure that it's gonna be self-sustaining? - How about that? Yep, so there's a few ways that we look at cash flow. Either for operating businesses, historical cash flow, what have you made the last couple of years and year to date? That's one, two is, if it's a brand new business, it's going to be projection cash flow. So we're gonna get your projections and we're gonna run those through the ringer. I mean, they've got to make sense. We have industry comparisons that we can look at to make sure that your ratios are in line. But there's a third party feasibility study that we're gonna hire somebody to validate your business plan and your projections. So that's the second way. And then the third way for more non-owner occupied is going to be the appraisal. The appraisal is going to give a pro-forma net operating income. So market rents minus normal expected expenses, leading to net operating income, and then we're gonna use that figure to determine the debt service coverage. - That's cool. No, I just think that's really awesome because for the average person's like, "Man, I want to get into something more than another single family than I want to get into that commercial space." I think this is a really cool route to go because they're gonna have the assistance of you as their broker and all the underwriters of the USDA or BSBA loans that actually make sure that it all looks good before they actually give them the money, which is a cool way to learn for somebody who hasn't done it before. Are you gonna super-experience operator in another space the commercials that different ballgame? - Let me interject there because I don't want people to listen to this podcast and think it's as easy as going down to the local ice cream store. So number one, the weight works for both SBA and USDA as you interact with a lender. So we are a lender, we're considered a non-bank lender, private credit lender. We have a license from the USDA to make these type of loans. So the applicants never interact with the agency directly, they only interact with their lender. What I would say in your case or in your example is it's not that newbies can't qualify, they can. You don't have to have experience owning a building. However, there's some pretty good hurdles. So number one, you've got to have the cash to put in. And number two, the project has to be shovel ready. What that means you're going to expend dollars to get plans sufficient to get to a contractor to get a bid. There's an embedded cost there. You likely are going to have to pay for the land and the USDA doesn't allow reimbursement. So if you pay more, then you pay more. So there's some problems there. - That's the building, you can't buy the land with these loans. - You could, but what ends up happening? The land is absolutely eligible. But it never works out where the land seller says, "Oh, yeah, it takes six months, no problem. "And if there's any delays, no problems, "they have a hard closed day, usually 90 days." And because you have to get the plans and specs, that would probably take six months, at least. So you generally have to buy the land or own the land already. Doesn't have to be that way, but that's generally the way it works. - Gotcha, gotcha. - And I'll give one more caveat there. So it wouldn't, this is not suitable for somebody who says, "It doesn't happen to build a 10,000 square foot building "and build it and they will come." What it would do is, if you had a local business in town, and they said, "Man, I really gotta grow, "but I don't want to own, or I don't have the down payment." Great, then that entity would sign a letter of intent to lease the building. You'd bring that to us, and then we can identify the tenant. So we didn't want to land on spec, but if you're building it specific for a tenant, that's something that we can do. - Nice, that's cool. What are some of the fun projects that you've funded? You've seen people do with these kind of loans? - Well, we did a sand terminal in South Dakota. I know that sounds weird. The sand was mined in South Dakota, South Dakota, and shipped by Railroad to a terminal, and then it shipped down to the Permian base and to use in fracking. I just think that's cool, that you have that coming from all over the place. We did a project in Texas where they are recycling rare earth metals. Way before we knew where earth metals were gonna be a thing. So they're buying iPhones and computers, and then they're extracting the rare earth metals, and we think that's pretty cool as well. We do a ton of hospitality, so we're involved with some pretty stellar projects. In one of our primary markets, if you can believe, is Utah. It seems like 50,000 or less might be a big restriction, but if you think about it, first of all, that's based on the 2020 census, which was delayed a little bit. But in these high growth areas, you could have grown to 100,000 by now, because people are moving in, and usually, especially in the tourist areas, so we do a lot of deals around park city and what have you. But in the tourist areas where there's a lot of people, there's a need for commercial real estate, even though the permanent population might be kind of low. So we're actively involved in tourism and hospitality. And what kind of tourism and hospitality structures are going in? Are these like hotels? Yeah, primarily. But it could be an event center, it could be a theater, it could be retail stores for gifting things like that. It's really, if you went to park city, any of those businesses you see in park city are going to be eligible. Brew pubs, restaurants, anything. So as far as going back to qualifying, if you want to qualify for a loan like this, let's say you're going to build out, or you are buying like a boutique hotel. You know what I mean? You're going to go buy two or 20 units, maybe 200 units, you're going to turn this, you know, rural motel into like this cool boutique hotel and make it awesome, profitable. Is that the kind of thing you would get a loan like this for? And what would you as the borrower need to qualify? Is credit experience what? I'll tell you what our guidelines are and other lenders may have different guidelines. But for our guidelines, we want to lend to people that have experience in this industry. Now maybe if they're going to lease it out to somebody else, that's a little bit different. And we're not worried so much about, you know, whether or not they have direct industry experience. But in everything else, we want. to see that you've done this before because we don't want you to have to learn, suffer a painful experience, and cause us to suffer a painful experience. So we do a lot of boutique stuff. We're doing a tremendous amount of science, glamping in boutique hotels and everything else. But these are usually well-funded businesses whose primary business is hospitality, who have limited partners where they could raise money both to go in and if something goes wrong they can access to to fix whatever may have gone wrong. So that's what we're looking for regardless of the industry. Hospitality or anything else. Personal credit, a concern. It is, but we're probably a little bit more lenient there. So for example, lots of lenders would say if the person has a bankruptcy, it's a no-go, and we wouldn't do that. What were the circumstances? What's the age and was it a reward or did people just walk away? Somebody owed $10,000 to city bank and they just decided to discharge it. That's not great versus somebody had a medical bill of a million dollars and they just couldn't accommodate it or they had a business relationship that just went terribly wrong. So we're a little bit more lenient there. But in general we're looking for better credits. What is a better credit? I'd say 720 and above doesn't mean that we can't do 700 or 690, but 720 and above is usually something that we're going to feel comfortable. And then you look at the asset itself. You're looking at, hey, is this going to be a viable business? Is it actually going to make money? Is it actually going to be able to pay its debt? You look at the details of that, I assume as well. Yeah, in two ways. So number one, we're getting an appraisal on the building so that we know what we could look with it for if it comes to that. But for any business that is going to be based upon projections, we're going to require that the borrower hire an independent third party feasibility company to independently validate. A lot of people don't like that because it takes time to cost money. But I mean, it's cheap insurance if you're going to start a business, risk hundreds of thousands or millions of dollars every year on money and borrow millions of dollars. That seems to me that's a pretty prudent thing to do anyway. But we're going to have both those reports. I love it, man. This is super cool. We could dive into this stuff for hours, but we do need to get wrapping up pretty soon here. I have a final four questions I would like to ask all of our guests. But before we do that, what is the best way for people to keep in touch with you or to reach out to you if they want to dive more into this and utilize your services? So our marketing team does a great job on LinkedIn. So if somebody searches X-Calibur Real Capital, they will find us. Or if they search my name on LinkedIn, they'll find me. And I respond to my direct messages. So that's probably the best way. If they just search X-Calibur Real Capital, they'll find info at xrceusda.com. It'll go to the appropriate person. Perfect. Awesome. Well, we'll dive into it in the final four questions, Jordan. If you could send a text message to everybody in the world, what's that text message going to say? Seek discomfort. So I think that our society has gotten a little too comfortable, whether it's parking right next to the store instead of having to walk a little bit or many things. Get it out doors, exercise, be more nutritionally disciplined. So seek discomfort would be the message I would send. What's one of the more interesting or gnarly things that you've personally done to add discomfort to your experience discomfort? I don't do it anymore, but I used to go through multi-day fast. That was pretty uncomfortable. So that's probably one of the most uncomfortable things. I would also do cold plunging. Now that I think about it, I'm not doing these things anymore. So what are some of the more things that I'm doing? I try to get out and exercise every day, try to work up a sweat. I am personally very nutritionally disciplined. So while I might want that pizza, it's something that I will avoid because it's just, I don't believe it's good for me. Yeah, I love it, man. So valuable. All right, question number two. What is a book recommendation do you have our listeners should check out? And if not a book, it could be even a podcast or a YouTube channel or something like that. The Almanac of Navarre-RavaCon. So that is my current favorite book. I'm not on Twitter, so I had no idea who Navarre was until I listened to the author and a podcast. I said, oh, this is interesting. And you know, Navarre is like a modern day philosopher. It's not just, it's been an incredibly successful investor. Just this philosophy of life, I appreciate so much. So that would be the number one I'd recommend right now. Yeah, I haven't read that one, but I've followed a lot of Navarre's stuff. And definitely interesting. I'm like, I want to check that one out. I like that recommendation. All right, what is one of the most expensive or interesting mistakes that you've made or seen in real estate investing? So my expertise is lending. And our company will often structure securitizations and securitization will have a senior piece that goes to an insurance company and a junior piece that is supposed to be held by more risk tolerant investors. And I've invested in those. And I've gotten done well with those. I decided to go ahead and say, well, I'm an invested multi-family. Now, only real estate is not my forte, but there was a project in Atlanta to buy a multi-family property. And there was a consortium of investors. I invested it. The thing didn't work from day one burnt down a last all my money. I'm like, okay, I'm good with no more investing in multi-family for me. So you invested in what, a syndication or who was the, how kind of was the operator? And the patient, the place burns down and they didn't have insurance to cover it? Apparently not. Or at least not enough after the senior dad. Let me put it that way. Yeah. And that's an interesting part of it. Where are you in the waterfall, right? Awesome. That's good advice. And I'd like to ask mistakes is that sometimes we can learn from others and stuff, have to suffer ourselves. But if you're investing in syndications, who's the operator? What's your protection? Where are you in the lineup of getting covered? I do a little bit of private lending lately and just here there. But I like to be first position on a property with 50 to 30% equity on it. Because then I'm just super, super protected. And people don't always think about what position they are. You first, second, third, who's going to get paid back before you? Because if you have to liquidate something that you're probably selling at a discount and there's not going to be enough to go around. So something to keep in mind and you experience that firsthand. Thanks for sharing that with us. I actually appreciate that. All right, Jordan, last question. What's one word or short phrase and encapsulate why you love real estate investing? Well, I would say real estate financing. But for me, especially the role focus, I grew up in a world town. This isn't one word. I'm thinking about one word. But I would say opportunity. I love providing the opportunity for small businesses and individuals to grow. Because when they grow, they create jobs and opportunities for other people. So it's very much a ripple effect. So if we finance something for $25 million and it's a $40 million project, that project is going to create a lot of jobs both for the construction and then the long term operation. And to see talent grow because of our involvement is just incredibly rewarding. I love that, man. And I love, like you said, opportunity. That's such a great thing. And it's funny me when I first got into real estate investing, I felt like half my time was studying loans, was studying lenders, was studying what I can do to borrow. Because most people, even if you have a lot of cash, you're going to want to leverage it. And if you don't have cash, you're really going to need to leverage. And so when people can learn, and that's why I appreciate you coming on the show, when people can learn that there's more options. What are the options, the opportunities they could take advantage of to do low money or virtual areas or just so many things they can do that. If you don't know there's funds available and programs available, then you just go, oh, I could never do that. But maybe you can. You can say you get a USDA, you get a pace, you get a private investor to cover it. to the down payment and bam, you've got this, you know, 10,000 square foot warehouse when you thought you could never do anything like that. There's so many ways to do things if you know there's options. And if you don't know there's options and you don't know there's ways and everything looks like a big impossible no. So I appreciate you shedding light on more and more options and opportunities to do it. But man, thanks so much for being on this show. We really appreciate your time. Yeah, I mean, you're providing a great service for people to learn. I'm happy to be a part of it and I'm a fan and now following your podcast. So thank you to you as well. Love it, man. Well, this is Joe Jensen signing off for the real estate investing school podcast reminding you to look for the opportunity. (upbeat music)