State of Lending in 2019 for Finance Agents & Funding Brokers - #FINANCEAGENTS LIVE 073
Hello everybody welcome, to the first live, stream of, 2019, for, finance agents this is episode number 73. And today, we're gonna give you the state, of lending. In 2019. For finance agents and funding brokers if you're, out there selling money like we are then, you know that you're only as good as the products you're offering, so, what do you have to sell if you're selling the wrong thing nobody, wants it or you can't sell it or it's not funding, you got to constantly learn and adapt and this is one of the things we spent a lot of time with our agents. And offices doing so, today I'm going to aquick Lee run through the nine different types of financing, or financial related services, that we offer on a regular basis, I'm going to go through those tell you what, you're, looking at in 2019, is good because it growing rates going up we're just going down whatever, then, at the end I'm gonna finish it up with our three, big predictions. For 2019 that. Watch. NC note right now January 9th I said. It let's see what happens so running. Into it first of all let's start with commercial, real estate as you, know in 2018, we saw a lot of growth in our commercial real estate product, these are privately, funded real. Estate loans for, non owner occupied properties, and this. Is what we are predicting, going, into 2019. First. Of all the big lenders we've, had a lot of growth, over the last I don't know four five six, seven years it's been growing constantly. While not a ton each year it's been growing considerably we. Predict, that the. Private, lenders who have been funding like crazy, I want I went, and met with some people that are launching mortgage funds like what we have and they said there were two or three launching, every single week what, you are going to see is those lenders are starting to pull back defaults. Are starting to increase a little bit we saw bad in December, last year all, of a sudden like half the loans didn't pay at one time so, lenders, are gonna start pulling back and rates, will increase now, if you already think the rates are high they're going to get higher and this is a national trend you're gonna see on a lot of different stuff so expect. It to be a little bit more difficult, to do get your deals funded if you're going with traditional, lenders you're gonna need the private lenders more because they're gonna have a better risk appetite, but, you're also gonna see them changing their mind more quickly so rates, go up and some.
Pull, Back and not major but some. All right the next one is 401k rollovers, if you have money in a 401k you've, been loving the markets for the last eight years but. What we're seeing we saw it a lot in the end of 2018 and we predict this is going to continue to happen the, market, is, getting. Getting a lot more volatile, people are getting nervous about their, success. Of their returns in the market people, are starting, to pull money out of the market and invest. It into businesses. When before they wanted to keep it there so if you see people get in a 17 18 percent, return in their 401k, not, likely to happen this year it's a good time to pull your money out and invest in a business that, will grow in a downturn so we're seeing it already we expect to see it more in 2019. Next. Product we are talking about is business credit, cards now business. Credit, cards and personal. Term, loans those, two products, are very similar for us so the information I'm going to tell you about one is going to be true for both, of them and. This is the change that we're expecting over the. Past year, we've been telling people the. Ranges we've seen when. You are from the cheapest, we've seen is sixty six point nine percent rate. Up to twenty. Nine point nine percent that's, the range and average. Clients, have, been getting from thirteen, to eighteen percent, those. Are the interest rates we. Expect, the amount of funding, to stay the same if you qualify for fifty thousand last year probably going to qualify for fifty thousand this year we, don't see that changing but. The, rates are gonna go up probably, about two points, so, when, it before was six point nine to twenty nine point nine I'm imagining seven, point nine up to, even thirty four point nine we're seeing the rates go up that high and averages. Are, expected. We expect them to go from, fifteen to twenty percent so expect a mouse, to say the same rates, to increase alright, next product we're gonna be talking about is business, term loans these are SBA loans or this is big traditional, financing, and it. Had banks have been loosening, up some, frankly, for the amount of recovery we have over, the last five years I have not seen that banks loosen up as much as we expected and I don't expect that to change I don't, see a retraction, coming. But I sure don't see them expanding, in 2019. One. Thing you know you're gonna see is Prime is very like Prime's already gone up and these, are variable, rate loans, they vary with Prime so, as prime continues, to go up we expect. Interest rates to go up as well, and interestingly. We, were not expecting, this but last year as prime. Increased, now if you got a loan that's prime plus 2 and, prime. Goes up the, whole loan amount goes up you, wouldn't expect to see a big change from the bank but. That's, not the case what. We've seen is that the banks are actually cutting Commission's while, their interest rate goes up and down with Prime they're cutting Commission, some banks not all but they're cutting commissions to the brokers we saw it with some of our lenders we pivoted to the ones that aren't cutting the rates but you might see that train content, that trend continued going into 2019. All. Right next equipment, finance, equipment finance is an interesting industry, because there's a lot of big banks that do it there's a lot of non-bank, lenders that do that what, we predict. Is that the banks are not going to have a lot of change I don't see a pull back there might be some, pull back on the bank lending and if. There is then. You're gonna see that business go to the non-bank lenders which, is gonna exacerbate the rates, will increase trend. Right so you've got really, rate sensitive, clients they may not, take the equipment financing, that they previously wanted. To do so, as a broker you might see that decrease, but, the non-bank lenders are still gonna be there but, they're gonna be even more expensive if your client didn't like them before they're really not gonna like them now because the rates are gonna continue to go up I'm not expecting. Anything drastic, but, 3, 4 percent, increase. Maybe. More especially, in a riskier industry, that might be hit by some. Stagnation, then, expect, the rates to go up fix. And flip is among. Another your next product we're going to talk about among, all the different products, we offer fix.
And Flip is. Probably. The most aggressive right, we have a lot of lenders that have gone up to that, will finance 90% of the purchase and 90% of the rehab costs, what. We are seeing is the fixing foot blenders we work with they're, telling us behind the scenes that they're seeing. Seeing. Defaults, increase fact, we had one lender that said they didn't have a sink default now they got a ton right and a lot of this happened in the last quarter of 2018. So, two, things are gonna happen rates are gonna increase you're gonna hear that one a lot today rates, are going to increase and you're, gonna see I. Predict. Two, or three major, fix and flip lenders could, just, plain fail, in 2019, that's my personal prediction, what. You're gonna also see is that they're not gonna be going a lender that was going to 90 to 90 will still say they're going to 90 that 90, percent of acquisition, 90 percent of purchase but what they're really gonna be doing is 80 and 80 so they're gonna be they're gonna continue to advertise, what they did in the past but fewer, and fewer people are gonna do it somebody that was going to 80% you're gonna see him going to 75 it's, a 70 and if, you are offering, these products, you know that this is gonna make it harder, to get a deal done because, somebody's. Going to have less money less money, in order to finance the, what. Used to be 10% now they got to put into 20% in order to get the deal funded. Next. Product will talk about merchant, cash advance ACH, what we call revenue based advances, this. Industry. Exploded. For about a five year period and then over the last two years has, been, consolidating. Or retracted. Depending on how you look at it a lot of your probably 20%. Of the lenders maybe 30% of lenders are gone and this. Is not necessarily a bad thing what, you see is the big guys are taken over what. That means for you is a funding broker is that. You, are gonna make less and less each time you offer this you're going to be competing with larger companies, there. Are fewer. Of these loans are being offered because more people have done them and they know what they are so, people will like them less, the. Rates can't really, go up because they're so dang high already but, the Commission's, are gonna decrease if you want to continue to sell this product to make money on it you got to sell it for less or you're just gonna get slaughtered by the big guys that come in and maybe routinely. Only put a couple points in the deals because they're doing, 500. Deals a month and you're trying to squeak out three it's gonna make it harder to compete as a funding, broker I think.
That Is the last no I think we have one more product that we're gonna talk about and that, is debt. Settlement you're going to bring that up put it on the screen debt settlement is not, actually, a funding, product, it's sort of a conclusion. To funding we've. Had a lot of funding happen over the last six. Or seven years, the economy has given grown people, been excited, they've been starting businesses, and, when. That rising, tide has been floating all boats businesses. Have been doing well and people have been pulling out more lending now. That at a minimum the market is sort of consolidated. You're, gonna have a volatility. Not. Necessarily, a lot of growth you're, gonna see more businesses, failure, people that made a mistake in their judgement and pulling out loans are, gonna be looking for ways to get out of it all right and one good way to do that is debt settlement, commercial. Debt settlement hasn't had a big rise over the last couple of years it really, exploded last year and I expect to see the trend continue, more, and more providers, are gonna come into the place into. Into, the market so there's. A couple interesting things are gonna happen one, if. You're offering debt settlement more. People are gonna want it so, that's good but, there's. Gonna be more people offering, it which means you're gonna sign a client up you, might get a commissioner, to and then, you're gonna lose that client, who's sold, by another debt settlement company kind, of crazy I see these clients going they sign up with one then they hop to another then they hop to another then they get some more debt then they go to another one and why. You think you got a client you lost them to the next guy that sold them so, it's a weird thing to make money on you, should only really rely on those first one, or two commissions, if you get more be happy about it because these clients are hopping all over the place all right so that's a run-through on all the individual, products, and from. All that I'm gonna give you Tim, Tim MCS and Finance agents three big predictions, for 2019, you're gonna be able to guess some of these because you've heard me say I'm a lot over the different products but let's jump into it prediction, number, one for, 2019. The. Banks, are going to hold they're. Not going to be doing a lot more lending, they might be doing a little bit less I expect, sort of a steady-state. For, the bank lending and what. That's going to do is it's going to add, to the, trend that we've seen over the last five, or six years where. Alternative. And non-bank. Lenders are going to continue, to grow, I wouldn't. Say they grew a ton over the last year because the banks have been gone but I think that's going to stop is. Is a long-term. Trend we're seeing so. Alternative. And non link non-bank, lenders are going to continue to grow what, I on, a side I think we're gonna see more partnership, between the alternative. Lenders and the bank lenders and when, a bank partners with an alt lender they get a lot of text they could put a lot of money into a space really quickly I think, you'll see the partnership but I don't actually see the banks doing. That second part where they dump a lot of money in as you. Know if you've been in the market a long time when a bank comes into a space that, they're not formed, current, previously, in they, will obliterate, and, hunt bank lenders because, they can do so much lower rates because their, cost of capital is so much lower I don't. Think that's gonna happen you're gonna see the partnerships, but you're not gonna see that explosion, of money all, right so that's prediction.
Number One prediction, number two rates. Will. Increase. All. Right. The, Fed is raising. Rates, rates are gonna go up for all these different reasons the economy as a minimum gonna stagnate. Inflation. Schoen up rates Iringa going to increase in 2019, I'll put, my money on it watch. Him it's already happening it's gonna, continue to happen the only thing that's stopping rates, from increasing, our, usery laws and a lot of the non-bank, and alternative, lenders are finding, ways to lend that completely. Bypass usury so rates are gonna go up in, 2019. That's why I feel the most confident about that prediction, the. Third one which, says sort of a mixed effect on you depending on where you are or, where your clients, are where you're borrowing from so, you're gonna see more and more state, regulations. All right don't, expect, federal, regulations. To happen right now if you're a trump supporter, he's, definitely delivered, on that campaign promise he's been slashing regulations. A lot, not, as much in the lending side is people. That are trying to get money out there would like but. It's, definitely happened, you, don't expect a lot of growth in the CFPB, the Consumer Financial, Protection Board, if you're doing consumer financing you probably love that but. With. The Fed out of it the, states, have, been ratcheting, up the regulations, and it takes a long time for it to happen but they're coming we're already seen it happen in different states over the last couple years expect. To see that more. The more the federal government says they're not gonna do anything and that they're gonna repeal stuff individual. States are gonna do their own regulations, which, is gonna have a real patchwork, effect depending on where you are if you're in California maybe you'd want to sell California, financing, maybe want to set up states where they, don't have the regulation, you could do that and, that's why I say the impact, is going to be real scattered, based on who you are and what, you are offering all right so that is it I do have one extra, random. Prediction, that, I and, another thing that I'm seeing and that's, financed. Everything. Everywhere. Right instead. Of the way it's been with a lot of things where I'm gonna go find this and I got to figure out how to finance it expect. To see financing. Offered, more and more at the point of sale you, may go into a store and want to buy something and say that's too much and you. Don't know if you have your credit card with you they may offer on the, spot financing. Be this on the consumer, side the, business side is a little bit slower to adopt it but I'm definitely seeing, it so, those are my three, and a half big predictions, if you, are seeing any trends please, go. To the notes I think Darren's about to talk so maybe somebody's already said something already I would love to hear your feedback on any of these predictions any. Of the things that happening with individual, lenders put, it in the comments or put it into the notes. At the bottom tell. Me what you are seeing, if you see something different than what I was saying or disagree with me I love that I like hearing people. Disagree. What. Are you seeing that what kind of comments you got coming well so I was gonna make a note. So you're asking about, like. Financing, everything, uh-huh Best Buy has been doing this for a little bit right they will you, know they have a credit card but they'll do like twelve months zero APR. To. Get people to finance their, products, like higher ticket items mm-hm so it's yeah you're seeing it a lot you're, seeing a lot I think you're gonna see interesting applications, at the point-of-sale where. You're there at the box clicking buttons and it says do you want to pay for this over three payments instead of just right away and they, can do an instant approval with the soft poll I think you're gonna see some real interesting stuff you're already seeing it online or different websites a lot, of people are offering their own financing, by, the way we have a really good partner, if you, are a business and you want to offer financing, for your products, we can help you do that we've been using it for the last year for the people that sign up for member, off is's so it's something we can help you do but. Not just us I'm telling you I'm seeing it everywhere unless the market really, moves, down which I I don't think is gonna happen in 2019, you're, gonna just see financing. Everywhere, everybody wants to get into finance, it's the fastest, growing industry. In our economy over the last ten, years maybe, I don't say the fastest, one of the fastest growing industries, as far as GDP and segments, financing. Has been growing at a point that it's alarming some economists whatever, that's what it is it's a trend I expect it to continue well.
If You think about it it might be you, know people. Are looking at their paychecks, and they're coming at a certain certain like. Frequency. And they'll. Take, that as the amount of money they have instead. Of saving up for one big-ticket item they'll pay it over a certain, amount of time that they know, that, they'll have that amount of money for yeah, I mean I think just about anybody would rather pay for on, Tuesday, for a hamburger today, to quote Popeye, so. You're gonna see it more and more it's just convenient, it's gonna be easier, we're not talking about where you go to buy for some furniture and you have to do, 30-minute, application, and it takes three days to approve I'm imagining more. Instant approvals. More. Payment, plans and more types of financing everywhere, on all sorts of stuff all, right so we have a question from Lawrence rescue, V Lawrence West sir, all right hello Lawrence what do we got Sammy, wants to know if we're going to get back into credit repair if we. Are gonna get back into credit repair that is a great question, and. I would love to give you a better answer we've had a, credit. Repair, program, going for the last year, in sort of private, alpha-i. It's. Still there that's. All I can say about that. Credit, repair as you know is kind of a tricky, product. For a lot of reasons that I'm not going to get into right now but there's always a place for and they're always people didn't need it so, I, can't. Answer that question because I don't really I don't want to give you the wrong answer I would, love to, not. Sure I have the right service, to roll out right now and. When. I feel confident, about that I'll go as you if you've been with us a long time you'll. Know that a couple years ago we, did a big launch and, then the person that was running that partnership, had some major medical issues took the entire thing offline and really, mess, it up in the Simpson we've been really focusing on CRE the, private real estate loans because we're just you, just make so much more money getting, a couple points on a million dollars you. Make 20 grand Commission at one shot as opposed to a twenty dollar Commission a credit repair it. Takes a lot of one to justify not focusing on the other but. With, that said there's where there's a need we want to fill that need and we want to work with you if you got a great solution that you've been working with for a long time don't call me up to tell me some amazing story about somebody get removes, bankruptcies. In a day I don't care about that what I care about is a consistent. Provider who, is able to help people sign up communicate. Clearly and have happy customers or more I'm more concerned about good, customer service and, low.
Complaints, Than whether or not their magician, or they do things which sound often sound very illegal I. Don't, want to offer something that sounds way. Too good to be true any. Other comments, yeah. We'll. Stay on Stan Howard wants. To know about the. Cannabis industry, okay. Great, all right good, question. Cannabis. You know that is so interesting, it's, one of these single, most interesting, things in financing. That, I deal with I feel, like there should be lots of cannabis, financing. Already, and there is there's, a well. There is and there isn't right there's, a lot of people offering, it, not. Necessarily, as many people funding it it if, you're in it if you're in the industry you're gonna see a lot of people talking about it there's, a lot of really difficult. Problems. The. Money can't go across state lines and money can't be in a bank a lot of banks won't touch anything. To do with cannabis, because, the banks deal, with federal laws and, who. Knows what Trump or the Attorney General or anybody's gonna do at any moment they're fully within their right to prosecute anyone, so. The. Most likely thing, you're gonna see in the near term is, in-state. Investors. Financing. In-state, customers, and that. Is not something that's scalable or easy to roll out so you're talking if you're a private investor, in California. And you want to pry finance, somebody who's purchasing, a building, for, cannabis in California. It's. Still a problem because you're my name is in a federally, chartered, bank you, know so I. Expect. To see it growing, just like the canopy industry cannabis industry which is growing like crazy, but. Growing in a scale well we could have some sort of a national product, is impossible. It's. Gonna be Patrick so if you're, in there and you're focusing, on it you probably make a ton of money being. A funding broker being a finance agents all about arbitrage, it's all about having something that other. People don't have the, problem is those. Things are changing, the smaller the investor, the smaller the product the more likely it is to be here today gone, tomorrow that, makes it tough to have a consistent, cash flow or business. Out of it you want to be making a ton of money now. Have. The business die and you're. Done you got to pay the bills right. Do. You have a few more a few more comments questions. So. Gregory. I. Apologize. To find this just say Gregory so let's go with Gregory. What about Siri commercial, and residential, reef eyes, according. To him I'm gonna need a commercial refi on a package of rentals that he purchased, and. Wants. To know more information about that sure. Great well we'd love to talk to you about it we don't do anything.
Residential. Conforming. Meaning the owner occupied so as long as you're talking about investment, properties, we'd be happy to look at it as a recap what I expect, to see is that private lenders are gonna have a minor, pullback this year and that rates are gonna continue to go up but. With that said I don't expect a major retraction. And if, the banks do pull back a little bit it's just gonna add to the private lenders so, I think it's a great space to be in and you, know, if the economy does go down the more the banks pull back the better space. You're in with private lenders as long, as the private lenders aren't losing their shirt and having, big defaults. You've got to be with the right kind of private lender that understands. That a default isn't necessarily, problem, it's, only a delay. Yeah. You know think you're gonna have a patient private lender which we are and we have access to so. We would love to look at your deal so again if you're looking for cheap though that's, not going to be us if you want commercial, you, know like I see a lot of guys want to buy hotels and they're looking for four or five percent interest that's not us we, can't help you go, somewhere else but if you're with somebody who understands, that we adjust based, risk we would love to look at your deal yeah, and Francine, had, a comment. About the, discussion, about cannabis, and cannabis industry. But. She said that there is many non-qm, lenders, financing, cannabis, industries. So. Right and and that's exactly what I said I just see it being erratic, and inconsistent, and temporary. Which. Isn't which, great if you want to focus on doing that you, can make a ton of money, but. Strains I'm seeing a lot of people advertise, it so what I really think is happening is you've got a few, people that actually have, the lending and then, a lot of people offering it which, means if. You go off for now you're gonna have a lot of competition, a lot of your competitors are gonna be smoke, and mirrors, yeah. Sorry, to bring in a smoke analogy, with cannabis, but it's the reality they're gonna be offering something that's not really true, and, then the borrower's. Are gonna have a tough time figuring out if you know what you're talking about it and if you're new to the space frankly. You don't know what you're talking about so, you. Know you want to get in with a lender see real track records with. Anything. If you're getting into a new space and you're talking to a lender please, have them show you the last ten things they actually, funded, you. Need to offer what, they're actually doing not, what they say they're doing they're gonna tell you oh well I'll end up to this lend up to this forget, what they said look at what they actually did, and lend, on and that's what you promote to people and then you're not gonna be the guy who's selling, vapor we're all over the place, alright, so Jeff. Has an excellent, question. Awesome, what you got for me Jeff alright. So Jeff wants to know how are you better than the competition how. Am I better than the competition well, you. Know right. There end of a conversation YouTube show done hey, YouTube Michelle that's it's all Darren that's, why we're better finance. Agents is, different. You know we asked, me how am I better than the competitors I could, give you twenty different answers based on whatever products, we offer so. It makes it a little bit complicated so I'm gonna say from the position of Finance agents as an, organization. That, has, sales. Funding. Brokerage offices. Underneath, us we're, different than anybody else because there's really nobody else that does it I know Len, do has a franchise, right, they have a franchise, but you just selling the Len do products.
There's. There's nothing bad about what they do but it's very specific. And we. Got people to go and open a LenDale franchise and then contact us for other products, the. Other alternatives, is you have training. Systems where you go learn how to do stuff and then that's it you pay thirty forty thousand dollars they train you for a week and you're on your own and good, luck alright so if you remember office with us we, train you and work together with you it's a working relationship in that sense we're much, cheaper to get into and when, you get way more because, it's a working relationship where, we grow and succeed together so that's how we're everything competitors, if you go on all the different funding products, there's, too many answers because frankly, we change products, all the time based on what is good so whoever is best we will switch and work with them and that's an advantage over working with one lender if you're working with on. Deck, for revenue based advances, or merchant cash advances, that's, great as long as hon Dex is the right solution for your customer if you need lots of solutions to, come to us and we can help you with that where you try to do it on your own but it's difficult doing everything by yourself so, we're, going with us you bring in with a team versus, trying. To hold. The fort by. Yourself anything. Else it. Looks like they wrap it up with that after. Talking about how amazing we are if you new to the show please subscribe, come back and we'll probably talk about how amazing we are next week next we're gonna be talking about our new, real estate master. Class we did a show about this back in October, before it's live it is now available so, we're gonna talk about what is in there what you get and we're. Still adding more stuff onto it the things we're gonna be adding in the near future please, come back next Wednesday and, learn all about it if you're not. Experienced, in selling private real estate loans you definitely want to get in on this because a twenty thousand dollar Commission is way better than a twenty dollar Commission and it's. Not actually that hard to do we had one member office sign up and they, did five deals in six months and make seventy two thousand dollars in commissions, you could do that too and that's all from private real estate so come, back next week as it is thanks for coming on show 73, and I'm. Out.