Aaron: Good morning everyone, thank you for joining us. As a quick reminder my name is Aaron Pfeffer, I own Spyglass Lending. I do conventional mortgages and have been funding real estate investors for the past, about 12 years, with private hard money loans. Today with me is my good friend and business partner Andrew Dinsky. As a quick reminder about who he is. We share an office space here. So thank you, Andrew, for bringing me in. He's out in the building here in Sherman Oaks at Harmons Company. He is the number 10 out of 180,000 Keller Williams agents across the country, he is crushing it. His area is Studio City, Valley Village Sherman Oaks and Encino and we're gonna talk a little bit about that. If you have any questions or if you're watching this or have any questions, pop them in the comments section. We will get to them. Anything you wanna ask either of us regarding lending or regarding real estate. We're gonna get right to it, I'm going to just fire away and ask him a really quick question obviously and we all know this, the last couple of years, and especially since COVID hit, prices have gone through the roof. What's going on man? Break it down for us. Explain to us what happened. Why are we looking at such an explosion of equity across the board?
Andrew: Yeah, I think there's a lot of uncertainty in the marketplace, obviously the stock market's gone completely crazy. It's up one day down the next day. Part of the end of 2020 and all of 2021-2022 has been a really interesting beginning for the stock market. But real estate, I think, has been that kind of certainty asset class for most people and you have a combination of a lot of people investing when you have a lot of people that don't want to move because of the Corona virus that are scared to sell. You have low interest rates so you have the perfect storm that's created a big surge in real estate appreciation.You know, I think it's going to remain even though we see a threat of a rising industry, which is definitely going to happen according to the Federal Reserve, but I think we're in a good position to remain strong, certainly for 2022.
Aaron: Love to hear that. It's pretty good. A lot of people are talking like equity is gonna continue to go up, we haven't hit that affordability threshold or even if we do there's all these other things in place to keep it going, keep the bull running rocking. And people's equity is gonna go up and buying houses is still gonna be difficult. And maybe you can tell us about that. I mean, what is the percentage of listings that you have compared to the buyers you have and how many of those buyers are you working with? Compared to your team? And tell us about your team.
Andrew: So I'm primarily a listing agent, so I work mostly with sellers. I do take on some buyers but the majority of the buyers that come in, are requesting they work with the team, I do give it to other agents on my team to assist with. Just because I can't be spread too thin.
Aaron: Tell us a little bit about your team.
Andrew: I have five different buyers that will work on my team, five buyers agents, they're all great. I have two assistants. My main assistant is Alex. She does all the operations, transaction coordinating and marketing.Then I have Brandon as well who is also assisting, more of a client care specialist.
Aaron: Pretty cool man, and how many escrows have you got right now? What are you working on? If you don't mind sharing what your month looks like?
Andrew: Right now I'm looking at my pipeline, 8 homes in escrow.
Aaron: Is that normal for you? Is that the standard? Or are you looking to do more than that?
Andrew: You're always trying to do as much as you can without ripping your hair out and still having time for your family and everything they want to do. I learned I need to be a better delegator so I can certainly increase my business. But yeah, it's a lot of balls in the air. As always, I'm always speaking to a lot of sellers and trying to sign up new clients for listings and, you know, provide value to a lot of homeowners. S, a lot of business is coming up. Certainly a lot of new constructions that our team will be listing in the next three or four months and quite a few remodels coming up as well. Along with some other, you know, standard sellers and single family and condos we have coming up.
Aaron: So let's talk about those remodels and new constructions. You say something like that the thought immediately is developers right? That's the keyword, the buzzword that just goes off. Are you working with a ton of developers? Has that been a big thing for you? I feel like it is and I'm obviously lobbying for a pretty softball question. So tell us how you position yourself with the developers especially here in the San Fernando Valley? Or this little pocket San Fernando Valley in the past, let's say decade, and how is your business that way?
Andrew: So I actually started off originally working in the loan business like yourself and when the market in the mortgage market imploded in 2008 and the whole world fell apart. I teamed up with a developer that I met actually at a conference in Las Vegas that was wearing, you know, a shiny coat and nice shoes and I approached him and I said hey you look like you have a bunch of money I have the ability or the wherewithal and drive to go out there and find lender owned property. There were a lot of foreclosures at the time and he was lazy and he just wanted to put his money to work. So he and I teamed up and together we flipped from 2009 to 2012 forty something properties within that time frame together and then I ventured off on my own from 2012 and beyond fixing and flipping properties myself. But I was listing a lot of the properties that I was fixing and flipping and that really started a snowball into a realty business. The way I built my brand and I think, you know, in retrospect it worked out well, was being able to speak the developer language and approach developers that are, you know, fixing and flipping homes and offering to represent their property and also offering to try to find an opportunity for them for their next project. And when you're representing beautiful properties, people look at the homes that you're selling and buyers approach you and say hey we wanna buy homes similar to the ones that you're listing, the ones that you sell. So it really built my brand you know, that way.
Aaron: So that's awesome, that's a great way to do it. So you've got a lot of off market possibilities that you work with. Developers and then obviously you know you're maybe sourcing the property for them and then on the back end that you're listing it after they've completed project right?I
Andrew: It's been very challenging finding opportunities for developers in this market. It's definitely slowed down a tremendous amount. I think most sellers, the psychology of the marketplaces that sellers have all of the control. So in order to find a good opportunity out there it's become everyone jumped into the development space because they see the financial opportunity and how it's unfolded and had in the last decade and it's only gotten crazier. It's been very challenging to find off-market property. So I'm not sourcing an enormous amount of off market opportunities at this time. Really, maybe one a month sort of thing, but I have my go-to developer or two that I go to and share the deal with them and if it's a pass for them I go down the list.
Aaron: But even then, over the past decade you built all these great relationships with them even if you're not sourcing the property for them you're still their go-to listing agent 'cause you've done something great for them, having done it and they're sourcing the property themselves. Even if it's not this incredible deal, they're willing to pay more for it because hey, as we just spoke about, yeah we've been going up, up and up certainly the past couple of years and it seems to be heading in that continued direction. You talked about it, you work obviously with standard buyers and sellers as well so of course you just have standard listings and you know your signs are everywhere around this neighborhood and you seem to be doing very well. I mean what's the key to that success? You know of any realtors out there who want to listen to this and do that? What do you attribute being able to grow that side of the business?
Andrew: You know when I started in this business, and I started to take it really seriously, I had my number one rule:I don't want any seller or client that I ever work with to be unhappy. So I go to great lengths to make sure everyone is as satisfied as possible and the clients that I serve in the past have really acted as the best salespeople for me pushing my business. So it's really just that being someone that they can really trust and just doing an amazing job and being available for them. That has really helped my business growth. So I'm an open book, anything I've sold is online and when I meet new sellers I let them know all the time, I say hey, I'm an open book you can contact any seller I've ever worked with you can see all of my history. I'll give you their name and number and pick three or four of them and you can speak to them and see how well of a job that we do.
Aaron: OK so you know if you don't mind sharing some numbers, what do you do in ‘21 and what are you looking to do in ‘22 and beyond?
Andrew: Volume wise, myself I, did just over $120 million and in residential sales in 2021
Aaron: That'll put you in the top ten across the country for Keller Williams; that's massive, yeah that's a lot!
Andrew: It was a great year you know, in that respect in 2022 I've set my goal of doing $200 million total so that another 40% or so increase.
Aaron: That's just you or you and your entire team?
Andrew: That is just me. I actually I have a goal of hiring a certain number of new agents, I don't actually have a total team goal volume yet but I have for myself
Aaron: Let's talk about that. You want to scale the business up. I mean, what is your plan to do that? Without giving away the farm, I mean or behind the scenes. How many agents do you hope to attain and what's the Dinsky team gonna look like a year from now or five years from now?
Andrew: Sure, I'm really looking for quality agents that I think have a few different characteristics. One is they have to be very trustworthy and to me, I really feel my gut has to tell me that they’re someone that I can trust with my brand. That's definitely the most important thing. And then secondly is really having that drive. There's a lot of real estate agents in this business that think because they get a license all of a sudden business starts coming to them but the reality is even the best in the business, the guys that do a tremendous amount of business each year, really are consistent. And that's the keyword. Consistency is really the key to greatness in this business. They're consistent with doing income producing activities, which is mainly prospecting for business. We're in the lead generation business so you can't ever take your foot off the gas. You have to be prospecting every single day. So as long as agents join the team and they’re of that understanding that they're not joining the team just for me to give them a free hand out of a bunch of leads, and I certainly do overtime as they prove themselves, I think they're gonna be successful. And I offer support to help agents along the way. I think agents want to join a team for three reasons: structure, support, and leads. I certainly provide the structure and how to be successful and it can give them a blueprint on a road map for that. And then support, we have the couple assistants on my team that I mentioned and I'm looking to hire a couple additional systems to support the staff and the agents as they come on.
Aaron: Those are three pretty good pillars for a company. At this point, where are you, and personally what's the percentage of your business that's referral and how about all the marketing efforts and money you spent out there. I mean month by month, what are you getting from new marketing, new clientele and what are you getting from just referral business from what you've done in the past?
Andrew: Last year was about 40% of my business was referral business. So that took a big jump for me. I think starting off I was always a little bit of shy asking people within my sphere of friends and family, people that I know for their business. I felt a little bit uncomfortable about mixing the personal and business thing and I've learned to get over that a little bit but my referral business has really grown by being able to understand how to ask for business from past clients. In addition to that about 20% of my business was incoming leads or new leads that were brought on that were either from referral sites like you can sign up for or you know Internet type of marketing. We have a Redfin partner agent relationship where we receive a lot of leads from them.
Aaron: By the way, to be Redfin do you need to have reach kind of like a certain status or can any realtor do that?
Andrew: Really good question. They definitely have some sort of qualifications. I don't know how high the bar is. I think it's pretty low. I think you just have to have some sort of license. I would encourage any agent starting off to look into that and potentially partner with maybe another agent that does have a little bit more experience with them with than them and maybe they act as they can sign up for the Redfin partnership and they can work together in tandem on that because it's free leads. The challenge with them is most of them are buyers and buyers are hard to place in this marketplace, especially at the price point that Redfin is giving out. So Redfins is giving out leads at least to our team typically $800,000 and below and that is an extremely competitive price point up here in San Fernando Valley.
Aaron: I appreciate that, we just got somebody watching us who just said good job fellas so appreciate that. Terrax, I had a good friend of ours watching all the way from the middle of the country. I see you buddy, hope you've been well. We got about 5 minutes left so switching gears 'cause I just grilled you for a little while. Any questions you got from me? Anything you want to know from my side of the fence, from the lending world as a realtor or just even as a borrower that's been on your mind?
Andrew: Definitely, so the mortgage space has changed a lot since obviously the mortgage meltdown of 2008 then you've seen any creative lending products come out in the marketplace in the last you know 12 months or so or do you see anything on the horizon that you feel may fuel or help fuel the real estate market?
Aaron: I love that question, that's good. Well, we're investors ourselves and there's always been that feeling that real estate investors do help fuel the market and if there's a product that has come on the market, I'd say in the last year or will continue to come, 'cause I see so many lenders now marketing to me as a broker trying to get them to bring these loans was known as a DSCR loans. So debt service coverage ratio loan. Absolutely, this is a major product and really what that means is you know, the borrower, the real estate investor doesn't have to prove themselves anymore. You don't need tax returns, they don't need their financials or whatever it is. It's really about the debt service coverage ratio. They have single family houses all the way up to multifamily building. Are the rents covering enough, and you know the loan to value ratios have gone up on these loans in a big way and they're all the way up to 75% and again the qualifications are a lot easier so this product is huge and that's it. They just need the rental money to cover what it is for their debt service for the loan, that's it. I see this becoming a much bigger thing, and of course, people would think it's the opposite of that because the rental moratorium that was put on this country for so long because the COVID, but really in the long run you just haven't seen that many defaults Most people are continuing to pay their rent, finding ways to do it. And you're also seeing rents just skyrocket just like the equity has across the country, so the lenders have picked up on that and they're saying hey for the people that are defaulting that's OK. There's enough people who are still paying that we're willing to take the risk and make these types of loans. So that product alone I think will help continue the trend in whatever it is because the investors are out there just picking up property left and right, happy to take on the new rental market.
Andrew: A follow-up question that's interesting as far as the debt service coverage ratio loans. Airbnb a lot of people are doing short term rentals on their vacation homes, rental property and they're achieving a much higher return or cap rate. Are these companies that are offering the debt service coverage ratio loans? Are they taking new account short term rental income or does it have to be based on a market rent for a monthly or yearly lease kind of thing?
Aaron: OK, interesting enough. Yes there are a few of the lenders who are starting to pick up on Airbnb or VRBO we're just putting.com whatever the short term stuff isn't. Sure, you obviously have to prove that in a little different way, they just kind of like a standard lease or in a stoppel for that lease. But there is a caveat to this, this is interesting. It just pops into my mind if you're asking that question to say, OK the lender will use the short term money and the rental space for Airbnbs the appraised value of that property, they may otherwise be looking at it as a long term rental, and those numbers are going to look very different. And anybody who's ever rented something special here in Los Angeles or around Los Angeles might say hey if I do this Airbnbs on my property I might get $15 grand for the month on it but if I rented it out long term it's $5000. Well the appraiser has to take into account the value of $5000 on the long term rental, right, and use that on the income approach. And that's gonna keep a value down, otherwise say if I'm renting for $15 grand a month and I put this out over 12 months and I take a gross rent multiplier like my property is worth three times the amount. Well no, not necessarily the case. You're still looking at the concert around the area. You're still looking at the long term rental comps, so you know, the borrower has to take that into account, the lender certainly taking that account. There are some lenders who are doing it. Yes, that's gonna become even more of a rage. I mean everything is on the table now, I've got lenders that are using crypto funds as the proof of funds to show what people have in their reserves as opposed to just like a 401K money in the bank. There are lenders out there looking at everything now
Andrew: Yeah, that's interesting. Yeah, I can see those challenges of someone taking their properties worth significantly more because of the income they're generating on the VRBO or Airbnb but not being reflected in an appraisal. So yeah but that's what definitely gives the marketplace. So that's something to be excited about debt service coverage ratio especially on maybe the commercial space multifamily and that's some more lending there.
Aaron: So we just did the 20 minute mark which is pretty good. Appreciate the time today and the look at you. You and I can sit here and go back and forth forever and cover a million things but you got things to do. I think you've got, if I know you, you gotta run out to a property already and get out the office and do something. I'll get back to hit the phone and see if we can get some business generated today. But I appreciate you coming on doing this today and we'll post this all over our social media so anybody who didn't join us today can watch it. Thank you very much.