Ep 107: Lending to Investors with Aaron Chapman, Security National Mortgage Company
Updated: Dec 9, 2020
Interest rates in the U.S. are far higher than the official numbers show, meaning you should only refinance a loan if you plan to reinvest the equity. Aaron Chapman, owner of Security National Mortgage Company, understands investor lending, and he joins us on today’s show to talk about how he got into the business as well as share some facts about refinancing, scaling a company, and his personal habits for success. Aaron tells it like it is, and he starts our conversation talking about his ‘Quit Jerking Off’ philosophy – how it helps him sift through deals and clients more efficiently as well as forming the basis of the content he puts out in his books and YouTube account. We then talk about how Aaron got into the mortgage business and what his current model of lending to investors looks like. Aaron tells a fascinating tale involving many rough and ready jobs, hitting rock bottom, and then working himself silly to get where he is today. We then take a deep dive into the way the Fed measures interest rates and what this means for the practice of refinancing loans. Aaron explains why people should not be so ready to refinance unless they use the payout to expand their holdings. From there, we take a deeper look at how people should set their baseline when they buy an investment property. Wrapping up our conversation, Aaron talks about how he was able to keep expanding his business and some of the morning habits he practices to keep up with all that is flying toward his team and him. Be sure to tune into this episode.
Key Points From This Episode:
The value of getting a ‘no’ from a client early regarding not wasting time.
Aaron’s ‘no bullshit’ approach to real estate and his attitude of presenting people with facts.
An overview of Aaron’s many hustles and how he got introduced to the lending industry.
How well Aaron’s mortgage brokerage business is doing despite competition in the space.
Aaron’s business model of lending to investors and how he helps educate them too.
How Aaron fell into working with real estate investors rather than selling typical residential loans.
The climate in Arizona with out-of-state turnkey investors that Aaron saw as an opportunity.
What turned Aaron off working with local homeowners from Arizona who buy more than they can afford.
Two ways of structuring loans, and why there is such a frequency of refi booms.
How much higher rates of inflation are than what the Fed says.
A deep dive into how Aaron structures his loans and why borrowers shouldn’t refi.
The only time Aaron would advise refinancing – pulling out equity to expand holdings.
How to reinvest refinanced money to pay back loans without taking on too much risk.
Understanding what loan amounts are safe in relation to income and expenses.
Evaluating whether assets will be profitable via ‘dollar per door’ as well as ‘percentage of income’ metrics.
The value of having good teams for getting the best out of the assets you have.
How Aaron scaled his business to its current state and is coping with all the deals they do.
Aaron’s self-development practices: Waking up early, reading, contemplating, and more,
More on the types of loans Aaron brokers, his jurisdiction, and the clients he works with.
“I lost my sugar shaker years ago in the industry. I just tell people how it is.” — Aaron Chapman [0:04:19]
“Where I’m at today is I finance investment real estate in the conventional lending space.” — Aaron Chapman [0:07:12]
“I tell everybody, you leverage high, you leverage long, you pay off slow, you don’t let people talk you into refi for a rate. You don’t let people talk you into putting more money down than you absolutely have to because the rate is better. The rates don’t matter shit.” — Aaron Chapman [0:26:07]
“Every time you refi just for a payment to go down, you have increased your taxable liability, you have decreased your taxable deduction with a lower interest rate.” — Aaron Chapman [0:26:07]
“Sometimes it doesn’t matter what the asset is. You still have to understand the fundamentals but if you have got a great team and a great environment, things will work out. — Aaron Chapman [0:35:51]
Links Mentioned in Today’s Episode:
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