"Don't shred those tax returns just yet!" Chris Barker spills the beans on creative financing for self-employed folks in Part 2 of Exit Strategies Radio Show.
Chris is the number one Account Executive in the nation and has closed over 100 loans a month several times for the last 20 years. He is the senior account executive with Angel Oak Mortgage Solutions.
Learn how bank statement loans can help you buy that dream home, even if your income isn't cookie-cutter. From truck drivers to beauticians, Chris has a creative solution. Discover how to calculate your income without the tax return headache and hear about outlandish scenarios where he worked his mortgage magic. Get ready to level up in the real estate game with these unconventional strategies!
2:49- How to qualify for a bank statement loan?
9:33- The lifeblood of real estate is appreciation.
13:16- How do you qualify for a mortgage?
18:31- The difference between an artist and a loan officer.
Ready to unlock the secrets of creative financing and make homeownership a reality?
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Good morning. And welcome to another episode of Exit Strategies radio show. I am your host, Corwyn J Melette. Broken and owner of Exit Realty Low County group in beautiful North Charleston, South Carolina. If this is your first time listening to this show, you sir or ma’am are in for a treat. Because our mission here is very simple. That is to empower our community through financial literacy, and real estate education. We’re legacy building, that is what we do. So if you’re out there making things happen with your family, for the generations yet to come, teaches us to leave a legacy to leave an inheritance for our children’s children’s children and so forth and so on. We want you to put a hashtag on that thing that says that you are legacy building because that is what you are doing. You can find us on Facebook, YouTube, AnchorFM. You can also find us on Instagram, at our website, exitstrategiesradioshow.com, you can catch us in a number of different places on your favorite podcast applications. We appreciate you listening, please share this content with your friends, your family, your co-workers, even those in your groups, your church groups, etc, guys, but sometimes the message in the word that we are speaking here today is for you. Sometimes it is for someone else that you know, again, we appreciate you listening. Let’s get started.
And here we are going into part two, because we got to talk about these loans that y’all can get, let’s see if we can frame it that way. So for your self-employed person, Chris, you guys do bank statement loans. You know, for that person, that truck driver who was 1099 runs, maybe locally here in Charleston from the ports, so maybe, they’re a hotshot driver, I got plenty of those, as well, maybe you’re a beautician, maybe you’re a barber, all of those people that would qualify, that they have good income, but they don’t it’s not documented, as well as it could be. Could well it could be, what, what programs do you have for them.
So really, I try to steer most people to the bank statement program. Because it’s easy, it’s super easy. It is good for truck drivers, nail techs, hairstylists, I mean, anybody who is self-employed or gets a 1099, I would recommend this program, You can also do a 1099-only program. But this late in the year, it becomes a bank statement program, because I want to see seven months of bank statements to see what they’ve done this year. If a 1099 person is not getting a monthly summary, if they’re getting a monthly summary, I’ll just take a 1099 summary the whole time. But the bank statement loan is super easy. You literally and people ask me all the time, how do you do the calculation? You like do is subtract out this and subtract out that and do that. What about the ending value– It is so easy. You look at that bank statement and self-employed people who are listening can do this. Look at your bank statement, see what the total deposits were for the month, do the next month, the next month, and the next month, add them all up and divide by 12. And there’s your income. And I bet you I say this four or five times a day, Hey, if you got tax returns in that file, I want you to shred them, burn them, trash them, whatever you make sure nobody accidentally uploads that into my bank statement loan. Because here’s what happens all the time. People are self-employed and 1099 people go into a mortgage broker’s office. And they will say hey I’m making about 110, 120 a year let’s say truck driver, nail tech, whatever it might be owner of a nail salon. And you would not believe the money I see getting deposited in people’s bank accounts. I’m just like, holy moly. But they’ll go in there and say hey, I’m making 120 a year. And the loan officer comes back and says well, your tax returns say you’re making 20 a year or not you’re missing a digit there you can watch 20 So you were looking at a $400,000 house and I’m gonna call qualify you for $80,000 house. And that doesn’t make anybody happy. The buyer, the realtor, nobody’s happy in that situation. Another cool thing about that is if you have a self-employed buyer who wants to go out shopping, and I think Realtors probably feel the pain of this one a lot. They’ll put people in a car, drive them around all Saturday, and not know what they’re qualified for. And all these bank statement loans can be before the property is selected before you do anything. You give me those 12 months of bank statements. Four hours later, I will send you a really pretty income determination that will say your income is exactly $13,297.46 a month You plug that into your loan application, you check the DTI and you hand that over to the realtor and go here Mr. Realtor I’m qualified for up to a $700,000 loan amount and remember the ello said gave you the worst advice ever. Guys ever there go here’s your qualification for a $75,000 loan amount, which person you want to work with. And that realtor is going to love it because you’re not wasting that realtor’s time and I can nail it right down to the penny of what the maximum they’re qualified to purchase is. So it’s super easy for all the self-employed 1099 people Just turn over 12 months of bank statements, and I’ll have it back to you in four hours, you can do that on a Friday, and you are ready to go shop, and Saturday and Sunday. No, exactly. I pre-underwrite the whole thing. There are three big parts of underwriting three big parts, credit, capacity, and collateral, The credit underwriting, capacity is the ability to repay. So I’m looking at banks and underwriting that myself. And collateral is the property itself, that’s your job, that’s a realtor’s job, or the borrower’s or the buyer’s job Go out there and finance but two-thirds of the whole underwrite is done in the first four hours.
So that makes it real. And I don’t want to say easy, but it doesn’t overly complicate the process and makes it a lot more of an efficient process. To get someone from, Hey, I found this house, I love this house, I’m ready to close on this house so Chris, I’m always excited when I get to talk to you. And the reason that I’m excited is because a lot of the people are around me, so obviously in my office, I have a bunch of real estate professionals around me, and I deal with a lot of business owners. And everybody’s trying to figure out how to fit into the conforming box, if you will, they’re trying to figure out how they can qualify for an FHA loan when your income varies– is variable fluctuates. And, if you just don’t fit, check all the boxes, but that’s vanilla, that’s the go-to, for most people to try to figure out. But those that think creatively, to think on the other side, like you, you’re on the other side, you work the other side exclusively, you’re able to provide options to help bridge and get people over and get them into investing in property, get them into homeownership, because these other people, I mean, I’m a prime example. I know a guy who’s been working for a company forever doing a particular thing. Now he has started his own company, doing the same thing. He has the experience, but now his income. One is completely different because he is the company, then the next part of that is on top of him being the company, and his bank statements reflect it. If he was looking to purchase a home, he wouldn’t fit any of the other programs, none of them. And he’d be able to buy a home in this situation. Barbers, beauticians, stylists, and anybody who is self-employed, they fit this. And I’m super excited every time I get to talk about it because I see opportunities that other people are just walking right on paths. Right? They just walk and ride on paths. I’m like, Look, you can buy a house, what are you trying to qualify? This person says can be two, or three years before they can get you qualified. Well, two, or three years from now, what you’re going to pay for the house? Well, what about the– and you always get this question. What about the race? Well, great. But if rates come down, then refinancing the future. But you don’t save yourself the money by buying the house at today’s pricing instead of tomorrow’s pricing. So, Chris, we’ve covered DSR we covered bank statements, we covered integrated 1099. But for those people that receive 1010, nine hours from their employers, you have an elite program you also have jumbo programs. Um, the jumbo probably you do loans up to what 3, 4, 5 million?
Well, we say 3 million, but we did one last week at three and a half. I mean, it’s, it depends on how much I talked about skin in the game. Skin in the game is the most important. The two most important things are that the lifeblood of real estate is appreciation. Okay, as long as you have appreciation, you’re pretty safe. But the insurance policy, and I’m talking about on a national scale of what can hurt us out there. As long as things are appreciating, we can’t fail. But our insurance buffer is skin in the game meaning before 08. It was 100% loan to value there was no down payment whatsoever. And people didn’t have any skin in the game. So if you put 5 – 10% skin in the game will open doors We will make magic happen. But that’s the most important. That is the secret sauce to us is there’s a little bit of skin in the game. So if something does go wrong, we’ve got a buffer there to work with. And we think it’s a good idea when we go into these loan transactions together that the borrower that we’re working with is more like a partner. You know, you’ve got your skin in the game. We got our skin in the game. Are we all working to make this thing happen? And a lot of people, question and go, how do those loans perform? And if you compare us, we are our loans because of that skin in the game. And because of our years of underwriting experience are better, way better than FHA and better than Fannie and Freddie even. We do not. I mean, I haven’t had one delinquency in seven years, I mean, these people pay, and something that you were saying a minute goes a little bit sad, but at the same time, happy. So many of these self-employed, people get told no, oh, I’m sorry, your tax returns don’t work, you’re gonna stop doing that, what do they say back? Man, I’m not gonna stop writing that off, You’re telling me to stop right now, and I’m not going to, I’m just going to keep renting, or I’m going to save up cash, might take me 1015 years, or they’re just not going to not do that, they’re gonna get that tax refund. And I don’t blame him, especially if you’re talking about, some of these truck drivers and, and a lawyer, a painter, whatever it might be, they’re writing off everything. Home Office, cell phone, credit card, bar, tab, Bar Mitzvah, barbecue, I have seen people write off the fertilizer that they put on their grass, like, well, that’s part of that’s my home, but my home office is in there as part of maintaining my stuff. And I’m, like, go after it, but they don’t.
So I’m not to cut you off, Chris. But you’re right. I mean, I can’t tell you over my years, how many times I’ve had a lender, say to someone, well, hey, we’re gonna have to we’re you’re gonna have to start writing this off, which then creates goals, take someone from they’re a small, tight liability to now they gotta take an increased or higher, much higher tax liability, to be able to get on paper to a number that allows them to qualify, now. They qualify, they make income, and they have income to support and sustain the mortgage. So, we’re meaning the ATR, the ability to repay, look, I learned my term today, take that off the list. But on the other side of it, they’re being exposed to having to pay a substantially higher tax bill, because Okay, to Linda saying, Well, look, I can’t add this number back in your income. Technically, if you don’t write this off, we’ll be here. And we can qualify you for this. But you can look at that same scenario and say, Well, look, based upon what you’re already reporting, based upon this, we can qualify you for this, which is more than what you’d be qualified for. Otherwise, by doing it this way, you have the assets, you save money, and your business is making money, so you’re showing a profit, but not because that’s what you’re looking for, all you’re looking for, is the amount of money coming in to say what the income is. So make it simple, and, and this is for our listeners, guys, I’m, I’m excited, this is kind of, Chris, I’ve had this idea about doing, a series of workshops. So, we’re going to work on that, because I want to help the people that, we leave out I do a lot of, work in certain niches, and this is a niche that I work in, but it’s hard because people are so conditioned, they’re so conditioned to do the same thing over and over and over again, but they miss the opportunity to accomplish more by doing something a little different. It’s not massively different, just a little different, and you can accomplish so much more. So I appreciate you bringing that information to share. So let me ask you this, When I get another, I have a question. And then I’m gonna get us quote unquote, to our mic drop question if you will, but Chris, what kind of scenarios, what’s the most, let’s say, the easy peasy as and then the most outlandish scenarios that you’ve had, that you’ve been able to serve as doing what you do? And I look? Yeah, I just saw that. So that that was a glimmer, you you got you got something outlandish. But what do you have to kind of share? When somebody’s looking at this thing is saying it’s not possible, but you made it happen?
Well, I mean, twice today, I’ve done that. I mean, I got a phone call, one out of the upstate, and one out of Somerville, and called me two or three weeks ago. And, here’s something I want to touch on too, is rates, people are like, Oh, what’s the rate on that? What’s the rate on that? But it was a DSCR loan. It was an investment property and the guy thought he could DTI and he thought he could use his tax returns. And he went, the vanilla inside the box conventional way because the rate was like half a percent lower, and it blew up. And now they’re all I mean, everybody you involved in a transaction is, can you close this in three days? And I’m like, Hmm, that you can’t even legally close a loan, you got this waiting period for disclosures and for closing disclosures and this waiting. I mean, all these compliance things don’t allow that, but you talk about easy peasy. Those are easy. But, jamming that round peg in a square hole. That’s what they’re trying to do there, that round peg belongs in an open borderless hole there, it’s like, Come on, bring it over here, we’ll do it and knock it out in no time at all. But, to me, the DSCR loan is just the easiest. I can pre-underwrite one of those in three minutes, man, I mean, it’s just like, Does this make sense? Check, check, check pre-approved, send it back to the mortgage gu, The mortgage guy gives it to the realtor realtor calls the borrower or whoever, let’s go shopping, or this deal done, let’s get this thing rolling. But those are super easy. You know, now complicated. Holy moly, man. I have seen it. Um, there’s so many, there’s a lot of them, but because like I said before, 50% of our loans do not meet our guidelines. People start throwing everything at me, okay, hey, I got this guy who’s got five different companies. He’s writing off all this stuff on his taxes. And I like to stop them right there. I don’t want to be rude to him. But I’m like, Hey, burn the tax returns, shred them. And I’ll forget the word is talking about bank statements that I have taken five different companies that this is a guy who is a real deal entrepreneur, okay. He’s got, a food truck. And he’s got a motorcycle company. And he’s got a hair salon. I mean, he’s got all kinds of stuff. And I would take all five and put them together and ended up closing like a 2 or $3 million loan for somebody like that. But you start putting pieces together. And we can do even a bank statement W2 hybrid loan. So for, let’s say, the guy. And we’re only looking at 12 months of bank statements which makes it easy to but let’s say in months 10, 11, 12, he was just getting started on his really good income. And he didn’t quite hit the debt-to-income ratio. And I’ll always ask the question, Hey, is he got a spouse or she got a spouse that works? Yeah, but he’s W2. Cool, we’ll add it to it. Or he’s fixed income. Cool. We’ll add that to the bank statement income. Now we have a bank statement, fixed income bank statement, and W2 hybrid. We’re now at 48% DTI, BAM off to closing. So the beauty of this is the creativity and I even think of it as artistic because you’re in there going. What if I put a little like I was talking about painting that picture? Right there. All of a sudden, my DTS 49 Bam, off we go. Then people just sit back and go, How did you do that? Like, it just makes sense. We painted the picture. The picture makes sense. We’re off to closing. But Fannie and Freddie don’t do that. Oh, who are they? Who is failing? I don’t even know them. So
So Chris, man, look here. I just want you to know, that I almost fell out of my chair over here. Okay. Because I wasn’t ready for that seat. And that’s why I am I guess, so excited to talk to you because what allows the flow of creativity and all that because you just gave me like, a lot of other ideas and stuff and ways to help people with this and you also touched on something, I explained this to my buyers I’ve been doing this for years, as an explanation I explained their loan as the canvas, if you will, the underwriters to artists, and the colors are the pieces of your life. You know, your employment, your credit, your income, this that whatever it is, those become the colors and the loan officer has the unique. Well, my friend me phrase that the underwriter is the art buyer, but the artist is the loan officer, because they take calls on your life and they paint out this canvas, and then they present it to the art buyer. And hey, what do you think about this? Will you buy this and when they buy it then you have to deal with this code. That’s how that works. If they don’t like it, then they take your canvas back and they try to change it up a little bit. And sometimes they can get it to where it looks appealing. You just made this thing man so simple. For our listeners, guys, look out y’all have got to engage on this. Now Chris, look, I know that you’re not the guy they should talk to, first because loan officers do this. Like you said loan officer, your customers. You’re the guy beyond so for our listeners, I want you all to know that look, we come a little bit higher up in the tree. We had to get Chris off one of the top limbs out there because he services everybody below. So, reach out to me reach out to our group, our team here, and we’ll get you in contact with one of our lending partners that do these kinds of loans working with Chris, That’s how we’ll get you connected, how we’ll get you service, and how we’ll get you into homeownership. Now, Chris, I call this one my mic drop question. Okay. And it’s that thing that whatever point in time you say, you’ve been doing this 2020 Somebody has 25, 26 years now. So, you gave me hope, because I’m quickly approaching 20. But my mic drop question is that thing, if you didn’t know, this thing, whatever it is, whatever it is, if you didn’t own this a long time ago, what particular thing would have completely changed the trajectory of your life that you will be catapulted to the way where you already have the catapult into where you are now, or far beyond if you’d have known this way back yonder when, and it could be related to the mortgages, it can be related to any particular thing. This is a mindset question. What would that thing be?
I would have done exactly what I was doing. And I gotta tell you, I had a buddy of mine, I was working seven days a week, 14 hours a day, working at a local resort, I mean working. And he tried to recruit me into this. And he, again, goes back to being a missionary, he was spreading the good word to me. And I didn’t believe him, I’m like, it can’t be that good. I got a great job. I work a lot, like all the time. But you can’t have it that good. So he ended up things in my life changed where I had to. And I started doing this. And I would not change one single thing from that moment, because he taught me what I’m sharing, keep saying you got to be a missionary, you got to spread the good word. He taught me everything that I’m saying to you guys, today. I’ve been doing this for decades, I could not do any more of it. I have closed over 100 loans a month, several times I work now voluntarily, till two in the morning, I will get up, not take a shower, and start slamming and saving these deals and saving people. You know, tomorrow morning, I’m driving to Greenville to talk to a bigger real estate group up there. I wouldn’t change a thing, this has been the best life that my friend taught me this. And I have gravitated to it. And I just keep, I’ve got to do a better job of talking to more people. And the only way to do that is to work on Saturdays. And I can’t do that. But I would just urge everybody to take what we talked about today, it levels them up in the real estate game. You know, you talk about video games or powering up or leveling up this is what does it right here, your competition will not be able to compete with you. Because they’re not complete. What this does is complete the real estate mind through financing, and abilities that the people who aren’t on this that aren’t listening to this. They don’t know, everybody that just listened to this has a new superpower. Okay, they have creativity. They have abilities that they didn’t have before they got on here. And they’ve leveled up in the real estate game. And they’re complete. And I get sad when I see people in a mortgage business and real estate business who didn’t get to have this talk. But that would be my most important message spread the word, utilize what we’ve given to you here today, and go get ‘em, man.
Awesome. Chris, thank you so much. Thank you for taking time out of your busy schedule to be on the show with us. I get excited every time I see you and I get to speak to you. Because I know. You know I’ve always said this and I’m gonna say this brief and close this out. But I’ve always said that real estate is like a domino and it’s multifaceted. And depending upon your angle, your view, you’ll see it a certain way. But if you turn it just a little bit if you adjust yourself just a little bit, you get a completely different view. And that’s what I love about this industry. If you can believe it if you can figure it out if you can think of a way you can get it done. And the programs that you guys offer are just that they are a different way to get it done. It’s a creative way to get it done. It is the other, it’s another facet, if you will of loans or mortgages it’s another view of the same thing and I always get excited about it because everybody doesn’t fit the vanilla box. Everybody doesn’t fit the chocolate box or whatever flavor it is. Everybody doesn’t fit. But some options are out here for those who don’t fit, but who still can. So thank you so much for taking time out today. For our listeners, guys, look, this has been an amazing, two parts show. You know how I feel. You know what I say always put the two of those things together. And I always say it to you this way, which is I love you. I love you. I love you. And we gon’ see you guys out there in those streets. Guys, that was a great show today and we thank you so much for taking the time to listen to Exit Strategies Radio Show. My name is Corwyn J Melette. Yes, that is me. And I thank you from the bottom of my heart for tuning in for today’s episode, Exit Strategies is my faith. It is how I give back to our community. It is how I foster goodwill, spread good news, and trustfully help you get great results. Guys, as I always say to you, as I always say to you, I love you. I love you. I love you. And we gon’ see you guys out there in the streets.