Construction Loans with Jennae
Episode #82: Welcome to the She Builds Show, I’m your host, Stefanie Olson and today I would like to introduce you to an amazing Woman, Jennae Leisey. Jennae is the owner of JL Lends, a company that works with a vast amount of lenders, to get you the best rates on all types of loan programs including: Conventional, Jumbo, Home Equity Lines, FHA, USDA, VA, Commercial, Construction, Renovation, 30yr/20yr/15yr/Custom terms, ARMS, DCSR, Reverse, Bank Statement Loans, Doctor loans, First Responder & HERO loans.
ABOUT JENNAE LEISEY:
I’m Jennae (pronounced Jen – NAY) – I have been a part of this crazy real estate industry for nearly fifteen years, lending has been my absolute favorite piece of the real estate puzzle. I started out in mortgage operations where cultivating relationships with underwriters, processors, and closers became my strength in getting loans through efficiently.
Those relationships really shaped my understanding of guidelines and how to make loans go through the system faster!
A few years ago my husband and I started talking about this CRAZY idea of buying land and living on the property with our family. Well that crazy idea became a reality last year and we have been having so much fun ever since! When we started thinking about this a few years ago we realized how hard it was to find lenders who offered construction financing. All I could find were sketchy websites and local banks where their loan officers had no real experience making helpful decisions that would affect our build. I decided it was time to be the help that I needed, but for others. So through that, JL Lends was born! I am SO excited to help you finance your dreams whether it be a renovation of an existing home, a beautiful custom home or an ADU add on.
Let me know how I can help and let’s build!
CONNECT WITH JENNAE:
• Website: https://www.jllends.com
• Instagram: https://www.instagram.com/Jennaeleisey
WAYS TO CONNECT WITH STEFANIE…
• Website: https://shebuildshomes.com
• Facebook: https://www.facebook.com/shebuildsbetter
• Instagram: https://www.instagram.com/shebuilds.homes
• YouTube: https://www.youtube.com/shebuildsshow
EPISODE TRANSCRIPT:
0:01 Welcome to the She Builds Show.
0:03 I’m your host, Stefanie Olson, a licensed general contractor who builds new construction, renovates and designs your vision today.
0:12 More than ever we need raw, authentic women who are willing to rise above society’s norms, break those glass ceilings and encourage each other to boldly build the life we were meant to live.
0:24 So, honey, what are you building?
0:27 All right, welcome to the She Builds Show.
0:29 We have a guest today with kind of a spin on our topic.
0:34 We are talking with Jennae.
0:37 I’m going to say Leisey.
0:39 I was like looking at it like I’m going to say that wrong.
0:42 I’m sure people butcher your name like crazy.
0:44 Well, welcome to the show, Jennae.
0:46 Hi.
0:47 I’m so happy to be here.
0:48 Thank you.
0:49 Ok.
0:49 So tell the audience what you do in the name of your company.
0:54 Oh boy.
0:55 So I am a correspondent lender and we, you know, it’s funny, I left retail lending and so I’m still kind of used to like who I work for, but I’m self branded.
1:05 My company’s name is J L Lends and I do residential lending for all things, construction, construction from ground up, tear down renovation, all that fun stuff.
1:16 So, it’s a pretty dynamic world right now.
1:19 That’s awesome.
1:19 So you do loans for people who are building remodeling, buying anything like that?
1:27 Ok.
1:28 Give me a little bit of history.
1:29 So you were in retail lending and then you kind of, I read a little bit about, you got a little frustrated.
1:35 I feel like every good business woman starts with being pissed off or angry or frustrated at something.
1:45 Maybe, maybe not.
1:46 I’m going to test my theory.
1:48 Oh, my gosh.
1:49 That’s too funny in a way.
1:51 Sure.
1:51 You know, I worked in real estate in general for about 15 years and you know, the 10 of those years were residential lending in that time, I worked primarily in operations and we did, you know, I, I worked on renovation and construction loans and, you know, in the operations world way back in the day and then fast forward to 2020 and 2021.
2:15 We probably, I mean, anybody you talk to that worked in real estate during, you know, COVID and beyond was, oh my gosh, it was exhausting.
2:25 I mean, we were all burnt out.
2:26 We worked so much and in that process just kind of saw my life kind of happening while I’m just kind of watching it through a window mostly like I always think of this moment watching my husband and my son outside my office window and he was like learning how to ride a bike.
2:43 And I’m like, what am I doing in here?
2:45 And why am I not out there?
2:47 And my husband and I for years talked about buying land and building and, you know, kind of slowing things down a little bit and getting more, you know, more spending time with our family.
2:58 And after those two super rough years in lending, I was like, oh, we got to do this.
3:05 And my husband’s like, yes, let’s sell the house, let’s buy some land, let’s, you know, raise our kids on some land.
3:10 And, you know, as I was kind of seeing this kind of shift in my career happen with just the overwhelm of working on a team and doing so much business.
3:19 I was like, as an individual, I don’t need to do this much business.
3:22 I can slow down.
3:23 I can do kind of more of these like very specific products.
3:27 And oddly enough, you know, during this time that we’re kind of going through this, hey, we’re gonna buy land or we’re gonna build, I started researching construction lenders and looking at, you know, where could we get a construction loan?
3:41 And because the retail lender that I worked for didn’t offer construction loans because they’re usually bank products.
3:48 However, what I noticed was either I was finding super shady lenders online or I’d go to banks and yet they had absolutely no idea what they were doing like they were selling this product, but no.
4:04 Correct like, they didn’t know what they were doing, they didn’t know how to talk to me, they didn’t know how to answer my questions.
4:10 And so, you know, by the time we basically moved out, got onto the land and everything, I was like, I need to do this, like I need to start doing for other people because I have this experience now of not only knowing how to do these loans operationally, but I can actually have these relationships with my clients and know what they’re going through and actually be able to walk them through the process more than just here’s alone.
4:37 It’s, you know, have you done all these nine steps, you know, up to this point and, you know, it’s interesting because, and I wouldn’t say that they’re the same, but the lending and construction world are very dynamic in the sense that we are constantly kind of battling with different code changes and guideline changes and these kinds of things that we have to be very, yeah, you got to solve diligence.
5:00 Right?
5:01 Yeah, exactly.
5:02 You’ve got to be up on our guidelines.
5:04 We’ve got to be diligent, we’ve got to be able to kind of get ahead of these problems before they become, you know, bigger.
5:09 So anyway, that’s kind of how I came to this conclusion was I’m here and I really want to help people and I really want to help people be able to do this in, you know, the best way.
5:22So anyway, that’s awesome.
5:23 So, it’s like, interesting because I’ve, you know, I’m not super familiar with the construction loan process because like every new build I’ve ever done I’ve, you know, either my clients have had the money to pay for it and it wasn’t a construction loan or I’ve gotten private lending and done specs or subdivisions and stuff myself.
5:45 So I’ve never ever dealt with a bank and my like mentor when I was doing subdivisions, he’s like, you have it way too easy.
5:54 You need to go get a construction loan from a bank and see how hard they make it for you.
5:58 So you understand how good you have it.
6:00 Like he said that to me like multiple times and I was like, why would I do that?
6:04 Like that sounds miserable, you know, and so the overall, you know, kind of feedback and sense is that construction loans are horrific.
6:17 It’s not an easy process.
6:20 So I have fear about it when I have a client.
6:24 That’s like, oh, where do we go?
6:26 Get a construction loan?
6:27 Like where we live?
6:27 I think there’s like one person and I don’t even like, know how well it goes.
6:33 I’m sure there’s more, but like, I only know of one person and I had two people ask me yesterday, do you know anybody who does construction loans?
6:41 Because I had two client meetings and they’re new builds and they need to get loans and I was like, no, I don’t.
6:46 And now, so guess who I’m going to be calling today and telling about you if you can convince me that they’re good.
6:54 So walk me through if I like, let’s say I’m a buyer or just I have a piece of land, let’s say I have a piece of land and I have a contractor and I have a contract to build a house and I have building plans.
7:10 Let’s say I’ve got those four things nailed down.
7:13 What happens next.
7:17 So, ideally in a perfect world, I’d like to get with that client before all of those things take place just because they need to understand what they actually qualify for and what they’re gonna be comfortable with that budget.
7:31 Because ultimately, what I keep telling people is that I’m like, you know, go to a contractor and show them your Pinterest board, show them, you know what you’re thinking in your mind because I feel like we all live in this universe of champagne, taste on a beer budget, right?
7:45 Especially with interest rates because unfortunately, interest rates are higher and that does impact your budget.
7:51 But yet if you have it in your mind that you want, you know, this marble bathroom and you have, you know, all of these like intricate finishes and everything like that.
8:01 But then you get online and you google the price per square foot and you’re like, I can do it at 303 150 you know, a square foot and then, you know, you make it all the way and then you finally get to me, you know, after you’ve had all those meetings and you’ve got your plans and you’ve got everything and you get to me and all of a sudden you’re like, oh, I don’t qualify for as much as I thought I would.
8:20 Well, it’s kind of like the same concept of, you know, I’m, I also have my real estate license and when I have a buyer that comes to me, the first thing I say to them is I’m not gonna take you.
8:29 I mean, I’m not mean about it, but I’m not going toa take you to go look at houses until you talk to a lender because I’m not going to show you something out of your budget.
8:38 I’m not going, you know, and are you qualified?
8:40 Do you know that you qualify?
8:42 How much do you, are you comfortable with the payment?
8:44 Because really what it comes down to is we’ve got all of these, you know, ideas and until there’s actually somebody telling that buyer or that client what their monthly payment is going to be and what their interest rate is going to be and how much that’s going to cost them that changes everything and they no longer want that bathroom.
9:05 You know, it’s like I will take a fiberglass insert.
9:09 Thank you.
9:13 Yeah.
9:13 Well, so to go back to your question though, you know, if somebody had all of those things and let’s just say in a, in a perfect world, all of those things would be done.
9:21 The next thing I would do is depending on what lender I spoke with them because I am a correspondent lender.
9:26 So I do have kind of an array of construction lenders that I work with.
9:30 So I determine what is going to be the best fit for them.
9:34 You know, whether it be, you know, different guideline issues at different ones or better rates at different ones.
9:39 What are kind of like the in the construction loan world you can do?
9:45 I mean, I could, you know, if I sound like an idiot right now, just tell me that’s fine.
9:50 Well, you might change your mind when I ask this question, just give me the question I have is you can get a construction loan and then that construction loan turns into your conventional loan.
10:04 Right?
10:05 Yes, that’s one option.
10:07 And then I’ve had people that say we do a construction loan, but we do not as the bank roll that construction loan into your new loan, you have to go get another, you know, mortgage to pay off basically like a, is that kind of like the two pathways in construction loans?
10:26 For the most part.
10:27 Yes, I mean, the, the other change would be if they are getting a Jumbo loan or if they’re getting a conforming loan and that’s gonna make a significant difference on which pathway they’re going to go.
10:38 Do you suggest most people go with?
10:42 I mean, because to me it seems easier to just, you know, take draws on your construction loan, you’ve got the loan with that bank or with that, you know, lender and then you just turn into making payments on that and you don’t have to go through all the rigmarole again for the final loan.
10:59 Is that generally what you suggest or what do you prefer?
11:04 It all depends, to be honest, it depends on what their situation is and what you know, where their credit score is, what their assets look like, what the reserves look like.
11:12 It is becoming a lot more common to do these single close construction.
11:17 But with both of them, you know, where we’re predicting our interest rates to go, both of them are gonna end up requiring refinances, you know, later on, you know, in their life anyway.
11:27 And if you look at it from the perspective of you probably have between 12 and 18 months in that time frame of the construction by the end of 12 or 18 months, they may want to refinance out of it.
11:37 Now, some of these loans, these single clothes have what they call like a float down policy and they will come down where the market is at the end of that construction time frame.
11:47 But some of them, you’re not like locked into a rate on that option.
11:52 So you’re locked in but yet the float down kind of supersedes the lock if that makes any sense.
11:59 So at the very time, you, you’re not gonna go up, correct.
12:03 Correct.
12:03 You’re not going to go up, you have the potential of going down.
12:06 Yeah.
12:06 Ok.
12:07 So I come to you, we can change the story.
12:11 I come to you at the beginning.
12:12 You tell me how much I can afford.
12:16 I go get the land, my contractor, my and I’m guessing you need a contract signed.
12:22 Like, what are the requirements of somebody?
12:26 What is the experience going to be?
12:28 Like, how painful is it going to be for the contractor or for the b well, I kind of want to know that too, but how painful is it going to be for me?
12:36 That’s all I care about now, you know.
12:38 So they’re definitely not cookie cutter loans, you know, they’re not a loan product that is as easy as, you know, hey, I’ve got a, a wage earning position and I’m just gonna go out and buy a traditional home.
12:49 Those, you know, you can do in, you know, 15 to 20 days and, and we can be done with it.
12:54 But these ones, I always tell people, you know, if you really want this, like there’s gonna be more work on your end.
13:01 It’s not just going to be, hey, I’m going to gather, hey, I’m going to submit to underwriting.
13:03 It’s going to be, hey, you know, we’re gonna probably have to submit to underwriting a few times.
13:08 I look at it in two parts.
13:09 So I qualify the borrower like for a traditional loan just to determine what their max budget is.
13:15 And then we get into the nitty grit on the second part of the, the approval, which is basically all of the builder stuff.
13:20 So your budget, your plans, all of like the city stuff, the county stuff maybe and then your contractor approval.
13:27 Now on a contractor perspective, it’s gonna be kind of a pain in the butt.
13:31 But I try to do as much as I can for each of the contractors that I work with to do things for them and just kind of be like more like sign here, give me information here, that kind of thing so that it is very turn key for everyone in the process.
13:45 Now for a contractor to be approved, it typically it’s fairly easy for a contractor who regularly builds homes to get approved with these lenders.
13:53 All you really have to have is three most recent construction projects in the last three years.
13:58 And references to those they have to obviously validate your license, your insurance, all of that kind of stuff that you have to carry anyway.
14:05 And then the process after that, you know, point after, you know, everyone’s approved and everyone’s ready to go.
14:11 We have our short escrow period and then we start funding and typically the first draw is gonna be possibly paying off that land loan and then the could be also included in, you know, the first round of materials and labor costs, whether it be like, hey, we’re gonna do foundation framing windows, roof, whatever it may be for that first draw and then we, you know, carry on with each draw thereafter.
14:34 But ok, so I want back up a little bit.
14:37 Oh yeah, that’s a lot of information to digest.
14:40 So no, I just like, I wanna know, you know, for a borrower they go, they get you all of the information that they’re, you know, would be required to qualify for any loan, right?
14:53 You know, all of the documentation, then what do you guys require from the contractor?
15:00 Like if I was a, you know, I’m like, hey, I’m gonna go find a contractor, what do I need from that contractor in order to make this go through?
15:09 What I mean, besides obviously qual, you know, the contractor has to be qualified to get that part.
15:14 But what kind of falls on the buyer to make sure that they’re getting you the information from the contractor so that they, because it, if some, if a contractor isn’t, you know, aware of it and a buyer is not aware of the stuff, what kind of things are you guys asking for?
15:29 So for a buyer, so it’s going to be different as far as like a spec when a contractor goes and gets a loan versus a buyer getting.
15:40 Yeah.
15:40 Yeah.
15:41 So because I’m actually handling the communication for the most part, the buyer, I need the contractor’s contact information.
15:47 So you’re communicating, you’re communicating directly, correct.
15:51 And so it’s really, it comes down to, you know, having that budget dialed than to what we require.
15:57 And each lender is going to be a little bit different.
15:58 Some require, you know, a 5% contingency or a 10% contingency making sure that, that budget, you know, includes that kind of thing.
16:06 And then that’s actually a really big deal because I had a client yesterday say that to me that the lenders asking is saying that they need a 10% contingency and just briefly explain that to the audience what that means.
16:21 So the contingency is like the what if it’s, you know, in a perfect world, here’s your budget.
16:27 But unfortunately, and we run into this, I would say more so on renovation than ground up construction.
16:32 But you know what if something goes wrong?
16:36 And this actually isn’t the cost?
16:37 What if it ends up being more expensive?
16:39 What if you break ground and you find a gigantic rock that, you know, you now have to blast out of the ground or something, you know.
16:46 And so now all of a sudden that just added to your budget and labor costs will if you don’t take into account for these, what if situations, then we can kind of run into problems on the qualifying on the, the loan side.
16:58 So we make sure that we have this just what if kind of dollar amount and usually a percentage of the overall loan amount, right?
17:06 And so in their scenario, this actually put them above what they wanted to actually pay and I think it keeps them from even qualifying was 10% contingency was, you know, if you’re at a $600,000 house at $60,000 and, you know, that pushes you beyond your budget.
17:31 And so I think that that’s really important to know that like that’s why I think it does go back to have the conversation first because if you knew that you’re OK with 600,000, but you’ve got to put in a 10% contingency.
17:47 That means your contractor’s bid needs to be at 540,000, not 600.
17:53 And so we had this really long conversation yesterday, like, how could we like?
17:58 We literally were trading tile showers for fiberglass inserts to try to get their stuff down, you know, because they just, the cost of construction obviously isn’t cheap, but they had to sacrifice some, some stuff to be able to qualify for that loan.
18:12 And I was just fresh, you know, I was frustrated for them that they felt totally like there wasn’t any other option there.
18:20 The thing that they came in frustrated about also was they couldn’t find any lender and I don’t know if you do this, they couldn’t find any lender that would loan on a property and build a residential house on AG property.
18:33 It was like certified AG, not like R one and there was only like one person in, I don’t know how much they looked and I don’t know if you do something like that, but that was their, you know, they were kind of like stuck into a pigeon hole so they couldn’t go to someone that had a 5% contingency or something like that.
18:50 But maybe what I’ll send, I’ll send them to you and you can figure out if, if I’m happy to look into it.
18:58 That is the interesting thing about this business is though, is that everyone finds these questions that come up that you never see before.
19:04 You know, I was like, oh, I didn’t know that.
19:07 And unfortunately, like ag property is that it’s kind of looked at like a commercial property because ag property is income producing property.
19:14 And so that’s where just kind of lending as a whole we run into, even when I worked for a retail lender and we would just lend on just a traditional house if you had like 40 acres and you had, you know, these outbuildings where like, you know, why, like, why is that though?
19:31 Because of the, you know, I don’t even know why.
19:35 I don’t know.
19:36 I think like those trees are paying for the mortgage.
19:39 Why do you give it I, I agree.
19:42 I think it’s more like the risk as far as a borrower getting in over their head with a property that’s gonna be way too difficult to maintain.
19:50 And if they don’t have of that experience and maintaining that kind of property and if they did then they need to go get a, you know, a USDA loan that, you know, satisfies it.
20:00 But actually that’s what kind of popped in my head was that USDA does one time close construction and they might lend on on a property.
20:08 So that’s good to know.
20:10 Ok, so after you know, you make contact with the contractor, the buyer is qualified, what does the draw scenario look like in the like through the course of construction?
20:22 So I know you mentioned at the beginning you get like a first draw to maybe pay off the land.
20:27 If there was a loan you used to purchase the land and then what is needed from the contractor and the buyer to kind of through construction?
20:36 What does that look like?
20:37 Are there inspection requirements?
20:39 Are there like, do you are photos?
20:41 Ok.
20:41 Like what’s the general experience each lender that I work with?
20:46 Some of them have different ways of doing things for the most part, all lenders will require that you in the budget package and all the contractor docs that we collect, we’re going to slate out the whole entire draw schedule, what everything looks like just for the course of construction so that everyone’s aware from the beginning what’s coming when, what’s the next step in that time frame?
21:11 Let’s say we’ve done the first draw.
21:13 And the contractor is basically saying, hey, we’re ready for the first draw.
21:16 We need to pay off, you know, X Y Z people or we need to order X Y Z materials, whatever the lender, the contractor and the borrower all have to sign off on that approval.
21:27 Because if the borrower feels like the borrower is our eyes, essentially the borrower is the one who’s basically saying like, so our contractor wants this money.
21:36 But yet the last time I talked to them, the form wasn’t ordered, this wasn’t done, this wasn’t, you know, whatever it may be.
21:41 They need to also be a part of that approval process and getting that money back out.
21:47 It does the money go to the borrower or does it go to the contractor?
21:51 How does that work?
21:53 So again, different lenders, different requirements for the most part, a majority of lenders are using like a third party company to handle the draws and they actually issue them out to the subs directly and then issue the contractor, their payment directly, some of sub like the invoices for the subcontractors.
22:13 And that way you kind of avoiding the like liens and stuff.
22:18 It’s mechanics, liens and that kind of thing.
22:20 Correct.
22:21 Yeah, so at least, and in that way is making me feel sad, frustrated.
22:28 I’m like, oh God, you have to send all of that out.
22:31 I like.
22:32 So from my perspective, dealing with like the third party companies, they’re actually really easy.
22:38 As long as they have the contact information, they send the checks and then as the contractor, you don’t have to do anything, you’re just collecting your check and then you’re not responsible for the divvying up of the payments.
22:48 Now, I know some banks still will send it all to the contractor.
22:52 Then I’ve worked with a bunch of different contractors who prefer it all different ways.
22:55 Some of them prefer to control the money and then others prefer, they don’t want to touch the money at all.
23:00 And so, yeah, it’s all dependent.
23:02 It’s all I know.
23:03 It’s not like we don’t, we already, like, collect all the money and pay all the bills anyway.
23:07 So it’s not an easy deal.
23:08 But I’m like another per, I don’t know, because I think I am kind of a control freak about all of that, making sure everybody gets paid, you know, and paid on time and paid quickly because like, that’s probably the biggest thing that, you know, stresses me out is I, like, you know, I really pride myself on paying my guys quickly immediately.
23:28 You know what I mean?
23:29 And that’s all, you know, and I have enough money, you know, I’ve built up my business enough to be able to pay everybody even before I’ve been paid.
23:37 So what’s kind of like, say, I’m the drywall guy and I just finished, or drywall gal and just finish, you know, the drywall.
23:46 And I sent my invoice to the third party person.
23:50 How long is it going to take for me to get my check?
23:53 Do you have any idea?
23:54 Not, not very long.
23:55 Usually those checks are drawn within 10 days or the wire goes out within 10 days.
24:00 So, I mean, I’ve seen it to where it’s actually being done in 48 hours.
24:05 You know, as long as basically everyone has, you know, submitted proof of work completed or, you know, whatever signed things off, the borrower has signed it off the borrower, the borrower.
24:15 I’m waiting on, I was going to say it probably you didn’t do you sign your thing, you got to prove it.
24:21 Does the borrower have to sign off on that subcontractor’s invoice.
24:26 Does the borrower have to sign up on the subcontractors invoice?
24:29 Like as far as their for the payment?
24:31 Yes, because like, I mean, to me that seems as long as it matches the budget in the beginning, then they don’t have to sign off on the approval.
24:40 It’s all going to go through you as the contractor too.
24:43 You know, because I just, you know, like the protection of your markup and you know, your as the contractor, if the borrower is seeing every single invoice that you’re getting from the subcontractor is that their experiences and you know, like, oh, I, you know, because generally the contractors are marking up and, oh, for sure.
25:03 And then you’re like, here’s everything and then I just didn’t know if that’s part of the experience where everything’s just totally transparent and they see everything and, you know, exactly what the contractor is making is that what the lender wants to see?
25:15 Not, not necessarily, but I’ll be honest, I think the majority of borrowers that I’ve talked to lately know exactly how much each one’s being paid as far as the labor costs.
25:24 And the reason I feel like I know that is just because how many complaints I receive on a daily basis of people being overpaid for whatever.
25:31 And I’m like, you know, what, go out there and do it, see if they’re being overpaid.
25:36 But for the most part, as long as in the beginning when you establish that budget and we have that package, the invoices later that come through as long as they don’t exceed that budget aren’t necessarily being rea approved by the borrower.
25:49 They’re just being approved by you as the contract.
25:52 They’re just, they’re just approving like the payment that the work is done, but the work is completed and it’s done and it’s ready to go.
25:59 But like I said, a majority of the time that the people we’re waiting on to approve that or to sign like the docusign or to sign like the acknowledgement or go into their portal and check the boxes.
26:08 Usually the borrower, everybody else is like, OK, I want my money and the borrower is like, I don’t want to send it.
26:14 Yeah, that would be frustrating.
26:17 I’m sure for everybody.
26:19 OK, then, so after you finish everything, all the draws are done, so majority of the lenders don’t require somebody to go out and like physically see the status.
26:32 You’re depending on the borrower to sign off on that and say, ok, yes, we’ve completed four way and we’re ready for that draw.
26:41 Well, on top of that, you also have county and city inspectors coming through and so you get those inspections, we upload those.
26:48 Ok?
26:49 Yeah, we upload those and everything so that, the underwriter can see that those were completed.
26:54 It’s not just that like, hey, everyone says we’re good to go.
26:57 But no, we have, we’ll, we’ll require those.
26:59 There’s no one coming out from the bank.
27:02 Now, that’s what I was wondering if like a bank person comes out and it like, let me see necessarily.
27:07 Ok.
27:07 No, because we basically, we’ll do the appraisal, we’ll do two appraisals and we’ll do one at the beginning to determine what the value is, you know, intended to be at the end.
27:15 And then we’ll have the second appraisal towards the end to where we have that completion.
27:19 We’ve got that collateral and then we do like a usually a two approval phase.
27:25 So we’ve got the one you know, at the very beginning when we start to draw and then we reapprove the borrowers at the end, which it’s quite funny because one of the last calls that I did with another lender, I was asking about that reapproval time frame at the end.
27:38 And I was like, what happens if basically the borrowers, you know, credit score just completely plummets?
27:43 Right?
27:43 Like, so, hey, they have like an 800 credit score.
27:45 You’re not just gonna take the house away at the end and they’re like, nope, all it is is as long as they’ve been making their payments, they just do that reapproval at the end, see if they need to hang on to it as a portfolio loan or if they’re able to sell their loan after the fact.
27:58 But ok, so once you’ve been approved, you can, you can go buy seven cars and you’ll be good.
28:07 Please don’t really don’t.
28:09 But it’s crazy because you know, when you’re and my husband and I had bought a new construction like a track home, you know, years ago, the frustrating piece of that track home experience is that you don’t own the house, you don’t own the land.
28:23 When you get preapproved, you know, a year prior or nine months prior, you need to make sure that your credit is all the way fantastic and your asset for that whole time frame until you get to the very end.
28:35 And then finally you know your end of your escrow is when you actually get that certificate of occupancy and you get to move in.
28:41 Whereas at least with the, at least with the construction of live your life at the beginning you can move on.
28:46 Yeah, on that.
28:48 Well, I didn’t know that.
28:49 I didn’t know that.
28:49 That’s neat.
28:50 So then if it was just the loan that transitions into, you know, a standard 30 year mortgage, you get the certificate of occupancy.
29:00 How long does it take to close on that scenario once everything’s kind of completed with the house?
29:08 So once you’re at that final draw, I mean, we usually do, you know, 12 to 24 months, actually, I think you can go as, even as low as nine months, California is kind of hard on that regard, but as far as the building time frame and we try to make sure that everyone’s on time.
29:21 At the end of that 12 months, that’s when you’re gonna get your certificate of occupancy.
29:25 That’s when you made your last interest only payment and then the loan transitions.
29:29 But for the most part, once you have made that final payment and you have your certificate of occupancy, which is really just waiting on, you know, city county, that kind of thing, you can move on in then just keep on making those payments.
29:41 There’s nothing that really stops you.
29:43 But so you just, you know, said something that was important, the the payments during construction are interest only.
29:51 So you’re not paying correct.
29:52 Ok.
29:53 Correct.
29:54 Which is really like helpful, especially if you always, and the borrower is paying that interest only payment on the draws during construction.
30:04 Correct.
30:04 So that’s why I always describe it like a credit card.
30:06 Basically, let’s say you’ve got this, you know, $500,000 credit card, but, you know, you’ve only spent, you know, $100,000 on that credit card for, you know, your foundation framing that kind of thing until that next draw where we issue you the next, you know, 80 to $100,000 you’re only making interest only payments on that 1st 100,000 you have.
30:26 Ok.
30:27 And what are your interest rates ranging for those construction loans right now?
30:32 It’s so funny I actually posted to my insta story the other day that like there’s such a wide range because it truly depends on what you’re doing.
30:39 Conforming is going to be very different than Jumbo.
30:42 And then we also explain the difference between conforming and Jumbo.
30:46 So conforming is going to be you getting a smaller loan amount.
30:52 And what I mean by smaller loan amount is that every county has their county loan limits.
30:56 I’m super familiar with like class or county in Sacramento County which I say that off the top of my head, I’m like, shoot, what’s our loan limits because it changed in January?
31:04 It’s like 762 or something like that is our, our counting.
31:09 Yeah.
31:10 And so anything beyond that threshold, you’re considered into Jumbo territory.
31:15 And so those loans are higher risk loans, obviously we’re lending you a lot more money.
31:2 1Whereas these loans that are under the counting loan limit are usually, government insured or you might be paying mortgage interest on them.
31:27 They’ve got a little bit less risk on them.
31:30 So they typically come with a little bit better interest rates on the construction loans than the higher in the general category.
31:37 Right.
31:37 And then, so I do everything from, you know, conforming, you know, construction land loans all the way up to private money.
31:45 So private money is going to be upwards.
31:47 Would say like down here in like the 6% range with like the smaller loans all the way to about 11% on the, the private money.
31:55 I was actually just like talking to my clients yesterday about private money for construction loans.
32:02 Do you guys do that?
32:04 Yeah.
32:04 And it, and it’s way easier.
32:06 Right.
32:07 Yeah.
32:07 So there’s, there’s at least comes at a cost.
32:13 Yes, absolutely.
32:14 The interest is if you have a good contractor who can get your shit done quickly, you know.
32:18 There you go.
32:19 Right.
32:19 Give me a call.
32:21 You know what I tell people.
32:23 The majority of the people that talk to me about like private lending are ones that are wanting to go the owner builder route.
32:29 They don’t want to hire a general contractor or case, like we didn’t hire a general contractor, but we hired a owner builder consultant who just happens to have his G C.
32:39 So we’ve got that in our back pocket, but most lenders will not allow you to do owner builder.
32:47 So sometimes you’ve got to like figure out a way around it, but one of those solutions is to go private money.
32:52 Ok.
32:53 And the private money lenders, you have like a pool of people that just how did, how did you get to kind of brokering and managing private money?
33:02 So there are a bunch of different pools in kind of the broker world as far as what they do.
33:08 So sometimes there’s like investment groups that only fund on certain kinds of private money projects, whether it be, you know, fix and flips, spec builds that kind of thing that they don’t actually want to work with buyers owner, right?
33:21 But they want to work with contractors.
33:23 And so that’s one private money pool and then the other private money pool would be other investment groups who are lending on, you know, higher risk projects and that would be owner builder, construction and that kind of thing.
33:34 That’s cool.
33:35 So, so you really offer like a, a wide array of options.
33:41 Would you like say you kind of specialize in things that are a little bit more difficult or unique?
33:47 You know what?
33:48 Yes and no, I mean, I feel like everything is pretty unique right now Michelle, but I love this world.
33:56 Like, I love this space.
33:57 Like I’m fascinated with all the different kind of ideas that people have and all the different ways they want to do things and, and I always kind of have it in my head that California is a certain way.
34:07 And then I’ll talk to certain people in California who are building like a super efficient house for like $250,000 and they just want a private money loan just to be able to get it done so they could do it on their own.
34:18 It like, blows my mind.
34:19 And so, you know, every day I feel like it’s a totally different unique situation.
34:24 There’s been a lot of completely off grid questions that I’ve been asked and completely off grid is really hard in the lending space because we don’t easily lend on off grid homes.
34:37 So it’s really caused me to really do a lot of research in figuring out all of these different specific loan products.
34:44 So I wouldn’t necessarily say like, my niche is like, doing things like that, but it’s caused me to do stuff like that.
34:53 And I would say I’m pretty good at researching and finding, you know, what we can do to kind of.
34:59 Because I do, I wholeheartedly believe that there is a solution for everyone.
35:03 There is a loan for everyone.
35:05 It’s just, it either may take a little bit more time to find it or it may take, it might be a little bit more expensive.
35:12 And so are you, like, you’re just qualified to loan in California in California?
35:19 Nevada and Colorado.
35:20 And then next, I’m working on Idaho and Montana, I think are my two other goals.
35:25 But that’s awesome.
35:27 Yeah.
35:28 Yeah.
35:28 So I have one last, well, I don’t know, it would be my last question but I have one question about since the transition of, you know, working retail COVID, staring out the window, seeing your son and husband playing without you.
35:44 Are you work, are you working more or less now?
35:47 Oh, you know, and then I got to go outside.
35:51 I definitely have gotten to out.
35:53 But I think I’m able to work more intentionally in certain times I feel less guilty about taking time for my family and because it all falls on me, it’s not really like I owe someone else my time.
36:09 It used to be.
36:10 I remember this feeling of just stress of like going and picking my son up from school and, and then dropping him off in school, you know, vice versa.
36:17 It was this like mad dash like I’ve got to get him there.
36:20 I’ve got to drop him off.
36:20 I’ve got immediately go back and I’ve got to get in front of my computer and I don’t have that feeling anymore.
36:25 So to say that I work less though, it’s probably not, not true.
36:30 Yeah, but to say that I’m spending my time intentionally better would be accurate and that I feel like my kids are getting a better version of me now than they got before.
36:43 So that’s so it’s worth that.
36:46 It’s 1000%.
36:47 Yeah, completely.
36:48 That’s amazing.
36:49 Ok.
36:49 Well, now that I know about you, you’re going to get all the people and she’s not very far.
36:54 So if you’re in Chico and you need a construction loan or private money loan or whatever, I even love that.
37:00 You’re doing like the fix and flips and remodel loan too because people don’t even know that they can get, you know, something besides a he lock or something like that for a remodel.
37:13 Oh, there’s so many cool ways to do renovation loans right now that are pretty rad and ways that even I talked to agents to kind of save deals that, you know, when a borrower is basically like using all their money to be able to buy a house, but now they have no money left to buy like appliances or like replace windows or something.
37:31 And like you can just switch that into a renovation loan.
37:34 We could finance in appliances, we could finance in new windows and boom, you just save that loan and yeah, you’re like a little wizard pretty sometimes I feel like it like that is like the role like, you know, you need like a cup that’s like I’m a wizard.
37:49 You know, how, like, what I think my dad when he was an account, you know, my dad’s an accountant, he had a cup that was like, I am an accountant, not a magician.
37:57 You know, it’s like people think that like lenders are magicians.
38:02 Oh my gosh.
38:03 When you have a good one, I feel like you are, you know, like, just like problem solving at its highest level, for sure, for sure.
38:13 We figure out solutions to make sure that everyone still just stays in the transaction, we get it done.
38:18 Yeah, that’s right.
38:19 That’s amazing.
38:20 So who do you like, how do you get a majority of your business?
38:23 Like, what is your biggest kind of like?
38:25 Is it referrals?
38:26 Is it agents?
38:27 Is it contractors?
38:28 Like, what’s your final for getting new clients?
38:33 Oh my goodness.
38:34 It’s an array.
38:35 One thing that I found was interesting that I tapped into was joining builder, Facebook groups, not for contractors, but for owner builders looking for advice on like finishes and that kind of things.
38:45 There’s a lot of people in those groups who are looking for lenders in certain areas, which is really interesting.
38:51 I’d say like my traditional loans, my husband’s a firefighter.
38:53 So I swear, I think I get a lot of my loans from the fire community.
38:57 But yeah, those Facebook groups are pretty rad and then just, I, I have called called contractors and emailed contractors and sent off flyers and everything.
39:06 And have been able to get a lot of business that way.
39:09 It’s been pretty, I would say organic for the most part just because I started this on Instagram to kind of track our own home building process a few months back.
39:19 And so a lot of people started reaching out to me on that and I’m like, shoot, I don’t have like my license and everything and it’s like, but reach out to me on my personal side, my life is never exposed and everything on that one.
39:28 But yeah, so it’s honestly, so the media is an interesting world, but I would say that’s a majority aside from these other little kind of niche areas of my life.
39:36 But awesome.
39:38 Well, I’m excited for, to just know that you exist and know that you’re not too far away and that there’s options because it’s, and for me to just like, learn about it from the contractor’s perspective and like help because I think a lot of people think a project isn’t possible and it feels impossible, you know, to do a remodel or a new build if you don’t have the money sitting in the bank and to know that like there is loans and, and ways out there to be able to do the project you want to do and have somebody you trust to help you, you know, through that process.
40:11 And I think you and I are going to do something.
40:14 Yeah.
40:16 Ok.
40:16 So tell people where they can find you and alone with you.
40:23 So, my website is JLLends.com.
40:28 So it’s my first and last initial and lends.com.
40:32 JLLends.com and you can email me.
40:35 It’s L E N DS.
40:37 That is correct.
40:38 Ok.
40:38 Yep, I’m spelling it correctly.
40:40 That’s my website and my email is just my first name at JLLends.com.
40:45 J E N N A E at JLLends.com.
40:48 Perfect.
40:49 And your website is beautiful.
40:51 Good job.
40:51 Thanks.
40:52 Yeah, of course.
40:53 And I really am gonna share you information with a few people today.
40:57 So I’ll probably just send an email and C C you know, send an email to both of you and the clients and see if you could help them out because I have a couple of people that are kind of in the same boat that and it was just like God was like, here’s Jennae raining her down.
41:12 She will help you.
41:15 Perfect.
41:16 Well, it was so nice to meet you and we are so nice to meet you off today and, and thank you for doing what you’re doing in this world with good people that we can trust that, you know, understand what it’s like and they aren’t acting or, or saying stuff that they, and, and they’ve never been through it.
41:36 They don’t know what it’s like to build something, they don’t know the construction process they don’t know that it’s stressful and there’s a lot of paperwork and things that need to do and like you’re just doing everything you can to help facilitate that.
41:47 I love it.
41:47 It’s beautiful.
41:48 Absolutely.
41:49 Absolutely.
41:50 Well, thank you.
41:51 So thank you so much.
41:52 Of course.
41:52 Have an amazing day.
41:54 See you.
41:55 You too.
41:55 Bye.
41:58 Thanks for joining me today on the She Builds Show.
42:00 My name is Stefanie Olson.
42:02 My hope is that this episode leaves you feeling empowered and ready to boldly take that step into building the life that you envision 12 by four at a time.
42:11 And if you can do me a quick favor, please leave me a five star review on iTunes.
42:15 I get giddy over reading the reviews each week and I will choose one special person to win some She Builds swag.
42:22 Make sure you add your name to the review and I’ll reach out if you’re the winner.
42:25 Thanks again for hanging out.
42:27 Be sure to visit me at theSheBuildsShow.com or you can ask me questions and share with me what you’re building.