033 How to Finance Rental Properties and Flips With Mark Filler CEO of Jordan Capital Finance

Update: Jordan Capital can no longer do 30 year fixed rate loans. I tried to refinance with them and after paying for appraisals, I was told the company that offered the 30 year fixed loans was no longer lending. I was not told that Jordan Capital was using another lender and I would not recommend them.

On this episode of the InvestFourMore podcast I interview an awesome guest! Mark Filler is the CEO of Jordan Capital Finance and he was the founder of Prospect Mortgage, which is one of the five largest mortgage lenders in the nation. Mark started Hilco Real Estate Finance, which later became Jordan Capital Finance, because he saw a huge opportunity for lending to real estate investors. As many of you know, it is tough for investors to get loans on many rental properties and hard money loans can have outrageous rates. Mark created a company to allow rental property owners to finance many properties, not just four or ten. He also created a company that would give consistent short-term loans to investors at reasonable rates.

How did Mark Filler get started in the finance world?

Mark graduated from Harvard law school and became an attorney after school. However, he had an opportunity to get into the mortgage banking business and although he no experience with banking he jumped in. He helped found Prism Financial, which grew from $1 million in revenues to over $275 million in revenues (15 billion in annual mortgage volume). He helped the company complete an IPO and was president when the bank was sold to Royal Bank of Canada.

Mark joined American Home Mortgage and then created Prospect Mortgage. Prospect now has a servicing portfolio over 15 billion. Mark started Prospect to focus on renovation loans and even though he created the company in the midst of a housing and lending crisis it was a huge success. Prospect was the number two bank in the country for renovation loans, but most of those loans were for owner occupied buyers. Mark started Hilco in order to provide renovation loans to investors in 2012. In 2014 the company was bought by the Garrison Investment Group, which is now a five billion dollar hedge fund. Hilco was turned into Jordan Capital Finance and that is where we find Mark today.

Why did Mark want to focus on lending to real estate investors?

Mark saw a huge gap in lending a few years ago. Most loans were marketed to owner occupants and real estate investors had very little options except for small local lenders. He knew there were many real estate investors who had solid financials, good business plans, but could not get loans because they owned too many properties or lenders did not like to offer short-term loans.

What kind of real estate investor loans does Jordan Capital Finance offer?

I have used a local portfolio lender for many of my loans on flips and rentals. However, my lender has some limitations as far as type loans and how much they will lend me. Jordan Capital’s philosophy was to offer real estate investors great short and long-term financing and even the option to use the two together.

• Rental property loans: Jordan offers 30 year fixed rate loans to investors. They offer single property loans or bulk loans and rates that can be under 7 percent. Jordan will offer a cash out refinance and up to 75 percent of the value of the property. Jordan looks at the property when giving loans, not just the investor so debt to income ratios are not the main consideration like they are with many banks.
• Fix and flip loans: Jordan offers short-term hard money loans on flips and can finance the repairs in the some cases as well. Jordan offers very competitive rates and once you get approved with them, can close very fast.
• Combo loans: Jordan also offers a very interesting combo loan for rentals. You can use a short-term hard money loan to buy a house and fix it up and then switch into a long-term fixed rate loan that could cover most of the repair costs. This allows the investor to buy rental properties that need work, without having to pay for all the work out-of-pocket.

Why would an investor use Jordan Capital to finance their properties?

I am in the process of refinancing some of my rentals with Jordan Financial right now. I have 16 rentals and 14 mortgages, which are all ARMs. My portfolio lender has become a little tougher to work with since I hit 2.5 million dollars in loan with them (that includes fix and flip loans). Since it is tougher for me to get loans on new rentals, I am considering refinancing 8 of my rentals into 30 year fixed rate mortgages. My rates would be higher, but I would also be able to cash out about $300,000. I could then get more loans on new properties with my portfolio lender and have more cash to buy more properties. I would still cash flow on those 8 properties after refinancing them, but obviously not as much as I do now.

Even though the rates on a 30 year fixed loan may be higher than a conventional loan. Most investors have a hard time getting loans on more than four properties and an even harder time getting loans on more than ten properties. Hard money loans are not always easy to get either and many lenders charge more than 12 percent interest rates on them. Jordan has no limitations on the number of loans investors can have and they have plenty of money to loan.