All Things Residential Real Estate Investing with Ruben Izgelov

Ruben Izgelov has spent over a decade in the real estate industry, acquiring, flipping, developing, and financing over $500 million in real estate. He has quickly become a renowned real estate expert, speaker, and guide for many industry professionals. Ruben’s most successful period was during the 2009 financial crisis, when he bought, fixed, and sold distressed properties, demonstrating his determination in both bullish and bearish markets. After using private money financing himself, he quickly recognized the need for innovation in the private lending space and decided to lead it by co-founding We Lend, LLC (a private lending platform).

Ruben, on the other hand, began as a hardworking eight-year-old boy distributing flyers on the streets of New York, and he still carries that work ethic with him wherever he goes. He holds a BS in legal studies from St. Johns University and a JD from Touro School of Law, where he completed cum laude and magna cum laude.

Episode Highlights Here:

Ruben Izgelov:

I would say that some costs, the cost of supplies, and the cost of goods have appreciated tremendously. I think that a lot of borrowers are under-appreciating that.

Pierce York:

What’s the number one secret to getting the best loan?

Ruben Izgelov:

I gotta tell you, the number one secret is a good deal. A lot of our borrowers today, especially the new, inexperienced first-time investors, are analyzing the deals incorrectly. I think they’re looking at it from a perspective of, what’s listed on the market today? What are the asking prices versus what is actually sold, or has been sold? I think that’s very important. Also, I think, a lot of our borrowers today, not a lot, but those who are applying for loans, especially inexperienced borrowers, underappreciate and underestimate the cost of construction today supplies, the cost of supplies, the cost of materials, I gotta tell you, I mean, we have a project of our own right now, where I expected, the scope of work and a construction budget of about 100,000, hypothetically speaking, and I’m literally at about 220,000. So I would say that some costs, the cost of supplies, the cost of goods have appreciated tremendously. I think that a lot of borrowers are underappreciating and underestimating that. So I think just being realistic with your numbers, I think knowing what’s a good deal from a bad deal, I think is really key from a lender’s perspective, and, of course, an investor’s perspective, because that as a lender would make us feel comfortable knowing that there’s meat on the bone and that the borrower knows what he’s doing from a perspective of investing makes us feel a lot more comfortable.

Pierce York:

Absolutely. How are you currently changing with the landscape? How are you adapting to raising rates?

Ruben Izgelov:

A lot of what we used to do, and I would say, about four months ago, a lot of what we used to do was the 30-year rental loans, so our borrowers, they were buying properties, they were using us for the bridge, and we were bridging their acquisition and construction, they would reposition the property rehab it rented out and ultimately come back to us for a 30-year loan. That was a very common theme. Right now today’s especially with the rates, the way in which there have been increasing a lot of our borrowers, instead of holding on to the properties which that which was their plan, rightfully so, because of all the inflation and all the appreciation of rents, their plan was to fix up the property and hold on and keep it in their portfolio. But with the rates increasing at the pace, and at the rate that it has been increasing, a lot of our borrowers today have been repositioning and instead of holding on to the properties, that portfolio, they’re flipping it. And I think, from our perspective when we’re underwriting a 30-year loan, we want to be careful in the fact that we’re not closing or locking in a rate at say, hypothetically 5% and then having to sell it or put it on put on our line at 7%. Because then effectively, we’re losing money. So, we want to make sure that we’re underwriting these loans correctly, especially with the appreciation and an increase in the rates. So we just want to be careful and kind of tread carefully on that perspective.

Pierce York:

So basically no more doing the burr method right now you’re not letting them cash-out refinance at, pulling 40 or 50 in liquidity out of the house and hitting your, DTI is to see higher debt to equity is too high and just keeping it real, real streamlined and kind of encouraging them to liquidate assets instead of holding them.