Real Estate Explained

Breaking Down DSCR, PMI & Mortgage Myths with Glendon Grose

• Nick Bush

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In this week’s episode of Real Estate Explained, host Nick Bush sits down with Glendon Grose, a seasoned mortgage strategist at Movement Mortgage with nearly a decade of experience serving buyers and investors across Virginia, D.C., and Maryland.

Glendon isn’t just a lender—he’s a trusted advisor who’s helped countless families secure their first homes and guided investors in building powerful, income-producing portfolios. And today, he’s giving you a front-row seat to the strategies that are working right now.

We unpack:

🏘️ DSCR Loans (Debt Service Coverage Ratio)
 How investors are buying rental properties without tax returns—and how 1031 exchanges can multiply your gains.

📊 Non-QM Lending
 Loans built for self-employed buyers, business owners, and anyone with non-traditional income.

💸 PMI That Pays You Back
 Yes, mortgage insurance is now tax-deductible—Glendon shares how to turn it into an advantage.

🏛️ What the New Housing Legislation Means
 From expanded deductions to builder incentives—here’s what you need to know.

₿ Crypto & Real Estate
 Bitcoin. Solana. XRP. Is crypto the next frontier in wealth-building? We break it down.

📉 Market Glitches & Opportunity Zones
 Why DSCR lending is vanishing in some markets—and what savvy investors are watching next.

🏢 Commercial-to-Residential Conversions
 Could office buildings become the answer to the housing shortage? We explore the potential.

🧠 The Buyer-Seller Mindset Shift
 Why waiting for “perfect timing” could cost you more—and why homeowners still build 40x more wealth than renters.

Whether you’re buying your first home, scaling your rental portfolio, or advising clients in today’s unpredictable market—this episode is your roadmap to playing smart.

Don’t sit on the sidelines. Press play now and learn how to move with confidence—no matter what the market does next.

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Speaker 1:

always popping, always popping, and it's low cost, and I mean the ice cream's not even expensive, but like everybody wants ice cream bro, yeah, dude, and there's no, like you know.

Speaker 2:

It's all numbers games, right. What can you do with low overhead? Keep the cost down. That has high demand, always right. I was looking at when I was at Mason. I was like, dude, like a fucking Wawa would kill right here, yeah, and we looked it up and we tried to do one. Some guy had the rights to it, but wasn't putting one in there.

Speaker 1:

Yeah, okay, you can do a franchise with one more.

Speaker 2:

We're rolling by the way, nate. Okay, but somebody had the rights to it wasn't doing it. I'm like what a waste of money, man. Yeah, it's like 24-hour MTOs college kids beer, wine, gas, all those things, cigarettes whatever, never going to go out of style. Well, cigarettes are going out of style, but alcohol, gas, the vape is not going out of style. Vape is not Candy, yeah.

Speaker 1:

I was like damn. I actually when I was younger, I mean, one day I was in 7-Eleven and this guy was like kind of following me and my cousin around and so I was like 22 at this point and I knew he was like doing that. And then I was like yo, you own this spot. And he was like yeah, and I was like so. Then I was like how is it Like, how's the money? You know you kind of make like $80,000. He's like you know you net $80,000 after everything which was like low, you know which is low, and he's like but you're basically like buying a job, like you got to kind of be in here, you know. I was like that's interesting.

Speaker 2:

Well, this guy was telling me like they have four Aquatots now and he's like it's and like that guy, if he had four of them at 80,000, ah, he'd be doing well that makes sense, yeah, right, so you scale up. You know it's like the mcdonald's thing, right like you own one mcdonald's, it's a living. You own 10 mcdonald's you're killing. You're killing now, and then you reinvest that in other stuff, you know and I was excited to hear that you had.

Speaker 1:

Um. Well, first we got glenn and gross on the podcast.

Speaker 2:

Welcome back is this mic good where it's at, I'm good okay um, glenn is on the podcast.

Speaker 1:

I'm gonna I'm gonna have you talk about this before we go into the pod, but you have a 10 dscr product. That I was personally, I think you do. You looked at me like, do I have a 10 dscr product? But I feel like you told me that, um, and so I just want to talk about how important that is to me. Glendon has been here maybe like six times now.

Speaker 2:

I know I feel like we should just start our own pod, to be honest with you.

Speaker 1:

I'd be down if you wanted to start a pod. I think I've flirted that idea out to you. I think maybe we'll branch off and start doing a quarterly or a once a month. See, he puts it out there and he takes it away right away. No, no, no, no I like that.

Speaker 2:

I love the idea. I think we would kill, and now we're doing it in-.

Speaker 1:

I like talking to you all the time, so and now we're doing it in Fairfax, so you can make it to Fairfax more than you can make it to-. We can have a conversation about this, bras.

Speaker 2:

I feel like if we keep bringing him out here too, I'm sure, you're chilling, come on man.

Speaker 1:

And one of the reasons that it would be cool for us to have a podcast is because for a little while now, like a few months, it's been kind of more like interview style, and it used to be more commentary style and not commentary style. I think it actually provides more value and you would be the perfect guy, you know.

Speaker 2:

So we're going to do it. It's no fun interview style, because you've got good things to say, that's what I'm saying, and so if you're never talking, you're just asking questions. I feel like it's too one-sided. I love hearing what you've got to say just as much as you like hearing what I've got to say.

Speaker 1:

People need to hear my takes, the Nick Bush takes, we're going to start. Oh, nick Bush takes, we're going to start a thing.

Speaker 2:

So tell the people, introduce yourself ton of time, but maybe this is someone's first time listening. Yeah, First time listening. This is a Glendon gross. I work for movement mortgage. I've been in the mortgage industry for almost eight years now. Yeah, eight years, shit. Um, I'm at movement now. I've been a movement since 2020, 2021. Um, I love helping people get into houses, man. I love solving problems and, uh, a lot of times, the mortgage finance, the housing finance question, is one of the biggest problems that people have to solve, so I enjoy that aspect of it. Uh, I love the great people that I've gotten to meet through it, like nick, like bronson, you know. Um, our buddy shane was here earlier. You know, that's awesome. Got to meet, got to see javier here and there. Uh, so the just the human aspect of it is my favorite part. So I know I'm rambling on about what.

Speaker 1:

No, it's good, yeah, that's me man Glendon at movement and I always say Glendon, shout out to Glendon, because he helped my wife and I buy our first house, um, and uh, he's probably gonna help us do our second deal. I've like pre-qualified with Glendon like four times in the last probably like seven, eight months. I'm like, hey, this is where I'm at now, like what do you think? And uh, and I don't know if we're going to buy a primary, but we might buy, um, an investment property next, um, investment properties next, before we we buy a primary. I'm not even that interested in buying a primary residence right now. Um, and you have a 10 dscr product or 15, or what's the dscr we definitely have a 15.

Speaker 2:

The 10 is there, it's um. I haven't been able to use it yet because the payment ratio with 10% down doesn't get you there right now, so it'd have to be like the absolute best situation. We definitely have 15 and the numbers could work there, especially if you can get, maybe, a buy down. The coolest thing about even the 20% or 25% not that that's what you're talking about particularly is that a lot of those DSCR programs non-QM, so you don't have the same conventional guidelines, which means that as an investment, some of them go up to 6% in interested party contributions, which means that you can get more than the standard 2% seller credit right.

Speaker 2:

And so it's like okay, you know, I may only be able to put 15% or in the product, but if I can get five percent in seller contribution, then I am essentially putting down 15 right. 20 to 15 right because I'm either using it to buy down the rate specific you know significantly, or we're adjusting some stuff. Yeah, you know, your, your net tangible value there gets to be significant if you negotiate it properly.

Speaker 1:

Yeah, that's actually a really good product. I think the DSCR is amazing, especially if you can find a market to invest in where prices aren't too high. So you find my strategy Bronson has heard me say this like 100 times at this point but my strategy is Ohio, tennessee, $100,000 property or less, hopefully 15% DSCR. You get 1.2% of the rent there and just like run it up there and then you know, get to a certain number and be able to do what I want in life. Yeah.

Speaker 2:

Well, and then you know what kind of magic you're trying to create. Right, like, let's say, your DC property, your investment property there? Right, let's say, in five years or so you decide to sell it, capital gains kicks in exactly, so I got a 1031, this thing, yeah, so 1031, which I know we're going to talk about, maybe the big beautiful bill yeah but, uh, they kept that in place, so 1031 exchange still exists.

Speaker 2:

Uh, because of that, um, and instead of, you know, with the 1031 exchange, one of the rules is you got to buy a more same or same, or same or more valuable property right, but you can dissect that into. Instead of just buying a more valuable property, buying three or four properties, oh, you can buy a few properties yeah, yeah, yeah, oh okay.

Speaker 2:

Yeah. So let's say it was a million-dollar property and you're going to make 400K on it. Instead of buying a 1.1 or 1 million higher, you buy four $300,000 properties. Put $100,000 down on each DSCR all four of them.

Speaker 1:

Yeah.

Speaker 2:

You can do it pretty much at the same time, because it doesn't matter what your income is, just as long as the properties qualify, you have the assets. All you got to make sure is you have the reserves and Bob's your uncle. You've got four new properties that are probably all cash flowing.

Speaker 1:

Do you need reserves to DSCR? Is that?

Speaker 2:

Typically Because, with the DSCR, the only thing that's qualifying you is credit assets and the property. That's all we look at. We don't look at tax returns, we don't look at income. We just look to make sure you have enough assets for the purchase. Plus, again, it is an investment property. So I want to make sure you have assets for your properties if they were to end up vacant.

Speaker 1:

Yeah.

Speaker 2:

Usually it's three to six months per property. Okay, that's good to know, but again, it's based off the property, right? So if the property mortgage is $2,500, you're looking at $7,000 per property. So it's not like insane amount. You don't need like an extra $150,000. It's a couple thousand dollars. Let's say $8,000 to $10,000 per property. And again, again, doesn't have to be liquid per se. It depends on the program. But it doesn't, you know, it could be in an ira or like in a 401k or an investment.

Speaker 1:

Have it somewhere right and now you can use crypto I, I'm buying a lot of crypto, I'm buying bitcoin. I was buying a lot of xrp and um then I was like I'm not buying it, I'm not buying. I like focus on xrp because it was cheap and I could load up, but then every day I don't buy Bitcoin. I told Lauren the other day. I was like every day I don't buy Bitcoin, I'm keeping us poor.

Speaker 2:

Did you see what they said?

Speaker 1:

No, what did they say?

Speaker 2:

So 95% of the world can't afford a Bitcoin now.

Speaker 1:

I mean it's 107 000, so yeah.

Speaker 2:

So it's like I mean, how much more does it go up before it becomes unaffordable for most? And then it becomes rare, rare, rare air.

Speaker 1:

You know I should have bought it at 30 000, like a hell of a lot of it, uh. But like you know, I'm like, let me buy it now and if it goes up, like I'm just trying to get as much as possible and so like, whatever you know, like you just haven't, just have, I don't even like, am I gonna get one bitcoin in a year or two? Probably not right, but if I have some chunks of that when it goes up, I'm gonna be winning you know the bitcoin lingo, like dca, dollar cost average yeah, yeah orange pill in it.

Speaker 2:

yeah, my wife's all into it, man, uh, I mean, it's just one of those other nest eggs, right, like if it hits great, if not, it's you know, I'm storing some stuff there.

Speaker 1:

It's almost like the way I perceive it is. It's almost like if you knew Amazon was going to become what it is and you just weren't buying any of it. Right, it's like what are you doing, bro? You know, and that's what I think is happening to Bitcoin, all the banks are accepting it. They're right, you know, like it's, it's, it's accepted.

Speaker 2:

Now, you know, and so I literally had the same conversation with a guy yesterday, guy way smarter than me and I I say example is I was like I'm trying to find the Nvidia. Now. That was you know 2005, when no one knew what it was Right. Yeah, that's what I'm trying to find. Said hot take, he thinks Solana is going to be the jam, solana's popping.

Speaker 1:

Yeah.

Speaker 2:

He's like the use case of that thing is extraordinary. He's like XRP could be, but he's like it's gotten so much, gotten run through the ringer so much. Now he's like I don't know if it's actually going to be able to survive all this chaos. But he said Solana use case and again he's smarter than me, so I'm like, all right, now I'm thinking the same way you are. I'm like we need to buy some more Solana.

Speaker 1:

I'm going to buy some Solana too then. So our house in DC you mentioned it. We have like 100K net proceeds in there. If we sold at the price that it's valued at, we try to sell and it just like didn't sell. So now we have a renter in there and we don't love our renter all the time we're actually getting around. We get another renter in September, Hope she's not listening.

Speaker 2:

Yeah, hopefully or be listening right.

Speaker 1:

She's cool, but she just, you know, she's always like trying to negotiate things and you know, so we would sell it. You know, and I just tell Lauren all the time I'm like, but if we sold it, like, what are we going to do? You know, like I don't want to sell this and like not do anything. Like if we have $100,000 in there, we must invest that somewhere else. It's going to make us money. Or else I mean, like you know, blow $10 is from investopediacom.

Speaker 1:

I haven't been able to talk today so I might stumble through some of these words, but I just want you to take on some of this stuff because I think it's really cool. You know, it says like you were just talking about the key takeaways and this article mentions three things. So it says like you were just talking about the key takeaways and this article mentions three things. So it says the legislation restores tax deductions for mortgage insurance. That's number one. Number two it also expands the low income housing tax credit for builders who create affordable rental properties, and the third thing is it's expanding state and local tax deductions. And the third thing is it's expanding state and local tax deductions so it benefits some housing in high priced areas and for high income earners.

Speaker 1:

So like our McLean earners, our Montgomery County earners, our Loudoun County earners at this point, but it specifically talks about places like New York and California, and if you've read this, which I'm sure you have, and you have some other things that you think are kind of like, more important to talk about, feel free to take the conversation in that direction. I'm just referencing this article.

Speaker 2:

Yeah, yeah, I forgot some other points from it too.

Speaker 1:

Yeah, I didn't know about the 1031. I think it's interesting to have a lender on here and talk about PMI because obviously, as you know, like we're working with buyers and a lot of buyers hate PMI. They like despise it. And I had a client that closed and he's like I'm just I'm gonna put 20% down. We're like you only have to put 15%. He's like, yeah, but this time like I don't want to pay PMI. And then, um, you have, like my situation where we bought DC FHA, so we have PMI for the lifetime of the loan and we're never going to get rid of it because we're never going to refinance from our 3.6 to a 6.5% interest rate.

Speaker 1:

But this one is what they did in the bills. Even cooler, because now you get to write off your PMI and it said in taxpayers who qualified in 2021, when you could do this. Trump just brought it back. The average deduction was $2,300 a year and that's what, like a couple hundred dollars of PMI a month. So it's not even necessarily a pain point anymore. I guess. Monthly you're paying it, but you get to write it off. So how do you feel about that as a benefit?

Speaker 2:

Well, first of all, I am not a tax professional. I always seek a tax professional for tax advice, Ditto. This is merely our opinions on these matters. I think the first important thing to note and this is something that you and I talked about before too where it's like and this is something that you and I talked about before too where it's like, if you're not deducting, it doesn't matter.

Speaker 2:

If you're just taking the standard deduction, it's the standard deduction. So, for a lot of listeners or for a lot of people in certain income brackets or income, if you're W-2 and you're making less than $100,000 a year, you're probably just taking the standard deduction, especially as a family, right, because it's a pretty good standard deduction. It's like 25K, something like that, and that's the same rule applies when we talk about real estate in general. Where it's like and I was joking about this the other day where it's like if you're not in the game, what do you care about the rules, facts, right? So if you don't own a home, I don't really want to know your opinion on interest rates because you're not in the game. What is it? You know? Got to buy a ticket to the show first.

Speaker 1:

Right.

Speaker 2:

So it's the same kind of thing. If you're not filing deductions, like what do you?

Speaker 1:

what is this? What is?

Speaker 2:

you know like we can be mad or happy about this if we want, but if you're not even doing it, what does it matter? Right? So that's the first thing. But again, we're talking to your cpa, your tax professional, when you're filing your um, uh, turbo tax. If you're doing it yourself, you know, check and see, because now that you have these additional deductions, you may be able to deduct more than the standard right. And it's easy just to click and say I accept the standard, da, da, da. But go through and find out. Because now to your point. Let's say you bought, you know, in this area, an $800,000 house, right, $800,000,. I'm gonna pull my calculator up real quick, do some quick math for you. So $800,000 FHA right is a 772 loan amount. So immediately, right, immediately, you're paying $13,000 rolled into the loan, but $13,000 in upfront mortgage insurance with FHA 1.75%. Okay, so that's rolled into the loan. Yeah, so you write that off right there. So now, if you're single, you're already pretty much at the standard deduction.

Speaker 1:

Yeah.

Speaker 2:

Just with the home purchase right. And then let's say it's at $800,000, at 772. It's probably close to $400 a month. In mortgage insurance We'll say 425. That's another 5,100 that you can write off and that you can write off in perpetuity. Right. You can write that off every year. So you take that plus. Mortgage interest is also tax deductible still. They kept that in the bill so you can still do mortgage interest as well. They made that permanent. So now you have mortgage interest, which is half of your payment in the upfront right. Almost Almost half your payment is interest that you can write off. Now the other third of it is MI, which you can now write off. So essentially you're writing off two thirds, if not more, of your mortgage payment every, every, every month, every annually. So that's significant man.

Speaker 1:

That's so significant and it's such it's a major benefit, right, and it makes home ownership, you know, make sense, right? We're just like, okay, I'm buying this house, cause what we didn't talk about is the appreciation that you're going to get right, so, conservatively, you'll get 3%, but in our market you'll get closer to 5% and you're writing off two-thirds of that payment and then you're increasing your value 5% every year.

Speaker 2:

And so that's sweet, correct. Mark your value every five percent every year, yeah, and so that's sweet, correct? And in my world you know, as a libertarian, fuck them taxes you know, whenever you can. But also you know these kind of deductions don't necessarily affect the bottom line as far as what I'm calculating for oh, that's a good point to make.

Speaker 1:

So when? So? Okay, so when someone qualifies I think I asked you this are you qualifying on gross or net? I know know for business owners you're qualifying on net, but that makes a lot of sense. So if someone's writing off, if someone makes $100,000 and they get these deductions and it's $10,000, you still can-2 or your salary in some capacity.

Speaker 2:

We just take the gross right. If you are taking deductions as a self-employed borrower or 1099 or commissions or things like that any income level that you can control some of your tax deductions we have to take what's called the gross taxable right. So not the net, not the absolute lowest, but the gross taxable. So after you gross down your taxes to your gross, your net gross. But then we can throw some stuff back in there. So standard deductions and things like that we can do, or things like this, where it's across the board, it's not, you know, like a lot of times if you're writing off your car, we can put that back in. Okay, things like that right.

Speaker 1:

Yeah.

Speaker 2:

Which is why, a lot of times, when you know we're working with somebody that's self-employed, we like to get you know. Shout out to Nick's Tax Guy Diego. You know, shout out to Nick's Tax Guy Diego. We like to all sit down and kind of think together to make sure the way that they're filing for you, the way that the tax deductions work, also give you the highest income. As far as we're concerned and there's a fine dance there it's staying within the law, making sure everything looks great, but also giving you the biggest amount of leverage in the market. Right? You still want to make sure that your buying power is as strong as possible while at the same time keeping your tax liabilities as minimized as possible.

Speaker 1:

Yeah. So in general, I mean, we're going to talk about some of these things in the bill Like do you like the bill, Do you dislike the bill? What are your thoughts on it?

Speaker 2:

uh, in my opinion, these days, all these bills have too much in them yeah there's things that I don't think.

Speaker 2:

there's one one bill that's existed in years that everybody likes everything in it, right, like they're all gonna have earmarks and back doors and hidden agenda things. You know, I like some of the things that I think were fiscally responsible. I like some of the things that I think were clearly designed to benefit the average American. Yeah, I think that spending is still way too high. I think there's too much for international things. We've got enough domestically going on. We shouldn't be spending so much internationally. And I think that there were still too many promises that weren't kept.

Speaker 1:

Yeah.

Speaker 2:

Especially again as a libertarian, I feel like there were a lot of things fiscally that were promised.

Speaker 1:

Yeah.

Speaker 2:

You know, and haven't come to fruition. Now it's the first year. These things all cycle through. Cycle, yeah, you know, but overall I think that it's a time will tell kind of thing. Yeah, Kind of like we were on the market right where it's like someone asked me the question the other day not to pivot too far, but someone asked me the question like do you think Powell should lower rates? You think the Fed should lower rates? And it's like it's kind of like in sports right where it's like, with a minute left in the game To the rest of the, yeah, you know, like if you call a timeout, you know, and you're trying to win the game, do you? Does the ball go to? I'm not showing my age here, but like, does the ball go to Jordan or Pippen? Yeah, Right, Goes to Steve Kerr shoots, scores, wins great decision. But if he had shot and missed, Then why didn't Jordan?

Speaker 2:

Right, right. Why didn't you give it to Jordan? You gave it to Kurt. Why would you give it to the?

Speaker 1:

you know, that's like LeBron's entire like career right. Why didn't he?

Speaker 2:

take the last shot.

Speaker 1:

Right right.

Speaker 2:

Where? Yeah, I mean, it's like you know, if you make the right decision, you're a genius. If you make the wrong decision, you're an idiot.

Speaker 2:

And it's the same kind of thing where it's like these bills, all these things, like just to get them passed they have to do so much wheeling and dealing, whipping of the votes and making compromise, that, and it's gotten so much more convoluted and complicated now than it's ever been. I just don't know. You know it. You know it's like how much is good and how much is bad and how much is just kind of like actually just status quo, that we're like making a bigger deal than now we see, because it's that the article is released, right.

Speaker 1:

I mean, I think one thing that they did that was cool was um the the low income housing tax credit for builders to rehabilitate and, you know, rental houses for like medium to low to medium income renters, right, I think that anytime you're incentivizing and hopefully people are doing the right thing, they're building with quality products. They're you know, they're flipping with courts and laminate.

Speaker 2:

Right, you want that.

Speaker 1:

But I think anytime, you know, I think there's some push and pull Right, like we want to make sure that, to make sure that our low to medium income people, citizens, are living in nice places, but somebody has to upgrade those properties or build those. What's the incentive to a builder to not build a $3 million spec home and to maybe build something that he's like buying and holding right and I think getting some tax credits for that made sense. And in the article here it says David Dworkin, who's the president and CEO of the National Housing Conference. He said that the low-income housing tax credit remains the nation's most effective tool for building and preserving affordable rental housing. So what he's saying is like we need the builders to like build and want to like renovate properties.

Speaker 2:

Yeah, yeah, now more than ever I think you know it it we are still in a housing shortage crisis. Right, there may be a stagnation in the market as far as homes for sale and homes being bought because of interest rates and because of economic times or whatever, but the rental market is still booming because people have to have places to live. That if there was a bubble in the real estate market, it is in the commercial side. Yeah, a lot of major developers are having an empty space and trying to refigure, reconfigure what they want to do with some of these spaces, and I think that the incentive here, you know, for home flippers and small time great, but even more so if we're talking about hundreds of millions of dollars, billions of dollars, on the development side, where I'm a huge, you know, national developer and I've got property vacant in, let's say, a hundred different localities, in, let's say, 100 different localities.

Speaker 2:

I could save a ton of money if I turn those into affordable apartments or low-income housing or Section 8 or something like that, and I can create a ton of units, reuse that space that's currently costing me money, get a huge tax write-off for it and then be incentivized to do other things elsewhere. The restructuring and the reuse of commercial space, I think, is going to be interesting. I think a lot of it's going to go commercially but into residential outlets.

Speaker 1:

I think that obviously, covid hit the commercial real estate space the worst and I think that that's a reason why a lot of people or a lot of companies are like you must come back into the office, and even more so since january.

Speaker 1:

But the development, but also the development like from like a job standpoint you know it's expensive. I think almost cities should basically be incentivizing, uh, these people who own these commercial buildings to convert them into residential, especially in a place like DC specifically, where you can't build up right and there's not enough inventory, but we have all these buildings. We do know that working from home creates productivity. You're still productive that way and I think it's okay to give some tax credits to people who own these buildings to turn them into residential real estate, because we need it. It's useless if no one's going into it and it's so hard to change, you know, because the electric and the plumbing and where the elevators are. But if you were just like demoing those or like fully gutting those, you create a lot of business opportunities and jobs for people locally. Yeah, you know.

Speaker 2:

Yeah Well. And then you look at, even like, let's say, downtown DC for example, right, like the use case for in a rundown neighborhood, let's say, you know where you've got 50 row houses that are all like 7,000 to 8,000 square feet where you could easily convert into six-unit condos, four-unit condo buildings. Stack, stack, stack, stack. All of a sudden, instead of 100 houses you've got 400 units, new converted. I mean again, the use case there is significant. It's fantastic.

Speaker 1:

I think I always look at like Baltimore as, like you know, it's like the. You know, baltimore is a lot for us, right, you can invest low, obviously, you know it's not always the safest place, and it's it's. It's the neighborhoods are like they need help. You know, I think what'd about, you know, dc, where you have a neighborhood where you convert to, you know, a one row house, essentially into a four unit, right, I think in Baltimore it's even cool because you might have a stick of houses you know 20 houses and all but three of them are abandoned. Right, and all but three of them are abandoned, right, and the issue with investors buying in those neighborhoods is that they don't want to buy a house to renovate and flip next to an abandoned house.

Speaker 1:

So if they're together, it's like, well, we have to buy both of those houses, because if we don't, then we get all the issues from there, right, and I think that incentivizing an investor or a builder or developer to like buy a block and then, you know, make those, make that a quality product for renters who are going to be in that neighborhood, and I think I think that's a good idea and people might be like, oh well, won't some wealthy guy, rich guy get richer by buying all these properties and renting them out? Yeah, but we can also. But he's also giving a quality product back to the neighborhood and creating opportunity. Right, you don't have an abandoned block anymore. And I think that we could do some other regulation, like capping the the income for the person who rents there, you know so it's interesting you brought that up.

Speaker 2:

I got a question for you Statement, then a question just found out this week and I'm still trying to digest it myself. We've had multiple investors for DSCR non QM investor products. So investors as in lending entities yeah, bank banks, banks and private equity that are pulled out of programs in specific localities Okay, baltimore being the one that was brought to my attention.

Speaker 2:

So basically not all products that I have, but a lot of my products got limited in the DSCR space in certain demographics In certain cities, cities, really, I'm trying to wrap my head around why I you know, if, if this is like the first of many, or if it's just investor appetite, or if it's it had to be something going wrong, otherwise why would they take away? You know such a lifeline. Um, you know a funnel. If you will, what do you think?

Speaker 1:

so basically they take up. You can't like dscr in these certain places. Um, you know, it's interesting like baltimore would be one of those places, because governor westmore is doing a great job. He's, um, you know, he's, he's wants to make Baltimore the anchor for the state. He said there's no state in the country where the biggest city isn't the anchor for the state. And the mayor I forget his name, but he's doing a great job. Also, crime is significantly down after school programs or things like that. So he's crushing and so Baltimore is having kind of like a resurgence. It's doing well, it's doing better. The Orioles sold right.

Speaker 2:

Right, right, baltimore is doing a lot better. I agree, I was there a couple weeks ago.

Speaker 1:

I think if you think about it from a, you have to understand the data right. So it's like what's the foreclosure data, what's the neighborhood data? What's the value? That's what I'm wondering. And if it's non-QM mostly those banks they're not selling those loans right, they're holding them. So it's just like what's the opportunity for us? What's the upside on this loan if it's in a neighborhood where it's not growing in value or it's not attractive? I don't know how the loan and insurance works together, but if your house might get broken into or burnt down or it's next to a bunch of abandoned houses, is that a cool house to buy, Right? I don't know. Yeah, I'm wondering the same thing, Because that's where a lot of abandoned houses. Is that a cool?

Speaker 2:

house to buy Right. So I don't know. Yeah, I'm wondering the same thing Because that's where a lot of opportunity is for investors.

Speaker 1:

That's what I'm saying.

Speaker 2:

But I'm also curious, because it became pretty popular pretty quickly, yeah, because of the. I mean you could buy a row house for like 90 grand.

Speaker 1:

Yeah.

Speaker 2:

And flip it for 260, 280, 300, even you know, which is pretty good. But you know, I'm wondering if the ratios bloated faster.

Speaker 1:

Ah, kind of like when buildings. Sorry to cut you off, but kind of like when condo buildings were not FHA approved anymore because, there were more renters than homeowners.

Speaker 2:

Right, okay, right, I'm wondering if it was just like wow, there's so much that it's bloated the ratios as far as, like, rental calcs and you know, and so maybe because that's the major data that they were using to qualify these houses might be skewed. That's what I'm again trying to like think about why, because again in my mind and the way you said it, I agree, I'm like why would you not? This seems like a revitalization, yeah, but I think, financially, what you're talking, about makes sense.

Speaker 1:

It's like, well, if there's all investors in these neighborhoods, then there's competition in the rental market, right. And investors can start kind of slashing Because you only have to qualify for the DSCR one time, right, right, but after that you can do whatever you want, right. And so then investors are competing and maybe the value of the rental product decreases, which makes it harder to DSCR in the future.

Speaker 2:

Right. And again, by doing that, you kind of curb, reverse, redlining right, where all of a sudden a neighborhood doesn't become all of a sudden too expensive for everybody to live in right Now. That's probably giving them too much credit. It's probably more math than it is ethics, yeah, but it just makes me curious because I heard about it this week and I was like huh, like why would you? But to your point, like, yeah, I mean, it's probably just a factor of a lot of things, yeah, and somebody made the decision to Report a plug.

Speaker 2:

Programs, you know like programs and products and investors. They float in and out of the market all the time. You know we had a really awesome program through VHDA I don't know if you heard about it. That was you could qualify for the 2% grant, which is great all by itself. But in addition to that, if you were a first-generation homebuyer which means you sign an affidavit basically saying that your parents don't own a home and haven't owned a home in the last three years and that you've never owned a home, you also get a 2% rate reduction. Oh, that's huge. Yeah, cl you also get a 2% rate reduction.

Speaker 2:

Oh, that's huge. Yeah, Closed a guy about a month and a half ago with it's like a $500,000 house, so 10K off helped offset his closing costs and he got a 5.125 interest rate.

Speaker 1:

That's huge, especially for a first generation buyer who's like that's already an overwhelming thing to do, yeah, and to navigate. And you get 2 percent off the rate plus a two percent grant, and that doesn't include, I imagine, anything that your agent negotiates for in the transaction closing costs, etc. Correct, that's a sweet deal. You should be pushing that product, bro well, here's the kicker.

Speaker 2:

This is my point. I was pushing it okay, ran out of funds, ah so now I got I got buyers lined up for it that only want that program now because they saw the honeypot right. They're like, oh, I'm not going to take a six and a half interest rate when I know I could get a 5% or a 5.125. Like, I'm waiting for the program to refund, and it always does.

Speaker 1:

It's kind of like HPAP in DC.

Speaker 2:

It might not always fund, though, because again bringing up Big Beautiful Bill they did not allocate first-time homebuyer incentive funds in the new bill, so FHLB and some of those may not. Once they're gone, they're gone, maybe, maybe. I don't know the details of that, but I do know that that doesn't usually happen. There's usually some sort of allocation of funds for first-time homebuyers and homebuying incentive.

Speaker 1:

So that's a really weird one that I'm not a fan of. Yeah, I uh hpap. Hpap really affects um when we try to sell our house. Hpap had run out of funds and I and hpap super affects east of the river and hpap is they even changed? They had, you know, they had increased it to 202,000 and now there's a lottery. It's, it was a lottery, but now it was a lottery, but now it's like a real lottery. So you might not even they're not just giving out the HPAP funds anymore.

Speaker 2:

Yeah, and I'm wondering how this bill affects HPAP and.

Speaker 1:

DC.

Speaker 2:

Open Doors and the DC specific, because DC is. I mean do they have their own legislation on that? They have their own. I mean, do they have their own legislation on that?

Speaker 1:

They have their own, or is it from the feds?

Speaker 2:

I'm not sure I got to look into that too.

Speaker 1:

I don't know. Talk about non-QM. You've mentioned non-QM before. I don't think people really understand that. Right, you got Fannie Freddie non-QM. Can you explain to everybody what that means?

Speaker 2:

Yeah, so the biggest thing with non-QM, so non-qualified mortgage, qualified mortgage is either going to be a conventional or a government loan right Government real simple is FHA, va or USDA.

Speaker 2:

Thank you, usda. So those are the three government loans. Those are government-backed, government-secured. Government owns those loans, right Conventional loans. Fannie Mae and Freddie Mac are private, still under federal government conservatorship, but essentially runs a private entity. But they buy back all the loans, not the servicing right, just the loan itself. So they buy and insure the loan. Then they package them and resell them on the secondary market as mortgage-backed securities loans, not the servicing right, just the loan itself. So they buy and insure the loan. Okay, then they package them and resell them on the secondary market as mortgage backed securities right which is bought and sold like stocks, like REITs and stuff like that.

Speaker 2:

Yeah, um, anything that is not those two things is a non-QM, is a non-traditional loan, right? Those are investor-specific, so they could be a bank, they could be private equity, they could be you if you wanted to start your own. And so they have their own set of guidelines. Each one has their own rule book right. A lot of them mirror. We have some that literally say two Fannie guidelines and then they have what we call overlays. They just have some additional rules. You check and see if they qualify for the conventional guidelines first, and then they have some overlays. Some of them are just wild west Commercial loans. For example, you could write in your kid as equity or collateral if you need you know it would be messed up, but you know,

Speaker 2:

you can put whatever you you know. Um, most of the non QMs that we do uh are based off of uh not fitting Fannie Freddie guidelines, and by that I mean the debt-to-income ratio doesn't fit. Credit scores are off. Income can't be calculated the same way. We have to use bank statements or we have to use the collateral of the property DSCR, dscr. We have to use depreciation or distributions from IRA 401k investment property trust. Some people that maybe are getting distributions from a trust that we have to figure out over a five-year or something, breakdown whether or not they can qualify as opposed to, you know, just like Social Security or something like that In our non-QM can those be called at any time.

Speaker 1:

Is there like a? You know you can't call a Fannie and Freddie all at once, but you can call like a like. If I change my property from like my ownership, and I deed it to an LLC, the bank can call it.

Speaker 2:

It would be part of that happen. It can again, it would be defined in the in the language, but it's not standard, necessarily because you're doing a non-QM product. No, no, I don't think it would be standard. You know it would depend on the investor and the product. Yeah, you know the. The other thing that could occur is is you know the other thing that could occur is, you know, repayment penalties. You know a lot of DSCR programs, for example, have a repayment penalty.

Speaker 2:

Repayment penalty or prepayment If you prepay the loan before a certain number of years, there's a penalty. Some of them have balloon, you know where. If you're getting a certain interest rate for a certain amount of time, balloons, uh, at some point, um, so there's just yeah, there's different nuance to it. You know it's, you know you, and I've talked about it before. It's very much like, um, these things are niche yeah they're for specific situations.

Speaker 2:

each person should figure out specifically what makes sense for them. Yeah, you know, most people are going to fit into either a government or a conventional model. These are honestly, though, these are getting more popular. Um, the, the Solana guy I actually met with, is a hard money lender that I I'm working with because I'm getting a lot more questions about hard money as a, as an opportunity to buy, to refinance or just to just to qualify because they can't qualify conventional, and so it's like well, I really want this house. I got to get my taxes in order. It's going to take a couple of years for that, but I want this house now. So I'm willing to have a higher interest rate, take a higher risk loan with a with a private investor or with a with a group, as opposed to going the conventional route. Or I can't get my credit score up because of something that's happened years ago. I'm not there yet. I really like this property. I want to move quickly. It's going to take a year to get my credit score up. I'm just going to get it now. Or I'm going to buy and rehab and flip this thing, and this is the fastest way to do it. I did legs yesterday Because I can get some money for the finance to flip Not that we don't have that in the conventional landscape too just got a lot more hoops to jump through.

Speaker 2:

I was chatting with him about kind of he's like you have to rewire your brain, glendon, because your training, the way you underwrite conventional loans, is debt to income ratio and income and credit score and employment and tax returns, and he's like we don't give a shit about any of that. He's like we want to know is there meat on the bone about any of that? Yeah, he's like we want to know is there meat on the bone, right? Yeah, is there collateral in case something goes wrong? That we have, you know, cross collateral things like that. Does the person know what they're doing and does the deal have opportunity? He's like if those things make sense, he's like credit score is not nearly as important to us, their income is not nearly as important to us. Because, again, if they not nearly as important to us, because, again, if they fuck up this property is going to be profitable for us anyway.

Speaker 2:

Is it a headache to have to go through that? Yes, that's why we charge. But would this be profitable on the left side or the right side? Yes, and that's the way that they think, because it's just a different mentality, different game.

Speaker 1:

That makes sense. Yeah, I'm going to get you out of here on this one. And I know you work mostly with buyers, obviously, because you're not a listing agent, right, you're a lender. I was like I know the lender works mostly with buyers, like yeah, of course, right, but what is some actionable advice that you would give home buyers and home sellers right now?

Speaker 2:

That's a good question. So the funny thing I can't take credit for this, because somebody told it to me, but the description of the market right now which I found was hilarious is she said buyers think that it's 2008. Yeah, right, and it's bottoming out and they can get whatever they want for next to nothing. And sellers think that it's 2021 right, and they can just list at the top of the market. It's going to sell in two days and you're going to be the best house on on the block. Yeah, neither could be further from the truth. Right, like they they are, they are both way. It is very circumstantial.

Speaker 2:

My thing for homebuyers is always the same If you don't own, you should own. Period, point blank. Owning real estate is better than not. Yeah, does that mean for every single person, every single time? No, but by and large, real estate is the fastest path to wealth. I mean it's like what is the crazy statistic? That a homeowner is 40 times wealthier on average than a renter. It's an insane amount, right? You build equity, you build wealth and you're not paying somebody else's mortgage, you're paying your own.

Speaker 2:

So if you're not in the game, like we talked about before, you should try to figure out how to get in the game. Do it intelligently, though, right. Don't just jump in to jump in. Figure out a game plan. Sit down with a realtor, sit down with me or any other mortgage professional that can have a good conversation with you and figure out where you're at, how you get to where you want to go and the fastest path to do it. I think the craziest thing with homebuyers that I hear that you probably hear a lot too is they just assume Interest rates are high. What does that mean? High for who? High for what? Compared to what? Or I can't afford Afford to what. If you're paying $3,000 in rent, you could probably afford to buy a house.

Speaker 1:

Yeah.

Speaker 2:

Like or more right? And then sellers. Sellers are an interesting one, right? Because it really is nuanced in that regard, right? If you have a 2.5% or a 3.5% interest rate or something in between, it's hard to get rid of that. It's hard to get rid of that. It's hard to get rid of that, you know.

Speaker 2:

But in my opinion, life is more important, right, than just numbers. And if you're growing out of that house or you don't like the house or you're commuting two hours every day just to keep that payment, there's a way around it, there's a way to figure that out. You know, we're also seeing a lot of people post COVID, postcovid post, where we're in the economy. We're in now where they've got a low housing payment but they've got $200,000 to keep this 3% interest rate, where it's like, man, if you sell and take this $400,000 or $200,000 or whatever equity position that you have, downsize a little bit or move somewhere that makes more sense, or even get out of the housing market for a little bit, rent for a little bit, build yourself back up and then capitalize when you're ready, I think that's genius, right. I think it's just having to be honest with yourself. Look at the situation, do what makes the most sense for you, but if you're super comfortable, right.

Speaker 2:

And you have a great interest rate and you've got a great payment, don't change it. Yeah, there's no need to change it. Just because I'm in the business Like I'll tell people all the time like, hey, this might not be the best thing for right now. I get it that maybe it's not your favorite house or you weren't planning to be here. Still, you know, um, I guess that's kind of my two cents on it game game.

Speaker 1:

Yeah, thanks for coming back, bro dude always uh, if the people love this, tell glennon in the comments so he can, you know, lock in and we can start a podcast together. Yes, bronze is gonna also tell us if it was good or not. Um, and then when he was the truth, he's like half listening all the time and, uh, where can the together?

Speaker 1:

Bronson is going to also tell us if it was good or not. Give us the truth. He's like half listening all the time. Where can the people find you? How can they get in touch if they want to buy a house and tell everyone the state you're licensed in, because it might not just be DC?

Speaker 2:

or Virginia. I'm the easiest person to Google. Not a lot of Glenn and Grosses out there, but it is Glennon Gross, g-l-e-n-d-o-n-g-r-o-s-ecom. Instagram same thing, glennon-gross. Facebook same thing. I got to get on the X or the Twitter, the tweets. I need to do something like that. Or TikTok. I haven't done any of that stuff yet. I'm too old. I'm licensed in Virginia, dc, maryland, west Virginia, north Carolina, south Carolina and Florida and I do a surprising amount of business in Florida and the Carolinas.

Speaker 1:

And Glennon's going to get Ohio and Tennessee, so I can I'm going to get Tennessee, you're going to get Tennessee. We're considering Johnson City, tennessee, as a place to invest.

Speaker 2:

I'm getting Tennessee.

Speaker 1:

GPT told us it's lucrative.

Speaker 2:

So we're going to check it out. Ohio's a a place to invest. I didn't get in Tennessee. Jpt told us it's lucrative, yeah, so we're going to check it out. Ohio is a good place to invest in too, I hear.

Speaker 1:

But Ohio is like the play, and then we're considering. I have a past client who has a couple properties in Tennessee and they love it out there, just like the real estate, and so we're looking there. So yeah, man, thanks for joining me.

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Nick Bush

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