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Global Investors Podcast
GI47: Financing U.S Real Estate Through Private Lenders with Eric Tran & Milica Krstic
May 13, 2020
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Eric is a managing partner of Universal Commercial Capital, a private lender with 25 years of experience in real estate and private Lending.

Milica has a master’s in political science, and a journalist by profession. She works with Eric as a Sales Executive at Universal Commercial Capital.

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Transcript:

Announcer:
Welcome to the Global Investors Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host, Charles Carillo, combined decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now here’s your host, Charles Carillo.

Charles:
Welcome to another episode of the Global Investors Podcast. I’m your host Charles Carillo. Today we have Eric Tran and Milica Krstic. Eric is managing partner of Universal Commercial Capital, a private lender with 25 years of experience in real estate and private Lending. He is a member of the American Association of Private Lenders, loves working with US and international investors, brokers and realtors. Milica has a master’s in political science, and a journalist by profession. She works with Eric as a Sales Executive at Universal Commercial Capital. So thanks so much for being on the show.

Eric:
Thanks Charles. Hello everyone. My pleasure to be on this podcast today.

Milica:
Hi Charles. Nice to see you again.

Charles:
Nice seeing you. I mean we had you guys on a few months back and we went through some of the different loan programs for foreign investors and I want to, we’re going to dig into a couple of different parts of your business and the different programs you have a little bit more in depth and can we start off with getting a little bit more background on yourselves prior to working with Universal Commercial Capital?

Speaker 3:
Sure. Our company started out as a regular lander, like we provide loan to people in the UAS, regular loan people buy home, put out some down payment. About 10 years ago we stopped receiving a lot of inquiries from people overseas. They say, I want to buy a property in the U S it looked cheap compared to where I am? Do you know, or do you know how we can get financing for our investment? And that’s when we start getting into this loan program for foreign national law. The truth is it’s not very common in the US for loans for foreign nationals just because to the U S banking institution, it is still a small market segment. So all the big guys, they didn’t really pay attention just because it’s too small. But like for us, you know without ethnic background, we are from overseas tool. So we realized that is a huge demand for search space. That’s, that’s why we started our loan program for foreign nationals.

Charles:
Awesome. And what was your, what was your experience prior?

Eric:
Prior the, we call it like Nila lone, regular loan for regular people. Regular American in here that you wanna buy a house, you worked out three- five percent, you got a mortgage.

Charles:
Yeah. Like the majority of lenders out there.

Eric:
Right.

Charles:
Well it’s a, what’s your role? What’s your background prior to starting with UCC?

Milica:
Well, before I started working for UCC, I was working as a journalist and I was at the market exploring my opportunities. Then I just got into real estate business and it really got me interested. So I met UCC team and I find them like a great team because we all work like one and we all work like a family and that’s what is bought me to just continue growing in real estate business. So far I’m so satisfied to work with this open minded and positive people like UCC teammates.

Charles:
Awesome. Okay, great. So a lot of well some of the investors or some listeners probably don’t understand exactly what a private lender is compared to. I think most people know what a traditional bank lender is. You would walk in and you’re doing application. It takes like you were doing Eric previously 30, 45 days, all this kind of stuff. There’s a lot of red tape, a lot of boxes to check. How is a private lender different?

Eric:
Actually we are more or less same as a regular band except how we raised our Pappy toys, their front, a regular band. They can raise money from anyone from the public, but for us, we are not allowed to raise our capital base from the public. We can only raise our capital base, what we call accredited investor. Not mean people have experienced investing in stock, in bond, in real estate. So in the sand to protect the general public, we only allow to work with my very excoriating institution. That’s the only difference. Besides that, we are more or less operate, look at thing the same as a regular bank.

Charles:
Okay. And how are your, or is your guidelines pretty similar to a traditional bank when going into looking at a potential loan application?

Eric:
Actually we are easier because unlike the bank, which is regulated by the federal reserve, we are regulated by the sec security exchange commissions. So-So we are easier because we are under the last regulation, the last rules just because the government does not have to protect that much. The Zelle Republic investors, they know what they doing. So we are lenient rules.

Charles:
So for investors are, for our listeners, what happens is that when we’re talking a lot about syndicated real estate and we’re talking about raising money and sec guidelines that’s coming in on the equity side of it, what mr [inaudible] is coming in on the debt side of it. So these are credit investors, so they’re wealthy individuals. There’s different guidelines, the SEC sets for them and this is where you can invest with a company like UCC to get involved in the private lending on the debt portion of it, other than how we always usually talk on the show where we’re raising money from investors to come in on the equity side. So actually owning the property. So it’s a little, it’s, it’s on the other side. It’s a little different. So that’s very interesting. Okay, we’ll get into that a little bit more. What I want to see is what is your, what are the different loan programs that you guys offer traditionally?

Eric:
Milica?

Milica:
Yes, yes, of course. Well. as people can see on our website we’re offering hard money loan commercial on construction loan and fix and flip loan. It depends off your I dunno project that you have or long scenario that you have. We are very open for new partners, new ideas. So that is what we offering to people that those kinds of of loans that we can offer.

Charles:
Are they mainly short term loans? Like I imagine the hard money and the flip loans, those are all short term. Do you also do longer term loans?

Eric:
Yes, we do actually for the boat cash today we have all that talk about international investor and for international investor they normally come in on the, on the longer term loan and that fix and flip because they not here. So this really hard for them to, I run the whole process of fix it, fix and flip it. We have like 30 years long program down for international investor, the same ass of regular America in this country. The only difference is red is a little bit higher just because I requirement to approve the loan is much less than the regular America, but the term 30 years, 15 years, 20 years to say. They can have a long term loan if they wanted to.

Charles:
Okay. And what is the minimum loan amount you guys usually work with? Is there a, do you guys put a floor on that?

Milica:
Well

Eric:
Yeah, go ahead.

Milica:
Well we usually work from 100K up loan programs, but we’re very flexible when it comes to lawn. So it depends on the loan scenario, but we usually do that kind of loans.

Charles:
Okay.

Eric:
And I want to mention about alone a mile, a lot truck, like our clients from Europe, they are attracted to the U S market just because the property price in much cheaper than you asked. They can fight a large apply $80,000 property under $100,000 property. So sometime the loader miles for each property is small. But like we can do bracket loans, like shop investor from Europe, come in and say, Eric, I want to 10 property at the same time, put one blanket, love our tanned for me. So, that’s not normally how we work with like Brian from the hero and on this podcast today I believe merely to have on the top more emphasized more to our client from Euro and follow like all the region. We will have another test.

Charles:
Yep. Perfect. What for the different property types, what are the main property types you see or you can work with? With foreign investors?

Eric:
Yeah. Milita you can answer.

Milica:
I like you to expand this a little bit more.

Charles:
For the property type. So are you, is it from, for foreign investors, are they able to do, I know obviously residential, but are they able to do commercial properties? Are they able to do commercial, like larger multifamily properties, retail office? Is there a limit on it or do you guys specifically focus on one part of it? One asset class, I would say.

Eric:
Oh, really? Yeah. Okay. lot of our clients from zero. They go into life for single family residence. That’s what we call S, but I have a few client they’re going to go into like multifamily, small retail office space, social. We do all kinds of assets class. We’re not limited ourselves to only single family by a few of them. By multifamily, not big one, seven unit, 10 unit, 15 unit. I see low type property a lot.

Charles:
What are the typical requirements for obtaining a loan as a foreign investor? Whether they’re here and they don’t have an SSN social security number or whether they are actually based out of the country.

Eric:
Okay. For foreign national, mainly it’s equity base, but there are certain thing we always ask outlying, how do they want to acquire the property as an individual, as an LLC or as a corporation? First thing. Secondly even though they reside in a foreign country, you know, we always tell them to apply, go online and apply for the IT number. They don’t need it now, but they will need it in the future for facts verbose when they apply for their own national tax. So I don’t need the it number, but they should have it handy ready from the beginning. So when they sell it, you know, they have to provide that number because they have some IB, some tax liability when they sell the property. Beside that, not much else we required, you know, sometimes sometime if they say I want to buy this how as my primary residence, I’m going to leave it there, then we might ask for some documentation about their income out of their credit history in their native country.

Charles:
Okay. Yeah. All right. Interesting. And what are your typical loan terms?

Eric:
Oh, well we can do like 30 years. Okay. Yeah. Regular loan, like I said before, like a regular American people.

Charles:
Okay. So a fully amortizing 30 year loan and you said okay. And 35% loan, sorry, 35% down payment. Is that normal?

Milica:
Yes, it is.

Charles:
Yeah. Okay.

Eric:
Normal and minimum,

Charles:
Normal and minimum, okay. Obviously, yeah. So it can raise from there depending on the specific borrower’s situation. Okay.

Eric:
But like I bought like for apartment loan, you know, it might sound strange, but for apartment loan, bigger loan amount, wicked property, we can go with 20% now. Okay. Yeah. Just because, just because the loan program is different from the single family loan program, but like to be on the side, let’s say 35% minimum.

Charles:
Okay. All right. Yeah, I’ll use. Okay, perfect. The I was about the ITIN as well for listeners is that that’s something that you should work with a CPA or an attorney in the States that knows about that cause they can fast track your, getting that ITIN number when you’re setting it up with your, if you’re setting up a, an EIN number, like an LLC or if you’re buying it through an entity that’s different from your name. So that’s something as well that I imagine Eric and Milica can point you in that direction if you need it. You guys work with a number of different real estate investors, U S and foreign and what kind of issues do you normally see investors make that you deal with? I always like to ask to see from lenders perspective from attorneys, from anybody that’s not the investor where they see investors making mistakes.

Eric:
You want me to answer this question? Milica.

Milica:
Yes, of course.

Eric:
Okay. See this is the common, not problem, but the common reason why we decried alone. Like I say, a lot of investor from overseas, especially Europe, they are attracted to the U S market because of the cheap price. But sometimes they go for too cheaper price. That means they go to a very remote area, you know, see by or rural area where the populars and cow, well what we consider is a small town, 20,000 and under population cap. And if that’s how we do small weight alone in such city or Taos, we just turned out a five unit loan from applied in Norway. Just because the town is so small, there is no comparable property like I and this property in the area. You know, we can put how you own the property. So, so a very common mistake. Okay. You know what I heard there is a $10,000 property in Chicago. They don’t know. It’s in the West side, you know what I mean? Yeah. That’s one thing. And the second thing is, and that’s when they need us the most. She and they farm oversea, they don’t have that deep expertise on the valuation of a property. Sometime they overpay for the property, which is we don’t say nothing about that, but we are only loan on real market value. If you overpaid for the property you have to bring in to defend yourself that those are the common mistakes problem that I can see from our fault.

Charles:
Yeah.

Eric:
Maybe not area location.

Charles:
Valuation, not knowing the market. Okay. Yeah, those are, I could see that and especially it’s much more difficult for someone that’s not local or especially foreign. It would be a lot more difficult for them to find and actually have a actual a well you’d say an actual, a good estimate of what the price should be for the property. And so yeah,

Milica:
That’s why they need to just inform themselves a little bit better or just to contact us. We are here to help to see if the property is good, if the neighborhood is good, we just can recommend something. And just we have to deny small lawns and just, you know, it’s, it’s the risk that, that we have to take.

Eric:
Yeah. Yeah. And I want to add one thing, Charles, you know what a lot of foreign clients. They don’t come to us, they don’t look at us as a lender, but they come and look at us more, more as an insurance policy for them. Because besides that, our pay money, that money, that 35%, 55% is our own money on the table. So we will make sure the value is there. We will make sure the legality of the property is there to protect outsell first. And if we protect ourselves, we need me. We protect outlier. So I have the guy on from Finland, he buy one time 50 property. He can pay cash. They still come to us and one of oral, again, those properties. So we can do all the quality control on his investment for him.

Charles:
Yeah. Yeah. It’s another set of eyes for doing underwriting. So it’s it’s definitely, that’s definitely one benefit of when you’re taking on a loan when buying property is that it has to go through a whole separate appraisal, has to go through a whole, you know, many different parties go through the bank and then goes through another appraisal as well. So there’s other factors, other people looking at it. It’s just not you and getting a property and have a broker tell you it’s a good deal and it’s not really a good deal. I was looking on your website and you have a new section, it’s called opportunities. What does that explain a little bit more about those properties or those properties that you’ve taken back that you’re selling now?

Eric:
Okay. let me answer us on this question, on that website opportunities. Remember I talk about accredited investor, qualified investor in the country. They have access cash access capital. They want to deploy it and they are, they’re always look out for the opportunity. So they contact us, they say, Hey Eric, you know, you have any investment opportunities that I can call me, I can eat, go eat mass or I can buy the loan from you. So, so that is a base, the base for like our accredited, both American and AUC shot in bachelor to come in and review our portfolio so they can make a decision on how to be plowed their capital.

Charles:
I’m sorry you don’t commingle it then they come in and they will make a, an investment and they’ll have themself, we’ll have the, the note on one property. It’s not spread out like a fund or anything.

Eric:
No, I mean on their own, you know, we are not setting up like they put the money in the fund and we need the money to do that. They make their own decision on where and how do we invast.

Charles:
Yeah. Yeah. I think that’s the best way. It was just when I was looking at it’s nice because they can see exactly what property it is and then if they want to loan they can loan on it. So I wasn’t sure, and I saw some of them close. So that’s cool. That’s neat that you’re able to do that. So how can people learn more about UCC, universal commercial capital and if they’re interested in actually being a working with you to make money in the sense of becoming a lender with you loaning money on the properties or if they want to actually get a loan on a property that they want to buy themselves?

Milica:
Well, besides our website they can find us on bigger pockets platform also. So they can find us there. They can just send us a message, they can send us their own scenario. And we’re really fast in answering also we have our podcast where we are answering all those questions and we have our team advising people how to invest their money so they can find us on our email addresses, our phone numbers. We’re really, really open. I would like to add that that is the difference between us and banks. We are very open for communication, you know, because banks are really strict and I like to say that we have a soul in real estate business because people can openly come to us and expect that they will be treated well, that they will get all informations, nothing will be hidden from them because we’re not to say, Oh, you’re making a mistake here. We can help you or let’s do this on a better way because we think that this is the better way for you to, to just save money or more money or something like that. We’re very open for questions, suggestions. So as I said, you can find us on our email on our website or you can find us on bigger pocket platform.

Charles:
Okay, perfect. I am for investors on Giro. Please remember [inaudible] she live in Euro, so, so we can always meet.

Milica:
Yes. I’m very proud of Europe because Europe has a potential and people have ambition to invest, but they don’t know how. That’s why we want to say that UCC is the right place for you to contact us and to see all about the terms. Everything that you need. It’s not so complicated because maybe it looks like it is, but it’s not. It’s very simple and people are interested just, they don’t know where they, they can ask questions or to come to, to talk to.

Charles:
Okay. Well, great. I’ll put all the links and to the podcasts and YouTube notes, and I want to thank you guys for being on the show and look forward to speaking to you in the near future.

Eric:
Thank you, Charles. And you have a nice day. Thank you.

Milica:
Thank you, Charles. Take care to All.

Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. thank you.

Announcer:
Thank you for listening to the Global Investors Podcast. If you’d like to show, be sure to subscribe on iTunes or Google play to get new weekly episodes. For more resources and to receive our newsletter, please visit global investor podcast.com and don’t forget to join us next week for another episode.

Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of harborside partners incorporated exclusively.

Links and Contact Information Mentioned In The Episode:

About Eric Tran & Milica Krstic

Eric is a managing partner of Universal Commercial Capital. A private lender with 25 years of experience in real estate and private Lending. He is a member of the American Association of Private Lenders. Loves working with US and international investors, brokers, and realtors.
Milica has a master’s in political science, and a journalist by profession. She works with Eric as a Sales Executive at Universal Commercial Capital.
Universal Commercial Capital is a U.S. based, private money lender. A trusted resource in real estate mortgage lending, Universal Commercial Capital is known for its flexible, common-sense underwriting and efficient, hassle-free loan programs. A private lender specializing in Commercial, Hard Money, and Not so Hard Money loan programs (see our website for more details). We offer fast closings, great rates, and an experienced team. Brokers and agents working with us are protected and earn more, as we charge less and keep borrowers yours forever.

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