The Real Brokerage has appointed Christian Wallace as chief of integrated home services, the company announced on Thursday. Prior to joining the brokerage, Wallace worked at some of the leading companies in the industry, such as Rocket Homes, Better.com, Opendoor and Farmers Insurance

In this newly created role, Wallace will report to Real Chairman and CEO Tamir Poleg and will oversee Real’s consumer-facing products. Through a mobile application, she will streamline “every touchpoint of home buying and selling” into one “seamless experience,” the press release said.

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Christian Wallace

“There are a lot of companies looking to make it easier for consumers to become homeowners. At Real, the company has made a huge investment by acquiring mortgage and title businesses and everybody is moving in the same direction to help both our agents and their clients be successful,” Wallace said in a statement. “As someone who is obsessed with creating the best experience imaginable, Real provides the runway to change the game for consumers.”

At Rocket Homes where Wallace worked from Feb. 2022 to Oct. 2023, she oversaw business development, back-end operations as well as the partner real estate agent network. During her tenure, she focused heavily on the customer experience.

Poleg said that Wallace brought “the unique combination of being an agent who has also built the customer experiences at some of the leading disruptors in the real estate industry, all of which are in the race to change how people buy and sell homes.”

“I couldn’t be more pleased that Christian will be driving our integrated services platform, which today consists of mortgage and title businesses, but has the potential to become so much more,” he said.

Wallace kicked off her real estate career in 2014, after working at FedEx as a regional sales manager for a decade.



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CoStar Group, the parent company of real estate data giant CoStar, has made an offer to acquire OnThe Market, the third most visited residential property portal in the United Kingdom.

The announcement bolsters the claim that CoStar is “playing for keeps in the residential real estate market.” The company offered to acquire the U.K. portal for £1.10 per share in cash, amounting to approximately £100 million in total, according to the press release.

“We believe the acquisition of OnTheMarket represents an attractive and efficient entry point into the £8 trillion United Kingdom residential property market,” Andy Florance, founder and CEO of CoStar Group, said in a statement. “We are excited to welcome the OnTheMarket team to the CoStar Group family.”

Founded by a group of agents in 2013, OnThe Market is headquartered in London and has approximately 180 employees. It competes with two other major U.K.-based portals Rightmove and Zoopla and went public in January 2015. For the fiscal year ending January 31, 2023, revenue was approximately £35 million, with adjusted EBITDA of £8 million, according to the company website

“We are very much looking forward to joining the CoStar Group residential network,” Jason Tebb, CEO of OnTheMarket said in a statement. “From a position of strength, the partnership will significantly accelerate our strategy with a clear target of becoming the market leader. Together we share a long history and strong commitment to agents, who will benefit from CoStar’s commitment to maintaining our fair and sustainable pricing model and greater opportunities to enhance their businesses.”

CoStar’s path towards residential real estate

CoStar Group has a track record of acquiring residential property portals. The company acquired Apartments.com in 2014, at the time the fifth-place U.S. residential rental platform. In 2021, it acquired Homes.com, the sixth-place residential property portal in the U.S and turned it into the No. 2 most visited platform, trailing only stalwart Zillow.

In September, Homes.com recorded over 100 million unique monthly visitors, HousingWire reported. It was a 1290% increase over the year prior, according to the firm. Meanwhile, Realtor.com and Redfin respectively reported 74 million unique monthly visitors and 52 million unique visitors in all of Q2 2023.

About the deal

In the first year of the integration, CoStar plans to invest £46.5 million into sales and marketing, exceeding OnTheMarket’s current annual media budget by six times and more than triple Rightmove’s budget. This initial investment is only one piece of a multi-year investment program. In total, the plan would amount to hundreds of millions of pounds, according to the press release.

The transaction, which is dependent on shareholder approval as well as customary closing conditions, is expected to close in the fourth quarter of 2023. CoStar will most likely discuss the OnTheMarket acquisition during its third quarter 2023 earnings call scheduled on October 24, 2023. 



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The inefficiencies of paper documents are undeniable. But when a mortgage lender, credit union, bank, title company or settlement service provider wants to transition away from paper closings, it can be hard to know where to start.

DocMagic’s AutoPrep solution is the easiest step a lender can take to automate their eClosing process.

It offers instant document e-enablement by leveraging cutting-edge AI, machine learning and powerful Optical Character Recognition (OCR) technology, instantly e-tagging third-party documents for eSignatures, eNotary and eClosing processes.

E-enabled documents are a fundamental component of eClosing workflows. While progressive document generation companies like DocMagic already provide e-enabled documents, the move to a digital workflow requires that ALL documents be e-enabled. Mortgage documents from sources such as title companies or appraisers can include unique formats. Adapting disparate document types into an electronic workflow can be a complex and time-consuming endeavor.

Regardless of a document’s original format, AutoPrep transforms every document into a high-speed, all-access pass to the world of digital closing. AutoPrep enables documents for access within DocMagic’s industry-acclaimed eClosing solution, Total eClose, no matter the format or source of the document.

AutoPrep saves time, protects resources and reduces errors by eliminating the effort involved in the manual tagging process. By automating these labor-intensive document processes, users can quickly unlock the benefits of reduced operational costs, heightened efficiency and an improved overall customer experience immediately.

AutoPrep leverages the potency of crucial document metadata, utilizing AI and machine learning identification algorithms inspired by DocMagic’s extensive document repository. The outcome is an enhanced level of efficiency and precision as the metadata enables testing and adaptation, employing document recognition as well as pattern and trend detection for improved decisions over time. AutoPrep categorizes, tags and barcodes documents to identify signature, initial and notary regions with pinpoint accuracy. But the real magic happens when it turns those documents into an e-powerhouse, preparing them for any type of eClosing process.

“​​This technology isn’t just a tool; it’s a strategic shift that positions lenders to thrive in an increasingly digital and competitive lending landscape,” said Dominic Iannitti, DocMagic president and CEO. “It offers real operational efficiency by automating a fundamentally labor-intensive process, accelerating data transfer and improving accuracy by eliminating transcription errors and streamlining a path to the digital closing process. “

E-enabling documents has increased efficiency and sped up the closing process for users like Superior Financial. The credit union known for high-quality customer service has reported 100% elimination of paper, which has compressed closing times by as much as 75%. And enabling the convenience of eClosing from anywhere has led to positive feedback from borrowers.

DocMagic’s commitment to automating the loan process has been the driving force behind its innovative efforts for more than 35 years. “Looking ahead, we’re harnessing AI to introduce the future of mortgage compliance. Guided by our cutting-edge automation, we’re empowering underwriters and settlement providers to make more informed decisions based on systematically classified data,” Iannitti said. “We’re bringing efficiency, consistency and user experience enhancements — and offering a vastly more efficient and compliant lending future.”



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HousingWire Editor in Chief Sarah Wheeler sat down with Matt Lehnen, chief technology officer at Deephaven Mortgage, to talk about building a tech stack for non-QM loans. Lehnen has been at Deephaven for the past five years leading the technology team.

Sarah Wheeler: What is DeepHaven’s philosophy on build versus buy?

Matt Lehnen: It’s situational. There are a lot of things out in the marketplace that are great solutions, that are mature products and there’s no reason that we wouldn’t explore them. And then there are some areas that are specific to our products in the non-QM lending space where there may not be anything in the market that is pre-built or off the shelf and the only opportunity to actually bring some of our lending products to market or execute on our on our strategies is to build something custom.

SW: What’s been a recent example of that?

ML: Our bank statement scenario tool, because a high number of our loans are bank statement income-based. And when we brought the product to market, there was no standard product that would do an income analysis. There are products that will pull data, but there’s nothing that will actually assemble that, do an analysis, make sense of the information, and calculate based on our guidelines.

SW: Because you do a lot of non-QM loans, where you might have to do more manual underwriting, how does technology fit into your overall process?

ML: It’s an integral part of the process. With non-QM, there are a lot of manual or semi-manual pieces, but there is still a lot of opportunity for technology to augment that. And anywhere that we can find time savings, reduce error, streamline a process for the users — that’s our main focus.

SW: Is there a part of your tech stack that you are very happy to have right now? Is there anything outperforming or outshining in this market?

ML: Our commitment to a unified tech stack has paid a lot of dividends. We’re in a virtualized environment so we’re very nimble, we’re very quick to deploy, we’re very scalable. When the market moves in a certain direction, we can deploy very quickly. With our bank statement analysis, income analysis, we have a very good set of partners working in the background that we’ve assembled our product on top of. We’re utilizing various Lego bricks of technology that are in the marketplace to assemble a very, very usable product.

SW: What are the particular advantages you offer brokers with your technology?

ML: There are different size broker shops, so for the smaller brokers, they don’t necessarily need to invest in their own technology to originate a loan. We provide the majority of the tools that they would need to prospect, whether that’s pricing engines, to be able to qualify and run eligibility on products, originating the file through our TPO portal and shuttling that loan to us. Deephaven’s operational staff is built specifically to be the one-stop shop for brokers. If the broker brings us a client, Deephaven gets the loan across the finish line in partnership with that broker.

SW: What kind of difference is AI making right now?

ML: AI is everywhere and everybody’s interacting with some component of AI every day, whether they know it or not. For example, all of our cybersecurity stack incorporates AI and machine models. All day, 24/7, across the board, in every facet of the network, there’s a portion of AI looking at something to find behaviors. So that’s an example of AI that’s completely behind the scenes.

On the front end, AI is deploying tools for our users. For example, if you have a year of bank statements to review — if you actually have PDF documents, or if you were to print it, they average hundreds of pages for a 12-month set of bank statements for a business. A human can review them, but it’s not time efficient. Our underwriters are best used for their expertise. They’re good at finding nuances, finding exceptions, making judgment calls. But behind the scenes, we let them train an AI model and machine learning model that says, okay, based on the inputs you give me, now we’ll let the system learn. And it becomes a training feedback loop.

If the human partner gives the AI good information, and teaches it, the AI, in turn, is going to make that human partner’s job easier. I think AI and machine learning and everything in that realm has tremendous potential, as long as it’s used ethically. It needs to benefit the employees, it needs to make people’s jobs easier, more repeatable, so we can use people for their expertise. We don’t need people doing manual menial tasks, we need people making judgment calls and making decisions.

And then for our clients and our customers: AI also has to be used fairly. You don’t want to just feed a bunch of data into a model, get the result and take it at face value. You want to interpret it and make sense of it. AI should be a tool to help get you somewhere faster, or double check your work or improve things. But you never want to rely solely on that for decisions, because you still have to be fair, equitable and do things in an in a transparent way.

SW: So your goal would not be to replace all of your humans with AI?

ML: No, it would be to use AI to do the tasks and activities that make our employees’ and partners’ lives and jobs more fulfilling.

SW: Where is technology helping you on cybersecurity?

ML: The technology helps us in every facet of it. There are so many endpoints — every single server, virtual machine, laptop, desktop, smartphone, every device that has the ability to connect or communicate with the internet is vulnerable. So we have to deploy tools on every endpoint, we have to collect telemetry from every endpoint, we have to aggregate all that telemetry and all that activity, and we have to make smart decisions as to what’s a true positive, what’s a false positive and what is just noise. And that’s probably the biggest area where the automation, the AI or machine learning, really helps. You have so much signal noise that you have to distill out the very specific signals that actually matter.

SW: Are you investing in technology in the midst of this slower market?

ML: The mortgage market has cooled with rates up, but for Deephaven and our non-QM products, and especially our DSCR product, there’s been an enormous uptick in volume. That’s a product tailored towards investors and there’s still a lot of investment activity in the market so that product has really taken off. So, volume has not necessarily ticked down for us, it’s just moved from one set of buckets into a different set of buckets.

To your question about technology, yes, we’ve been making enormous investments all year. And we’ll continue to do so. It’s streamlining. For the DSCR product, for example, we had to do a major revision of our workflows and processes to accommodate those products, make those products more efficient, because we know more of that volume would be coming through.

SW: Are there things that still defy automation or where tech doesn’t help as much as you might have thought when you got into the industry in 2007?

ML: In the broad sense of mortgage, tech has made enormous gains, especially in the agency and conventional space. The area where I thought we’d be further along is the consumer space, specifically, the back-end processes. Consumers will take an app online, a lot of them will e-sign documents, disclosures, they’ll upload documents electronically — they’ll even link their bank account. But we’re still not seeing as much adoption from the industry when it comes to closings. There’s still the traditional sit down at the table, and sign documents, which is due to a patchwork of different state laws and regulations. As a result, the post-closing processes are sometimes hindered, because those are still paper heavy processes on the back end.

If you knew at the inception of a loan process — from the very first interaction with a client or customer — that this could be a fully digital experience, that experience could be tailored one way. But if you don’t know if it can be fully digital or it might go down the conveyor belt only so far before it’s converted to non-digital — that’s where the some of the challenges lie.

SW: What keeps you up at night?

ML: The ever-changing landscape and how fast things accelerate. Anything that is true today is very likely to not be true tomorrow, and especially in the world of cybersecurity. It’s a complete arms race every day. For every advance in defensive techniques, defensive tooling, defensive products, there is probably three times as much investment in defeating those defenses.

And then on the mortgage technology side, it’s keeping up with products. What’s the next product? Did we make the right decision on where we put our resources, where we innovate? It’s a gamble. You don’t know, so we rely on capital markets and market research to advise us where things are going. The most important thing is anticipating the future and trying to make the right decisions now that are scalable for those future unknowns.

SW: Looking at the tech landscape, what makes you optimistic about the future?

ML: I think there’s still enormous demand for housing. There are also a lot of good things happening within the regulatory and lending environment on product mix and the way the agencies are adjusting to the new normal: the new makeup of families and what households are forming. I’m generally optimistic t



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Rates on the 30-year fixed-rate mortgage eclipsed 8% this week as the Treasury yield surpassed 4.9% for the first time since 2007, according to one index.

Per Mortgage News Daily, mortgage rates touched 8.03% on Wednesday, up from 7.69% the previous week. HousingWire’s Mortgage Rates Center showed Optimal Blue’s average 30-year fixed rate for conventional loans at 7.78% on Wednesday, compared to 7.52% the previous week.

Both indexes showed higher rates than the Freddie Mac‘s Primary Mortgage Market Survey, which focuses on conventional and conforming loans with a 20% down payment, and recorded the 30-year, fixed-rate mortgage at 7.63% as of Oct. 19, up 6 basis points from the prior week. By contrast, the 30-year, fixed-rate mortgage was at 6.94% a year ago at this time.

Mortgage rates in the 8% range are further impacting already strained levels of affordability, Sam Khater, Freddie Mac’s chief economist, said in a statement.

“In this environment, it’s important that borrowers shop around with multiple lenders for the best mortgage rate,” Khater said. “With research showing down payment is the single largest barrier to first-time homebuyers attaining homeownership, borrowers should also ask their lender about down payment assistance.”

While high rates are stifling homebuyers, homebuilders are feeling the brunt as well, Khater noted.  

“Incoming data shows that the construction of new homes rebounded in September but as rates keep rising, home builders appear to be losing confidence. As a result, we expect construction to trend down in the short-term,” he said. 

On Tuesday, the builder confidence fell to 40,  its lowest point since January 2023, according to the National Association of Home Builders (NAHB)/Wells Fargo Housing Market Index (HMI). 

Bob Broeksmit, the president and CEO of the Mortgage Bankers Association, said the organization expects rates to level off and fall over the next quarter.

“Mortgage application activity is now at its lowest level in 29 years as high mortgage rates, limited housing inventory, and affordability challenges continue to constrain borrowers,” he said in a statement. “While 2023 has been a tough time for the housing market, MBA expects that mortgage rates will moderate heading into 2024, which should bring some relief to those looking to buy a home.”

Still, inventory remains a huge problem for the housing market. Though inventory has ticked up of late, existing home sales are still down double-digits from last year and many homeowners are reluctant to give up sub 4% rates when borrowing costs are so high.

“With mortgage rates remaining near their 20-year high in recent weeks, homeowners are hesitant to list their properties,” Jiayi Xu, economist at Realtor.com said.



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Soaring interest rates and a higher-for-longer policy will take its toll on the economy, according to Fannie Mae’s Economic and Strategic Research (ESR) group.

“The cause of the recent run-up in long-term rates is multifactorial and likely includes some expectation of more resilient economic growth coupled with a higher-for-longer monetary policy stance from the Federal Reserve,” the ESR group said in its latest economic commentary.

After the 10-year treasury yield began July at around 3.8%, rates were about one full percentage point higher three months later. On October 18, the 10-year treasury yield peaked at 4.91%.

In part because of the recent run-up in long-term rates, Fannie Mae does not expect additional Fed rate hikes, Doug Duncan, Fannie Mae’s senior vice president and chief economist, said.

Several Fed officials have indicated that a rate pause is necessary while stressing rates will remain higher for longer. The Mortgage Bankers Association (MBA) had also expected the central bank would pause on rate hikes as real rates – which are inflation-adjusted– are 2%. Philly Fed P

Fannie Mae noted that the economy likely faces fewer structural headwinds than previously thought after significant updates to the national accounts showed real consumption and incomes are in better balance than had been reported previously. 

Personal consumption expenditure (PCE) inflation remained elevated in August at 3.5% year over year and September’s consumer price index (CPI) rose 3.7% year over year, holding steady with August’s annual gain and above economists’ expectations.

“Personal consumption has not only remained resilient, but recent official data revisions indicate that the consumer has been in a better position than previously thought, increasingly the likelihood of an economic ‘soft landing,’” Duncan said.

The ESR group revised its 2023 real GDP prediction to 2.5% on a Q4/Q4 basis but continues to expect a modest recession in the first half of 2024.

Home prices proved more resilient than expected, in turn leading Fannie Mae to revise its 2023 home price expectation from 3.9% to 6.7% on a Q4/Q4 basis. 

Fannie Mae forecast that home price growth will decelerate in 2024 as affordability remains constrained.

Further declines in home sales from an already low level due to the run-up in mortgage rates will likely be muted relative to the slowdown in 2022, the ESR group projected. 

But the annualized pace of existing home sales are expected to fall below 4 million units in the fourth quarter, according to Fannie Mae. 

New home sales continue to hold up better than existing home sales due to ongoing inventory constraints, though the ESR group’s forecast calls for a modest deceleration in both new single-family sales and starts in coming quarters.

Fannie Mae forecasts 2023 mortgage originations to remain roughly unchanged from last month at $1.3 trillion. 

In 2024, Fannie Mae expects purchase volumes to rise 10% to $1.4 trillion, a $7 billion increase from September’s forecast as stronger home price expectation outweighs minor downward revisions to the sales forecast.

“We expect the higher mortgage rate environment to continue to dampen housing activity and further complicate housing affordability into 2024,” Duncan said.



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The Federal Housing Administration (FHA) is working to offer a new partial claim option before the end of 2023, according to the federal housing commissioner at the U.S. Department of Housing and Urban Development (HUD), Julia Gordon. The commissioner also discussed the rise in mortgage loan assumptions.

On May 31, the FHA submitted for public comment a proposal to create the Payment Supplement Partial Claim, which has the support of trade groups, servicers and industry experts.

The new option allows servicers to use the FHA partial claim to bring borrowers’ home loans current and temporarily reduce their monthly payments for three to five years. 

Gordon said she believes the COVID-19 loss mitigation efforts were “successful,” but many tools are not as effective in today’s rate environment. 

“We’re hoping to have a final policy [for the payment supplement partial claim] out before the end of the year, although I will say keep your fingers crossed that we don’t face any lapse in appropriations that would shut down the government.”

Gordon spoke during the Mortgage Bankers Association (MBA) Annual Conference held Oct. 14-17 in Philadelphia. 

Mortgage assumptions 

In an interview with Laura Escobar, president of Lennar Mortgage and 2024 MBA chair-elect, Gordon said that the FHA is “thinking a lot” about how to encourage and incentivize lending for less expensive homes, which would be properties under $50,000.

“We’ve had a request to Congress to provide us with funding to help provide cash incentives to help overcome the structural disincentives to do those smaller balance mortgages,” Gordon said. 

Regarding mortgage assumptions, Gordon said that the FHA wants people fairly paid for their work but doesn’t want consumers to pay something disproportionate. 

Assumptions allow qualified buyers with a government loan to purchase a home by assuming responsibility for the sellers’ mortgage terms, including the current balance and interest rate. Servicers can only charge up to $900 to close an assumption. But, per the MBA, it takes on average about $2,500 to close a government loan. 

Gordon said that the FHA is looking at mortgage assumptions rules, but it’s not sure how much impact rule tweaks would have on the market. Home prices have risen “so much, so quickly” that borrowers sometimes have to bring a lot of cash to the table, Gordon said. 

On mortgage insurance premiums, which had a cut earlier this year, Gordon said the change “might feel small, but in the government world, it was a really big change.” 

The FHA cut the annual premium to 55 basis points from 85 bps. In doing so, the White House claims the average FHA borrower and homebuyer will save $800 in 2023 alone.

“I don’t think that we will be able to make another change on that until we kind of see how we’re doing, what the effect is on our capital reserves, and how we’re projecting revenues in the future.”  



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One in five Americans now shares their homes with adult children, parents or grandparents. In the face of soaring housing costs nationwide, multigenerational living has gained traction as a path to make living expenses more manageable and to maintain closer family bonds.

While many multigenerational families are living together under one roof, potentially leading to feelings of overcrowding, accessory dwelling units (ADUs) have emerged as a practical solution for affordable housing that allows families to stay close while maintaining some separation.

ADUs offer a detached living space where adult children or elderly family members can have their own place to call home. ADUs can help families to stay nearby, share responsibilities of caregiving, keep housing expenses in check and still enjoy privacy and personal space.

Multigenerational housing gains steam to combat affordability pressures

According to a recent survey conducted by OnePoll, 61% of homeowners cited multigenerational housing as their primary motivation for constructing an ADU.

Multigenerational housing can also provide a residence for aging parents or family members in need of additional support or caregiving. According to the same survey, one in four homeowners either house a disabled family member in their ADU or have plans to do so in the future.

Notably, accessibility was an important consideration for 73% of homeowners who have an ADU, whether for the purpose of aging in place in the future or for accommodating current residents.

Multigenerational living is not a new concept. In various parts of the world, it is deeply ingrained in the culture, and it was also common in the United States prior to the 20th century. Families in many parts of the world support one another with childcare and eldercare, fostering robust support systems that cater to all needs.

So, why does this trend appear relatively novel in the United States today?

Since the early 20th century, the American dream has historically centered around starting one’s own family and achieving enough financial success to purchase a home and build durable wealth in that home over time.

This dream was attainable in 1950 when the median home cost just $7,354 and the average family income was $3,300 (both figures not adjusted for inflation), meaning home prices were ~2.2x the typical annual family’s income, according to U.S. Census Bureau data. At the time, mortgage rates were about 4%.

However, factors such as population growth, a scarcity of new entry-level homes and rising inflation have collectively rendered housing — and especially homeownership — increasingly unaffordable and elusive for many. 

For comparison, the median home price in 2022 was $457,475 and median household income was $74,580, according to data from the Federal Reserve Bank of St. Louis and the Census Bureau. This means that home prices are now more than six times the typical annual family’s income (and today mortgage rates are north of 7%).

ADUs provide an alternative for multigenerational living

Whether it’s a young family striving to purchase their first home or a retiring couple looking to downsize, the competition for real estate is fierce, and housing costs are prohibitive for many families.

ADUs can add much-needed space to support multigenerational living and they can do this at an affordable price point for homeowners who are looking to build them.

Adding an ADU can be very cost-effective when an existing space is converted (i.e., a garage or basement) or when modern offsite construction is used to build a new structure.

We are seeing more and more homeowners look to modern offsite construction for ADUs because of the low cost, fast speed and sustainability advantages compared to traditional construction methods.

As the benefits of ADUs continue to be realized by more and more homeowners, they offer a promising solution to the challenges posed by rising housing costs and the desire to keep families close, reinforcing the idea that home is not just a place but a space that fosters love, support and togetherness.

Sean Roberts is the CEO of Villa Homes.



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Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra expects that servicing rulemaking will be issued in the coming months modeled on the lessons learned through the COVID-19 pandemic.

“I do anticipate that in 2024 we will propose some amendments to the mortgage servicing rules that are reflective of what we learned through the pandemic,” Chopra said on Monday morning to an audience of mortgage professionals. 

According to Chopra, the amendments’ “bullseye” would be to “create flexibility” to the rules, but “without undermining the core consumer protections that people have in the process of evaluating an alternative to foreclosure.”

Chopra spoke during the Mortgage Bankers Association (MBA) Annual Conference held Oct. 14-17 in Philadelphia. He answered questions raised by Bob Brokesmit, president and CEO of the MBA. 

Much of the conversation touched on the Basel III proposed rules. 

The Federal ReserveFederal Depository Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) released the proposed changes for the Basel endgame in late July, which significantly increases capital requirements for banks.

According to Chopra, the capital requirements discussions were part of the conversation even before the bank failures in the first half of 2023, including Silicon Valley Bank and Signature Bank

Chopra added that “there’s no question about the real risks it [banks collapsing] imposed on the financial system” and that it “could have impacts on the mortgage system to continue functioning day to day.”

“And it is important that we make sure that risk is small. We want to do it in the right way. But I hope we can align on the fact that let’s take the big bailout off the table because it’s disgusting for that to continue to proceed. People who are taking risks should have the downside, especially when there are very large financial — monumental failures of management.” 

Chopra’s message was that he does not want the feeling that the mortgage industry is under some special “magnifying glass.” He said, “It’s really the entire shadow banking arena, to make sure that we understand and can mitigate those risks.”  

“If you are deeply interlinked with the financial system in ways that are reminders of past crises, that’s something we have to look at.” 

The CFPB structure 

Regarding discussions on whether the funding for the CFPB coming in from the Fed is legal or not, Chopra said, “If there is legal uncertainty about all the mortgage rules that were put into place after Dodd-Frank, that’s going to just be a big bonanza for lawyers who get to litigate over all those questions.”

“My own view is that the mortgage industry and homeowners are going through a tough [moment] right now. And that I’m not really sure that there needs to be further uncertainty.”

Chopra said he’s “very hopeful” that the long-standing legal precedent involving the CFPB and the Fed will be maintained.  

For those favoring a CFPB structure similar to the FDIC, Chopra said he’s “not sure the argument makes sense because we operate in a society of majority rule.” 

The FDIC has a board with five members that make decisions, but a maximum of three can be from the same political party. 

“The way in which we regulate the financial system, there have been shifts back and forth. And that is a reflection of a lot of different factors, including some people not willing to follow the facts and not willing to reach common ground,” Chopra said.



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Your first rental property is the hardest; trust us on that. You go through SO many strategies, different markets, and emotions throughout the process. Most wannabe investors get fed up and quit before they can build any real wealth, but those with a strong reason behind their dreams of rental property ownership make it and seldom regret it. Lyrva Sanchez’s “why” was taking care of her two boys while being present as a single mom.

Shortly after her separation, Lyrva knew she didn’t want to sacrifice any quality of her children’s lives. She still wanted them to go to the best schools in the safest areas, but in Southern California, even the most basic property was pricey. She tried several strategies to get her first rental property and create extra income, but none cemented. One day, a light bulb went off, and she came up with the PERFECT first rental property strategy.

If you’re struggling with analysis paralysis and don’t know which way to turn in your investing journey, hear Lyrva out. She flew across the country just to realize what she wanted was in her own backyard. Now, she makes life-changing side income and doesn’t have to sacrifice time with her kids to get it!

Ashley:
This is Real Estate Rookie episode 331.

Lyrva:
I’ve learned a little bit about how to screen tenants, how to write up an agreement, how to enforce my own rules, how to do renovations even though they were small renovations, but that’s a big part of being an investor, getting bids, all of that. So it’s just changed my life and to where I’m confident now that if I venture out and do another deal or another project, I have confidence in myself. I do know something.

Ashley:
My name is Ashley Kehr and I’m here with my co-host, Tony J. Robinson.

Tony:
And welcome to the Real Estate Rookie podcast, where every week, twice a week, we’re bringing you the inspiration, motivation, and stories you need to hear to kickstart your investing journey. And in today’s episode, you’re going to get a healthy dose of all of that. You’re going to get a little bit of inspiration, a little bit of motivation, and a little bit of kick in the butt to really make something happen. Today’s guest is Lyrva Sanchez. And when you hear Lyrva’s story, you’re going to hear something that a lot of you’re probably struggling with, which is there’s so much information out there, there’s so many different strategies.
How do I choose one that makes the most sense for me? And you’ll get to hear Lyrva’s story of how she went on this journey of identifying the right next step for her.

Ashley:
And the way that she talks about choosing her strategy, you’ll be able to relate to it as to like, “I read this book, I listened to this podcast,” things like that. But she breaks down as to some of the reasons she ended up going with the strategy that suited her. She talks about her lifestyle, her why, just the kind of person that she is. She actually started out trying to wholesale and she will tell you one thing that happened to her that was actually going well.
If you’re a wholesaler, you’re like, “Yes, I want this to happen.” And she didn’t take action on it because it was not her and go through that explanation. But I think she makes a very valid point that if you are uncomfortable and don’t feel that this is something that really suits you and fulfills you that you may not be that successful with it. So she talks about trying to tie in what are things that are going to suit you to picking your strategy. But also we learn about sourcing deals, how she was able to find off-market properties.

Tony:
Now, before we jump into the conversation with Lyrva, I want to give a quick shout at someone by the username of DeLauro who left to a five star review on Apple podcast. This person says, “This show is great for people like me who work a full-time job, but want to learn more about investing. Real estate investing seemed overwhelming at first, but listening to Ashley and Tony every week helped me get more comfortable with all the terms being thrown around and investing in general. I’m on the BiggerPockets forums now and learning as much as I can. Thanks for all the tips, guys.”
So if you’re part of the rookie audience and you haven’t yet left a review, please do. It only takes a few minutes. And the more reviews we get, the more folks we can reach. And no, the more folks we can reach, hopefully we inspire more people to take that next step or get that first deal. So do us a favor, do someone else a favor, leave that review.
Lyrva Sanchez is a registered nurse, single mother of two boys living in Southern California. Actually not too far for where I live in SoCal. And after her separation, she spent two years chasing down the shiny object syndrome of wholesaling and a little bit of out-of-state investing. But then she doubled down on a real estate strategy that really worked for her, for her kids and learned that one property could really change her life. So Lyrva, welcome to the show.

Lyrva:
Hi. Thank you, Tony.

Tony:
Super excited to have you.

Lyrva:
Thank you. Thank you so much. Thank you.

Tony:
Excited to have you here on the show with us, but I want to get right into the nitty-gritty, Lyrva. So what would you say drove you into the world of real estate investing?

Lyrva:
So as you mentioned, I was newly separated. We have two young boys and that was a really difficult time. Actually, there were a lot of good things going on and not so great things going on. I had just paid off all of my debt. I had school debt, I had car loan. Just paid off everything.

Ashley:
That is amazing. Congratulations on that. That’s not typically an easy thing to do.

Lyrva:
Thank you. Thank you. So I was on a Dave Ramsey trip and it was just full on saving and saving, and putting everything towards the debt. So when we made this choice, this decision to separate, it was a really, really obviously difficult and difficult challenging time in my life, and it just made me shift towards working on myself. So I dove into personal development, self-help books, all of that. But part of that process, I also came across real estate investing, building wealth.
How do I still carry on with my dreams and the life that I want for my kids now that I’ve pretty much lost half of my income overnight basically. So that’s how it just came to be. It was part of that whole process of going inward and just trying to do better, be better, and have the same or better life for my kids regardless of my status.

Ashley:
So after your separation, how long was it before you actually got started into real estate and maybe give us a little bit of what your life looked like. Did you go and rent an apartment? Did you stay in your house? Were you working somewhere? Fill us in what your financial picture looked like.

Lyrva:
Financially, I was doing well because we had paid off and we had started saving, but I didn’t feel good because obviously I didn’t have access to… Previously, we had dual income. I did stay in an apartment. I moved out of the apartment that we had together and I moved to an area that I wanted to be closer to, so better schools, all of that. So I was already working at the company that I’m still at now. I’m a registered nurse, but it’s not really a traditional role, so I work from home for a health plan, and that was something that I consciously made an effort to do because I had my second child and working in a hospital, it just wasn’t going to work out for me.
So it helped out that I was working from home and living in an apartment and I really tried to minimize any expenses. Just still stay in that very savor mentality at the time. So that’s where I was at.

Ashley:
Okay. So then you started learning about real estate. I’m very curious as to in your role where you were able to work at home, do you think that played a large part in being able to become a real estate investor? What are some of the advantages if there is someone listening right now who maybe has an opportunity to work from home, what are some of the things they should be thinking about to get started in real estate and how this can actually benefit them?

Lyrva:
So I think it played a huge part because… Well, now, I have a short-term rental, and so it’s actually on the same property. And so just being on the property itself helps. I have a cleaner, so I’m not actively doing a whole lot, but just to check on things to be present there, that’s helped a lot. Also, at the time of learning and going through the process of learning what was going to work for me, I was driving neighborhoods and seeing what areas I could possibly get into.
So I would drop off my kids from school and drive neighborhoods on the way home. And driving for dollars, seeing if there was… Everything that I learned on the podcast, I was trying to implement it like, “Oh, is that a vacant home? Is that a potential property that I can pick up?” Just trying to implement the things that I heard on the podcast.

Ashley:
So you looked for vacant homes. What were some, and you said there was things you learned. What are some of the other things you learned as to houses that could be a potential property for you?

Lyrva:
So I never acted on those, but I think it was just something that I was going through the motions. I would look up property values and I would see, “Okay, this is a vacant house, really how much could it be worth?” And without seeing inside, could I even take that on. I guess I was just playing investor at the time. I don’t know if it really has to do with working from home, but just that you have a little bit more flexibility in your time too. I drop off my kids and I picked them up. And so during those times, during my breaks and stuff, I would be able to drive areas and see properties, new listings that would come up. I would go see them just drive by them as soon as they came on the market.

Tony:
Lyrva, you said something that kind of stood out to me is that you listened to a lot of the podcasts and you try to implement everything you learned. I think that’s a path that a lot of new investors go down is where they hear all these different strategies, they try and go after everything. So I do want to touch on how you were able to take all of the information you learned and implement it all at one time. But before I do, just one other question. What would your advice be to someone that is maybe in a similar situation where they’re going through this big life change?
A separation, divorce is something that’s unfortunately kind of common today, and there are a lot of folks that have these aspirations of becoming a real estate investor, but they might use this life event of a separation or a divorce as an excuse as to why they can’t invest in real estate. So just what is your advice to someone who’s in a similar situation that’s looking to get started?

Lyrva:
I think my advice is to keep hope. Somehow you can figure out a way. It’s not that you can’t, it’s just that haven’t figured out how yet. And finding a way to make it work for you and your lifestyle. I would say going through the motions, it took me a long time not giving up, trying to find information, like reading things, you’ll come across random articles, things that help you. That’s kind of how I found it play out for me. I was really tight on cash to purchase a property. Not for my expenses.
And these little clues would come up or opportunities. There was an opportunity at work for me to get a promotion and I took it I was thinking in the back of my head, real estate that’ll help me. So just try to stay motivated and don’t lose sight. The shiny object syndrome is a really big thing and it really did impact me for a good two years.

Tony:
One thing that I think is incredibly important to point out, and I love that you said hope, Lyrva, because I think that’s something a lot of people lose when they go through difficult times in their lives. But when something challenging happens to you, you can never control what life throws at you, but you can always control how you respond in those situations. And someone could take something. It could be divorce. It could be a death in the family. It could be the loss of a job, and they could take that moment and let it break them down.
Or they could take that moment and use it as motivation to become a better version of themselves. And it seems like, Lyrva, you took the second approach of using it to catapult you towards something better. So on that note, let’s talk about what you did next. So like I said, I want to go back because you said you tried to implement everything that you learned on the podcast. That sounds overwhelming almost. So I guess walk us through that process of trying to implement everything and what worked and what didn’t work from there.

Lyrva:
I started going to meetups. It was like the topic of the week. I’d get super excited about that and then look into that and try to see if that was something I wanted to get into. So I started thinking, “Well, what does everyone else do?” So I started looking at what does everyone else do where I could potentially start wholesaling?
So I looked into it, I thought, “Well, I don’t know, it doesn’t seem very genuine for me or something that I would do, but that’s kind of where it seems like everyone gets their start.” So I met one of the organizers at one of the meetups that I was at, and everyone socializes afterward. I told him what I was interested or what I thought I was interested. Everyone is really helpful at those meetups. What do you need? What are you looking for?
Everyone’s just really just sharing and everything. He was a flipper now, but he started out as a wholesaler and he had this program that he purchased that helped him wholesale. He’s like, “I can burn you a copy of the CDs if you want them, and that can get you started.” I was like, “Sure, great.” So took that home, implemented it to a tee, everything. And then I quickly realized it was just not for me. I was getting phone calls and I could not answer the phone. So it was like this feeling I can’t explain. It was just not for me.

Ashley:
What did you do to get those phone calls, I guess? Why were people even calling you? What were the steps you took before that?

Lyrva:
So the whole steps of the program, so they teach you, you get a list and they tell you about the different types of lists that you can get. And then I decided to go with letters. So I was like, “Well, I can just shoestring this together and create the letters, print them at home.” I got a case of envelopes. I did the whole stamps and everything with everything that they say, the tips about how to get your letter opened, make it a color so that it pops in the mail and just all that stuff that… I mean, there’s so many different tips.
So I just wanted to get it perfect and it took me forever to even get the letters out because I was like, “I’m going to make a mistake and no one is going to open my letter.” Well, people actually started calling and then I couldn’t even answer the phone. I was so scared to answer the phone, so these calls were going to my voicemail. I had to set up a Google number, so I knew they were calling from that specific number. And so I was like, “This feels so fake. This is not who I am.”
The letter, I’m pretty sure said something like, “I buy houses for cash,” and I did not have a buyer, and it just felt so sleazy. So it just didn’t work for me. So there were a couple other things that I can think off the top of my head. Someone did a talk on mobile homes and how they invest in mobile homes and do that. And so I bought a book and that’s as far as I got with that.
So it was just like whatever the topic was, I’d dive into it and then I’d be frustrated because I was like, “Well, that doesn’t work for me either.” And then the next thing was out-of-state investing because it was maybe the more of the price point that I thought I could actually invest in. And the one thing was that I was very torn between should I buy a home and I’ll be house poor, or should I rent and invest out of state?” It was so hard for me to decide and it felt like I can’t have the two.
So I started, “Well, let me just see what’s out there.” I looked at turnkey properties, which I didn’t feel comfortable because I felt like a lot of the numbers were being inflated at the time because I was actually doing my own analysis. I also just looked at Zillow and was trying to find on market properties. The thing is I was trying so hard to find the perfect market out of state, and now I realize there is no such thing.
So that was another thing. I probably analyzed hundreds of deals in different pockets of states, and I probably could have bought a property at that time because I had done so much analysis. So then when I was like, “Okay, I just need to maybe go for it.” A friend of mine had moved to Kansas a few years before and another girlfriend from college said, “Why don’t we go visit her?” And I said, “Okay.” And maybe I can make this also a trip where I actually go see properties out of state. Kansas is probably a good area. I looked at the area and what the job market and all of that was doing. So I was like, “Okay.” And it works because maybe I can go visit my friend while I’m out there or I have a place to stay if I ever need to go out there.
So we worked on that trip. We set it up and then I mentioned it to my friend like, “Hey, I’m going to spend a day while I’m out there. I’m going to be looking at property.” And she said, “Well, do you need a realtor?” And I said, “Well, yeah, I don’t have one yet.” And she said, “Oh, I know someone who might know someone.” So she got me the number. I reached out, got in touch. She sent me properties beforehand. This is what you might see while you’re out here. I can’t promise you that any of them will still be available when you’re here, but this is just to get an idea.
He was working only with investors at the time. It was like a hot market. It seemed like his broker had just started this investor only department. And so he was only working with investors. So I felt pretty good like, “Okay, I’m working with someone who should know what the market is and what I am looking for.” Flew out there. We saw eight to 10 properties, I think, and one day my friends were so tired. It started off with, we were all happy and excited and everything.
I was the only one that was like, “No, we have to finish the list.” Got through the whole thing. But I was starting to feel like, “Okay, these properties are…” Because of my price point, we were looking at C and maybe B minus areas and I was just feeling a little uncomfortable. It looked like the systems were probably… Maybe the major systems had to be replaced yesterday or it was just on the verge of breakdown or there was just something funky about them. There was nothing where I was like, “Oh, this is in my price point and everything is great about it.”
And just being out a state and being new, it made me really uncomfortable. But I said, “Well, it’s about the numbers.” So I just went home and I picked the top three that I could potentially go for and the numbers didn’t work for me. It was just clear. And I think the property values were from 110 to 215 between the three. I don’t remember where the one in the middle landed.

Tony:
But the numbers didn’t work.

Lyrva:
Cash on cash was less than 3%. It was just [inaudible 00:20:30]

Tony:
That’s such an important thing for you to call out, Lyrva, because I think a lot of rookies, when they invest all of this time and energy looking into a market, you fly out there, you walk a bunch of deals, you start to get this kind of emotional reaction where it’s like, “Hey, I’ve already invested so much time, energy, and effort into this. Let me maybe pat the numbers a little bit so I can feel better about it.”
But you made the decision to not do that. So it sounds like you were dipping your toes a little bit in wholesaling. You sent the mailers that didn’t work out. You went to this out-of-state market and met with agents and analyze deals, and that didn’t work out. So how did you actually land on the strategy that was right for you?

Lyrva:
Okay. Yeah, this is… Exactly. I came back from Kansas, saw the numbers. I was like, “This is still…” I’m so frustrated at this point because I feel like nothing is working for me. It’s working for everyone else but me. I was like, “Okay.” Back to, “I want a house. I don’t want to be house poor in California. It’s just doesn’t seem feasible for me, but I really, really want an investment property, an income generating property. How do I have that? How do I have the two?” And it just came to me. I have to have a property with an ADU on it.
That’s the only way I can get the two, the best of both of what I want. And it was just like, “Yeah, yeah.” I was talking like, “Yes, that’s exactly… That’s it.” And once I made that decision, it was like nothing could stop me. I was honed in like, “That’s it.” So however long it would take me, I don’t think… It actually only took a couple months after I made that decision that that was going to work for my lifestyle for my family and it took a couple months, but if it would’ve taken me even longer, I think that’s kind of what my strategy was going to be. I knew that was going to work for me.

Ashley:
Can you explain to us real quick what an ADU is?

Lyrva:
So it’s another unit, like an accessory dwelling unit that’s on a property. I mean, there are other terms for them or like guest houses, a converted garage. So I was looking at any of those types, but it had to be a separate unit like a back house where I could live separate with my children because if I had been single, I could buy a house and rent out the rooms, but it was just not an option for what I wanted. So that’s very popular now and it was already gaining some traction in ’20 that… By then it was 2019 or late 2018, beginning of 2019. But not as popular as it is today. Now, it’s like ADU booming in California, but at that time it was still gaining traction.

Tony:
The ADU strategy I think is something that, especially if your house acting can be exceptionally powerful, and I think hopefully we’ll get into a little bit later how that ADU has worked out for you, Lyrva. But I want to point something out really quickly. Your journey of finding the right strategy for yourself, it started with the educational phase of, “Hey, let me just learn as much as I can about all the different options that are out there,” which is the right thing to do. And then you kind of dipped your toes in these different strategies to understand like, “Hey, what’s the one that works for me?” You said wholesaling doesn’t quite mesh with who I am as a person. Out of state investing, I’m not quite comfortable with the idea of doing that in these other marks. I don’t understand.
But this strategy of house hacking with an ADU, that lines up perfectly with who I am and what I want out of my investments. And I point that out because if you’re a rookie that’s listening that hasn’t identified your strategy yet, I think you can follow what Lyrva did of tons of education and then testing in a small way the different strategies that are available to you. But I guess, Ash, when you think about choosing your first strategy, do you remember what steps did you take to say, “Hey, I want to focus on BRRRs in my backyard?” Did you try anything before you did that first deal?

Ashley:
I just didn’t know there was other strategies. I worked for one investor and he did long-term rentals, and that’s all I knew there was like this is real estate investing. So I was just a limited mindset and naive that that’s why I did mine. But I think too, when you’re looking at different strategies to start with is where’s your opportunity? Where do you have… And so, Lyrva, you looked at which one best suits my lifestyle and what I want to accomplish and achieve what your why is for going into real estate investing.
Some of them didn’t fit what you want to do like wholesaling. You didn’t want to be answering the phone. That would defeat the whole purpose of you becoming having some kind of time freedom and getting to that financial freedom because you were doing something you did not like to do and dreaded it. So there’s so many different things you should look at when you are choosing that strategy. So Lyrva, what were some of the things that were important to you that this is why this strategy, if for anyone listening, if they’re kind of stuck deciding, what would be your advice?

Lyrva:
Yeah. Definitely evaluating your lifestyle. My why was my kids. I didn’t want to let this separation and then eventually the divorce that was part of this whole process of that was going on in the background to really define our future and for us to have a different lifestyle. I still wanted to give them the same lifestyle. I still wanted them to live in a good area with good schools and to have that feeling of being in a home. I grew up in a home that my single mom lived in and owned. And so it was really important to me.
I just didn’t feel like I knew how, but once I figured it out, that was so important to me. It’s just something that I couldn’t give up. Once I figured out how to do that. So just figuring out your lifestyle and where your strengths are. If it’s not going to be answering a phone because you’re so scared to answer sellers, calls. Don’t do that. Just try to see what works out. What’s your zone of genius? Where you’re going to shine? And I get creative on things. And so that’s how I figured out when I finally got my property. I got creative. So that’s one of my areas. I can come up with a solution for how to make something happen. So that’s my advice. I could figure out where your talent is and kind of go with it.

Ashley:
Once you identified that you wanted to find a property within ADU, was that because you just saw a property within ADU or you learned about it and then you started searching? How did you find that first property?

Lyrva:
How did I find it? Well, I learned about them at the meetups. And like I said, this was 2018, 2019. There was already a buzz about ADUs and they were hard to come by at the time. So they come up once in a while. Usually maybe an investor is the one to buy it. So there wasn’t a whole lot on the market. And so how I found it is… Well, that’s part of my journey. So I was looking online. There wasn’t very many that would come up. I think maybe every few months maybe one would pop up.
So I knew about how much they added value to a property like if it was a two bedroom, one bath and there was an ADU on it like, “Well, how much more it would be than just a two bedroom, one bath.” So I had an idea of how much it would add to the property. But I was like, “Well, I don’t want to wait. I want to take action. I know what I want now, so I need to flush it out somehow.” I reached out to my friend who’s a big sister and she’s a realtor, and I told her my plan. I said, “Okay. And I know you’ve followed me on this journey and I’ve been talking about all these things that I’m doing, but I know what I want now.”
I said, “I want a property with an ADU like a Backhouse or a guest house and I want you to show me the property. If it comes on the market, I want you to be my realtor.” I said, “But I also want to be honest with you.” I’m going to look for properties off market. I had already a little… That my experience from wholesaling, so I knew how to get a list from ListSource, how to pull a list and what to look for. But I also asked her, because we were friends and we had that relationship, “Would you be able to get me a list from the MLS? Can you scrub a list for me with some keywords and some timeframes that I gave you?” And she agreed. She was a supporter.

Ashley:
Yeah. What were some of those you used?

Lyrva:
So I think on the MLS, you could look for backhouse. You can just free type in something [inaudible 00:30:10]

Ashley:
Mother-in-law suite or something.

Lyrva:
Mother-in-law suite was one of them. Yeah, converted garage. Any word that could potentially mean like there’s another unit on there. And then there were some timeframes I think if they had bought in the last two years then it was like remove those from the list. So I gave her some parameters and she gave me the list and I had gotten my list from ListSource and I combined that. And then I went and I searched these properties online. I was on Google Maps. Again, I drop off my kids. I’d go look at the list, I’d drive by them. I was trying to check off the ones that wouldn’t work for me and just condense it to like, “Okay. Well, I’m not going to buy up in the hills and have a four or five bedroom house. It’s just not feasible, so let’s just keep it real.”
So I brought it down to about a dozen properties. And around that time, I also came across something that was super important for me to actually be able to buy a property. I found information that you can pull $10,000 from an IRA to use it for the purchase of a new home. So if you’re a new home buyer. And so that put me in a slightly different price point because I was like, “Oh, that’s more money for closing costs.” I was so tight on the budget at that time and it made a huge difference, which I wouldn’t have been able to use out of state.
So I was like, “Oh, this is just another sign that I’m on the right path.” Actually, I’m not saying this out of order. Before I had asked my friend for the list, I found this article from a designer like a decorator and she had put out a blog post that said how to buy a property that’s not on the market. And that was really helpful because I knew about wholesaling, but it was from a different fresh perspective. It was just a regular person that wasn’t an investor and she wanted to live in a specific historic neighborhood, and they didn’t come up very often.
So she wrote a very genuine letter about why she would want to purchase in that area and she reached out to that specific area. And I was thinking, “Oh, I can do that. It’s not like that sleazy I buy houses for cash. It felt just so much more me.” And so I thought, “Oh, I can definitely do that and I think I can answer those phone calls.” So putting that together with that list, and I brought it down to a dozen and I got the letter, used her template because she put it all out there and I finessed it to my story.
So it was just about me and my kids and that we lived in that area. And the reason why I would want to purchase a home, their specific type of home. And those letters wrote in my car for about two to three weeks. I could not get them out. It was this fear of like, “Well, what if… My name is unique. What if they’re like people that go to my kids’ school, their parents, and they’re like, ‘Oh, you’re sending us this. Why do you want to buy our house?’” And I just thought what are people going to think about me? And then it just came to the point where I was like, “I don’t care what people think about me. I did this. I am going to make this work somehow.” I sent them out and I was like, “I’m done. I don’t care what people think about me. This is what I want and I’m going to go for it.”

Tony:
That’s super inspiring, Lyrva, but I just want to pause you on that because I think that fear of judgment is something that a lot of new investors struggle with is even just the idea of, “Hey, I want to own property.” And especially if you come from a background or a community where that isn’t something that’s done often to own investment properties, people might think that you’re dreaming too big or like, “Oh, it’s Lyrva and crazy dreams.” But you have to have, I think, the confidence in yourself that, “Hey, if I’ve set this goal, I’ve spent the time educating myself. I’ve built up the resources that I need to do this. Why not take that next step?”
And obviously, it turned out really well for you. So I’m assuming you finally get the courage to drop those letters in the mail. Does your phone start immediately ringing? Do you wait months on end before you hear response from someone? And then how do you actually go about negotiating with the sellers once they reach back out.

Lyrva:
I didn’t expect anything. I was like, “Well, you know what, now I’m just doing it and I’m going to move on.” But it was part of like my, “I’m doing this.” So I contacted my friend and I said, “Hey, I sent those letters out. Thanks for sending me the list, but I’m still… This is what I really want.” So there’s two that came out on the market, two properties that had ADUs about a week or so within that timeframe. And I said, “Can we make an appointment to go see them? Like I told you on market or off market, I’m going for it.” So she said, “Sure.”
We went to go see them that weekend. I think maybe a week, a week and a half had passed. When I had sent the letters out, I kind of forgot it, put it out of my mind. We went to see the properties and while I was at one of the properties, one of the owners reached out to me via email. It’s like, “Oh my God. This is actually happening.” And my friend was with me, the realtor, and I was like, “Help me formulate an answer.” And I was like, “Something is happening.” I don’t know. Whatever it is, something is happening.
I formulated a response. We went back and forth a couple times and they invited me to see the property that evening. My friend couldn’t go with me, so I got someone else to go with me. I don’t know these people. I’m going to go meet them at their house. But I was like, “But I’m going.” Because when I got the email, I recognized the name. I had stocked these properties. I knew where they were. I was like, “It’s the greenhouse on the corner. It’s so cute. I wanted to go see it.”
So I went to go that evening to meet them and super nice couple, super nice family. They took me around to their property inside, outside. They showed me the ADU. It was a little funky, and I didn’t let that scare me. I was like, “I could work with this. I could totally work with this especially if I get this at a deal. If their price isn’t out of my range, I will totally work with this.”
So of course I didn’t say that to them. We had said, “Let’s both think about this. You take your time and we’ll take our time to decide if we’re going to move forward.” They said, “Take a couple of days and reach out to us and you’ll know so that we know either way.” They did tell me a little bit about their story and why they even reached out to me. So it was a family that was trying to get into the area. Again, the schools, the whole thing, it was difficult to get into a property at that time.
So they had been there for three years. They bought it off market from friends of theirs, and they tried to make it work like a property that really wasn’t a good fit for them, but they really wanted to get into the area. So they were a family of six. They had four kids. And so it’s a small home. It’s a two bedroom, one bath. So their two older kids were living in the ADU, and it just wasn’t a good fit to have your teenagers and the ADU. So they thought, “Well, it’s a really large property. Maybe we can renovate it and extend it.”
And they went through the whole process of the planning and doing all that, but it got really expensive for them. So then they said, “Let’s just scrap this, buy a bigger house and we’ll keep this as a rental.” And so they were fixing it up at the time to fix it as a rental, and they were an escrow for another house. At the time that I reached out to them, they said they were maybe thinking that they were biting off more than they can chew. So they were thinking, “Maybe we can’t be landlords. Maybe this is too much for us. Maybe we’re making our lives difficult and we should just move on.” And there’s this person that’s reaching out to us.

Ashley:
When you were looking at this property, did you know the rehab that this was something you could take on? You were able to finish it?

Lyrva:
Yeah. So the primary residence was turnkey for me to move in with my kids. For the guest house, it was, I think small enough to where I was like, “I could work with that. I could have a small budget and it was drywall. I think that really was the major part that would need to be.” There was a funky closet in the kitchenette instead of in the bedroom. And I was like, “Well, the bedroom is right next to the kitchen, I could just flip it and leave a space and make a functional cabinet like pantry in the kitchen.” I just was like, “I could do this. I could work with this. What’s drywall cost?”

Ashley:
Can you us the numbers of this whole thing? I’ll kind of do it rapid fire at you. What was the price that they wanted or did you just offer a price?

Lyrva:
So they started out with a price, 605. They gave two prices, actually. One with a kitchen renovated and one without, and I took without because I was like, this.

Ashley:
Okay. And then is that what you ended up paying for it, the 605.

Lyrva:
I did because I knew what an ADU, a property with… So it was under market.

Ashley:
Then how did you end up funding this deal?

Lyrva:
So it was a conventional loan. I put 10% down just to make my payment doable, and I used that IRA that I had from a previous job, and I used that for the $10,000 for closing costs.

Ashley:
So you borrowed money from your IRA or did you pull it out?

Lyrva:
It’s pulled out penalty free, so I pulled it out.

Ashley:
And then how much was the rehab that you had to do in the ADU?

Lyrva:
I think I spent… I think it was maybe 35, 4,500. It was like the bare minimum, paint and do that little switchover of the closet, and I needed to do it fast.

Ashley:
Then what did you decide for rent on this property and are you long-term or short-term, or even midterm renting it?

Lyrva:
So I started off, I did that for two years. The first year it was 1375. So it’s a one bedroom, one bath. It’s a little guest house unit.

Ashley:
What was your mortgage payment on that? A month. So how much did that cover of your mortgage payment?

Lyrva:
So at the time, because I’ve refinanced a couple of times since then, it was, I want to say, it was about 3,000.

Ashley:
So a little more than a third of your mortgage payment? It covered.

Lyrva:
Yeah.

Ashley:
Okay. So then what happened? You said for a year you rented it long-term. Then what happened?

Lyrva:
So for a year, it was 1375 and then the pandemic happened, so I waited to bump up the rent and then I got it to 1425.

Ashley:
Oh, awesome.

Lyrva:
So she stayed, the tenant stayed for two years, and when she moved, I was like, “I think I want to do short-term rental.” I think I want to dabble at that. And so I had seen in the area, there were a few at the time and they had been doing it for a really long time and it was kind of like that. Maybe they just put regular furniture in there or old stuff that they had found and guest house, back house units. I’m talking about not houses.
So I thought I could do it and I could do it better. I could actually get all the new furnishing and make it match. I could tell that these were seasoned hosts that were kind of doing it, I want to say the old school way where it was just like a hobby and they just put their maybe used furniture in there. And it was working for them. But I was thinking like, “I want to do it and do it like a real business. I want to just furnish it, make it nice, and do the whole thing.”
So by then I had a budget. I had two years, been a landlord and been in this property and was a little bit more comfortable. So I did a little bit more renovation. I was like, “Well, I have to do a little bit more work in the bathroom.” I redid the flooring and added some light fixtures.

Ashley:
With doing these renovations, were you able to get a lot more as a short-term rental than you were a long-term rental?

Lyrva:
I doubled my revenue.

Tony:
Wow.

Lyrva:
It’s been pretty [inaudible 00:43:12].

Ashley:
It was worth it.

Tony:
Almost covering your entire mortgage then, it sounds like, right, with ADU?

Lyrva:
Yeah, almost.

Tony:
Yeah. That’s fantastic. I mean, to be able to live in Southern California and spend almost nothing on your mortgage is insane. It’s a very difficult thing to do. So kudos to you for figuring out a way to do that. Lyrva, I love everything about your story. I love the fact that these different elements of the strategies you tried, you were able to roll up into this one deal that made the most sense for you, right? You were so confident by sending those 12 letters because you had already dabbled in sending all the mails for the wholesaling. And the work you did of analyzing deals out of state, it helps you be more confident when it came time to analyze the property in your own backyard.
So everything you learned culminated in this one deal, and it seems like it’s turned out incredibly, incredibly well for you. So are you ready for today’s question, Lyrva?

Lyrva:
Sure.

Tony:
As you’re listening and you want to get your question featured on one of our episodes, head over to biggerpockets.com/reply, and we just might use your question. So today’s question comes from Judy Underwood and Judy says, “For those of you who have borrowed against your 401(k) to purchase a property, did you refinance your home afterwards to pay yourself back? How did you use your 401(k) funds for real estate investing? I really don’t want to withdraw other than getting a loan.” So what’s your recommendation, Lyrva, I’m sorry for Judy.

Lyrva:
So that wasn’t exactly my situation. So I had an IRA that was not with my current employer. And I feel like everyone has those because you’ve worked somewhere else before. So I would say before going to your current, your 401(k) or 403(b), whatever your current retirement is, go to see if you have a pension or some kind of retirement fund with a previous employer, and then you can roll it over into an IRA. And then those are the $10,000 penalty free that you can use towards the purchase of a home.
So I don’t know if I necessarily would borrow from my current retirement plan. I guess it just depends, but I would do that first before I would use those other funds.

Ashley:
Awesome. Thank you. Okay, we’re going to move on to our rookie exam. And the first question is, “What is one actionable thing rookies should do after listening to this episode?”

Lyrva:
I’m going to go back to evaluate your lifestyle. What is important to you? What do you want your future to look like? What’s your family life like? And use that as the stepping stone to decide what your strategy is going to be.

Tony:
All right. Question number two. What’s one tool, software app or system that you use in your business?

Lyrva:
Well, now that I have the short-term rental, I use Airbnb obviously is one of the big ones. But like I said, I’m doing it as a business, and so I’m trying to be a little bit more sophisticated. And even though I only have one, I use pricing software, which a lot of people don’t do because they think, “Well, it’s costing them money, but it’s actually making me money if I use it the right way.” So ever since I transitioned into that, I’ve surprised myself at how much more I can get for certain nights where there’s events going on and things that I wouldn’t even have thought of.

Ashley:
Okay. And our last question, I want to tailor a little bit different to you today, but how has real estate investing changed your life?

Lyrva:
Wow. It changed everything for me. I feel like this experience, this whole thing, it’s helped me teach my kids like, “This is what you can do. You make things up as you go and you figure things out.” But also just my lifestyle, I feel like it’s been able to help me have the lifestyle that I want to live in southern California in an area that I want, making really good money on the property that I live on right next door. It’s in my back versus a state or few away and just to have eyes on that and just the learning that I have made through this entire process.
I’ve learned a little bit about how to screen tenants, how to write up an agreement, how to enforce my own own rules, how to do renovations even though they were small renovations. But that’s a big part of being an investor, getting bids, all of that. So it’s just changed my life to where I’m confident now that if I venture out and do another deal or another project, I have confidence in myself. I do know something. I do know a little bit about real estate.

Tony:
Isn’t it crazy what one deal will do for your confidence? And that’s why a big purpose of the rookie show is just to give everyone that’s listening that confidence to get that first deal. Because once you get the first one, the second one is exponentially easier. There’s so much more momentum and confidence behind you. So I appreciate you sharing that, Lyrva. Before we wrap up here, I want to give a shout-out to this week’s rookie rockstar. Today’s rockstar is Aaron Nygaard. And I can’t say the last name, Nygaard without thinking about the TV show Fargo. So if you know Fargo, anyway, I love that show.
But Aaron says, “Closed on property number two through a mutual friend. I let everyone know my goal of doing real estate investing full time. My first property I acquired through handwritten direct mail.” And he gave the numbers. It’s a 105 purchase price. $20,000 for renovation, and then it appraised for 225,000. Aaron says, “Now, out for a cigar to celebrate closing on this unit.” So Aaron, congratulations brother.

Ashley:
Well, Lyrva, thank you so much for joining us today on the podcast. Can you let everyone know where they can reach out to you and find out some more information about you?

Lyrva:
Thank you. I am on lyrvasanchez.com and on Facebook also Lyrva Sanchez. And then you can check Rustic & Chic B&B on Instagram.

Ashley:
Awesome. Thank you so much. I’m Ashley @wealthfromrentals, and he’s Tony @tonyjrobinson on Instagram. Don’t forget to check out our new book at biggerpockets.com/partnerships to get a copy. We will be back on Saturday with a rookie reply.

Speaker 4:
(singing)

 

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