Structure beats rate every time.

Welcome to the first edition of The Leverage Letter.

Quick context before we get into it. There seem to be a LOT of resources and options for beginning investors, and not much for the experienced investor. I think a lot of that has to do with trying to capture as broad a market as possible to increase ad revenue. Thankfully, I don't have to worry about that. I'm writing this for my clients out there who are crushing it, who just want a bit more insight into the industry, from someone who has seen a lot of it.

Here's the deal: one short letter, once a week. The main point up top, a win and a loss from my week, and what I'm keeping an eye on. Nothing for sale. No sponsors.

Let's get into it.

THE LEVER

You compared Loan Estimates. Shopped rates. Compared fees. Everything you were supposed to do, you did. So why are you just now hearing your loan can't be done?

I see it consistently. Investors do exactly what the podcasts and forums say: shop and shop, find the lowest rate, go with that lender. To be fair, they do that part right. But the gurus left out the next step. The more important one.

Here's the industry's open secret: we all sell the same money. Same rate sheets. Same lenders. Nobody has a vault of secret rates (that I know about anyway). The key is knowing which lenders your deal can close with, and when they'll get it done. Refinancing a long-term rental you've owned five years is a completely different underwriting profile than refinancing a property you bought 60 days ago and heavily renovated into an STR. Your scenario drives pricing far more than anyone cares to admit.

So before you shop your next deal, know these answers:

• Will underwriting use historicals or projections? If projections, what's the income formula?
• Any complicating factors? Rural property, state restrictions or challenges, small loan balance?

These decide which lenders can touch your deal. And that decides your pricing before anyone quotes you a rate.

THE W

THE L

A dual purchase ran two days past close. The client moved large sums across multiple accounts three days before closing, which triggers another full review of all documents by the underwriter. Both properties still closed and should cash flow well. The lesson: once you're in underwriting, don't touch your money. If money needs to be moved, communicate with me beforehand so we have the paper trail ready.

ON THE RADAR

• Small multifamily (5-8 units) is mispriced in a few markets I watch. My hypothesis: buyers still assume lending options are limited for the asset class. They aren't.
• DSCR is now generally cheaper than conventional investment rates. The investors buying these notes have serious demand, and larger lenders are pricing very aggressively.
• Perfect BRRRRs do exist. I'm working a structure with a client right now: 100% purchase, 100% renovation funding, then refinance out of the hard money note. If the ARV hits, at a 75% LTV DSCR refinance, he will pull more out of the property than he put into it.

Cheers,
Wyatt

The Leverage Letter | When you know the game, nobody can play you.

Deal details reflect real client files, anonymized; not a quote or a commitment to lend. All loans subject to credit approval and underwriting. Next in the archive: the best debt on planet Earth.