Episode 83 - Is Real Estate Really Dead? Alex Bekeza on Finding Deals in 2026

There is a lot of noise in real estate right now. Cash flow is dead. BRRRRs are dead. There are no good deals left. But is that actually true? In this episode, I sit down with Alex Bekeza, a real estate lender and investor who has originated more than $300 million in DSCR loans, to talk about what is really happening in today's market and what successful investors are doing differently. Alex shares why he has moved away from "lipstick rehabs" and now looks for deals that make sense even after accounting for major mechanical improvements. We also talk about reserves, conservative ARVs, DSCR loans, appraisals, turnkey properties, and why understanding your numbers is more important than listening to the noise online. We also get into how AI tools like Claude and ChatGPT are helping investors analyze deals, review scopes of work, challenge appraisal reports, and make better decisions. And for newer investors, Alex shares why you don't need to chase every strategy at once. Instead, develop a buy box, focus on one strategy, and learn from people who are already doing it successfully. If you're trying to invest in today's market, this conversation is a good reminder that there is no perfect market. You need to understand your numbers, manage your risk, and be willing to take calculated shots when the right opportunity comes along.

Stephen and Alex talked about:

00:00 Is real estate really dead?
02:41 What successful investors are doing differently
05:12 What is a DSCR loan?
08:57 The problem with turnkey properties
14:15 How Alex found a $75K deal
17:03 Why you have to take your shot
21:05 Why conservative ARVs matter
31:19 How AI is changing real estate investing
43:00 Why there is no perfect market
46:32 Why new investors need a buy box

TRANSCRIPT

∎ Teaser / Highlighted Clip

00:00 Stephen Husted: At some point, you have to take a little bit of calculated risk and just understand what you're doing. And when you're going to go look for a deal, these are your numbers. It's not, hey, I'm going to buy this deal and I'm going to fingers crossed that it's all going to pencil out and it's going to appreciate the praise. No, you underwrite it in a way. This is what I'm doing. And it's not emotional. It's calculated. It's by numbers.

00:25 Stephen Husted: Those people will succeed. Others will sit around. thinking that they have to wait for this market to signal to them that everything is perfect. And I will tell you, you'll never hear that because if rates went down, you're going to hear there's no inventory and it's too competitive.

00:44 Alex Bekeza: Part of what's going to allow you to be patiently aggressive, if you will, is maybe how I should have answered your question earlier about advice to a first timer is developing a buy box because you have to silence noise. You're going to be in analysis paralysis if you are entertaining the idea of all of these different cool strategies. They're all cool. Short-term runners are cool. Mid-term runners are cool. Pad splits are cool. ADUs are cool.

01:10 Alex Bekeza: Everything's cool, but you got to pick one. You got to put on blinders like this and just shoot shots at what's in that box.

∎ Podcast Intro:

01:16 Stephen Husted: I'm Stephen Husted, and you're listening to The Breakthrough Podcast, a space designed for clarity, curiosity, and the stories that move us. Here, we step away from the noise and into the moments that define us, the early influences, the hidden struggles, and the breakthroughs that reshape our lives. From personal reinvention to building a life through real estate and entrepreneurship, these conversations remind us that success isn't a straight line. It's a series of honest decisions, brave actions, and small shifts that change everything. This is where those stories live. Let's begin.

∎ Guest Introduction:

01:55 Stephen Husted: Joining us today is Alex Bekeza, a DSCR lender who has originated more than $300 million in loans and works with dozens of real estate investors every month. Alex has a unique perspective on the market because he sees the numbers from both sides, working directly with investors, appraisers, and lenders across different markets. In this episode, he cuts through the noise around whether cash flow, BRRRR, and other investing strategies are... dead and shares what experienced investors are actually doing differently today. He talks about conservative underwriting, building strong reserves, choosing the right buy box, putting the right team around you, and using AI to analyze deals and challenge your assumptions. This is a practical conversation on navigating today's market, finding opportunities when others are sitting on the sidelines and making calculated decisions instead of waiting for the perfect market. Let's get into it.

∎ Podcast Proper:

02:55 Stephen Husted: All right, Alex. Hey. Thanks for joining today.

03:00 Alex Bekeza: My pleasure, man.

03:02 Stephen Husted: Well, for one, you're the second guest that's been on twice. Awesome. What an honor. Since I started the podcast. And you were in the very beginning.

03:11 Alex Bekeza: Oh, yeah. I remember. It feels like yesterday, but it was a long time ago.

03:14 Stephen Husted: Yeah, it was a couple years ago now. That's crazy. Time flies. Sure does, man. It's insane. So. I brought you on today because there is so much information flying around on the internet about investing. And it could be all types of different angles that are going on right now. It could be short-term rentals are dead, long-term rentals are dead, cash flows dead. Everything is dead to some people.

03:45 Stephen Husted: And when I hear them talk, I sometimes have to understand their backstory of, like, how long have they been an investor for? When did they start? Did they start in the COVID market, low interest rates, pretty easy to do things, and you can make a lot of mistakes and still cash flow and still have a property that you can burr out of? It was a pretty easy market for a lot of people. I don't know if that was the best market to start in, in hindsight.

04:17 Stephen Husted: Then I know a lot of old timers, investors that are in their late 60s that have been in it for decades. And they're like, this is just another market. We've seen ups and downs, crashes, all this. And I think the ones that win, they stay the course. Maybe the business slows down. Maybe they're not doing the same amount of deal flow, but they are improving their business over time. And maybe instead of doing five deals, and maybe they're doing one or two in a year.

04:49 Stephen Husted: What are you seeing in today's market? That's a loaded question.

04:54 Alex Bekeza: Yeah, for sure. I mean, and granted, my pipeline is about as diverse as you could imagine in terms of what markets I'm lending in, types of properties, types of borrowers. It's the full spectrum. But I would kind of echo that the people that are saying things are dead. Well, if by dead, you mean you can't be making 20% type errors on your rehab budget and still get away with it. Sure. But realistically, I think people got to kind of quiet all the noise around them and just live in the numbers.

05:23 Stephen Husted: And are you seeing that out? Because you're lending to a lot of investors right now. What are the real operators doing? What are they doing differently than what people are saying you can't do?

05:35 Alex Bekeza: Yeah, a couple things. First thing that comes to mind is something that I'm personally practicing too. When I first got started doing BRRRR, I would look for those ones where I was like, oh, this house is pretty good. It barely needs anything. We'll just, we'll do some paint. We'll throw some vinyl plank down. We'll do agreeable gray and we'll burr out. I've very much gotten away from doing that, but I see a lot of other successful investors taking that same approach, which is like, and mind you, I'm kind of talking about Midwest markets. We have older buildings specifically. A lot of these things are going to be older than 60, some of them older than a hundred years old. And so I've abandoned doing those kind of lipstick rehabs. Now for me, the deal has to make sense with a budget that accounts for an entire.

06:22 Alex Bekeza: revamp of all the major mechanical stuff. And if it doesn't work with me doing new electrical, probably new HVAC, probably new roof, plus all the normal cosmetic stuff I had done on the first couple ones, then I'm just going to pass. And the reason I say that is because nothing's going to slow you down more than when you're trying to scale and keep doing new deals every time you close one out than one of those deals from two or three deals ago that creeps up with a major CapEx problem.

06:51 Stephen Husted: That's so true. And you don't catch that until you got three to five properties under your belt. And all of a sudden, it all comes crashing down in one week. You got three different scenarios popping up. It's crazy. And I don't care how much you run your numbers or how much money you have set aside. It's an event that is not fun.

07:12 Alex Bekeza: Yeah, and it's one of those things where over a long enough span of time, time will heal most of these real estate wounds if you can survive the interim. And these DSCR loans, the cool thing from a qualification perspective is that the reserve requirements have gotten more and more aggressive and in favor of the lender. I'm sorry, in favor of the borrower. Right now, the main DSCR program that I'm getting 90% of my stuff done through recently lowered reserve requirements to three months in many scenarios. Three months PITI plus 1% of any mortgage balances which show up on your credit.

07:47 Alex Bekeza: You know what doesn't show up on your credit? The other 50 DSCR loans you have. So if I'm only catching you at the bare minimum of reserves, like three to six months of PITI on this one deal, you're riding pretty tight because something's going to come up on one of these other guys that could really scar you.

08:04 Stephen Husted: Explain what a DSCR loan is.

08:07 Alex Bekeza: Oh, sure. Yeah. For those who aren't familiar, it's a debt service coverage ratio loan. The biggest thing to know about that is that qualification method. We're not looking at your DTI. We're not looking at debt to income. Instead, we're looking at the property's ability to cover the mortgage. Simplest way to look at it would be, does the rent exceed the PITI?

08:29 Alex Bekeza: Most commercial banks that do multifamily and commercial, they're all based on debt service coverage ratio as well. But it's different because they're typically looking for a 1.25 and they're going to add all different types of expense factors that make sense because they're real world expenses like vacancy, R&M, utilities, a market rate for management, whether or not you employ third party management and all of these things. They really make it bulletproof. Whereas in residential DSCR space, it's a little bit of the Wild West. I can get these things done at a 1.0 where the calculation is only rent divided by PITI. That's great for getting your deal done and getting out of hard money and everything else. But in the real world, if I got you a 1.0, you're negative.

09:12 Stephen Husted: Yeah, I was just going to say, do you find this to be a good thing or a bad thing? Or what are seasoned investors using that tool for?

09:20 Alex Bekeza: Right. Yeah, it can be. It's one of those things where it's enough rope to hang yourself from. The truth is. There's a lot of great operators that we do deals for that are at 1.0 or even negative. We have a bucket for down to a 0.75% DSCR. And that works excellent for the guy who has a well-established portfolio, lots of liquid reserves. And really, this property serves as a mechanism to defer taxes. And there has a lot of appreciation upside. When those two things are there... Who cares if you're losing a couple hundred dollars a month when you're saving hundreds of thousands or maybe tens of thousands in taxes and you have all this upside on the other end? Who I hate to see close at those tight DSCRs is the new investor on the smaller deal that really is supposed to be in a cash flow market. There's not a ton of appreciation upside. There is still some tax depreciation benefits. But yeah, I don't get as thrilled to see somebody a little greener getting so tight on their deals.

10:22 Stephen Husted: Right, because they will have an event down the road. And it's probably an event that they didn't calculate for to the extent that it happens. I mean, we've all gone through it. That's why we can bring them up.

10:35 Alex Bekeza: Yeah, and that's exactly why my approach to these most recent BRRRR that I'm doing, I'm in the middle of three of them right now. I said no to a ton of them that were very appealing.

10:43 Alex Bekeza: It was very tempting to go ahead and do it. But like I said, I want to refi out when that thing practically functions and feels like new construction, even if it's a 100-year-old brick building. The other thing about that is it makes your ARV that much more compelling. When an appraiser has to respond to the scope of work that you sent, which is literally you redid almost everything in this house. It's a lot easier for him to justify giving you kind of the upper end of your ARV expectations than it would be if you just kind of slap some paint on it. And you think you just say to yourself, oh, I got it way under market.

11:16 Stephen Husted: Yeah, that was one of my biggest things in the very beginning. I mean, a lot of the projects we did throughout Kansas City that you helped us with, we pretty much rehab them from top to bottom for the most part. And there's still issues. There's still issues. Even some of the properties that we have in Seattle right now, I would rather have a fixed item that is the toilet paper handle came off than all the other major crazy things. There's something to be said about having a property, all the big mechanicals done. It is definitely a peace of mind factor for sure.

11:52 Alex Bekeza: Yeah. I mean, and with the exception of actual new builds, something that just got built and listed for sale. One thing I don't get too excited about seeing new investors doing is buying turnkey. I'll make that new construction deal the exception. But in almost every other scenario, we know how this goes. How's his age? And even if something looks spick and spam and it was staged nicely, the only deals that I did that I still own, but I have a little bit of buyer's remorse over, were the couple that I bought, quote unquote, turnkey.

12:25 Stephen Husted: Yeah, I was on a webinar. And it was for new investors. And one of the people on there was about turnkey. On the benefits that I was keeping my mouth closed. I'm like, you're losing all that forced equity that you're building in. That is where that turnkey provider is making their spread.

12:45 Alex Bekeza: Exactly. It's always who's the messenger involved here and what strategy is great. At the end of the day, it's just a poor return on equity.

12:55 Stephen Husted: Definitely. Different scenario years ago. Sure. Years ago, it worked. Especially for somebody who's like, look, I'm super busy. I don't want to take on a rehab from 2,000 miles away. This makes sense, and I can just buy a couple and go about my day. But I don't know if that's the smartest approach in this market.

13:16 Alex Bekeza: Yeah. For guys like you and me, think back to when we were getting started on the West Coast, we didn't have much of a choice but to go far away from home to make something pencil. Right. Nowadays, guys like you are doing really creative stuff in their backyard and kind of making it work. It requires a high level of acumen and creativity and a deep insight into where my local market is going, like in your case with ADU development and things that they're allowing out there now, the splitting parcels and things like that. Yeah, but for those run-of-the-mill type residential BRRRRs, you're going to have to find a team most likely that you're comfortable working with to do it abroad.

13:51 Stephen Husted: From all the noise you hear online right now about cash flow is dead, do you think BRRRR is dead at the moment? Are you having, are you got investors coming to you that you're financing and you're seeing those? You have a great insight. I think lenders, appraisers are like the pulse. If you want to get real good information of what the heck is going on, tap into those two people. Because I think that's, especially you, you've already seen deals. You're seeing what's working for investors and you're also seeing what's not working for investors.

14:26 Alex Bekeza: Yeah. A couple of people I've seen get into trouble in the last couple of years that were, I thought they were hall of famers when we were helping them out in 2021, 2022, just because I was so impressed with the speed and scale at which they operated.

14:42 Alex Bekeza: A lot of those guys were doing it in markets where It can be hard to exit with a sale in a timely fashion. I can think of a couple of guys that I know that rolled up dozens and dozens of houses in somewhat, I think it's a stretch to even call them secondary markets, more tertiary markets. And so when shit hits the fan, it's not so easy to list something and get liquid. Kind of goes back to that emphasis on reserves. I think when I got started, I felt like, oh man, this loan origination business is great. I never thought I would be able to make this money. Every time I had... You know, enough for another down payment and a certain percentage of the rehab budget I hit send. But now I'm much more aware of the peace of mind that comes with liquid reserves. It's going to allow you to focus and make better decisions too with your investments.

15:29 Stephen Husted: And you brought up a really good point. We typically would operate in, let's pick Kansas City, C plus, B minus areas. And the C plus.

15:41 Stephen Husted: locations I'll pick this one property so we have we've had tenants in it for a couple years and they were amazing tenants and they actually wanted to buy the property I think it was a boyfriend and girlfriend that were living in this house and I think the boyfriend was more of a handyman and they kept saying hey you know we'd love to buy the house and I was running the numbers I'm like I can't even sell it right now. We would break even if not take a little bit of a loss. I'm like, I just don't sell an asset just to sell it. I've got to hold on to it. Is it a phenomenal asset to be in right now? No, it's breaking even. And it's something that's going to have to sit and go through some cycles of time. Okay.

16:22 Stephen Husted: But if for some reason I had to sell that property, it would probably be, would I get it done? Sure. But probably would take a little bit of a loss as well.

16:32 Alex Bekeza: Yeah, you know what? That kind of brings me to a decision that I made on the most recent burr that I finished. It appraised way higher than I expected. And I could have gone ahead and maxed things out, but something kind of told me, you know what? You've been doing this long enough. You know how it is to feel skinny month to month on these.

16:51 Alex Bekeza: I only cashed one couple hundred bucks a month. And I opted to take that lower LTV on the cash out. I still got all of my money back out. But I didn't go over the top because I just there was something about that extra few hundred dollars that that was going to cause a month for me that just gave me some peace of mind to keep scaling. And that was another deal where really just proves the point of I always hear people say there's no deals out there. And if it's on the MLS, it's already been turned down by 100 people. And it's totally not true. I'm in St. Louis specifically.

17:25 Alex Bekeza: I'm pulling stuff right off the MLS for the most part. There's a couple of off-market deals that come my way because I have good broker relationships. But this one that I really love is it was listed for $140,000 about a year ago. And I kept an eye on it. I said, wow, that's a beautiful house. It's huge too for the area. It's like a 5'3", 2,600 square feet right on a park in St. Louis. in a decent part of town kind of like what you're saying maybe like a c plus b minus but right on the cusp like very near that border where it starts to get actually pretty bougie and cool and you see people running down the street for pleasure not for not because they have to type of thing and so anyway listed for 140 000 i just kind of bookmarked it i check on it and a few days later they dropped to 120 i was like that was pretty aggressive after you know only a week on the marketer set

18:12 Alex Bekeza: And I don't know what I was thinking, what kind of mood I was in at the time, but I was hearing this little, somebody on my shoulder from other podcasts I've heard that, you know, maybe like Henry Washington, who says, if your offer doesn't feel mildly disrespectful, it's not low enough. So I had the agent write it. So I did the math. I said, hey, without even walking this place, what is it going to cost me to fully remodel the place?

18:36 Alex Bekeza: The person who lived there before was a carpenter. So imagine your grandparents' house where It felt extremely outdated, but you could eat off the carpet. You know what I mean? They just kept it super clean. If something went wrong, you could tell he fixed it by hand, but he knew what he was doing type of thing. So anyway, I get the broker to chuck out $75,000 because that's the number where I felt super conservative. I could do an $80,000 rehab on this place and I'd be in a super safe spot. They accepted almost immediately. Which kind of freaked me out. I was like, okay, why was that so easy? You went from 140 to 120 and you took 75 without batting an eye. And it just, it turns out it was really just a real life people thing where these were his heirs. They lived in New York. They didn't care at all about dealing with this. They say, we'll take it because we just want to be done. But you're responsible for getting all this stuff out there. We're not going to visit. Okay.

19:30 Stephen Husted: A lot of new investors are following all these other investors who are telling them. that all these situations are dead. And so they put in the back of their head, like, oh, I can't do this. I can't do this. So this is a great example of you saw some price action, looked like the seller was motivated. You then write a even lower offer and then you get it. But then you've come to find out that, look, they just want to be done. And so really the story is you have to like take your shot in this market. Don't listen to what everybody's saying because you don't know unless you go through it. And it doesn't cost you anything to just write an offer.

20:10 Alex Bekeza: It's just time. Yeah. I like to present these things too. I encourage my realtor. I like to just do a quick little snapshot. Super easy on the eyes. You don't have to be a real estate professional to understand where my offer is coming from. I went ahead and wrote my broker. I said, hey, I want to offer $75,000. That's because I'm budgeting $80,000 based on recent similar properties that I've done. And conservatively, it's going to be appraised for this afterwards. This is where it makes sense.

20:36 Alex Bekeza: And they were just very receptive to that. So this particular deal, it was like $75,000 purchase, roughly 80K rehab. So it was at 155 total cost. It appraised for 282,500. And the market rents 2,700.

20:51 Stephen Husted: So if you can

20:52 Alex Bekeza: follow all that, like I refined at 70%. I didn't leave a dime in the deal. I actually walked with excess, even at 70. And it's going to cash flow super well. My PITI is going to be like $1,600.

21:04 Stephen Husted: That's phenomenal. And hey, and here's the deal. If this is the only one you do this year, great. You did a great one. And you move on and you stack cash away and you have your reserves.

21:15 Alex Bekeza: And my strategy has been each deal, I'm kind of like inching north until if anyone's familiar with South City, they can kind of picture this in their head. I started out kind of in the bottom of Dutch town, just going for that. lowest barrier to entry type deal, but slowly I've been creeping up into these neighborhoods that are adjacent to it. They just have a lot more development and stuff going on

21:37 Stephen Husted: and nobody

21:38 Alex Bekeza: feels uncomfortable getting out of their car type of thing. So I'm creeping now into Benton Park West, Tower Grove South, some more trendy areas with also assets that have been less abused. I used to think, oh, these are more expensive. The rent to price is not as high. It really does not matter when you consider how much less of a headache you're going to have with CapEx.

22:01 Stephen Husted: For sure. That's a big one that slaps you in the face real quick. Well, we can talk about that because we've gone through it so many times. That's how we learned, right?

22:11 Alex Bekeza: Right. Yeah, it's at the point now where I started this in 2017. And like any other real estate sales business, it takes a little time to get that churn going. So figure it didn't start popping off until maybe 2019, but I've done 300 million in originations now. That's just counting DSCR. And so even though I haven't been, there's a lot of people who've been in the seat a lot longer than me. Like you're talking about some of those more established investors. I do feel like I'm somebody who has had the opportunity to see a couple of waves and kind of know what the worst case looks like when things get difficult. And that's informed kind of how I'm moving forward.

22:51 Stephen Husted: And how have you gotten that type of information? I know some of it's probably your own learning lessons, but you're hearing it from the other investors as well that you're funding their loans. So you're kind of learning from them as well.

23:03 Alex Bekeza: I have an unfair advantage, right? Because I'm not just intimately familiar with what's going on with mortgage pricing. I'm doing between 30 and 50 deals a month the hard way. Of course, I do a billion dollar loan here and there, and that's always great. My pipeline tends to be just from the audience I've drawn and the CRM that I built typically happens to be those guys that are doing, my average loan size is probably $200,000. So when I say I do it the hard way, I mean I do it a lot of units per month. Maybe it's $5 or $6 million worth of loan volume, but it's like I said, it's dozens and dozens of properties. So the point is I'm seeing dozens and dozens of appraisals every month in different markets.

23:43 Stephen Husted: What are you seeing? Talk to me about that part. Because every market is like a micro market. But across the board, what are you seeing and hearing from appraisal reports and appraisers?

23:54 Alex Bekeza: I mean, in a broad general sense, just because we are talking about so many different markets, it's probably what you'd expect. It's the people who have the most success or the people who were conservative on their ARV estimate and made the deal work with that number that's a little lower than they really hoped for. They were happy with the deal. with it coming in a little bit lower than they hoped for. And they have a very compelling argument. There's nothing worse than, from my perspective, when I have to give somebody some bad news. The appraisal came in significantly lower than what you put on your application.

24:24 Stephen Husted: And I

24:26 Alex Bekeza: get one of two reactions. I get the guy who's like, oh, what a shame. Do me a favor. Here's the comps I'm looking at. I don't know why he put comps three and four in there because this and this, but... realistically the appraiser overlooked this they're ready with that information so you got to have your arv comps dialed and in your back pocket otherwise you really don't have a light to stand on the other reaction i was going to say is they get really emotional they start throwing out character assassinations on the appraiser and this is not productive of course it sucks of course it's not what you hope for but you just have to white knuckle and take a productive second step. That might look like ordering another appraisal. That might look like disputing this one, or that might look like you take one on the chin because after sorting through this, you realize actually you were off a little bit. Yeah, I just went through that

25:11 Stephen Husted: with an appraiser out in Seattle. But this guy is super cool. I have had him on several refinances lately. So I have his number. We talk beforehand before he even goes out there. We have a conversation. He wants to know a lot of different things on what we did, what I think about the market, where I think the value is at. And so he just did appraisals for two houses that we rehabbed. But we're also doing a bridge loan for the ADUs that we're going to be building, right? So they appraised the main houses and then they appraised the new builds once they're done. And it's all packaged into one loan. And one of the properties, well, across the board, out of all four appraisals, the value came in 75 to 100,000 below what I thought.

26:07 Stephen Husted: And so he comes to me and goes, hey, I know what you said on numbers, but this is where the numbers are at. And I was like, ah. So we start talking about it. And I go, what could I have done better? And he's like.

26:19 Stephen Husted: you bought these a year ago. The market's changed in Seattle. He's like, there's a lot of different dynamics going on right now. The ADU market is getting saturated. So they're sitting, there's all these different moving parts. But he's like, I think you did good because you were conservative on your numbers from the very beginning. Now, if you look at the big picture, these values came in a little lower. You're keeping a couple of them, but you still have a lot of equity. When you kind of spread it across. So that was good. But it also gave me a lot of factors on understanding where we're heading. And I asked him that too. And he gave me just a lot of amazing information. And I couldn't have prepared for that.

27:00 Alex Bekeza: By getting to know him a little bit and picking his brain. overtly influencing him or anything. You just develop the ability to kind of see the deal through his eyes.

27:11 Stephen Husted: Yeah. Yeah. Yeah. And another thing that was really interesting about. the dynamics of these, let's pick the neighborhoods. This one, we were dead set on. And by the way, this is with Laura and I. Laura, who's with me in Kansas City. So it's me and Laura. And so we flew out. We flew out there when they were done. And we're like, yeah, we're keeping these two because we love this neighborhood. The other one was great too. And when it came to the ARVs, the other neighborhood, the other house in the other neighborhood. Hit all the value metrics where the one we thought was lower.

27:46 Stephen Husted: And he's like, look, I know you think that this these two streets are probably nicer than the other location. He's like, but that is a more desirable neighborhood over there by Green Lake. And this is why. And it was just so interesting. And that one, the one that we wanted to keep, we actually had to bring money to the table for the refinance. But the other one. We had a windfall. The appraisals came in higher, so it was a wash, essentially. We got $10,000, $15,000 back once it was all said and done. But it was just the weirdest learning thing. But the interesting thing is the one in the less desirable neighborhood, if you want to call it that, these are both B-plus neighborhoods, we got super high rents, where the other ones are about $1,500 less. So that's strange. You know what I mean?

28:36 Alex Bekeza: Yeah, if one's more desirable, why wouldn't it?

28:39 Stephen Husted: Yeah, and they are identical square footage. And the single families have been now turned into essentially duplex. So they went from two bedroom, one baths to a three-two upper and three-two in the basement, all rehabbed.

28:53 Alex Bekeza: Yeah, I think that strategy is one that years up there, you know, where... it'll get easier and easier as time goes on in the sense that there will be more available comp data. Like right now you're like at the precipice of something that's of new and evolving, right? So the, that there's in many cases, probably just fewer comps to like really rely on. But I think that's one of those problems that just gets solved the time. Same thing here in Los Angeles with an insatiable appetite from developers to pump ADUs out. I think it'll be easier to exit those. I mean, not that they're not succeeding now. I just mean that. It will be more bulletproof once there is a plethora of those similar property types.

29:33 Stephen Husted: Yeah, absolutely. And these two that we're building are in the new kind of laws that came out in Seattle, the middle housing. So they're a little bigger than your DADUs. So those are about 1,200 square feet. These you can push into the 1,400 to 1,700 square feet on your build. But then you run into other little issues too because now the cost to build is a little higher. And so if you want to keep them as a rental, they're not going to typically pencil out correctly. So there's another scenario in itself. Unless you're selling them, then it's great. Then you're probably going to do a little better because it's just a new product for people that are like, oh, the 1200 is a little tight, but this 1450 square foot with a two-car garage, this one makes sense. But back to new investors in this market.

30:25 Stephen Husted: what is the biggest, what would you, what's the biggest advice you'd give somebody new that's about to jump in and buy their first single family home? I know there's not one piece of advice to give, but what would you put in their ear?

30:37 Alex Bekeza: Not to reinvent the wheel. Like when I got started, I really just copycatted. I had the unfair advantage of having two clients in particular who were rocking and rolling. We're doing a deal or two every month. A year or two goes by. And I have 40, 50 appraisals from these two people in the same one or two zip codes. And so I had this library of data to go off of. So I wasn't doing anything that I didn't have a great sample size of.

31:11 Stephen Husted: And not

31:12 Alex Bekeza: everyone has that fair advantage. But what I would say is you still have the ability to go network at meetups, hear exactly what people are doing, and just try to replicate it.

31:21 Stephen Husted: Definitely, I think that for a newer investor now, jumping in, you brought up something earlier about your team. In the beginning, when I was putting together my team, I wanted people that were experts in whatever part they were doing within that business. So, for example, my lender, I want my lender to be actually doing deals.

31:47 Stephen Husted: I know that my lender that does deals and is running numbers, they're going to give me some insights of what I'm doing. And that's a very big key to have somebody on your team that can kind of fact check some of the information that you're putting in front of. That's a huge one.

32:01 Alex Bekeza: To your point, my GC slash project manager, because oftentimes he's actually just subbing stuff out, but I understand that. And I'm paying him to basically just be my boots on the ground. The reason I love it so much and have so much faith in it is because. I'm also his loan officer. I'm dealing with a guy who's essentially making some money doing project management and property management, but really he's trying to develop his own fix and flip and BRRRR system too, or I shouldn't say trying to, he is.

32:27 Stephen Husted: Yeah, that's smart. Yeah. Yeah. Put the people around you that are super smart. If it's, take away the weakness that you have within because everybody has their strong points when becoming an investor and their weak points. tap into the weak points. When I started buying out in Seattle, I know the numbers game was going to change a little and like how we're putting these developments together. My agent is a CPA. He's a total numbers guy, like backwards and forwards. And I'm like, and that's why I hired him. I didn't want an agent who was like a designer.

33:01 Alex Bekeza: And as you're developing your real estate portfolio and your tax planning becomes that much more important, your CPA better own rentals. My CPA, I actually met, our first relationship was borrower loan officer. I refied a couple of properties for him, kind of found out a little bit more about his business. I was like, man, this guy's got, he's only 37 years old. He's got an $11 million rental portfolio, mainly in Visalia, Tulare, California, where you can actually still kind of pencil rentals, more like straight up the middle SFR rentals. I said, this is the guy I want to work with because he's obviously. intimately in touch with the things that I need to focus on and is going to be able to provide me guidance. What I also like about that is that he's super conservative,

33:47 Alex Bekeza: right? So he knows how to pull all the levers without going over the top.

33:52 Stephen Husted: Yeah, that's smart. That's a big takeaway.

33:55 Alex Bekeza: Yeah, if your CPA and loan officer and GC are also active participants in the same strategy you're partaking in, it's a good idea.

34:04 Stephen Husted: It's a good idea because you're getting a ton of information passed to you to help you navigate what you're doing. That's such a, the biggest part to it all.

34:14 Alex Bekeza: And there's probably people trying to break into real estate right now that are like, maybe have a negative thing in their mind where it's like, I should have started in 2021. You're lucky you did this at that time. Well, you know what I didn't have in 2021?

34:28 Stephen Husted: Claude.

34:29 Alex Bekeza: I didn't have Chad GPT. I didn't have none. You know what I mean? We forget that we were like in the dark ages back then, even though rates were great. We didn't have access to this. It's incredible. I use it on a daily basis. I use it to do sanity checks on what I'm thinking about a deal. You know, I think everything with a grain of salt and review it carefully, but I've just been fascinated with its ability to analyze scopes of work. I can submit a swab of work submitted from the contractor and. It's going to find something tiny in there. It's going to say, hey, this particular line item is worded to be open-ended. I would reach out to them and confirm the exact selection of tile to close end that cost.

35:11 Alex Bekeza: Right? It'll say something like, yeah, depending on the type of tile, budget, no, what type of tile

35:16 Stephen Husted: are we going to use

35:18 Alex Bekeza: to establish that right now? I've also used it to help borrowers in a way that they don't even realize sometimes. I'll give you a good example, man. One. This happened a couple of times in the last few months where we'll do a deal. I don't want to say in the sticks, but just not in a major metro, you know, a secondary tertiary type market. And every now and then you'll see an appraiser check a box on that report. There's a section on every appraisal in residential where it says, is the market stable or declining?

35:45 Alex Bekeza: Okay. Nowadays, when the market's a little soft and especially in certain places, they're more tempted to maybe hit that declining tag. And if they do that. What do you think the lender wants to do? Well, they want to reduce LTV because they're saying, this guy's saying, hey, here's what I think it's worth, but I'm saying things are actually going down. Okay, well, it makes sense. The lender's going to say, okay, we'll do it, but reduce the LTV. Yeah, reduce the risk. Exactly. Red flag. They're going to say reduce the LTV by 5% from whatever the maximum they previously qualified for. But here's where Claude comes in. I say I upload the appraisal.

36:22 Alex Bekeza: Claude. one two three main street just got hit with a declining tag do you think this is substantiated or do you think there's a good argument to mark this market as stable and you know it's not easy it's not easy to dispute appraised values because

36:42 Stephen Husted: the

36:43 Alex Bekeza: appraiser partially because of ego or whatever is probably going to start out that conversation trying to reject what you're doing They're going to be trying to decline it unless they're hit with overwhelming data that they can't dance around. But with this type of discrepancy, Claude just puts together these. Like once or twice it's just said, hey, it is in decline. But a few times now it's said to me like, hey, a lot of the appraiser's comments directly contradict the designation of declining market. Here's why. He says that this and this has gone up. x percent and it just rips it apart and like this is something that we would have all sat there pulling our hair out about a couple years ago struggling and trying to figure out bar would hate me forever instead because i'm often the recipient of whatever emotions are involved in an appraisal of course you are you know i have nothing to do with it except i ordered it but instead clog gives me a chance to either look like a hero and get something done

37:44 Stephen Husted: or at

37:46 Alex Bekeza: the very least show good faith that I went above and beyond to present data to fight for your cause. And then the appraiser has to fire back with just as good of data if it's in fact true. The same thing has happened when we have a property that the appraiser checks as rural rather than suburban. But it's like right on the cusp. It's like I wouldn't have even taken the loan application if I would have told you up front that it's like clearly rural, which either comes with a decline for most lenders or at the very least a very heavy LTP haircut. Claude is amazing for that type of dispute or reconsideration request as well because they'll dive into like easy on the eyes fashion bullet points, all of the different characteristics that would imply a suburban designation.

38:33 Stephen Husted: on Claude are you doing projects and adding the folders for different scenarios like within your business oh

38:40 Alex Bekeza: gosh yeah I mean so one thing I'm glad you asked that because over the years I originally got into business purpose loans because compared to helping out like FHA and first and home buyers and things like that DSCR was just a yes or no situation. I just liked that. I liked that type of interaction. I also liked the type, the borrower profile. Usually it's like hustlers, guys like you, guys like me. I found them more relatable and that it was just about, can I be the get it done guy for them? Can I give them peace of mind that I'm going to tuck this ball into my arm and run it into the end zone for you?

39:14 Stephen Husted: And I

39:15 Alex Bekeza: got really good at, especially with new clients who don't have that relationship with me yet, extracting from them the most minimal information that I need. basically the eight or nine data points like value, rent, taxes, insurance, FICO, to deliver to them a really easy on the eyes set of term options, everything I would need to collect, answer a couple FAQs. You can only imagine how much easier Claude has made that.

39:43 Alex Bekeza: But ultimately, now we're utilizing some of these AI software development tools to, one, allow me to spend my time where it's most valuable, counseling borrowers. prospecting getting your deal from application to clear to close instead of what we all spent so much time in the past doing which is like doing arithmetic for borrowers oh i need to get 10 quotes out today but i gotta bust up this ugly eyesore of a rate sheet and do all these additions for all the little loan level pricing adjustments that are involved if i want this to be accurate and when i'm if for people who don't fully understand what i'm saying

40:20 Alex Bekeza: What loan officers usually have in front of them is this piece of paper with 10 columns this way and 20 the other way. And it's all these little micro adjustments for the FICO tier, the exact DSCR, the LTV, the loan amount, all these different variables.

40:36 Alex Bekeza: So what we've done is we've built this really beautiful, easy on the eyes kind of point of sale system that's not meant to replace me. It's just meant to compliment what I'm really here for. which is advising you. I remember we were sitting on this cool boat party with a bunch of investors and I'm sitting here thinking, oh my God, at this conference, I'm making hundreds of contacts, hundreds of people that they want to or might want to do a deal with me. How am I even going to accommodate all this? I need to have somewhere to send them. It's just built in for them to register the file, get everything they need and get moving.

41:11 Alex Bekeza: It's a long story short, we basically built that.

41:15 Stephen Husted: With lightning speed too, I bet. All you have to do is come up with your, well, about the whole appraisal scenario in Seattle.

41:24 Stephen Husted: I got all the reports and all this stuff. And so I just created a project folder called appraisals in analysis and everything and put them in there, gave it the skill, right? Put some context, loaded up the appraisals, and then let's make sense of all this. It just started spitting out information. And then it went even deeper. I go, we can't keep all four. We got to sell some. And then we're looking at what happens if we sell it all, which was interesting. Selling it all was the worst possible return on every level, on every level. Closing costs, taxes. You name it. Everything that hit. And it went so deep. It went to, hey, if you sell it, you're going to get this. You're going to get tax on this. I know about it.

42:08 Stephen Husted: It broke it all down. Here's the strategy. I'd keep these two, but then I would roll some of the cash of the proceeds into the main house and pay that loan down. So now you qualify more and then move on. It was insane. And some of the things that it puts in front of me, I have to second guess my thought process because it's so much smarter than me. And I just need to understand if it's right. That's another key. It's great that it puts out information. And by the way, those properties I used, this was a year ago. So I was using ChatGPT. Those two deals were underwritten through using ChatGPT. I didn't have time to get agents out and run. I had no time. I did everything in one hour on both properties and were in contract in that time period. That was underwriting, feasibility. Everything. It was off on the main houses, but it was pretty much dead accurate on the new builds.

43:06 Alex Bekeza: Yeah, I mean, it's just going to remove the emotion. The one thing Claude is very good at, almost at a bulletproof level, is just math. You know? So you ask it these types of math-related questions, and it's going to break down everything for you. And like you said, you're going to second-guess it at first, because it may say something that maybe triggers a blind spot that we had.

43:26 Stephen Husted: Yeah, it's cool. I think it's a good, my cohort's going to be starting here real soon, by the way. And I'm going to have you as part of my preferred lender and my directory. So there's going to be three, four of you total, two in Seattle and then two for the Midwest markets. So that's my game plan

43:42 Alex Bekeza: for this. I was at a conference not that long ago where a guy said something funny, old school guy. It was more of a banking lender specific conference, not really a borrower thing. But he goes, you know what? I always tell people, be faithful to your wife. but have two lenders.

44:00 Stephen Husted: That's good. Yeah. There is something to be said about that. I think there's going to be enough business to go around. And I want people to have personalities too. I want people to, I think that's a big, I've used lenders before. I'm like, I would not talk to you on a personal level. Oh yeah. Yeah. Dude, I'm sorry, but that's another rule of mine. If I'm going to have people on my team, I want to enjoy. being able to talk to them on the phone on good days and on bad days.

44:30 Alex Bekeza: Yep, that's right. I can tell you there's plenty of people in my space who are, one, very afraid of the hard conversations, so much so that they'll almost practice some level of avoidance. Or they're so desperate for a check that the second something goes wrong, they kick you to the curb.

44:45 Stephen Husted: Yeah. But,

44:46 Alex Bekeza: yeah, I think I've just gotten good enough up front to identify deals that aren't going to give me an aneurysm. A few weeks in, for both of our sake, for both me and the borrower's sake, I think most people will acknowledge this. They've been in the game long enough, whether it's loan originations or real estate sales or investing or really anything is just really learning the art and skill of knowing when to say no to certain things and not try to chase every deal into the ground. It's the same way that you have to practice patience with your picking which deals you want to invest in. Loan originators do have to. the conscience of how much time are they investing and how much emotional bandwidth do they have for some type of deal where it's funky, it's super hard to do, there's too much on the line, it isn't worth the high likelihood of decline. I like to tell people that up front. And if that scares them away, that's okay. But at least, or if they want to proceed, I'm game. But at least now you know, I told you up front what I think. are concerned. So if they come up later, it's not an enormous surprise.

45:55 Stephen Husted: I don't really care what year it is. There is no such thing as a perfect market. I mean, I can go all the way back to 2008. When I first got my license and I was helping buyers and they're like, do you think that's the right time to buy? And then they would buy and then their house would go down a hundred grand. But now you look back at 2008, those people that bought made so much money in equity and everybody, the sky was falling. But then there was all these investors quietly buying all these properties where I lived and I was watching all these different scenarios, but I wasn't a seasoned investor.

46:28 Stephen Husted: I didn't know anything. But now that I look back. Everything you hear online is not going to get you to where you want to go. At some point, you have to take a little bit of calculated risk and just understand what you're doing. And when you're going to go look for a deal, these are your numbers. It's not, hey, I'm going to buy this deal and I'm going to fingers crossed that it's all going to pencil out and it's going to appreciate and appraise. No, you underwrite it in a way. This is what I'm doing. And it's not emotional. It's calculated. It's by numbers.

47:01 Stephen Husted: Those people will succeed. Others will sit around thinking that they have to wait for this market to signal to them that everything is perfect. And I will tell you, you'll never hear that

47:13 Alex Bekeza: because if

47:15 Stephen Husted: rates went down, you're going to hear there's no inventory and it's too competitive.

47:21 Alex Bekeza: 100%. I was just about to say that. I actually, for how cheap debt was, cool. But would I say take me back to 2021 right now? I don't know if I would, because I don't know if you remember, man. It was much harder to get the ear of any listing agent because they had dumb offers from a bunch of people that were not properly budgeting for the rehab, overestimating the ARV. And sure, a lot of them got away with the sloppy Tactiq ❤️ because things were just pumping so hard. But that time had its own challenges.

47:54 Stephen Husted: It did. It did.

47:56 Alex Bekeza: Now, I'd say now we're much more in a buyer market scenario in many cases because people opting to list today, no one sells just because, like you said earlier. They sell because there's a motivation. If they list that property, you got to realize they're giving up some really cheap debt most likely. And yeah, now I like this environment because it's much more of a dealmaker's environment where I think sellers are going to be more receptive to a numbers-based approach. Whereas before, they didn't have to do nothing. They just had to list it and... wait for the offers to pile in and take the highest one.

48:28 Stephen Husted: Yeah, and it goes back to you definitely have to have a level of patience right now as well. And in this market, it does really come down to the numbers of what you're trying to do. You can't forecast in an appreciating market or wherever you're going through. You need to run the numbers correctly. You got to take the emotion out and block out all that noise. And write offers that make sense for you. And if you get one, I'm so glad that you brought up what you just did. Because that's a perfect example of what's going on. You didn't really know what that opportunity looked like. You knew the signal. It went from 140 to 120. And you were like, that's a big decrease right away. So I'm going to write it here because I'm factoring in X. And then come to find out.

49:19 Stephen Husted: They were fine with it. They just wanted to get out of it. You just don't know until you have to. You got to be a little bit aggressive. Yeah.

49:28 Alex Bekeza: Part of what's going to allow you to be patiently aggressive, if you will, is maybe how I should have answered your question earlier about advice to a first timer is developing a buy box because you have to silence noise. You're going to be in analysis paralysis if you are entertaining the idea of all of these different cool strategies. They're all cool. Short-term rentals are cool. Mid-term rentals are cool. Pad splits, cool. ADUs are cool.

49:52 Stephen Husted: Everything's cool, but

49:54 Alex Bekeza: you got to, you got to pick one. You got to put on blinders like this and to shoot shots at what's in that box.

50:02 Stephen Husted: Yeah, that's great. And everybody that I, a lot of new investors that I have mentored over the years, within a month, they've talked about five different strategies. I'm like, oh yeah, because they're on bigger pockets and they listen to an episode like. Storage units. What's that? I don't have to deal with the tenants and this. And I'm like, okay. And then it's the next week. It's this.

50:25 Stephen Husted: Pick one. You can change your tune down the road. No problem. You can. But if you have five of them going, you're never going to master one

50:35 Alex Bekeza: of them. It's like anything else. I could sit here and I could tell you because I'm licensed to do so. Oh, I could do conventional loans. I could do FHA. I could do VA. I could do... fanny freddy multifamily i can do dscr i can do hard money i can do non-recourse i could do i could say all that but i'm going to become a master of none of them since instead how i built my business is by saying hey if you want dscr one to four year in residential i'm going to be the best in the business and this helps me manage a pipeline of a lot of deals at the same time because they're all the same program too and then the cool thing about my company is let's say I have a repeat DSCR client, but now they want to upgrade their primary or they need to do some other kind of strategy. The cool thing is we've developed a little team, small and mighty team here where the other guys in my office, all they want to do is the hard money or all they want to do is the conventional or all they want to do is the small balance multifamily. So it's kind of cool because they come in, I can start that conversation. I know how to talk about it. And then I can pivot it to somebody who's an absolute black belly in it. If I can leave the new investor with one last thing. Earlier, I talked about the point of sale system or DSCR pricing engine that we've developed over the last couple of years. What I want to stress to the listeners is that it's not just for me to get loan applications and easier and all these things. It's completely anonymous way for you to analyze deals. So most lenders, they'll say, get pricing now. They'll take you through a series of pages where you put a bunch of personal information in there. They'll say, get my rate. And they'll say, thank you for your submission. Our loan analyst will call you. And what that really means is a bunch of us are going to hound you for a week and destroy your phone. We decided to flip the script. So without even giving us your name, number or email, you can go on our website, which we'll put in the show notes.

52:17 Stephen Husted: And you

52:19 Alex Bekeza: can just punch in a couple simple deal things, the price, the rent, the taxes, the insurance, your FICO score. And you're going to get instant actual live pricing with the rate breakdown. So you can see exactly what loan level pricing adjustments apply to your deal. You get all the fees, the P&I, you get the VSCR. You can download a term sheet to send to your private money lender as proof of your exit strategy or to compare with other lenders. My goal, my dream for this is that, yes, it functions as a cool way to funnel in loan apps, but really people just can use it after hours, late night, just to analyze deals because it takes two seconds.

52:54 Stephen Husted: Yeah, smart. That's another big friction point for a new investor. It's like, do I have a good deal in the beginning? And they're hearing it. I went on the Claude and asked it, what are the biggest questions new investors are asking? And it was interesting. It wasn't about cap rate or cash on cash. It was how to download a calculator. That was one. Am I going to get scammed? Why would an agent bring me a deal? If it was a good deal, they would just keep it for themselves.

53:25 Alex Bekeza: That's a funny one.

53:26 Stephen Husted: Yeah. Yeah. Interesting scenarios. And then how to underwrite a deal. And if you can have a tool like this, and we didn't have this years ago, where you can just plug in an address and a purchase price and repair, like what are you going to do on the project and then get a number out? That gives you so much peace of mind.

53:45 Alex Bekeza: Because the rate is actually accurate, right? So you're not just going off of your head like, oh, I heard somebody got 6%. Well, this is what your specific deal actually qualifies for. And it's six and a half or whatever. It's important to know.

53:57 Stephen Husted: Yeah, that's great. Cool. I think we dialed it in today.

54:00 Alex Bekeza: Well, thank you, man. So I could talk to you forever. So

54:03 Stephen Husted: you got to cut me off. I appreciate you jumping on again. I've been thinking about it. And like I said, you're right. I want you in my directory for my new investor students that they can reach out to you. So I think you're a wealth of information. And you brought up a really good point, too. You're actually doing it. There's something to be said about that. That's a big part of this.

54:25 Alex Bekeza: Yeah. And if anyone wants to reach out to me and just chat about DSCR, has any questions or anything, I'm pretty easy to find. I'm the only one with his last name around. So you can look up Alex Bakiza, the Burr Lender on Instagram. You can also check out our site, dscr.investorpropertyloan.com. And just before the show, I created a cool little promo code for your listeners. Use the promo code BREAKTHROUGH and you'll get a little rate discount too. Awesome.

54:54 Stephen Husted: That's great. Yeah, we'll put that all in the show notes for everybody.

54:57 Alex Bekeza: Sweet.

54:58 Stephen Husted: Yeah, it's awesome. All right, Alex, well, you have a good day. Thank you so much for joining today, milling down some of these things we're hearing on the internet.

55:07 Alex Bekeza: My pleasure, my friend. Anytime.

∎ Podcast Outro:

55:09 Stephen Husted: All right, buddy. Have a great day. You too. Thank you for tuning into our show, where we hope you found inspiration and gained valuable insights. If you enjoyed this conversation and want to stay updated on our latest episodes, be sure to subscribe to our podcast and share it with others who might benefit from it. We appreciate your support and look forward to bringing you more candid conversations and breakthrough moments in the future. Until next time, take care and keep exploring new ideas and strategies.