PBBP audio Jan 14 David Wallace [00:00:00] Welcome to the Phoenix Business Brief Podcast. I'm Brian Hyde, and today I'm joined by David Wallace, who is the president of Strive Point Advisors, LLC. David, welcome to the show. Would you take a moment and just tell us a little bit about yourself and about your background? Thanks for having me, Brian. Uh, yes. Um, I. Uh, I'm president of Stride Point Advisors. I've been in the, uh, finance industry since 1993 in various positions. I've been in the C-suite for various companies, um, since about 1998. I got my, got my start at Charles Schwab in the, um, sort of strategic planning group, uh, for Charles Schwab from, uh, 1998 till about 2003, uh, when I moved over to, um, a. Another company, a mortgage company, um, called American Mortgage Network, and I really kind of moved over to that [00:01:00] company, uh, to help them sell themselves. Uh, they were a small public company and, uh, the way our CEO described it, they were a PT boat. Um, you know, sort of traveling around in an ocean with a bunch of, you know, super tankers and that was uncomfortable for them, especially, uh, in that time, 2005. So they embarked upon, uh, trying to sell themselves and you can't imagine the timing of that, that that's, um, could not have been better timing. So I helped them put the book together. And, um, worked with the investment bankers to actually sell the company and we sold it, uh, in a bid process. We had all the big money center banks bid on it. Ultimately sold that company to Wacovia in December of 2005. Um, and then, uh, we ultimately, um, sold it to Wacovia. My boss, who was the CFO [00:02:00] of the public company, did not wanna be part of that. So exit stage left, I became the CFO for the entity, uh, the sub entity for mortgage under Wacovia. Um, and that was my sort of entree into the C-suite for mortgage. And so from there. Uh, I had a series, you know, ultimately the crash happened and then Wells Fargo swallowed up. Wachovia. Um, that was an interesting experience. Um, and then we were the first business they shut down 'cause it was a hundred percent duplication. Um, with Wells Fargo. Um, so then, you know, we put the band back together after that and started up another mortgage company, the whole group. And I was CFO of that company. Um, and so, you know, three or four companies later, uh, after we build them up and sell 'em, build 'em up and sell 'em, this is my fourth company. And this time, um. You know, I'm keeping it real small and we're doing something a little [00:03:00] bit different, um, doing residential mortgages obviously, but we're also doing sort of, um, you know, business lending, doing SBA loans and helping small business raise capital. And I'm also doing sort of advisory services, um, because of my background as a CFO, um, you know, I'm doing some consulting as well. So that's sort of my background. Um, I've got an MBA in finance, undergrad in finance, um, and I also teach, um, I teach, um, finance at Grand Canyon University. Just one class at a time. Not too crazy. So talk to me about, uh, what this shift from being a mortgage banking executive to, to operating as a, a mortgage broker. Um, how, how has that affected you in terms of, uh, you know, uh, your career satisfaction or, or, you know, the, the, the sense of purpose that, that you bring to the job? Yeah, I've always been really good [00:04:00] at interacting with people. Um, and you know, I find inner strength in sort of interacting with others, and I've always been told, uh, certainly early in my career in the, in the sort of early nineties when I first started working, um, I was told by everyone, Hey, you really need to go into sales. And I'm like, yeah, I'm a finance guy. Like, but you can sell and be in finance. Um, so I ignored them and just, um, pursued just being a pure finance guy and, you know, learned a lot about accounting at the same time. So, and that have served, has served me well. Um, so it served definitely adds to my credibility, but I started to have a lot more fun, you know, selling and being on the front lines. Now does that let me escape from all the back office stuff? Absolutely not. I'm also the CFO. I'm the president of the company, um, and I do all the licensing as well. We're real small. [00:05:00] One of, one of the key departures from what I've done in the past is all my previous companies have been full mortgage banks, where we've done all the underwriting, all the post-closing. We're not talking about just a, uh, dipping your toe in the mortgage banking waters. We're talking full hedging, right? Taking down TBA trades. We're going full execution here, right? Um. And I was the, you know, head of capital markets, um, going to the secondary marketing conferences and doing all of that. Um, what I'm doing now is I'm a broker. Okay. I don't want anything to do with underwriting or. Trading or any of that. And because what I found is it's very difficult for the small mortgage banks to compete with the brokers and, you know, I know this more than anyone else because I was a [00:06:00] small, independent mortgage bank trying to compete with the mortgage, uh, brokers, and I couldn't do it. They were killing me on price because you've got these giant, um, wholesale lenders like United Wholesale Mortgage and Rocket, who are just beating off the independent mortgage bankers on price. And so the mortgage brokers, I mean, believe it or not, have a huge advantage on the pricing. So the mortgage brokers can make more money than independent mortgage bankers. So that's why I chose to go this direction, and it's a lot more fun and there's a lot less risk involved. So I'm curious too, the, the pressure, um, what you described before in, in the, especially the executive work that you were doing, um, do you have more or less pressure, you know, professionally, uh, at this point than, than you did at that time? A far less pressure. Like I don't have to go through, um, an audit. Like as a, as a mortgage bank, you have to go through a full audit. [00:07:00] Right. Um, now. Depending on what state you're in and how much volume you do, you have to get a compiled financial statement, which is not an audit. Right? But if you're a mortgage bank, then you have to go through an audit. And also if you're putting loans on your balance sheet, which is the difference between a mortgage bank and a broker, then you are taking on repurchase liability if you underwrite a loan. Then you sell it to somebody else, then they can put the loan back to you, and then you have to buy the loan back. So if you do a $600,000 loan and whatever, they decide they don't like it, they can go back and nitpick on the loan and decide, oh, we didn't like this. And then they can just call you one day and say, you gotta buy this back. You gotta come up with $600,000 in cash to buy it back right now. And that's a lot of pressure. And believe me, I've been there, we've had to come up, we had a, a $2 million [00:08:00] loan that we had to repurchase. Um, it's not a pleasant feeling. So, and I don't have to do that anymore. I'm not underwriting. So that takes a lot less pressure. The pressure, um, re relief is, uh, a lot higher on the broker side than it is on the banking side. It sounds like you have greater flexibility as well. Um, talk to me a little bit about how that, uh, translates, uh, into, um, you know, an advantage for your customers. Yeah. The advantage to the customers is, um, depending on, on what kind of loan it is and what they're trying to do with the loan. I can shop the loan to anybody I want, right? Whoever has special going on, or, you know, some wholesale lenders specialize in certain loan types, right? Whether it be non QM or VA or FHA. You kind of just know who is gonna be better at doing those loans, right? So I, I'll, you know, I know if I get a VA loan, I'm definitely not going to this [00:09:00] lender and I'm probably gonna go over here. Right. Um, and then if it's gonna be a super tricky loan with, you know, difficult income documentation, you don't want to take it over here, you're probably gonna wanna take it over here. 'cause they're very nitpicky over here and not here. So it, it's a definitely advantage to the borrower. Um, because you can take it to the best place and make things easier, and sort of they get the benefit of the best pricing and an easy process. Talk to me a little bit about, uh, what makes Strive Point a better option than, than other brokers out there? Don't be afraid to toot your horn on this one too. Yeah, it's, and you know, I won't toot my own horn, but between myself and, and my partner Brian Taylor. So Brian Taylor's been an originator for 30 years. He's got a variety of options available to him, including, and I hate this term. But it's the industry term that is used. [00:10:00] Um, this loans are called hard money loans, so a lot of times they're very useful. Like if you're, if you're an investor and you want to flip a house as an example, right? Uh, you're gonna have a difficult time getting a qualified mortgage, right? Which is what, you know, Fannie, Freddie, Ginny, the standard loans. But, um, not all brokers have access to these hard money loans. We do, we have those relationships. And also, um, you, you're gonna get the knowledge base, um, that both of us have with my background as A CFO and as originator and his, as an originator of knowing, um, about what your background is on the loan. And having seen everything before, right, nothing is gonna surprise us. Um, the other thing you get with us is, uh, on the business side. Um, you know, I can read a financial statement. I can understand sort of what you're trying to do with your business, and I can go find the [00:11:00] right bank to get funded on the SBA side to help you grow your business, right? Because almost every business needs capital to grow. Um, and so I spend at least 50% of my time helping businesses get debt financing to try and grow their business. Are there any trends that you're seeing right now that, uh, you consider particularly positive? Well, um, you know, taking politics out of the equation. I think the Trump administration has really dedicated themselves to try and lower the cost of housing. Um, and this 200 and whatever, 206 billion or something they've, they've committed to buying in, um, agency bonds. That is a good tiny step. Um, maybe. You know, intermediate step and trying to bring down the cost of these loans. Hadn't haven't really seen it too [00:12:00] much in the pricing, uh, per se, but I'm interested to see what will happen over the next year or two to see how they bring down the cost of pricing. But my whole thing is, and this is what I tell borrowers, um. Don't wait for rates to go down to 3%. In my opinion, and it's not opinion, but this is opinion that is shared among a lot of people. Rates should never have been at 3%. Okay. That was artificial, that was quantitative easing. That was the government getting involved and now our debt is such that they can't do that ever again. So it's not gonna go back there. 5%, 5.5% is an incredibly. Attractive rate. So don't wait around to buy a house until rates go into the low force, because it might never happen. It is a buyer's market right now, so buy the house and let it appreciate Real estate is one of the [00:13:00] best investments you can make over the last 70 years. Um, so if you're gonna wait around for rates to go down to 4%, might never happen. Actually, you sound optimistic in, in terms of, uh, you know, housing. I, I know for, for especially younger generations, generation, uh, um, gen Z and, and Gen Y, uh, they, they seem to, to struggle with the idea that they're ever going to be able to afford a home. Do you see a shift in, in that mentality? I do. I'm, I'm doing a loan right now for, um, you know, a 24-year-old first time home buyer. Um, and. You know, look, they have programs out there that can help. For some home buyers get. Okay, so you put minimal amount down, and the calculus is such that you know if you're paying $3,000 a month in rent, right? So how much are you gonna have to pay to buy your house? So are you going to pay somebody [00:14:00] else's mortgage? Are you gonna pay equity to yourself? That's the question. And how much more is it? Is it $3,400? Is it. 3000 to 3000. Well, it kind of depends on what property you choose, right? And so I can help, I can help first time home buyers come up with the equation that works for them and get them to own a house and stop paying somebody else's mortgage. And that's what I tell my students and that's what I tell first on home buyers. Let's, uh, let's shift over to, uh, small business and, and particularly business lending. Um, uh, I, I'll kind of ask the same sort of thing, uh, for, for those who, who feel like, well, I don't know if there's gonna be a right time to, to to start a new business. Um, what, what would be your advice to them? I. I don't think there's any shortage in, um, businesses starting up. There's, there's opportunities abound. There's nail salons, there's yogurt shops, uh, you name it, there's tons of [00:15:00] businesses and they're all looking for capital, every single one of 'em. Um, uh, and it's the, the, the thing about what I do is. It doesn't have to be some sexy business that's high tech. In fact, I don't look for those businesses. Okay. I just raised, um, $600,000 for a commercial cleaning company, and they were, they were paying $22,000 a month in debt service because they went out and did those, you know, high interest sort of payday type loans to sort of. You know, get the capital they needed to grow their business. And I came, you know, they came to me and said, Hey, can you help me reduce my debt service? And also we need to, we wanna buy two of our competitors. And so I was able to help them buy two companies and re refinance their existing debt. They had 150,000 [00:16:00] of, of this crazy debt that that was just crazy expensive. And I took their debt service from 22,000, I believe it was 22 down to $8,000 a month, and they bought two companies. So they increased their top line in their bottom line performance and reduced their cash flow down from 22 down to about eight. And so, and that's like a huge win for them. Um, and so that, that really kind of changed their lives, honestly. And, um, I'm working with a nail salon right now, so those are, those businesses are all day every day. That's not gonna stop. I don't have to look very far to find businesses like that. Any final thoughts that you would like to add before we wrap things up for today? Um, I would just say, you know, anyone out there who is sort of looking for someone who's gonna be, be reasonable, who is not going to be greedy, and there's a lot of people that are, [00:17:00] um, for lack of a better term, shady. I am not shady. I've been around for a long time, and ethics are very high, um, in my mind. In fact, they're number one in my mind. So I'm just a straight shooter. I'm gonna give you exactly what it is, and, um, if you're looking for someone that can really help you and give you the bottom line on. What you can expect in terms of all things financing, either on the business side or on the residential mortgage side. Then come talk to me again. We are talking with David Wallace. He's the president of Strive Point Advisors, LLC. David, thank you for being our guest on the Phoenix Business Brief Podcast. Thanks, Brian. Thanks for having me.