Episode 2: Financial Freedom Series Podcast

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Welcome to the second episode of the Financial Freedom Series!

In this episode, your hosts Victor Lagos and Andrew Bean dive into the topic on Loan Application
Applying for a loan can be a daunting task, requiring meticulous organization and submission of various documents to the broker.
Thankfully, there are tools available to simplify the process. In order to secure a loan, the bank needs to establish your identity
and understand your income and liabilities. Let's delve into the details of the documents you may need to provide and explore the tools
 that can streamline this often challenging journey.

Welcome to the second episode of the Financial Freedom Series!

In this episode, your hosts Victor Lagos and Andrew Bean dive into the topic on Loan Application
Applying for a loan can be a daunting task, requiring meticulous organization and submission of various documents to the broker.
Thankfully, there are tools available to simplify the process. In order to secure a loan, the bank needs to establish your identity
and understand your income and liabilities. Let's delve into the details of the documents you may need to provide and explore the tools
that can streamline this often challenging journey.

Grab your FREE Copy of the 5 Benefits of Investing in Commercial Property Link: https://lnkd.in/gNUd3Pjq
Victor Lagos - Lagos Financial
Ph: 0450 313 606
Email: [e-mail]
Website: www.lagosfinancial.com.au
LinkedIn:https://lnkd.in/g2dMiCdr
Get your ACCESS to the Complete Suite of Finance Calculators Link: https://lnkd.in/gtMpDEin
Book your FREE Consultation with Victor Lagos Today
Link: https://lnkd.in/gvqHpcHB
TIMELY BILLS APP
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https://lnkd.in/enMJBaQ
SHOW CREATED BY THE COMMERCIAL PROPERTY SHOW NETWORK

HOSTED BY: Andrew Bean
Ph: 0410 694 633
Email: [e-mail]
Website: www.andrewbean.com.au
LinkedIn: https://lnkd.in/gsMS5zjq
Instagram: @andrewbean28
FOLLOW THE COMMERCIAL PROPERTY SHOW NETWORK ON
COMMERCIAL PROPERTY SHOW WEBSITE
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FACEBOOK GROUP – Commercial Property Show Community
https://lnkd.in/gwhTtKHg

#LoanApplicationMadeEasy#DocumentPreparation#FinancialJourney#OrganizedFinances#StreamlinedLoanProcess#BankingDocuments#SimplifyingLoan
s #FinancialTools#IdentityVerification#IncomeProof#LiabilityAssessment#SmoothApplicationProcess

What is Debt to Financial Freedom?

Welcome to the Debt Financial Freedom Podcast. Everyone loves the benefits of money, but so many of us avoid the hard truths about saving and investing. We wrongly assume we don’t have enough time, capital or knowledge to be able to get to the point of having passive income streams, savings, or investments.The things we really need to know about money aren’t taught in schools. Spending less than you earn, maximising your income, budgeting, taxes, mortgages, investments and passive income - if you didn’t learn these things from your family, then you’re probably like most people who rely on credit cards, buy now, pay later and overdrafts. And then when you want to invest or buy property you will be wondering why you can’t get approval.But there is no judgment from me here - I was in exactly the same situation! Huge debt, poor financial habits and no assets to my name. Step by step I turned my situation around and now, as a certified mortgage broker for 16 years with several investment properties in my name, I’m here to help you go from debt to financial freedom. Because if I can do it, you can too.In this podcast, I will share tips, insights and strategies from my own journey and experience, as well as my clients and guest experts, who share my values and mission to help others create financial freedom. My goal in this podcast is to share raw, honest, transparent, and helpful stories that you can relate to, and that will inspire you to take control of your finances. The only ‘good’ debt is debt that brings you closer to financial freedom and I will show you exactly how to achieve this. Everything shared by me and my guests in this podcast is general in nature, and for education purposes only. None of your personal objectives, financial situation, or needs have been taken into consideration. I highly recommend you seek personal, financial, legal, taxation, and credit advice before you take action on what you heard on this podcast.

Andrew Bean: Welcome to the
Financial Freedom series. My

name is Andrew bean and I'm here
with top mortgage broker and

financial expert Victor Lagos,
founder of Lagos. Financial How

are you mate?

Victor Lagos: Good, Andrew. Man,
how are you?

Andrew Bean: I'm fantastic,
buddy. Man, we had such an

awesome response. From the first
episode, I actually got a

response from a listener, saying
that us talking about saving,

got them excited about saving
again. So big win big tick in

that box.

Victor Lagos: It's good to hear
not many people will get excited

about saving. So that's it.

Andrew Bean: It's hard to get
excited excited about savings.

But I guess when you can see
your like, financial future

ahead of you. And you can see
little like, you know,

roadblocks there. It makes it
more exciting.

Victor Lagos: Yeah, just the
little wins that you get along

the way, right? Yeah, that's it.

Andrew Bean: Alright, so today
in this episode, we're going to

be talking about how you prepare
yourself to get a loan as in the

documentation that you need.

Because getting all the
documents for a loan can be

very, very daunting and a big
pain in the ass. So make.

So might, it's an Omani toss to
get the for the process of

getting a loan? Can you just
share with us like the

information that you usually
require or usually requests from

your clients?

Victor Lagos: Yeah, look. So
it's a daunting thing, it's

probably one of the hardest
things for a customer to do is

to get all the documents in
order, and then send them all to

the to the broker to get the
loan application going. And

there are tools now that you
know, I've got access to that

make it a little bit easier.

But, you know, if you just think
about, you know, in order to

apply for a loan, the bank needs
to know who you are. So first

and foremost, they're going to
have to see your 100 points of

ID, driver's license, passport,
if you don't have if it's not

expired, you sorry, if it is
expired, you need to get

probably a Medicare as well, or
even a birth certificate. If

you've been married, or change
of name, and you haven't swapped

it over, you need to provide a
marriage certificate as well. So

there's that part. And then the
next one is understanding your

income. So the bank obviously
wants to understand how much

you're earning. If you're if
your PAYG a pay slip should be

enough or usually to most recent
payslips. And depending on when

you started the job, you might
need to also provide an

employment contract to show that
that income that you that you're

receiving is in line with how
much your base salary is. So for

example, if you just started in
March, and we're now in April,

well, one payslips No, look,
it's going to look a bit funny

if you say you started like last
year, right? So they won't

actually see that it matches up
based on your start date. So

that's why you might need
employment contract. And then if

you're earning bonuses, or
commissions, then we're going to

have to provide evidence of like
the year before. So like an

income tax ready statement, or
PAYG summary that you can

download from the ATO portal. So
then that's if you PAYG. So this

is this is a long list, right?

But more in detail, so say
you're self employed. If you're

a sole trader, you're going to
need just your individual tax

return. And a lot of people get
this this wrong, they download

it from the ATO portal, they
just get like five pages they

can download from there are
sometimes people think it's the

notice of assessment. But that's
you have to provide them that

assessment, as well as the
individual tax return, and

individual texture and can be
like 10 pages. And that's per

per borrower, right. So if
there's two of you that you need

both of them for the last two
financial years, to FY 22, and

fy 21. So that's for tax returns
in providing for notice of

assessments. And then if you're,
if you have a company or a

trust, then you also need to
provide the last two years of

company tax returns, or trust
tax returns. And then there's

also financial statements, that
is the profit and loss statement

or a balance sheet. So then you
need to get that for the last

two years. So that's the income
part. And then we want to

obviously look at your your
liabilities. So then if you've

got multiple properties, can
imagine there's a lot of

statements and that you need to
provide. And usually, a bank

will want to see if they're
going to refinance the debt,

they're going to want to see the
last six months worth. And what

I mentioned earlier that there's
tools that you can use, well,

that's usually to retrieve bank
statements. Because say you've

got five properties and you've
gone across to five different

banks. You now need to get the
last six months if you're going

to refinance in the last six
months of transaction history

statements that shows the
balance, interest rate there

payments for all of them. And
depending on where you are in

the year, they may not have
produced that statement yet. So

then you actually have to
download a transaction history

that covers, you know, the
period between, say now

backwards six months, and you
might get a statement. So we're

in April. So you might get a
statement until December 2022.

What about the last four month?

We need that too? So then, you
know, some people just download

a CSV or spreadsheet and the
transaction and say, Can I use

this? I'm like, Well, if you can
change it, then no, because

obviously, the bank wants to
make sure that your payments are

on time. And if you can change
the spreadsheet and say, Look, I

made the payment on time, well,
they're gonna want to see a PDF,

an editable version. So it's
sometimes a bit tricky to

navigate. When there's multiple
banks, there is a tool that I

use, it's called bank
statements.com. That a year,

where you basically just enter
your bank credentials, and you

just select the bank that you
with, it's usually available for

most banks, some credit unions
aren't included. And you just

say select Yep. And it's it's
bank encrypted, so it doesn't

get stored anywhere. And it just
gets sent to me. I have a

subscription model for that. So
that covers that. You want to

keep going?

Andrew Bean: No, I keep going. I
want to hear all of it. This is

why it's such a pain in the ass.

Keep going. Okay, so if

Victor Lagos: you know, we're
talking, you know, generally

speaking here. So if you're
buying something, you're also

going to need to provide
evidence of a deposit. Where's

that coming from? Have you saved
it up? Have you got any multiple

accounts? Have you got some
shares that you're going to

liquidate? Or are you getting
gifts from family. So if you're

getting, you know, the Bank of
mom and dad coming coming in,

and they're going to have to
write up a declaration or a

letter that says they're gifting
you those funds and then non

refundable. If you're going to
borrow the money, because it

does happen. Sometimes people
will lend you the money, then it

needs to stipulate what those
terms are. So if you're making

repayments over a three year
period, or a five year, whatever

it is, it needs to say that,
because then that commitment, or

that monthly repayment needs to
be put into the serviceability

calculator.

Andrew Bean: And also there
because if you're borrowing it,

they're going to look at you as
100% 100% financed. So they

don't You don't have any skin in
the game. And and it won't look

good to them. Right?

Victor Lagos: Yeah, well, it
depends on the end LVR. Because,

you know, to be honest with you,
they don't, they don't care too

much about not having skin in
the game, as long as you can

come up the cash. So, you know,
that's why people can take money

from equity. Right, use that as
a deposit. Yeah, so technically,

that's not your skin, it's your
equity, right. But it's coming

from a property that you bought,
maybe a lot less than than what

you evaluate for now. So then in
that instance, you would provide

a statement, or a, even a loan
approval. So I've got deals

approved where I provide the
conditional or formal loan

approval from another bank to
say, X amount is, you know,

extra, let's equity we're going
to use as a deposit. So we

provide that. And then if if it
gets a little bit more like

safe, commercially orientated,
they're going to want to see a

copy of the lease. And it's
usually they want to see it

registered as well. They're
going to want to see the trust

deed. So if you bought it in a
in an SPV, which is known as a

special purpose vehicle, or a
trust or a company to own the

property, they're going to want
to see the trust deed, and

usually want that to be
certified by a JP as well. And

then on top of that, they want
to see the last 12 months of a

integrated, integrated client
account. So this is something

that your accountant can
actually download from the ATO

portal that they use, and an
integrated tax account as well,

which shows that you're up to
date with the taxes. And then,

of course, you know, we talked
about in the first episode about

your transactional account. So
occasionally, we'll have to

provide evidence from your main
transactional account. This is

where your pay goes to this
where you spend your money from,

but it's not always required. I
personally try and avoid it if I

can. Because I don't want to
spend so much time highlighting

every single expense over the
last three to six months, and

then questioning you, you know,
did you is this an ongoing

expense? Or was it a one off?

It's just it's very time
consuming. And banks don't want

to do it either. To be honest,
so the less less is more

sometimes.

Andrew Bean: Okay, so that
obviously that big monster

shopping list that you just gave
us there, that was like worst

case scenario, if you're, you
know, PAYG and also got your own

business or something like that,
like it's like, that's not the

usual what's, what's an average
client need? Like, usually it's

just if they're, if they're P
PAYG. You know, worker, they've

got to deposit what's the bare
minimum that you would usually

get from them

Victor Lagos: PAYG. Two most
recent payslips. Yep, bank

statement last three months
showing how much they've got

available for the deposit. And
Id, that's it.

Andrew Bean: So but you'll have
them fill out some kind of a

fact, fact fine as well, though,
with their expenses and things

like that, right?

Victor Lagos: Oh, of course,
yeah. So we're just talking

about supporting documents. So
the fact find is, I have an

electronic portal that I use. So
rather than customers, you know,

printing out a PDF, and then
filling out by hand or needing,

you know, W professional to edit
it on the computer, it's an

online secure portal. So they
get a unique code, they get to

log in fill out on their own
time. And then that's where they

complete their expenses. And you
know, their address history,

their employment history, their
assets, their liabilities, you

know, a lot of liability stuff I
can fill out for them based on

the statements that they give
me. But of course, I'm not going

to know their assets, like, how
much stupid do they have how

much savings unless they give me
the statement, you know, car

values and things like that
property values, I can get,

obviously audit valuations and
find out what the estimated

value is. But that's a good way
of doing it, they fill it out on

the portal. And then at the end,
they upload the documents

customized to them. So I
mentioned in a big list, based

on if someone's self employed,
or if there's a trust, but if

they're PAYG, I'm not gonna ask
for that stuff. You know, if

they are self employed, I want
to know, what are the companies

that they trade under? And I'm
gonna ask, you know, the

financial statements for each of
those entities?

Andrew Bean: Yeah, because it's
like, it's actually quite

daunting, you know, trying to
get finance sometimes,

especially if you're not doing
it through a mortgage broker.

Because you do a lot of the
legwork for people as well, your

customers. So like, you know,
you'll get a list a shopping

list from the bank, or whoever
it is, and then they're like,

Oh, we also need this, this,
this and this. And like, it's

happened to me a few times where
like, you're like, geez, I don't

think I have any more documents
to give you I've just, you've

got everything. There's
absolutely no way but they're

like, oh, no, we need you to do
a 12 month forecast for the

first use cash flow on this
thing. And like, oh, my god,

yeah, this is getting
ridiculous. So it's for a

business loan. So yeah,

Victor Lagos: I was gonna say
forecasting is usually if, if

you're doing commercial loan,
yeah, which can be beneficial. I

did one recently for for
customer that was buying a farm.

And he didn't have enough income
to service the debt. It's a

vacant land, right? So but he
put together a cash flow

forecast of, you know, buying
cattle, and, you know, whatever

the costs are to feed the cattle
and, and whatnot. And then the

bank used that income to service
the future debt. And he got the

loan. So you can't do that in
residential, that won't go off

projected income.

Andrew Bean: Yeah, that's right.

I mean, realistically, though,
like, a forecast is just a

forecast is never correct. Like,
it's, it's never correct. Like,

there's no way you can just
forecast out, you know, how much

you're going to like, especially
if it's like a service business

or like, you know, a business
where there's some kind of

churn, like to be able to
predict the churn unless you

already have a current site
operating that you can use as a

model. If you're going straight
into it from you know, not

knowing anything about like, the
actual acquisition of the

customer, how much is that going
to cost? It's really hard to do

a proper forecast, like the
banks come back to me like, Oh,

you've listed this and this is,
what about this? And like, well,

I feel like saying, like, look,
it's just a forecast. Like,

there's, there's absolutely no
way it'll be like this, like,

this is just what I think it
will be. But it's absolutely no

way it will be like this, and I
hope the bank doesn't hear this

Victor Lagos: thing, like you're
asking them to fork out money,

right? To help you devise
something, so the more accurate

you can be, and the more
detailed you can be, the more it

looks like you know what you're
talking about. If it's very

generic and basic, and you're
asking to do a business venture

that you don't have experience
doing, it's very unlikely

they're gonna lend you that
money. But if you've if you've

got history, doing something
similar, or your partner with

someone that has, and they can
plug in numbers that are

relatively realistic compared
to, you know, a similar business

operating in the past, then
yeah, you're more likely to, you

know, to get it approved, you
got to remember that banks have

specialists in certain
industries. So they know how to

benchmark. They know what to
compare it to. So if you saying

your expenses are going to be
XML, I imagine it's going to be

XML, and they they have all
these other customers on their

books that don't have those
margins and have much higher

expenses. Well, you know, who's,
who's the one calling the shots?

Andrew Bean: Yeah, well, it's,
it seems that not many banks

understand self storage. So
that's where I'm coming from,

you know, they just they,
there's not enough, you know,

exposure to that industry or
something like that. They just

don't understand it well, so
they don't understand something

they run away from it. So it's,
it's, it is difficult to get

financing on self storage.

Victor Lagos: Yeah, definitely.

Yeah, for that exact reason. And
you got multiple leases as well,

you know, like you said, you got
done like the month leases

dynamic pricing?

Andrew Bean: Yeah, it's
difficult to really understand

because you're gonna be trying
to push the rates as hard as

possible. But then you might go
too far. And then you have to

dial it back a bit. Like, it's a
very, very dynamic cash flow, as

you just said, like, like an
airline, you know, like, prices

are all different on seats on
the plane. So it's, it is hard

to predict, you know, a proper
good, you know, cash flow. If

you really want to be, you know,
to the dollar, which you can. So

I said, like a forecast, I can
forecast anything you want I can

I can tell you to, like, I can
sit on my heart, I just want I

think it'll be, but I'm pretty
much guaranteeing you or won't

be?

Victor Lagos: Yep. Well, it all
comes down to the risk that

you're you're taking on? And
what risk are you passing out to

the bank? Because if you don't
get that rent that you think

you're going to receive, based
on your projections or your

forecast, then how are you going
to cover the repayment? That's

the thing you got to consider.

And if you've got enough surplus
coming out from your other

income streams, well, that's
also mitigant. So you can

provide to the bank and say,
Well, you know, that can service

the debt if the rent doesn't
meet that, you know, estimate?

Andrew Bean: Yeah, 100%. I mean,
because this is, I'm getting

bank financing for a raw site.

So there's no business there at
the moment. It's just a raw

site, like a development. So
that's why it's, it's, they're

more like, Okay, what's it going
to be? Can you forecast this, I

can't say this is what it is,
I'm gonna start saying this is,

you know, this, I'm saying, from
the demand there, from how many

units I can put on the actual
site, this is what I should be

able to get. And then there's
also an aspect like, you know,

caravan storage and boat
storage. So it's like, it's,

it's very unpredictable, I can't
predict how many people are

going to want to, you know,
store their boat or caravan. So

it's, it's super hard to predict
those kinds of things for the

banks. Well, this is where your
CPE data comes in. Right? Well,

so unfortunately, CPE data is
only retail, office and

industrial. So I can give you,
you know, a great idea on

industrial like being that self
storage is part of the

industrial family. But in terms
of the market research that has

to be done on a, like a base
base by base basis, like, you

know, case by case basis, where,
you know, the demand student

research study is literally
like, has to be very current.

Otherwise, you know, you could
be looking back like 12 months,

and it's not really current,
because the markets can change

so much, which we're seeing now
is self storage, there's like,

usually right and all that for
the last two years, it's been

running at a very, very high
occupancy, which is not normal,

like 100% 98% occupancy,
unusually, on average, self

storage runs at about 81 to 85%.

And that's a good very good
business. So things are kind of

changing now, where, obviously,
money is harder and people have

had in an inflationary
environment, so people are

finding it harder to pay bills.

Yeah, for sure. That's why we
started this series. That's it,

man. So in terms of like, using
your service, mate, I just

wanted to kind of understand,
when would you say was the best

time to engage you? Is it when
we already have a property that

we've already had an offer
accepted? Or can you help us

with understanding, like, our
actual capacity, what we can

borrow, when should we engage
you prior or after a contract is

signed or accepted?

Victor Lagos: sooner, the
better. So if you've got an

interest in buying a commercial
property, and even a

residential, but say it's
commercial for because of your

listeners, it's not as easy to
work out your borrowing

capacity, compared to
residential property, because of

the you know, the the rent that
you're going to receive, right?

What sort of yields you're going
to put in there, the terms of

the lease, and where's the
deposit coming from? Nine times

out of 10 people don't have
access to the cash, they want to

actually refinance, or extract
the equity from their

residential portfolio. So then
you need to work out, well, I

need to work out for them.

What's that going to look like?

What's the interest rate going
to look like? How much equity

can they actually tap into? And
where's the rest of the money

coming from, if that's all the
money that can get and it's not

just an exercise of borrowing
capacity, it's also who's going

to give you the highest
valuation on your properties to

get you the most equity, which
will then translate into a

larger contribution and then
translate to potentially a

larger purchase price. So then I
put all those numbers in you

know, I put it into you know,
commercial property

serviceability calculator,
residential for the for or the

for the equity or the
valuations. And then I send out

a basically a funding worksheet,
which shows the maximum price

that can buy up to all the costs
involved. And what's the loan

amount, and then I even put an
estimated ROI. All right,

assuming, say, a 6%. Net yield,
which is, you know, somewhat

conservative. And I even put in,
you know, a buyer's agent fee.

And if they want to use a
commercial buyer's agent as

well. So there's no surprises,
right? With residential, you

know, you can get a loan with no
fees and bank covers evaluation.

All you pay is basically title
registration fees. Whereas

commercial, when you have to pay
for the valuation upfront,

right, you definitely want to do
building rapport. There's lender

application fees, or
establishment fees, and that

ranges. And then, of course, I
mentioned the buyer's agent. So

all these costs, you wouldn't
have or think about. So that's

where I come in, I work out the
numbers, and then based on that,

you can start working toward
finding the right property. And

then, you know, there's no pre
approval as such, because it's

really comes down to the
property, we might put an

estimate for, say, 6%. Net
yield. And then you go and find

something, it's only 5%. But you
really like it, all of a sudden

that pre approval, if we had one
doesn't count anymore. So we

need to rerun the numbers. Yep.

And then the equity, because the
rates are moving, we need to

sort of look at what are the
interest rates on that day. And

then obviously, let's look at it
next few months, and then redo

the numbers. But the good thing
about commercial property is,

you can usually put a clause in
your contract that says it's

subject to finance, or give you
a finance clause, as well as the

due diligence clause. So gives
you time to actually get out of

the contract, if you need to.

Residential, you know, people,
they waive the cooling off

period, and then they ended up
committing to a contract and

they running around trying to
get the finance. With

commercial. It's a high risk
game. You don't want to do that.

Andrew Bean: Yes, right. So if
you guys haven't checked out

Victor's website, he does have a
really, really awesome suite of

calculators that he's talking
about, I think you'd probably

use your own more, more detailed
calculators as well. But you

have a really cool section on
your website where you can play

with all the numbers in lots of
different calculators to see

your serviceability and things
like that.

Victor Lagos: Yes, definitely
helpful, especially for stamp

duty. Because different states
have got different stamp duty.

Yeah, and for commercial
property, and in correct me if

I'm wrong, South Australia, and
Canberra, there's no stamp duty,

zero stamp duty.

Andrew Bean: It's a beautiful
thing.

Victor Lagos: Yeah. That's the
only commercial not residential,

sir. Yeah, that's right. So, of
course, if you're going to buy

then, you know, you're very hell
bent on buying these areas. And

we can run the numbers there, if
you don't have as much cash.

Andrew Bean: Yeah, and I don't
know if people actively know

this. But if you do engage
Victor, early on in your in your

game, he actually like mortgage
brokers don't charge anything

until they actually get you a
loan. So I'm not trying to say

go and get Victor to do stuff
for free. But he will do it for

free until he gets you alone.

Victor Lagos: Yeah, it's, it can
be a bit of work, of course.

It's important work. Yeah, it's
important to work with the right

people. So, you know, if the
numbers stack up, and you know,

we gel well together, you know
that we were the right fit, then

it's just a matter of staying in
contact. And when the time is

right, when it's time to
actually buy the right property?

Yes, I'll get paid when the loan
settles, usually a month after.

So from initial conversation and
running numbers, you know, for

me, payday may not be for, you
know, six months?

Andrew Bean: Yeah, it's a long
time to wait. So do you? Are you

selective with your clients?

There's a selection process here
I'm hearing. Well, it all

Victor Lagos: comes down to if
you qualify or not. So I try to

help anyone I speak to, and I'll
be frank with, with my customers

or potential customers that if
if they don't service the debt,

or if their idea of what's
possible, versus what actually

is possible is the big
disparity, I'll send them the

numbers of what is and if it's
not, I'll just tell them, Look,

you're not in a position to buy
property right now. You need

more income, or you need a
larger deposit. And I'll show

them if you were to achieve your
goal, which is to say buy, you

know, 800,000 other commercial
property, this is what you need.

So then, you know, when it comes
to saving, and you know, putting

money aside or selling
residential property first, at

least they have a game plan,
right, what they need, what they

need to do to achieve that
particular goal. But I won't

just send someone away because,
you know, they're not earning

enough or whatnot.

Andrew Bean: Yeah, fair enough.

And I think one of the best
things about going through a

mortgage broker to is not only
that it doesn't doesn't cost you

any money straight away. But
they really are a guiding hand

for you. And they do a lot of
the legwork, like you know, your

fact find you transfer all that
information into the like banks,

application forms, don't you
don't give it back to the client

to do that themselves.

Victor Lagos: Yeah, exactly. So
they fill out their part. And

then I, you know, I work with
those with those data points,

and then that then trends, maps
across into another platform,

which then allows me to go to
multiple banks. So we might go

to one. But for whatever reason,
that bank, you know, doesn't

want to prove the loan, you can
easily Cloner or duplicate that

same data, and then get another
lender application form. So you

don't have to constantly, you
know, provide the same data over

and over. For commercial stuff,
it depends on the lender, some

don't have the online portal
stuff set up. So it's still a

manual application. But I tried
to fill that out for my

customers, you know, my support
team will, will do that, they'll

get data from the fact fine, put
it onto the application form

correctly, and send it out to
the customer sign. And I usually

try to get it signed by esign,
if possible, as well, commercial

sometimes has to be printed with
signature, but you know, where I

can get it signed
electronically, it saves

everyone a lot of time. Yeah. So

Andrew Bean: realistically, if
you don't want to be as hands

on, it's a no brainer to
actually go through a mortgage

broker, because it's one doesn't
cost you anything. And two, they

make it easier for you three,
they actually give you a helping

hand assessing you and making
sure that you are qualified to

do what you want to do. So
there's really no reason to like

go straight to the bank. Because
if you're going straight to the

bank, you're just anyone walking
to the door, and you're getting

the, you know, basic product
that everyone can get. But you

know, mortgage brokers like
Victor have access to the, you

know, best lending products that
you might not know about, you

know, he has access to different
things that are, you know,

potentially not available to the
walking, you know, customers,

and he can go to any single
bank, you know, not just one

bank that you've been banking
with for like, you know, the

last 20 years?

Victor Lagos: Yeah, I think more
and more people are realizing

the value that a broker can
bring heaps of value. Yeah, I

mean, it's, to me, it's a no
brainer, like, if I, you know,

every time I've gotten a loan,
I've gone through a mortgage

broker, even before as a
mortgage broker. Actually,

that's a lie, I did do it
directly, once because I worked

at the bank, and I got staff
pricing, different story. But

the main reason is, you're
right, you're having access to

multiple lenders, and
specifically, the changing

policies. So banks are always
changing their policies, like

every day, there's some email
coming out, you know, we've,

we've come up with a new self
employed policy. Now, we don't

need this much documents. Now we
need more documents, you know,

we've got a special on this
interest rate, or, you know,

we're waiving fees here. It's so
it's always changing. So every

customer has got a unique, you
know, situation. You know, it's

about understanding their
situation, and what they're

trying to achieve. And then
selecting, you know, the top

three lenders that fit that
objective, if they're going into

one bank, by themselves, and
they share their entire

financial position, that bank
can only present options that

that bank offers, right, just
maybe two products, or interest

only, or principal and interest,
basically, interest rates,

policy, how much they can
borrow. It's all limited to

whatever that one bank can
offer. So if you go and shop

that around, and you go to
multiple banks yourself, you're

doing all the legwork that I
would do usually as a broker.

But a lot of the time, you don't
know this, but the bank will

actually put an application
forward before they give you

some sort of indicative pricing.

So they're not going to give you
an interest rate and fees, until

they've actually got you to
somewhat commit. And then what

happens is, you're actually
putting an imprint on your

credit file. And if you do that
few times, in a short amount of

time, your credit, credit score
goes down. And now it gets

harder to get finance approved.

You're gonna happen to a client
recently, he didn't actually

realize that his his missus had
actually been applying for a few

different loans. And his credit
critical went down. And we

weren't able to get the finance,
unfortunately, but we're gonna

have to wait. You know, credit
scores improve over time. So

we're just gonna have to wait a
few months and go again.

Andrew Bean: Yeah, fair enough.

So mate, how long are you giving
the clients to actually get

lending? Like, what are you
saying to them? Okay, on day

one, we've got this, how long do
you think this cycle lending

process takes these days?

Victor Lagos: So we talked about
how much documents you have to

gather. Right? So my advice
would be to start getting all

that documents compiled in a
folder like a Dropbox or Google

Drive Have, so that when you are
ready to apply, you know, it's

very easy drag and drop. That's
probably the slowest process,

I'd say, banks, depending if
it's residential or commercial,

if it's a big bank, smaller
lender, second tier, etc, they

all have different turnaround
times, document requirements are

fairly similar. But let's just
say you have all your documents

lined up your ducks in a row,
you provide them to me, you fill

out your fact fine. I submit
that to a bank or lender, if

it's a fast bank, I can usually
if it's residential, and get

approval within 24 to 48 hours
with one bank, if it's a bank

that you know, was offering a
really hot rate, you know, cash

back incentives for refinance,
etc. You might wait two weeks

before you get you hear back. If
it's residential, we can do

automated valuations to save
time, depending on how, how much

that property is worth. So you
don't even need to send a value

out to inspect. But if it's
commercial, that's another game.

There's more documents to come
up with. There's probably a bit

more to and fro as well. Because
of this. There's another banker

involved asking questions, it's
not just straight to the bank or

to the credit team. And
valuations, they take a long

time for commercial valuations,
they're the more expensive, the

more in depth long form. And
depending where the property is

located, and how big how busy
the market is, and the values

are, you know, they can take
from anywhere from five days to

you know, a month before
evaluation is complete.

Andrew Bean: So, how long a
total? Would you say? How long

you total? You say to clients?

Victor Lagos: Again, it depends.

So I usually would say, from
start to finish

Andrew Bean: six weeks? Well,
it's still pretty quick. I mean,

realistically, to get financing
six weeks, I would say that's

actually like pretty good. You
know, it's it does take a long

time when you need all these
documents. And then because each

document request, it could take
you a couple of days to get back

to them. So then there's a week
gone pretty much, and it just

rolls on and rolls on. It's,
it's a real big pain in the ass.

Victor Lagos: Yeah, can delay
when you have to ask for more

and more documents, I really try
my best to get everything up

front and make it easier for the
bank to approve the loan.

Because I said to you earlier, I
used to work at Macquarie Bank,

and I worked in credit. So I
meant that I was approving the

loans. So I knew what to look
for. And I know from experience,

it's not the best when you have
to go back to a broker and say,

Hey, you missed this, you missed
that you missed that you didn't

do this properly, you didn't
tick that box, you forgot this

form, etc. That creates lag,
right, not just for the

obviously the customers taking
for as long for them, brokers

not getting a great experience.

And for me, when I was in
credit, I don't really like that

broker as much anymore, right?

Because they've just made my job
harder. But a broker that sends

me everything that I need up
front ticks, all the right

boxes, provides all the forms.

And just lets me go tick, tick,
tick approve next, I'm happy

because that's what a credit
person looks for. They don't

don't get emotionally involved
in the deal. They can't, right

then look at the customer's Oh,
they're buying their dream home

or they're buying, you know,
property that's going to create

financial freedom for them. No,
they just look at do all the,

you know, all the documents
provided that we asked for that

we need? Are there comments to
cover off certain things that

are red flags? Are there any
special approvals that we've got

from someone higher credit, you
know, all of that. So I tried to

cover all that off. So that way,
by the time they pick it up,

they can just say, tick, tick,
tick, approve. And then it goes

to the next person who sits in
the bank, there's a settlement

person or a document preparation
person. So the whole team that

does that, right? Sends about
customer sign, then we start

processing the settlement.

Right. So then when I said six
weeks, that can be end to end,

right. That's that's settlement,
right? That's when money is

exchanged, and you own the
property. Right? If you're

buying something in Queensland,
usually it's like a 30 day

settlement. So we want to get
that approval as quickly as

possible. So you can meet the
deadline for settlement.

Andrew Bean: Yeah, and are you
seeing a lot of contracts get

pushed out now, because I've
I've been speaking obviously to

the banks a few times on a few
different deals. And they've

been telling me that it's
actually the valuation that

they're having problems with
where the value is, we'll say

they can do it on this date. And
then they can't get to the site.

And sometimes it's even like,
you know, four weeks until they

can actually get to the site to
even start the valuation. And

then obviously, evaluation on a
commercial property or self

storage facility, like it takes
a long time, especially a self

storage facility. So that could
be another week and a half of

just the reporting on it. So
you're looking at like already a

five and a half week process
just to get a valuation back to

the bank so they can even look
at the fire. Oh, yeah, it

Victor Lagos: depends on the
complexity of the property. And

your storage isn't a simple one.

And it's gonna take the valuer
much longer to prepare the

report, do the research to
actually come up with a figure

and provide all the data they
need to in the actual report

itself. So getting access to the
property is one thing and then

doing the report is another. So
I am seeing that more and more

where we're having to ask for
finance clause extensions for

that exact reason. You know,
usually, if you go through,

like, if you're communicating
with the selling agent, well,

and you're transparent, they
know you're getting finance,

it's not a surprise to them,
they're well aware that that's

what's happening in the market.

So they then need to communicate
that to the vendor, to get the

okay to extend it. But there are
some sellers that aren't going

to want to keep extending it.

And, you know, if that happens,
you know, where, where are we

at? What are my options? Do we
go to another value, that's got

a faster turnaround time, that's
going to charge more. So you win

the property, because I always
get quotes, you know, like three

or four quotes, with turnaround
times and cost. Sometimes the

cheaper it is, the longer it
takes, yeah, expensive, they get

out there faster. But then you
got to navigate that. And then

if if we can't get financed
extensions, and that particular

lender is taking a while,
because they got the sharpest

rates and the best loan terms,
then we might have to go to, you

know, a non bank lender or a
private lender, and you pay for

that. But if this means you get
to, you get to buy the property,

or it means that you're
protecting yourself from not

losing the deposit. Sometimes
you have to take what what the

best option is at the time.

Andrew Bean: Yeah, I totally
agree. Sometimes it's better

just to get the deal done. And
then you can always refinance

later, into a low interest rate,
because people do, especially

with residential, they're very,
very particular on trying to get

the best interest rate. And that
will basically determine whether

or not they go forward with the
loan or not. Whereas like,

realistically, if you're looking
at it, like a 30 year, like, you

know, lifecycle of the property,
the interest rate right now

probably doesn't matter just to
get the deal over the line. And

then you know, in two, three
years, you can, you know, reduce

the interest rate to whatever
you want to or wherever you can

get a better interest rate, but
the most important thing is

getting the deal over the line.

Victor Lagos: Yeah, yeah, I
totally agree. It's, it depends

on if it's such a good deal that
you're buying below market, and

you're winning that property,
because you can settle quickly,

and get the loan approved
quickly, then, right shouldn't

be what you focus on.

Andrew Bean: Yeah, it's only a
very, very small piece of the

puzzle, because it's just for
like one or two or three years.

But if you're looking at like, a
lifetime of a property, where

the like capital growth or
residential property could be

double, even triple. Like, it's
like, it's like, like, the math

doesn't work out. You're like,
you're looking at like losing,

probably like $10,000, or losing
maybe potentially half a million

dollars in inequity. Like I got
a 30 year lifetime lifespan.

Victor Lagos: Yeah, exactly.

Right. And if you consider that
I can give you an example, where

I was in a position where, you
know, this was an I bought a

property into 2021. If I had,
and I don't advise this too many

people. Actually, I rarely talk
about this just because it's a

risky game. When you borrow
money for a deposit. Yeah,

outside of, you know, I'll tell
you how to work basically as a

personal loan, right. And they
call it gap finance. Yeah. And

if I and I was having a good
savings pattern, I was putting

away like, $1,000 a week, every
week saving. And I wanted to buy

property, my wife and I wanted
to buy his property, we could

have waited six months, and we
would have had an extra 40

grand, which we needed. But we
saw we wanted to get in at that

point. So we got a 440 $1,000
personal loan approved. We were

still in LMI. So we had to
obviously borrow Lenders

Mortgage Insurance, as well. So
we're already maxed out, but if

we had waited, then we wouldn't
have bought that property at the

price that we did. And we
wouldn't have been able to fix

our interest rate, because at
the time, we got an interest

rate for 2.59%. Fixed. So if we
were to six months, we wouldn't

have got that right, we wouldn't
have got that property would

have been priced out for that
particular area. And all we

really did was get the loan and
then pay it off over six months

anyway. So the amount of
interest we paid for that six

months on that personal loan was
was nothing. It was like a

couple of grand.

Andrew Bean: Yeah, right. But
the opportunity cost of not

doing that was would have been
huge.

Victor Lagos: Exactly. Sometimes
people get so caught up in like,

oh, I don't want to pay, you
know, high interest rate on a

personal loan. I don't want to
pay mortgage insurance. And I

probably has gone up 150 grand.

Yeah, and the rest He's been
paying off the loan. So imagine,

yeah, I talk myself out of it.

Andrew Bean: It's almost like
bragging rights. So like a badge

of honor saying I got this rate,
you know, I got this interest

rate, like it was really, really
low. And that's what they brag

about to, you know, their
friends at that barbecue. But

they'd never say, Oh, well, I've
got it. And you know, in 30

years, I'm gonna have half a
million dollars of equity. And

just because I, you know,
sacrifice today, so like, you

pay any price today. So you can
pay any price tomorrow, like in

the future?

Victor Lagos: Yeah, exactly.

Right, you got to think about,
like you said, the opportunity

cost if you, if you get an hour
if you if you don't get in at

all, or you focus too much on
the price, and you stop

actually, when I say price, I
mean, the interest rate without

actually making a move for your
future.

Andrew Bean: Yeah, that's it. So
maybe one of the questions that

I wanted to ask you is around
the finance clause. So we kind

of touched on the settlement,
how long the settlement has been

taking? What would your
recommendation be for the days

that you would request a finance
clause in your commercial

contract?

Victor Lagos: Yeah, it's a good
question. It depends on the on

the vendor, and the, I guess,
the demand for that particular

property, and how you know how
flexible they are? Yep. So

usually, you'd go in at least 14
days, like minimum. And even

that's hard to meet, to be
honest. Usually you'd ask for an

extension, but just so it looks
more appealing to the, to the

vendor, if you can get get away
with a 21 day, even better,

because that gives you more time
to get the valuation done and

get the loan approved. Again,
you might end up extending it

anyway. So it really just comes
down to, you know, what are they

willing to accept, as part of
the as part of the deal. And if

they can take 21 days better,
for fourteens? What it needs to

be for you to win the deal, go
in with 14. And then we can just

ask for extensions if we have
to. But it just means, you know,

we might have to go to work and
try to really push to get a fast

approval.

Andrew Bean: Yeah, fair enough.

Because everything in a
commercial contract is

negotiable. So you can try and
push the envelope. And what I

like to actually do as well, is
you're going with a more like,

you know, aggressive, you know,
due diligence and finance

clause, on your side, like being
like more extended out, like a

larger finance clause and DD.

And then that can be a
negotiating point for you that

like when they say, Oh, we
actually want you know, this

price, well, then you can say,
well, I want this amount of

days, like you need to have some
give and take with the

negotiation. So you know, you're
getting what you want. And

realistically, you both have an
aligned goal to sell the

property, you want to buy it,
they want to sell it. So there's

no point putting one party in
really, really tough, like hot

water, just to try and, you
know, meet the other party's

needs. Because this is just
because they want the money, you

know, sooner, there's no real
need for it to be sooner, but

they just want it sooner. So
it's better to be somewhat

aligned to make sure the deal
gets done on both sides.

Victor Lagos: Yeah, exactly. And
the reality is, if you're

competing with a with a cash
buyer, then doesn't matter if

it's 14 days, or 21 days, you're
gonna lose out anyway. paying

the price. So yeah, I agree with
you.

Andrew Bean: Yeah, that's it. So
mate with in terms of, you know,

your service as well. If you
bring if we bring a property to

you, and you know, you're doing
all your cash flow and

assessment and stuff, do you
give advice on the deal, like

the returns are where they need
to be, or the actual asset

itself.

Victor Lagos: So I try not to
mix up what I do, when it comes

to I focus on the finance, like,
that's what I'm here for, I

don't give advice on if that's a
good investment. If that's the

right area you should buy, if
that's the right return you

should get. All I'll do is just
plug the numbers in and say, if

the rent is XML, it can allow
you to buy up to X amount price,

initially, but then when they
present a deal to me, they're

gonna tell me that this is the
exact address, this is the

lease, this is the tenant. This
is how much the rent is and who

comes the outgoings, etc. I'll
put the same numbers in to the

calculator to the funding
worksheet to say, how much are

you going to contribute? And
what's the cash flow going to

look like? So this is what I
like about commercial property,

because you know that the
outgoings what they are and who

covers them, so you can know
what your cash flow position is

upfront, even before you buy a
property, whereas residential,

you know, you're guessing you
can estimate what the insurance

is or what the agent fees are
going to be council rates, etc.

But it's never exact. And
maintenance always seems to pop

up when you buy a residential
property, right. Something's got

to be fixed. Yeah. And so
whereas with commercial, you

know, that upfront so then if
you know what your cash flow

position is going to be, that's
how you make the informed

decision. Do I Want to actually
buy this property because this

was what was gonna cost me per
week or this how much it's going

to earn me per week. And then if
we're at a point where they're

going to sign a contract, or
they're going to put an offer in

to sign a contract, I will go to
the bank that I've been

presenting the, you know, that
interest rate and those

repayments on and I'll, I'll
make sure that that property is

actually acceptable as security.

Sometimes you don't know that
actually locations not the best

one yet, or they're overexposed
to that area, whatnot. So then I

just make sure that they okay
with the property, okay with the

tenant, and that the offer still
stands, if you're going to a big

bank, they usually have to give
an indicative of, like, it's not

just what's called a current
rate, which is an advertised

interest rate, they actually
have to get a pricing approval

from a specific area, like
Treasury or whatnot. And I want

to make sure that that's still
valid. So if that time has

passed, and other month, two
months has passed, that rate

would have changed a lot. That's
gonna affect the cash flow.

That's gonna affect potentially
the purchase price, depending

how, how reliant we are on the
rent, to cover the actual

interest. So then I go back to
them and say, yep, probably is

acceptable. This what the
numbers look like now, this

would potential cash flow looks
like now. It's up to you now.

You know, do your offer. And if
they do, we get a contract for

sale, we turn it into an
application for me on

evaluations and whatnot.

Andrew Bean: All right, so let's
assume we've got a property

offer accepted on a commercial
property. Right. So what

documentation do you usually
request from your client to give

to the bank? Is it just the I
Am? Or what else do you usually

need? With the property? Maybe
the contract of sale the lease,

things like that? Yeah, exactly.

Victor Lagos: Contract of Sale.

And lease is like number one.

Okay. And then for them, I need
to identify them. And depending

on, you know, the type of loan
contract, if it's a lease stock,

then I just need a statement of
assets and financial position

sorry, statement of financial
position, which should just say

assets and liabilities, signed
privacy form. And, yeah, it's

very limited documentation ID.

But if, if it's a full dock
loan, and then we need all their

income as well, the stuff we
talked about statements, pay

slips, tax returns, etc.

Andrew Bean: But just for the
property, so like, with the I am

actually stuck up with the bank,
like, can you just send them the

I Am and they go, you know,
okay, but is that something that

they would request?

Victor Lagos: Well, the I Am is
usually if it's if you don't

have like tenant in there

Andrew Bean: yet. Well,
automation Memorandum of the of

the property, so it could be
listing out the tenants, it

could be listed your list, I am
usually list out everything

about the investment. Yeah,

Victor Lagos: yeah. Well, that's
the bank doesn't care too much

about all of that, because a lot
of that is to help, you know,

the investor make an informed
decision. They just care about

what's what's the lease term,
and who's the tenant? And what's

the rent mount and who pays the
outgoings? So the lease usually

covers that. The I Am will
obviously go into more detail,

you know, the location and the
potential for for growth and

whatnot, as well. But yeah,
look, realistically, the bank

will give an okay, with knowing
the lease terms, knowing the

purchase price. And of course,
the actual property itself.

They'll do their own due
diligence to make sure it's

acceptable.

Andrew Bean: Yeah, fair enough.

All right. So I guess now that
you've listened to all of this,

you guys know how difficult it
is, and how many documents and

all the crazy things that you
need to, you know, get some

finance. So going to Victor and
getting him to do it is a no

brainer. And plus, it doesn't
cost you any money right up

front. So actually, it all does
it because the banks pay you.

Victor Lagos: Yeah, yeah,
exactly. Right. So there is an

opportunity where I can charge,
but it all depends on the

complexity, and the timeframe.

And most of the time, if it's
because the banks are just gonna

pay me a commission eventually,
right? But if there's a lot of

legwork that needs to be done
upfront, and I know that

customers not going to do
anything for next 12 months,

well, I gotta be conscious of
the time, right? So what I can

potentially do is, is charge a
mandate fee, which is basically

to work on on the on the deal.

And then in the future, when I
get paid a commission, they get

reimbursed that Alright, so it's
just actually, you know, it's

also skin in the game as well.

Andrew Bean: Yeah, it's like a
retainer. Yeah, correct. Yeah.

Okay. Awesome, mate. So, did you
want to put together a list of

documents that you need? Or do
you not want to do that? And

this doesn't have to be I'll
edit this out. Do you want me to

talk about it or not?

Victor Lagos: We can. Yeah,
that's a good question, talk,

talk to

Andrew Bean: you, maybe give you
a call or send you an email to,

you know, see what documents you
would need or something like

that. Or yeah,

Victor Lagos: I think there'll
be a good way to actually read

Shout out to me. So connect with
me via email or, you know, the

contact us form. And just give
me a breakdown of your situation

and what you're looking at
achieving. And I'll create a

custom document list.

Andrew Bean: Yeah, okay. All
right, cool. All right, guys. So

if you do want to find out what
documents you will need, or you

will require to get lending,
then we can suggest that you

just give Victor a call email or
contact form on his website, and

he actually will put together a
custom list for you based on

your situation. So, you know,
you won't be trawling through a

massive list of documents that
you basically don't always need

to send. Victor, we'll just
customize that list. Right,

right, Victor.

Victor Lagos: Yeah, exactly. At
least his preparation for you.

So you can start gathering
everything. And then when you

are ready to apply, you know
exactly what to send, because

you've got it all put aside. And
it just expedites the process

for you.

Andrew Bean: Oh, my Oh,
fantastic. Well, let's wrap it

up there. This is the financial
freedom series with financial

expert Victor Lagos. Mate, where
can the listeners go to find out

more about you and your
services?

Victor Lagos: You can find me on
my website, which is Loggos

financial.com.au. You can also
just google search Loggos

Panchakarma. And I've also got
my own podcast, which is called

debt to financial freedom. So
you can search that on all the

podcasting podcasting platforms
as well as YouTube.

Andrew Bean: Yep, definitely go
check that out guys. All right.

This has been financial expert
Victor Lagos and Andrew been on

the financial freedom series.

Cheers, everyone, to everyone.