fbpx

James Melton – Hard Money, What You Need to Know


Subscribe to our podcast anywhere you listen to podcasts:

HIGHLIGHTS FROM THE PODCAST:

0:57 – Introduction into private money lending
2:29 – How James sustained through the recession and got into the hard money lending business
4:43 – Lessons learned through starting his own business
7:13 – How much does he lend out monthly & who is his typical customer?
10:25 – Start to finish what a transaction looks like with James
15:08 – Term sheet
17:11 – How long does the process take?
27:21 – Bird’s eye view of real estate investing in Atlanta

Contact:
Phone: 770-354-1899
Atlanta Private Lending
atlantaprivatelending.com

FULL TRANSCRIPT OF THE PODCAST AUDIO:
James Melton:
The bigger the investor the harder it’s going to be to hit these big numbers. And I think that goes the same way for lenders. We’ve never positioned ourselves to be the largest lender, nor do we want to be because I don’t want the problems that come with that.

Spencer Sutton:
All right everybody welcome back to another episode of the Atlanta Real Estate Investor podcast. I am one of your hosts, Spencer Sutton and I’ve got as always, well, not really as always Matthew you’ve missed a couple of these.

Matthew Whitaker:
I have missed a few and I apologize for y’all having to just be stuck with Spencer the whole time so-

Spencer Sutton:
But you’re back.

Matthew Whitaker:
… I am back now to try to bring these ratings back up to the five star we hopefully deserve.

Spencer Sutton:
We brought the A team back so Matthew welcome back and today we’ve got a great guest. We’ve got James Melton he is the founder of Atlanta Private Lending so welcome to the show.

James Melton:
Hey, thanks for having me guys looking forward to talking.

Matthew Whitaker:
James everybody loves to talk about money, so we’re going to talk about how people can use hard money to do deals. Before we get started on the mechanics of it, I’d love to hear more about how in the world does somebody get into private money lending?

James Melton:
Yeah, so my story is I started out after college decided to get into the mortgage business because it was hot back in the early 2000s it was on fire. People were making killer money doing mortgages and I jumped right in. And for about five years did some… Well, no, actually that’s shorter than that probably two and a half, three years was doing more on the conventional side. And then I was approached to become an account executive for one of the bigger hard money lenders in the country the name of the company was Yale Mortgage, which they’re still around. And I worked with them for about five years.

James Melton:
Once we hit the iceberg around into 2007, early 2008, I started seeing them have to make some major changes. Georgia was one of their more stable markets. So I probably was the last lone survivor as far as the account executives, but it wasn’t enough to keep a big company like that going.

Matthew Whitaker:
Well, I know you probably when you hit the iceberg, you probably saw me and Spencer swimming around you too struggling for-

Spencer Sutton:
We were there.

Matthew Whitaker:
That iceberg has been well-documented on this show because Spencer and I were in the house buying business back in 2007, 2008, Spencer took a life raft and got out of the business for some period of time.

Spencer Sutton:
That’s right.

Matthew Whitaker:
But I like you James stayed in the business and kept digging. So I’m really interested to know during the recession because a lot of hard money lenders went out of business. Everybody was going out of business, we were all going out of business. But tell me more about how you sustained through the business and then came out on the other side and some things you learned in the hard money lending business through that time.

James Melton:
Yeah. So as Yale was winding down, like I said I was one of the last people there as far as active sales rep, they called me in November of 2007 I was in Vegas getting married ironically. And they called me that day and said, “Hey, we’re letting go of all the sales reps but we’re going to keep you, you’re going to manage Georgia and Tennessee for us.” And when that happened I saw the writing on the wall and I started to kind of… Trying to look at my next move and I had been approached by a local lender here in Georgia about coming in and helping them grow their business. So when I got back in town, I met with them and they were probably further deeper in water than I knew they made me a great offer.

James Melton:
I went over there after the Yale relationship ended and within months they failed as well. But the fortunate part about that was they had more of a tie into the rehab loans, which I had never done. Yale was more of just an equity based lender. The other group I went to did more renovation loans. So I really got to know that product and when they went under, I had a real come to Jesus moment where it was like, “All right, we either do this. I’ve had an amazing run doing the hard money, doing that lending. And I think I can do it on my own or I go back to the bank world.” And I just didn’t see much future in that, so I took a gamble.

Matthew Whitaker:
Good for you. So you went out, I guess you raised some equity with the idea. It was kind of starting to pick back up again, there were investors out there buying. And so talk about starting your own business and some lessons that you’ve learned.

James Melton:
Yeah. So as I started it, I kind of looked at what everybody because like you mentioned a lot of the lenders got hurt, so they were all leaving the industry and you were seeing people go out or get tighter wanting to do certain deals. So I saw a market, especially when the prices were so low, I saw a big hole there. None of the lenders wanted to do lower loan amounts. Well, it’s a lot easier to raise 50 grand than it is a million dollars. So I targeted really doing smaller deals to get my business off the ground. And we were doing any deal that came through the door if it was 30 grand, 50 grand as long as it made sense and met what I deemed as our underwriting qualifications, but we did it. And that was a whole that nobody else was really dipping into. And that really helped us get a name out there and get started and really give us a little niche in the market.

Matthew Whitaker:
Well, congratulations.

Spencer Sutton:
Yeah. That’s great.

Matthew Whitaker:
That’s incredible.

James Melton:
Yeah. It didn’t last too long as far as those price points, but it allowed us to fill a hole during a time where a lot of other people were struggling to find business.

Spencer Sutton:
So were those loans that you were doing those kind low end loans, were those for people who were looking to flip houses or like I want to rehab and then rent it and refinance.

James Melton:
Yeah. Believe it or not there were still people having success flipping. I think they were just in them at a good enough price point. The backend financing was always a question mark, especially back then because it was the banking world was just changing on a daily basis. But we’ve have had a true blessing. Because of we’ve always and we’ll probably get into how we look at deals, but we’ve always had some pretty core values of wanting our clients to have money invested, which I think is a big mistake that a lot of people did during the crash doing the high leverage.

James Melton:
Just because it’s valued out you don’t have the… People don’t like walking away from their own money, so if you get them to invest in the deal with you, you’re going to have a lot harder time or having somebody that’s going to walk away from you. So we just have really stuck to some core values when it comes to that, and really since day one had very, very little as far as repayments, we’ve always had a great track record of repayment history.

Matthew Whitaker:
That’s awesome. So as the business has grown and I’m guessing it’s been a business now almost 14 years, 13 or 14 years. Give us an idea of how much money if you don’t mind sharing, how much money do you lend out on a monthly or a yearly basis to investors?

James Melton:
Yeah. So it can vary. I would say right now we’re probably lending out anywhere from three to 5 million a month is probably a pretty good area. Obviously we’ve done more, some months we’ve done less, just depends on the size of the deals that come through. Being that most of them are single family homes. We don’t do a ton of commercial, well, I shouldn’t say a ton we do very little commercial. We’ve started seeing a lot more new construction and some of those price points they’re a little higher right now. So the volume has been on the upswing, but that’s all just in Metro Atlanta.

Matthew Whitaker:
Talk about what does a typical customer for you look like?

James Melton:
Yeah. So a lot of people think of hard money I had a call earlier today and the guy kept getting back to hard money or private money. I don’t know I’m not a big label guy. I kind of think that we’re creative financing. There’s really no way to perfectly describe it because if you call it hard money people think that means you have no credit.

James Melton:
That’s just a stigma that got put on it. Our average client probably has high 600 to 700 credit, good money in the bank, good experience could probably go to a bank if they wanted to, but they like working with us because of the ease of the transaction. They know how the flow’s going to go. It’s not going to take them 60 days to get closed out. It’s not going to take them two weeks to get a draw process. They’re going to get very hands-on service when they come to a company like mine.

Matthew Whitaker:
So some reasons to use hard money or again, shouldn’t have used the label-

James Melton:
No that’s fine.

Matthew Whitaker:
But reasons to use a private money lender like you would be ease of use, “Hey, it’s quick.” I would think the other thing is just sometimes I end up explaining to the bank over and over again what I do and that’s kind of frustrating. But you already have the mental model that I can walk in and say, “Hey, I got a deal. The after repair value on it is X and I needed to borrow X.” And you can say yes or no, “That’s something that we would.”

James Melton:
I tell people I can normally ask you about four or five questions and tell you right away, if it’s going to be a deal I can do.

Matthew Whitaker:
Can you give us those questions I bet everybody would really want to know.

James Melton:
Yeah. So the questions I normally go with are what is your… in no particular order, what’s your credit score? How many deals have you done? We get the property address, purchase price, renovation costs, ARV, and then how much money do you have that you’re open to investing in this transaction? That last question is always the one that is the make or break because I can work with bad credit, and I can work with somebody who doesn’t have experience, but if you don’t have money to invest it’s really hard to get these deals done.

Matthew Whitaker:
Sure. And that it gets back to people having skin in the game so I can appreciate that.

James Melton:
Yeah.

Matthew Whitaker:
Talk us through a transaction. So give us start to finish what a transaction looks like with you.

James Melton:
Yeah. So pretty simple process our website, obviously we’re constantly tweaking it, trying to find the best way to make it work for the clients and make it work for us. We have two apps on our website, we have a preapproval app and then we have a full application. So the preapproval app would be more for somebody who is trying to get approved, but they may not be under contract yet. They can use it if they are under contract, just to get a quote from us. And then the full application obviously would be for somebody who’s ready to go, but the client normally contacts us and they give us the specifics those questions that I went through with you. And then we can give them a ballpark term sheet of how it’s going to look, which I think that separates us from a lot of the lenders right now in the market.

James Melton:
A lot of lenders don’t want them to know how much money they have to bring to closing because it’s a lot easier for them to sell it to them once they’ve already invested a lot of time and money into the deal. And I find out from a lot of people on a daily basis we get calls saying, “I’m a week from closing and I just found out how much money I’ve got to bring to the table.” We want to put it all out there up front, we just don’t like wasting time. And we’d rather prepare our people for the realities of what it really looks like.

Matthew Whitaker:
Yeah. It’s about upfront expectations and transparency and, wow, if anybody has never done a deal, knowing reality throughout the whole process it’s hard enough to get a deal to close. But when people aren’t a 100% upfront about things that are going on then it just complicates matters a ton. And frankly banks will do that too. Banks will tell you everything’s great and then all of a sudden they need four documents while you’re driving to closing. If my bankers listening to this, I just want you to know, I love you. This is other banks other than you.

Spencer Sutton:
This is not you.

James Melton:
Yeah. And that’s just one thing as we talked about starting the business is I really focused a lot on what I didn’t like the other companies did. And how to be better at the little things that clients complained about when either I was brokering a deal to another company, or just they get shared experiences with me that they went through with other companies and how to tweak those little things. The one thing that we do again from the beginning is we try to give them everything they’re going to need upfront so that we have it, just like any lender We might need an updated bank statement before closing or something like that.

James Melton:
But for the most part we prepare them upfront, there’s not a lot of surprises unless the numbers change. And that’s always something that we have to be cognizant of as we get into the deal because we are reviewing the budget and making sure, again, a lot of lenders don’t do this but we have a complete team out there that makes sure the budget is in line with what it’s really taking to do that deal right now. So I have had nasty-grams from clients saying, “You ruined my deal.” And then I get a thank you letter later because they realize-

Matthew Whitaker:
Wow, I wish I had had you back when I was getting started.

James Melton:
Well, and that’s the thing. We learned a lot of those lessons through watching and winding down companies during that time. Not to go back to that, but that’s some of the lessons that we learned and really still to this day look at how can we keep that from happening to us. And we’ve got a less than 1% default rate since we’ve been in business, which is unheard of.

Spencer Sutton:
So what types of things are they looking at when they’re going back to the deal and just verifying everything?

James Melton:
So we have an in-house inspector that goes through and literally line item goes through their budget to make sure that they are covered on every line item, make sure that they’re not missing things. Maybe you would or wouldn’t be surprised at just some of the obvious things that can be completely left out of a budget. The big one right now is, “Your framing cost is way low.” They might’ve gotten a quote a month or two ago, and all of a sudden now framing costs has gone way up. So stuff like that, that our guys just on the ground he’s in the mix daily with getting details on these items and making sure that they’re up to date.

Matthew Whitaker:
So you get a term sheet I got you way off track James.

James Melton:
No that’s okay.

Matthew Whitaker:
Let’s get back to the pipeline. So you get a term sheet, once we agree on the basic terms of this is the next step that inspection piece.

James Melton:
Yeah. So we send the appraiser and the inspector out at the same time. So on a rehab loan or a new construction loan, we get a completed value, after repair value, a appraisal report. And they work right alongside our inspector to make sure that again they’re in line because if somebody’s coming out to do a retail grade renovation versus a rental grade, we want the right appraisal. So I want them working together to make sure that we got the numbers as tight as we can get them.

Matthew Whitaker:
Does somebody submit to you their numbers? “Hey, this is what I’m going to do. Here’s a budget of what I’m going to spend.”

James Melton:
Yeah. They have to submit. With the application we normally ask them to send the last couple months bank statements, the purchase contract, renovation budget and their corporate docs. That’s a pretty standard checklist of items that I would look for. So their budget that they’ve had prepared either they’ve prepared theirself or they’ve had a contractor prepare them. That’s what we go off of as far as for our budget review.

Matthew Whitaker:
Okay. So application term sheet, we got an appraisal and an estimate from your inspector, what is the next process?

James Melton:
So once the budget review is signed off, let’s just say that the budget was perfect and it came back just where and the appraisal was good the terms don’t change. If the budget came in higher and the appraisal came in lower then obviously we tweak the numbers, we give them an updated term sheet and then you go back to them and say, “Here’s the updated numbers based on what we found.” And they can accept or decline and assuming they accept it then we send it to title. It’s in final review at that point and we’re just making sure everything’s still up-to-date and accurate and then we send it to closing.

Matthew Whitaker:
Awesome. And then so soup to nuts how long does this process take?

James Melton:
Yeah. In a perfect world, I like to tell people it all depends on how prepared everybody is. A lot of times if the clients are piecemealing documents in it can get dragged out. Most of the time, if everything’s prepared, we get out there… I’d like to allow a week for the appraisal process and a week for the title process, give or take a few days. And it’s normally a two to three week process start to finish.

Matthew Whitaker:
Yeah. That’s awesome.

Spencer Sutton:
Yeah. That’s quick.

James Melton:
Yeah. And we’ve done quicker we’ve closed deals within a week. It’s not normal, but it can happen if everything’s lined up correctly.

Matthew Whitaker:
And I would imagine you have some investors that have built the reputation that the more better relationship you have with them, the more businesses they give you the more they can be sped through the process because you trust their numbers generally and they do a pretty good job. So it gets back to Spencer and I always talk about reputation. This business is a people business and a reputation business and a hustle business. The great thing about real estate is as long as you hustle and you build a great reputation, it’s amazing how over the course of time things just generally work out. Now that’s probably any business, but I’ve been doing this owning a real estate business since I was 23 years old so I don’t know too many other businesses.

James Melton:
Yeah. Yeah. I get that sob story a lot right now it’s like, “There’s nothing available. There’s no deals.” And I’m going we’re busier than we’ve ever been. So there’s obviously somebody getting deals done, you just got to hustle. It’s one of those no days off when the phone rings or when an opportunity comes, you have to just jump on it kind of businesses. I couldn’t imagine myself doing anything else at this point. The investing, seeing these deals go from start to finish from the ugly, burned out house to something beautiful that makes the neighborhood look great. It’s just something that is a really cool to be a part of.

Matthew Whitaker:
Talk a little bit about the terms. What can people expect from you in terms of what’s this money going to cost?

James Melton:
Sure. Yeah. So that conversation has changed greatly as we’ve gone over the years. And as we’ve grown as a business, when we first started out hard money that was the hardest of hard money. When we talked about that were high-interest high fees, it had very little change. It was the same terms on every deal.

Matthew Whitaker:
No budge.

James Melton:
Yeah. It was 15% interest and five points and if he deal worked we did it. And over time as we’ve grown as a business, our cost of capital has come down. As the market’s changed we’ve changed up some of our strategy on how we raised internal capital as well. Believe it or not for a long time we had a very hard time cracking into the big people who would invest a lot of money. I’ll call it an institutional investor that would come in and back us because they could not believe our default rate.

James Melton:
They couldn’t believe that we could do the deals that we’re doing and not have a high default rate. So that was something that was it’s like the craziest thing you have to overcome. You want me to have more foreclosures is that what you’re saying to use your money, that doesn’t really make sense. And the other part was the volume. A lot of these big guys wanted us to lend out tens of millions of dollars a month and could we lend out more money? Absolutely. But I think we would have to lower our qualifications and lower our expectations on clients, which would turn into a higher default rate. So now as we speak right now we’ve made some amazing relationships. We have a couple primary backers. One is a family office out of Nashville and one is an insurance fund and we’ve got our rates down right now almost everything’s getting closed out around eight and a half percent.

Spencer Sutton:
Wow.

Matthew Whitaker:
That’s almost unbelievable. You always hear people talk about when Jimmy Carter was president and how mortgage rates were so… Now I feel like I’m back when I was in the hard money or private money borrowing, it was 15% and five points. And now you’re telling me it’s 8%, which honestly is not that different from a bank. That is not, I would imagine five to 6% at the bank is pretty standard and probably more, I don’t even know I haven’t looked frankly.

James Melton:
Yeah. Really we’ve expanded our offerings too, the fix and flip model is still probably our primary loan but we’re doing rental properties. We’ve got a 30 year fixed program, which again, bringing in the insurance backing those guys have a different appetite than your typical hard money investors. So it’s allowed us to really expand. And we’ve done a few commercial properties and the new construction we’re doing a good bit of new construction for single family builders right now too. And again everything we’ve done a few lower rate rental property loans, but the majority is still in that seven to eight and a half, pretty much across through what we’re up to right now.

Matthew Whitaker:
I got to tell you, James, I’m floored. I’m not just saying that because you’re on the podcast, I just cannot believe they’re that low.

Spencer Sutton:
I had no idea.

Matthew Whitaker:
I was fully expecting you to tell me 12 to 15%.

James Melton:
I’ll say this it’s not that it’s not out there, so the 12 to 15% is, can still be done. If somebody came to me and said, “Hey, I need to close in two days and I just need you to go do a site visit.” Yes, those opportunities come up and we do them at a higher cost because we just don’t have time to do everything that’s honestly going to prepare us to sell the paper to our end money backer. And we’ve got deals closing this month that are in the 12% range. Maybe somebody went through a divorce and got their credit beat up. There’s normally something that’s going to be the reason that they go back into that 12% range rate. So it’s still there it’s just not… The majority of what we’re seeing right now and it speaks volumes I think to the level of clients we’re getting. Like I said, people with pretty good credit experience, good money in the bank. It’s not really the high risk loans right now that we’re seeing in the market.

Matthew Whitaker:
What I just love is the flexibility of it. And everybody has a unique situation and certain things whether bad, good, or indifferent, just the flexibility of speed and ease of use would make paying a couple of percentage or one percentage of interest higher makes it-

Spencer Sutton:
The brighter.

Matthew Whitaker:
… probably worth it. Absolutely.

James Melton:
We’ve had people do side-by-side comparisons. They’ll do houses in the same neighborhood, one they went out through the bank and one they went through with us, and the cost on these deals were much less with us because of the timing. They had a much faster turnaround on their draws, when these guys have done a side-by-side comparison to show the difference between when they went through a bank and went through us the transaction went so much quicker through us because of the draws, I think that is the most important part of what we offer is the ease of our draw process.

James Melton:
Because we have somebody that specifically works with us he goes out, it’s the same exact guy every time. He gets to see the property throughout the deal and he’s out there the next day, once he gives me a green light that, “Hey, what they have done is good.” We wire the people the money the same day. So it’s a very quick draw process as far as the renovation escrow goes. Which the banks, again, I haven’t done one in a long time with the bank, but I’m hearing people tell me seven days, 10 days, two weeks to get funded for their construction draws.

Matthew Whitaker:
Well, the banks also have to fit in the box. That’s the whole thing is like, if it doesn’t fit in their box it doesn’t happen. And so that’s why people choose smaller banks because their boxes are a little bit more flexible, but a private money lender what a great opportunity because they don’t really have a box. As long as it makes sense then they can do that. And how many times have we gone to the bank and said, “This makes so much sense.” And the bank’s like, “Yeah, but it doesn’t fit into our… It’s not what we do. Like, yes, I agree it makes sense but it’s not what we do.”

James Melton:
It sometimes can make too much sense. A lot of times the banks are so cookie cutter that they just can’t get outside the lines.

Matthew Whitaker:
So you lend on obviously fix and flips, you lend non rental homes, it sounded like you lend on new construction too.

James Melton:
Yeah. The fix and flip and new construction it’s very different but it’s for us if you want to say a box, we kind of put them into the same box because fundamentally it’s the same process. So we’re seeing a lot more people as it’s harder to find houses to fix up and flip people are hunting for land to develop that next house.

Matthew Whitaker:
And then what about like small multi-family would ya’ll lend on a deal like that?

James Melton:
Yeah, we would, again, kind of the same concept. If it’s a renovation, say it’s a six unit or an eight unit or even smaller duplex, we’ve entertained even a larger apartment complex. There’s a lot of moving parts on the larger multi-family. But we try to keep the programs fundamentally in a similar setup.

Matthew Whitaker:
Spencer do you have any more questions about lending and then I want to get into some Atlanta specifics.

Spencer Sutton:
No that’s what I wanted to get into about what he’s seeing in Atlanta.

James Melton:
Okay.

Matthew Whitaker:
Yeah. So my question, I’d love to find out more. You’re obviously somebody that has a bird’s eye view of what’s going on in Atlanta. Give us the bird’s eye view of and people real estate investing in Atlanta.

James Melton:
Yeah. I base a lot of my feelings on the market on payoffs. So if I’m getting a lot of payoffs and that tells me the market’s generally going in the right direction, we’re seeing a lot of activity on sales. We’re getting pay off requests every day, so these guys are having the ability to sell properties without a problem. For the most part what I’m hearing is most of them are going for over their asking price. So the market seems pretty hot, which I don’t think is a surprise. It seems like we’ve got a lot of people coming in from other states right now, coming in and moving down here.

Matthew Whitaker:
That’s something I think that’s really different. And you were around in ’07, ’08 during the iceberg as you call it, which I like that actually.

Spencer Sutton:
Yeah. That’s right.

Matthew Whitaker:
Because I felt like the Titanic for some period of time. But the thing that feels different about this is just migration and new demand. It felt last time like we were creating demand, people were not moving from the north to the south like they are now. And people were not moving out of multi-family early into more single family homes because of COVID back then. So I’m not saying that this bull run, real estate bull run will last forever but it does feel fundamentally different.

James Melton:
Fundamentally, I think it’s a lot more sound. When you look at these neighborhoods too, I’ll never forget driving around in 2008, looking at some of these properties and you would go through neighborhoods and it would be houses that you were told were just renovated, but they didn’t look any better than the house two doors down that have been sitting there. You go down to these areas of Atlanta now, and there is a very different feel to these neighborhoods. I’m sure there’s still houses that need to be torn down or renovated, but they’re not putting up… It’s not putting lipstick on a pig anymore. The people that have come in they’re doing very high end, very nice renovations. It’s not just the neighborhoods or the houses it’s the entire neighborhoods that are getting renovated. The infrastructure of the communities are all just upgraded.

James Melton:
So I think that that’s going to go a long way in seeing how we manage the next drop if there is any kind of drop. I don’t know, I just don’t see us letting it get there. I think the banks have been smarter this time around, I think the lenders, I think there’s been some definite questionable lending practices in my area of lending. Not internally, but some of our competition’s been doing some stuff that I can’t wrap my head around. But I don’t think that’s going to provide enough of a downturn to really affect the market.

Matthew Whitaker:
One thing I heard from an investor recently, which I thought was really smart I wish I had thought of it is that the institutions, especially in places like Atlanta and Birmingham, where the institutions are really buying a lot of homes, they’ve now created a floor for prices. Because as soon as it falls into their buy box, especially in these moderate income neighborhoods then they’re going to buy it and they have tons of capital to continue to buy houses. So even if there was a softening, we didn’t have that institutional floor back in ’07, ’08. Now there’s just tons of money that wants to buy a single family rental, now that it’s this huge asset class. Also I think the inverse is the same though.

Matthew Whitaker:
If people are blaming institutions for not being able to find deals, James, your whole business is built off of single family boots on the ground people that are doing deals. And you’re lending millions and millions of dollars out. So I don’t think that should be an excuse to anybody for… Institutions shouldn’t be excused. Yes, they’re buying houses and I haven’t seen the latest numbers but I think they own maybe 2% of the rental houses maybe. And so there’s just a lot of opportunity out there for the investor or small time investor that wants to buy a bunch of houses.

James Melton:
Yeah. Look, the bigger the investor, the harder it’s going to be to hit these big numbers. And I think that goes the same way for lenders. We’ve never positioned ourselves to be the largest lender, nor do we want to because I don’t want the problems that come with that. Kind of like we said earlier, you add more problems the more you reach outside your comfort zone or you change up your algorithm. So I think that it’s people that are trying to do investing, not on a huge scale, should be able to still get out, find some properties and have some success in this market.

Matthew Whitaker:
Yeah. It’s kind of like Warren Buffet always says if you had a punch card. There’s plenty of opportunity for me to do four deals a year and make an extra $100,000 just very small time, very much a side gig, a side hustle so it’s pretty unique.

James Melton:
Think about that number, that’s a great number for anybody.

Matthew Whitaker:
Huge number.

Spencer Sutton:
Yeah. Great number.

James Melton:
And that’s a side hustle. So I always get a kind of chuckle. I hear some investors that’ll call me and be like, “That’s not enough money for me on this deal.” And I’m just like, “Man, what-

Matthew Whitaker:
What people will work to get that number?

James Melton:
Yeah. People work their whole year. My wife’s a teacher, I know how much she makes. And it’s like, “Come on. You’ve got to take opportunities as they come. You’re not always going to hit home runs. It’s the singles and doubles that make a pretty good career.”

Matthew Whitaker:
All right. I’m going to ask you a unique question. If I gave you a hundred chips and gave you three areas to bet on in Atlanta, what three areas would you bet on? And how many chips would you use on each?

James Melton:
All right. Give me that again 10 chips-

Matthew Whitaker:
Well, a 100 chips and you can bet on three areas in Atlanta. And what percentage of those 100 would you bet in each of the three.

James Melton:
Man I’m probably not the best person to ask that from an investing standpoint I like the suburbs personally. Like if I’m investing my money outside the company kind of stuff.

Matthew Whitaker:
So give me a suburb that you like.

James Melton:
I would invest the majority of it near me in Alpharetta, Cumming, so North Fulton and probably Forsyth.

Matthew Whitaker:
Awesome. Would you split it evenly amongst those or put 90% of your chips in Alpharetta and-

James Melton:
No, I would probably put let’s say 25% of the chips in Alpharetta, 75 in Cumming because I think you get more bang for your buck in Cumming. I’d say I’m a gambler. I would probably take the rest of the chips and put them wherever I can find the lowest price points as a gamble because we’re talking chips were in a gamble.

Matthew Whitaker:
Super high return.

James Melton:
Right. Where has it not hit yet? Where are we still seeing lower price? I have a few investors I know this isn’t in Atlanta, but they’ve ventured down into the Macon and Augusta and the returns they make are incredible. It’s hard to get loans down there but it goes back to how we started though. The only reason I don’t invest more money down in those markets is because it’s harder for us to manage them just because of the distance. But we have a few investors that we work with down in those markets and they do amazing.

Matthew Whitaker:
Very good. Well, this has been great, James, thank you so much. If somebody wanted to get in touch with you had more questions, which I’m sure this just makes people think of a million different questions. What’s the best way to reach out to you?

James Melton:
Sure. Our website pretty much links you to everything it has all our social media, it might even have my cell phone number on there and you can call me directly. I can even give you that right here. My direct line, you can call me anytime 770-354-1899. Our company is Atlanta Private Lending, so atlantaprivatelending.com is our homepage. But like I said we try to do a good job on the website to keep it up to date. It’s got the most accurate up-to-date information about our programs. We’ve even laid out a couple of examples on the website of how you can do some different deals. Put a few boxes on there even though we don’t really have to work inside the box. We try to put some boxes so that we do the new construction, the fix and flip, the rental property lending and then the pure hard money loans as well.

Spencer Sutton:
Thanks, James. This has been a great episode. And so if you haven’t, if you’re listening now and you haven’t already subscribed, go ahead and subscribe. And we’re going to ask you to leave us a five-star review. Tell us what you like about the show. It’s a great way for other people to find the show on iTunes. All right, everybody, we will be back in a week with another episode of the Atlanta Real Estate Investor podcast.