Rising from the Ashes: Innovating Commercial Lending Industry with Mitch Ginsburg

Jeff Kikel: 00:00:00

Hey, have you ever thought about how challenging it can be if the business climate changes? While on today's show, Mitch Ginsburg is going to share his story with us. Mitch owned a mortgage company that went kind of belly up during the 2008. downturn, it actually caused him to re ideate and re change his business and ended up launching a whole new product that he's going to share that he's had for the last eight years that is changing the commercial lending loan cycle. So stay tuned for the show. And we'll see you here in a minute.

FN Intro/Outro: 00:00:41

Welcome to the Freedom Nation podcast with Jeff Kikel. On this show, Jeff shares his expertise in financial and retirement planning from a different perspective. Planning for Your Freedom Day, which is the first day that you wake up and have enough income or assets and do not have to go to work that day. Learn how to calculate what you need, how to generate income sources, and listen to interviews from others who've done it themselves. Get ready to experience your own Freedom Day.

Jeff Kikel: 00:01:15

Everybody, it's Jeff here, once again with the Freedom Nation podcast, and today's gonna be a fun show. I've got Mitch Ginsberg on and he is a commercial. He basically owns a software company that matches up commercial loans with borrowers and finds the best deal. And he's got a wonderful story to tell about that and how he got to that point. So Mitch, welcome to the show, my friend.

Mitch Ginsberg: 00:01:38

Thank you. Appreciate it. Jeff, thanks for having me. So

Jeff Kikel: 00:01:41

glad to have you on here. Really interested in your story. So why don't we get kicking off with that? It's obvious, you know, you came from South Texas. And yeah,

Mitch Ginsberg: 00:01:50

Deep south very, very south Texas. Well, as you can hear from from South South Africa, born and raised, educated there and arrived in the United States, back in the in the mid 80s. Back in South Africa was with Arthur young and company and big international CPA firm joined Leventhal in Haworth. When I arrived, I practiced for about a year and figured out pretty quickly I wasn't cut out to be a CPA. So got nothing against CPAs just wasn't for me, and then got into commercial and non commercial Residential Lending, built up a residential mortgage bank over 25 years. And then oh, eight rolled around, we were in probably three of the four worst hit states, we were in Arizona, California, Nevada. And then we're in Texas and a few other states. But those three were just devastating. I mean, property values dropped, in some cases, 60%. We were that we bank, the loans, obviously, we sold the loans off to the secondary markets, Fannie and Freddie. But the results were were devastating. I mean, we, you know, the buyback requests were just, you know, overwhelming, at some point, kept, kept the company going far longer than I should have and got out of that in probably around 2012. And saw an enormous opportunity in commercial real estate lending, which is very diverse. There's no, there's some different kinds of lenders, there's some different kinds of properties. And how does anybody know when you know know where to go because every lender underwrites, according to their own guidelines, there's nothing really standardized. So, you know, was struck by that there wasn't really a search engine or a marketplace for people as as you would have in everything else, you know, you want to book an airline, go online, and you got every airline in the world, in every hotel in their world, or whatever. And you can book it, commercial real estate, it's this black box for commercial real estate lending. So we've taken the mystery out of it. We built a database, we got probably 750 Plus lenders on which represents about 168,000 loan products. And our technology, we have search engine, which real live pricing will match the borrower with the perfect lender. So you're aware of the golden rule, right, who has the gold makes the rules of court and we've we've actually got it we've got a like a poster of the Golden Rule framed upside down in office, because up till now, the lenders had the gold and they've made the rules, but we really want to empower the consumer. So let the consumer select the lender they want it's got the terms that they want, as opposed to the lender saying, right, these are my terms. Let's see how I can fit you into my terms. It's been a great ride. We've been at it for about eight years now funded, you know, several 100 loans and we're scaling and actually is a phenomenal time for us because people are shopping online really because you know with interest rates are rising and a lot of uncertainty in the economy as just a great opportunity for us. So I feel very blessed. What an amazing

Jeff Kikel: 00:04:59

story Well, you know, I think the the big, the big thing in the room, you know, we've seen some bank failures and things like that, what, you know, what's your take from your perspective? Because you're you're trying to match up lenders, what's your take on the on the kind of commercial world going forward here?

Mitch Ginsberg: 00:05:19

You know, clearly, I mean, things have changed. I mean, the, you know, a lot of lenders are tightening up their, what we call the credit box, they guidelines are tightening up, you know, maybe requiring a little more money down better liquidity, sometimes putting up a cash deposit. But the sky's not falling in. I mean, I love the media, they, you know, they'll they'll grab on to one statistic or one, you know, bad bit of news out there, and it's Oh, my God, everything's, but I guess that's how they sell ratings. Right. But, you know, I think the also the exposure amongst the community banks has been overblown, I think some of those statistics that are thrown out there are far bigger. If I remember correctly, I'm just going by memory. Now, I think the overall exposure is something like 13% of commercial real estate dates held by community banks and smaller banks, you know, bearing in mind, you got your giants, you know, your big four or five that hold a huge amount as well. But then you got CMBS and, and Fannie, Freddie. So, I mean, there's clearly some exposure, but you know, we've obviously had the three failed, you know, there could be a few more that are a little shaky, but I think a lot of it is perception. I mean, if everybody thinks the sky is falling, and everybody pulls back, and then the sky will fall in. So, you know, I think, you know, there's certainly for us, I mean, this is a huge opportunity with rising interest rates, and we're busier than ever. And I think everybody's got to find the opportunity within every market, people in turbulent markets, that's when people make the most money. And those are the smart people that are looking for an opportunity and saying, Well, you know, where can I make money out of this potential opportunity out of this potential situation opposed to? Oh, my God, the sky is falling in and, you know, let's we'll go get a bunkin hunkered down top thing.

Jeff Kikel: 00:07:13

Yeah, I mean, it's, it's funny, because I do another show, and we talked about this, and you know, it was, I feel the same way you do, you know, they'll they'll hook on to one statistic, and then oh, every bank is going to fail. And, oh, there's this massive bubble in the in the commercial space, the market will adjust to whatever.

Mitch Ginsberg: 00:07:34

And it's, you know, there's certain segments, I mean, office buildings are probably one of the harder hit segments at the moment, there's so many factors that come into play number one, you know, you had COVID, you had, you know, people really getting used to working at home, and companies are finding it challenging getting people back into offices. And the hardest hits are these high rise towers, you know, downtown, you know, big cities, LA, New York, San Francisco, and then there's other there's other demographic issues, which are affecting it, you know, as far as safety in certain cities, etc. So, you know, so I think, and then obviously, rising interest rates doesn't help, you know, because a lot of commercial loans are short term, you don't have 30 year fixed rates, a five year tenure. So a lot of these are coming up for renewal. And with rising interest rates, you generally have to generate more rental income in order to support the higher payment, which a lot of these, you know, owners of these larger buildings don't have. So I think, I think in certain segments, you're going to see more defaults, particularly in that region. And, and they're going to make headlines because they're going to be big numbers. Yeah. But you know, you know, if you got a $500 million office tower in the middle of Manhattan, that, that fails, that's going to hit the radar screen, and all of a sudden, you know, it's like, but But it's gonna happen, but you know, what, it's, it's, I think the underpinnings of the economy are still are still decent, you know, it's not, it's nowhere near where we were, you know, it. So I think, if I can share any advice, keep looking for the opportunity and, and create your own reality, I think, to some extent,

Jeff Kikel: 00:09:19

yeah, absolutely. So, you know, let's kind of zoned back to 2008. You know, you you went through a pretty turbulent time and really for the next four years, I mean, you hung in there where other people didn't, you know, what advice can you have to other business owners that might find themselves in a similar situation to that,

Mitch Ginsberg: 00:09:40

you know, what I think is important and to some extent, you know, I held him longer than I should have. I should have probably read the tea leaves tonight, but it was bigger than then I thought it would be and my personalities, I don't like to quit. I mean, I hang on like a bulldog and at times you do have to learn to quit. So, you know, I think Clearly, you know, what's important is just to believe in yourself, believe in what you're doing. And, and just focus and execute. But once again, you know, don't make the mistake that I made of, I think at some point, you know, reality sets in any NF, clearly, it's a lost cause, and, and what's going on is way beyond your control and just a lot bigger than you can manage. It's okay to throw in the towel, you know, you, you live to fight another day, and I'm living proof of that, you know, it was a devastating time for me. When I was writing, I was on top of the world big company, you know, I thought I was bulletproof. And then and then these global economic factors came around which, literally, it was the NAMI that, that nobody could withstand. And, you know, so it happens, and you realize it, and it is what it is, and you stop feeling sorry for yourself, and you dust yourself off, and just say, right, where's the next opportunity? And with hindsight, you know, what, Jeff, I think it probably was the best thing that ever happened to me for two reasons. Number one, I think it changed me as a person that taught me that all the things weren't important, the fancy cars and big houses. And, yeah, it's great, but you know, that that shouldn't define you. And secondly, it's given me this opportunity, which I feel is a lot bigger opportunity, and certainly more fulfilling and rewarding. I mean, I'm having so much fun coming to work. And that's the important part, you know, enjoy what you're doing, have fun at what you're doing. And then the money will come, you know, once again, provided you in a real industry, and it does have opportunity. I mean, you know, that that's, that's important, but, and just because every day is a gift, you know, and it made me realize, certainly from a financial and economic point of view, and generally in life, from your health, don't take anything for granted. You know, every every day is a gift. And if you you know, thank God, I've got health, and you've, you know, you're you're in a position where you building economic security, which is Be grateful and enjoy the ride. I think that's, that's really the key.

Jeff Kikel: 00:12:16

That is awesome. That's such an it's great advice. Yeah. And I think just wait, every day you wake up above ground is a good day.

Mitch Ginsberg: 00:12:25

That's a good day, and you know, lots of things are gonna happen beyond your control. But how you react to them, is in your control. So ultimately, you do have control over everything. Because you control your reaction. And it either could be, you know, negative, or you know, what it is what it is, what's the best I can make out of this situation, and you move on. And I'm a firm believer that if worrying and panicking and, you know, did any good, I would worry and panic, but it does. And if anything, debilitates you you can't think clearly, you can't make the right decisions. I think you just go to strap yourself in and go for the ride. I think that's that's the key.

Jeff Kikel: 00:13:09

Absolutely. So, you know, when you when you kind of made that pivot in your life in 2012, and started to kind of refocus, was this, you know, the software that you guys developed and your algorithms and everything else? Was it something that you were able to take software that existed before? Or did you have to start from absolute ground zero,

Mitch Ginsberg: 00:13:31

started with a blank piece of paper, it was it was really a fun process. So, you know, having been in in Residential Lending for all those years, I understood lending. And I understood the fundamentals of lending. And obviously, just the rules are slightly different in commercial, but but lending is lending. So it was really fun. So I you know, I live the life of the proverbial startup. You know, I was probably a little older than the majority of the Silicon Valley startup guy. But But I, you know, I'd arrive at a little executive suite every morning, my sandals and shorts and T shirts and I design during the day. And I've got a phenomenal development team, we still have an office in India got a great team in India, which we've had for eight years now. And then they would develop at night. And that went on for probably almost about a year until we had the, you know, calm loan. 101 are actually our platforms called Cupid. And Cupid stands for commercial underwriting pricing index data, and obviously playing on the whole matchmaker thing that were the cubed of commercial real estate lending. But it was just a great fun process. And now eight years later, obviously, the platform is substantially different and has evolved tremendously since we first launched and to watch a growth. That sounds corny and everybody uses term you know, you're watching your baby, grow and grow up and I guess it's now a teenager. Hopefully it doesn't behave like a teenager. But but but it's it's just, it's just a great, great thing to think, oh my god, this literally started from just an idea. I was remember, I was driving one day and I thought, my God, how does anybody know? Because I was involved in this commercial deal. I was like, How did? Where do I go? You know, how do I know what banks has what and I say, There's got to be a search engine. And that was the inspiration. And eight years later, we come loan is alive and well and thriving and growing.

Jeff Kikel: 00:15:38

She's totally brilliant in it. Some of the greatest ideas come from that very thing, how there's gotta be something for this. Why is nobody thought of this?

Mitch Ginsberg: 00:15:48

Well, that's that, you know, what I was once asked, I was at a venture conference, I was doing a presentation and what, what was what, you know, what, what is the key to, you know, good startup, and, you know, what are the key variables that you need to ensure you have in order to keep going. And the first is, you got to be solving a problem. I mean, it's pointless creating, I mean, it's not solving a problem. So clearly, we were solving a problem. The second thing you got to be in a market that's scalable, it's big enough, you know, if you got such a tiny market, yeah, you can be solving a problem for for a handful of people, but what's the point, you're not going to really make money out of that. And then, you know, as long and you know, so you you gotta be solving a problem in a in a real in a sizable industry, and it's got to be a real market, you know, big sizable real market. And if you meet those criteria, then you just got to keep going, because you're gonna get knocked down, you're gonna get beaten up and every and you get all the naysayers, you know, particularly, you're doing something that's never been done before. I cannot tell you how many times I heard, it can't be done. It's too complicated. It's too diverse. But that's the whole point of a marketplace of a search engine, when you have a complicated, diverse, you know, industry, you've got to organize the data in a concise, systematic manner, that will enable people to make a correct choice. And look what Amazon's done. I mean, they they certainly that's a complicated market, that they're in all these different products. And it's just so consumer centric. And And I'll never forget, podcasts that Jeff Bezos that that back. Oh, my God, I was in the 90s. And he says, he said the internet's great. And technology is great. But the key is to focus on the customer experience. And that's the key to success, use technology to enhance that that customer experience. That's really the key.

Jeff Kikel: 00:17:57

Yeah, well, I mean, for you, I mean, it and you're absolutely true on this, it is such a complex market, knowing where to go and what the lending standards are, you know, and God willing, you you found that you know, that source? Is that is the data that's out there that you guys compile, is that, you know, commercially available, or is it something that you have to gather from each individual lender? Or is there any other source of it?

Mitch Ginsberg: 00:18:28

There really is no other source we we've literally gather that data, Linda, Belinda, Belinda, you know, we've got our onboarding process down to a science where we can onboard a pretty complex lender with you know, a lot of different products within 30 minutes, good. And then, and then all the data is kept current, either by the lender, or if the lender hasn't gone to update the lending variables in 90 days, we reach out to them and ensure that it's all accurate, but the interest rates are kept current daily. And how we do that is a lot of lenders link their rates to an index, you know, whether it's the the Treasury or whatever that index is, and then every lender has a margin that they would add to that index, which is their lending rate. So they tell us what their margin is. And then our system pings the indices on a daily basis, and we'll just update their rate. There's certain other rates like CMBS, or Fannie Freddie, which which are really functions of how the bond markets perform. And we've written algorithms which sort of mirror how those respective entities would would price their loans so the rates are current. So if you ran a quote through our system, generally within eighth to a quarter of a percent max, you're gonna get current pricing on where the markets at on that particular product which is which is really amazing.

Jeff Kikel: 00:19:56

How large of the range of products If that you have available, or can source, how large of a deal will your software kind of handle in that,

Mitch Ginsberg: 00:20:07

you know, there's no real limit, it's whatever is on the system. I mean, generally, our sweet spot is is a million to probably 50 million. Okay, I think when you start getting into and I mean, we just got a $70 million loan in that I think I heard one of the guys tell me today, so I'm probably but but really, generally, once you get to the real big loans, they become very structured, the capital stacks, very structure, there's different forms of MS financing. And, and, and, you know, a lot of those deals are sort of negotiated around conference from table, we're very transactional. So you got your debt component, you got your equity component. And so, you know, generally your smaller transactions up to, you know, 30 50 million is really where our sweet spot is, we are starting to work on loans below a million dollars, we've got a beta going, which we call our small balance loans. That's a very underserved market, because nobody wants to touch those generally, unless you using technology, you can't make money, they you know, because of the loan size. And they and believe it or not, generally they tougher to do you know, you've got borrowers that are generally first time they then not as well organized from a documentation point of view, as is very seasoned real estate investor who's you know, who's buying a $20 million property announced another five $20 million property. So they've, you know, this, you know, they've been to that movie before, but it's a great market, it's underserved. And we're looking to be able to service that market as well.

Jeff Kikel: 00:21:48

I love that well, and it's, you know, once again, it's when you can find those underserved markets like that and come up with a good solution. That's cost effective for those banks to do the business. It's that's a huge, huge, huge benefit to the world. So thank you for doing that. All. Right, let's, let's transition to the Fast Five questions now. So first question, you wake up in the morning, business is gone, you have 500 bucks in your pocket, laptop computer place to live?

Mitch Ginsberg: 00:22:19

What are you going to do first? Well, probably get used to eating Romans for a while.

Jeff Kikel: 00:22:28

For 500 bucks.

Mitch Ginsberg: 00:22:31

You know, I think I think the, you know, pretty much just what I said, you know, I would sit and say, right, where do I believe there's a problem to be solved? Where is there a gap there, where the consumers being underserved by virtue of their not being an efficient and efficient model or solution for them in whatever they whatever that that particular situation is? So to determine their major. Secondly, I would make sure that it was something in a large enough environment that's scalable. And then I'd say, alright, let's start planning. And obviously, you know, with $500, I'd have to run out and raise some capital to put it all together, but, but I think that's, that's really what I would do. Because, you know, being busy and just, whatever you do, you got so many hours in a day, and you got to make sure it counts. And if you want to build economic freedom, you got to be putting your energies into a direction that ultimately will give you economic freedom. So that's why you know, I wouldn't go and you know, wouldn't go and look for a job, I'd say, right, Where's where's my next opportunity? And, and let's figure out and do this. You know, the

Jeff Kikel: 00:23:47

they'll Grant Cardone, I want to know, I come to town, I want to know who's got my money.

Mitch Ginsberg: 00:23:53

Exactly, exactly.

Jeff Kikel: 00:23:56

What's the biggest mistake that you've ever made?

Mitch Ginsberg: 00:24:00

I think the biggest business mistake I made was not throwing in the towel when countrywide and all the other big guys that virtually immediately, I guess, underestimated the size of the collapse. And overestimated my abilities. Maybe. Yeah, there was a huge mistake. I I shouldn't have kept going as long as I did. Yeah, well,

Jeff Kikel: 00:24:26

you learned and I think I learned better and yeah, I think he came out better in the end because you de risked yourself massively. Absolutely. Absolutely. He'll participate in the in the world you just don't participate with all the risk attached to it. So

Mitch Ginsberg: 00:24:40

exactly. I learned a lot. Absolutely. What

Jeff Kikel: 00:24:43

is a good book that you would recommend for our audience?

Mitch Ginsberg: 00:24:48

You know, probably one of the best books that I've ever read, which is a classic is Jim Collins Good to Great. I think that you know, a lot of those fundamental principles All these years later still apply. I just think it's a great read just sort of looked at what, you know, what really what the Fonz is? What are those core components that are common to every really good company opposed to mediocre companies?

Jeff Kikel: 00:25:17

I love that book. Yeah, you hit it right on the nail head, what's a tool using your business every day that you might recommend to others?

Mitch Ginsberg: 00:25:26

Well, you know, what I think is critical is, is communication and building a culture in in a business that there's no secrets, and empowering your team. So what we do is we do daily huddles, it's like almost like a quick zoom call. And we used to do it with the whole team on every call. And now we sort of had to segment it just because the team's getting bigger, but we do once a week, all in call with a whole company where we go through key metrics that we follow and it really covers the full spectrum from the origination team to the fulfillment or processing team through marketing, etc. And I think what it does, it really empowers and really keeps the entire company engaged and that the company takes ownership. So I think that's a phenomenal tool. And then as part of that we you know, read off our guiding principles which really what what is it that defines us as an organization and I think very often somebody in some HR Tao will put together the you know, these are this is our mission, this is our values and, and it gets stuck into a drawer somewhere and just dust it off if they want to show it to somebody, but we really try to live it you know, we will read out one of our core values every week and really try and embrace it and love it and, and I think that that is is really just a phenomenal tool. Because you know, no one individual can build a great company, a taste of a lot of really good people that are all playing to the same sheet of music and are all in sync and and believe believe in the vision and believe in what you're doing. And I just feel blessed I got a great team just phenomenal phenomenal people that make me look good every day.

Jeff Kikel: 00:27:23

All that's that us as CEOs, that's the biggest challenge of it all is keeping it running and just i all i have to do is look good out front. And most executives running behind me I don't have to worry about that piece of it. So basically asking what a great answer to that I usually you get some kind of tech answer or some low tech thing but that I love it. That's a great tool. The company going so last question, what is your definition of freedom?

Mitch Ginsberg: 00:27:55

I think my definition of freedom is getting up in the morning and going to do something you really enjoy doing. Just to have that purpose, to feel challenged to feel excited and excitement could come from dealing with issues and problems and you know, it doesn't all have to be unicorns and rainbows I mean, but but being excited is getting up and wanting to do something special and to change and to change to leave something behind that ultimately is gonna make a difference. So yeah, freedom is is waking up every day with a purpose and and excitement for what's ahead. That to me I consider freedom I love

Jeff Kikel: 00:28:53

it that's such a great answer to so you've knocked them all the cover off the ball on all of them today.

Mitch Ginsberg: 00:28:58

I appreciate it.

Jeff Kikel: 00:29:00

If somebody wants to find out more about calm loan where's the best place to go?

Mitch Ginsberg: 00:29:04

Well our website which is calm loan.com C o m m two M's LOA n.com you know look at you know, fiddling around on the site and you know it's I think it's pretty self explanatory if if you are in the process of looking for a commercial loan, you can click on the button and get a quote something that's really exciting with just starting to open up our platform for loan originators. So we're bringing on loan originators up till now it's being Consumer Direct. Okay, we actually doing a launch in Dallas, the end of the month. So if you're a loan originator and you're looking at a life changing event, a commercial loan originator miss I miss ad, and you're really looking at really changing your life. We've got a phenomenal model for originators. Go to comm loan.com And you can click on become a loan originator and you'll you'll find out more about Got it.

Jeff Kikel: 00:30:00

I love it. Fantastic, my friend. Well, thank you for being on the show and sharing your story today. It was wonderful. I wish you absolute success. I mean, you don't have to because you're already super successful with this. But it's exciting to hear how the product continues to develop and improve all along. So thank you for sharing your time today and story.

Mitch Ginsberg: 00:30:22

Well appreciated Jeff and will hopefully keep in touch.

Jeff Kikel: 00:30:26

Absolutely. And folks certainly reach out to their company. If you if you're in the hunt for a commercial loan, they're the first place you should go to. And always make sure that you subscribe to the channel, hit that little notification button because we put these things out on a very rapid basis and you want to make sure you stay informed every time we're putting up a new show for you. So thanks a lot for joining us today. And we will see you back here the very next time.