Inside Construction Lending With Tom Coronato

Mary Anglade: Welcome to the Builder Lead Podcast. I'm your host, Mary Anglade, founder of Builder Lead Marketing. This is the podcast where home builders, modular manufacturers, and construction industry professionals discover proven strategies to generate more qualified leads, strengthen their brands, and grow profitable businesses. Each episode features practical marketing insights, industry trends, and conversations with the leaders shaping the future of construction. Whether you're looking to improve your website, generate more leads, navigate AI and digital marketing, or build a stronger sales pipeline, you are in the right place. Hello and welcome to the Builder Lead Podcast. I'm Mary Ann Glade. I'm founder of Builder Lead Marketing, where we help builders grow their sales and their leads through innovative digital marketing. Today I am delighted to be joined by Tom Coronado. Tom is Senior Vice President of Construction Lending at Calcom Mutual Mortgage, where he specializes in helping builders and home buyers navigate the unique financing challenges of new construction. With decades of experience in construction lending, he has become a trusted resource for builders, lenders, and industry professionals across the country. Beyond his work with borrowers, Tom has been deeply involved in advancing the home building industry through his leadership and volunteer service. He's a past chairman of the Building Systems Council within the National Association of Home Builders. He serves on the NAHB Housing Finance Committee and Leadership Council. He is also a board member of the Modular Home Builders Association, a member of the Modular Building Institute, and a national delegate for the Black Hills Home Builders Association. He brings a unique perspective that bridges the world of lending construction and housing policy. And today we'll be discussing the current state of construction financing, what builders need to know in today's lending environment, common misconceptions about construction loans, and practical advice for builders looking to grow their businesses and better serve their customers. So with that, I'd like to welcome Tom Coronado. Well, thanks so much. It's ⁓ you can see the gray hair, so the list gets longer every year, right? I don't know how you have time to to do anything. ⁓ that's a l really long list of in involvement. But that's we we don't sleep much. I mean, you know, to be honest with you, I have other things I do outside of mortgage, which when you actually hear that list, you'd be really amazed that I even do anything at this point. So yeah. Well, we we thank you. ⁓ so I always like to begin with, you know, guest stories. If you could tell us a little bit about your background, how you came to specialize. In lending and becoming such an integral part of the industry? ⁓ well, it's kind of long at this point, but I'll try to keep it short. I mean, honestly, so I'm originally from New Jersey. ⁓ when I got in the mortgage business, ⁓ they didn't stick me in a section of New Jersey that had high dollar ⁓ you know, real estate business. They stuck me in the other section of New Jersey where it was more rural farmland and and there was more builder. you know, based business. So I kind of the guy that brought me into business twenty eight years ago kind of said, Hey, let's get you involved in building. ⁓ at that point I hadn't talked to a realtor, a builder, an attorney. I didn't even know what the heck I was doing. I was kind of just out there ⁓ figuring it out. ⁓ but I saw that, you know, building was definitely in in my space in the counties I was in when I started. And then that bled into Pennsylvania and the Poconos on, you know, the eastern side of PA. ⁓ You know, I had really good relationships with builders. I did a lot of builder work, a lot of stick builders. and I joined, you know, ⁓ the New Jersey Builders Association, then ⁓ kind of became a member of the Pocono Builders Association. Believe it or not, this is kind of the backstory. I literally found an open chair one day at a table. It's your first meeting, you don't know anybody. And the guy that I sat next to in nineteen ninety eight ⁓ did modular, geothermal. IFC foam core, you know, solar and like, you know, was basically building off grid. And you're talking 30 years ago. And when I talked to him, again, he was the only builder because everyone in a builders group always huddles amongst their friends. And you're the new guy. And I was the bad guy because I was a lender and everyone hates banks. So he he was willing to talk to me and tell me what he did. And I'm like, God, this is so interesting. It's modular. It makes sense. And in the eastern part of Pennsylvania at the time, you probably had I don't know, six or seven of the largest modular manufacturers within say fifty, you know, miles to a hundred and fifty miles from my office. So he introduced me to like the local guy who inv introduced me to the sales guy. And then next thing you know, I was sitting in front of the owner of the of the ⁓ of the plant. And ⁓ you know, he liked me and ⁓ you know, the relationship started that I he I understood what I could. But I understood that the the nuances right away, brought it back to the company I was working at, and then ⁓ they said, Yeah, let's do it. ⁓ no one else does it, but you know, you can do it. They just thought I was kind of just ⁓ you know, just get them out of the office. ⁓ you fast forward like a year or two later of going to IBS and kind of networking, just n poorly to be honest with you. ⁓ one of the builders, ⁓ he was with ⁓ Target Homes, Joe Mackey, said, you you're at all these meetings. You should come to our board meeting. And I'm like, well, why would I come to your board meeting? Because like that's what old guys do. ⁓ so I walked into my first board meeting as a guest just to check it out. And they wanted me as an associate. And I looked around the room and I'm like, ⁓ my God, everyone here's a builder. It's a target rich environment. So ⁓ not only was it that it I actually was around people who were making decisions and and conversing locally about our concerns in the counties that we built in. ⁓ And again, I was a regular attender at meetings, but I wasn't really actually getting very far. And then from that, ⁓ Joe his name was Joe Mackey, he was the president of the PBA. ⁓ he actually then said, you know, ⁓ you might want to look at some other things. And then a friend in the industry, she's still a competitor, and Fran said, you know, I need you to come to this meeting. Yeah, because I go to IBS. Again, this all goes back to you know, the international builder show at the NAHP. ⁓ And I've gone every year that I've been into business. ⁓ she says, you know, you need to come to the Building Systems Council. I'm like, well, why would I do that? And she's my competitor, mind you. And she goes, Because they're going to like you. And you have, you know, the you have product that they can use. And then that led me back to modular because the modular guys that I knew, I'm getting all this pressure to kind of come and share, ⁓ that will lend in this space, which then led me to being a member there, which then led to you know, recognizing that in in order to really be a member, you don't you need to be get involved. And to get involved, I got more involved in my local, which then I got more involved nationally, which then led to, you know, like I moved to Wyoming from New Jersey, you know, and it's really easy to spot me with a cowboy hat at a meeting. ⁓ you know, because I'm representing Wyoming for the last twenty, twenty five years. And ⁓ you know, so it's again it's odd to be from this section of the country. Then it's odd to be in modular But the backstory was I really was pushed into get involved locally, then volunteer and utilize your membership, and then get involved led to a national presence, which was not my plan at all. Like I would never recommend that anyone do it my way, but I talked to people and said, I could give you the short version, which is just get involved with the local HBA and volunteer for the first committee that you can, which right now executive officers are going, Thank God this guy just said that because that's what controls the business, you know. Right. But yeah, that was kind of how I got into modular. So Yeah, no, that's interesting. ⁓ there's usually an interesting story ⁓ for anyone who's in in this industry. So, you know, how ⁓ has the industry evolved and and then you know also has there been an evolution with the lending angle of it? Well, I don't think it's evolved yet. ⁓ throughout my career where you take ⁓ you take lending in general most lenders, banks or otherwise, first of all, don't do new construction. Then those that do ne construction tend not to lend in modular. A lot of it, and we'll talk a lot about this today, is gonna be that ⁓ there's an education issue and a confusion in modular versus manufactured or site build versus off site build. But the banking institutions in general you know, are the worst thing for us because they're so stuck on doing things the old way and you have innovation in this industry that usually involves kind of a new way, but the the the new way is no different than it was twenty or thirty years ago. When when loans were easy in the industry and we were not really checking very deeply into people's backgrounds, construction lending we always did. We still do that today in the changes in two thousand eight and two thousand fourteen in the lending industry, it's still the most complex section in my opinion. is anything that involves a hammer, whether it's renovation, whether it's on site, off site, new construction. But those are the tougher loans because they involve more scrutiny. ⁓ they also involve more risk from the bank as far as holding on to monies while the builder's building and the dispersing. ⁓ there's more cost. But, you know, you know, the industry has changed to where you know, this is our time. You know, to be honest with you, we're the redheaded stepchild of the industry modular specific. But I'm in off site modular, log, panelized SIPs, you know, ⁓ you know, cargo containers, like we'll land on all that. And a lot of banks will. There are are there's are other people like me out there, so I don't want to make it a commercial necessarily for me specific. But you know, the industry is what we're trying to do to grow. But banks need to understand ⁓ how this happens. And, you know, there there's a lot of like little nuancing pieces in the payment schedule. that really make either a successful banking relationship or unsuccessful banking relationship. So Okay. Yeah, and it's it's funny. I ⁓ had a conversation with Tom Hardaman last week and you know ⁓ basically talking about the misconceptions and the need for education and you know really this should be a moment because we are don't have enough housing in this country and you know ⁓ it's a way to build quickly but build amazing quality and yet so many people don't really understand it or they confuse it with manufactured to to Yeah that's a whole other ball game we'll hit I'm sure too yes yeah yeah so what would you say like if you had to explain to builders who are thinking about modular like what's the the difference you mentioned something at the end that the payment schedule is different than like a stick build can you elaborate? So yeah, so I mean, ⁓ generally speaking, when people come to us for lending, whether it's the the builder or the borrower, whether it's the developer, it doesn't matter. I mean, the lending aspect of it is ⁓ and it's not this simple everywhere, but generally speaking, if we're we're talking all the time to the client about can they qualify for a mortgage? Like and again if they talk to their bank their federal credit union or what have you, whether it's USDA, VA, FHA, whether it's a non QM loan, anything that's out there, if they can get financing, all you have to do is put a construction piece in front of it. You know, that's not the same everywhere, but that's really how easy it is. And loan officers, their eyes glaze over, most of them claim to do new construction. Like I'm talking to forty, fifty people a week sometimes about new construction. Others might talk to forty, fifty people a year and maybe three about new construction and will consider themselves an e expert. They're really not. You know, so you know, when you're looking at the financing piece, really to get a new person or a a bank comfortable and a builder is like if I can get them a a loan permanently when the house is done, we're just gonna place construction in front of that because a construction loan, you know, is a two-phase loan. You have a construction phase and you have a permanent phase, and the the buzzword is C to P. your construction to perm financing is typically what people are going for. But from a distant, you know, different for like a like a site builder, if you think about it, from you know, from under the ground to the sill plates of some sort, it's all the same. It's a regular draw. You know, the builder goes and excavates, puts in a foundation. You know, the main difference in our world is Monday there's sill plates. A stick builder starts putting one stick up and starts faming. In our world on Tuesday, the house comes and goes plup, it's right there. Right. And it's basically weather tight and it's secure. And now there's stitching that has to go up with the siding and you know, and and and they got some interior work to be done and you might be adding decks and you might be adding a new now. So you kinda go from like a a regular draw of sight built to this like big chunk that goes out to ⁓ a sight built again draw at the end for the other stuff that kind of wraps up well set the fantasy. Yeah, okay. But the the the main hang up is modular manufacturers need a deposit for funds to start your home into production. And then what you know, what has to really happen for this industry to move is you have to do a pre curb side delivery payment, which pretty much nobody does. And the people that do it do it are rare. And you know, that's like my selling point when any like I'm recruited every day, you know, I love where I'm at. But like you talk to other you talk to recruiters, you talk to other banks, you're like, if you don't have pre-curb side delivery, then you're not in the business and you never will be. Because you don't order anything from Amazon today and don't pay for it in advance. This is a giant Amazon order. It's called a house. So it has to be paid for because if you wait for it, like most banks will wait for it to land on site on the foundation and then have an inspector, you know, come out and and pay. And that's not The way the industry works, nor is it gonna be efficient. You have to pay in advance. So that's the major, major, major difference. Because again, builders are kind of used to like they build, they put something in, someone inspects, they get paid. They build and they kind of go through this. Modular, there's a little bit of a leap of faith of you're gonna build this thing over in Pennsylvania, we're gonna ship it down to South Carolina, you know, the loan officer's gonna be in Maine. You know, and you know, what you know, wherever it is, like I mean, it's gonna be like it's a little more complex, but technology allows us like I don't need a local inspector. You shouldn't need a local inspector. Most banks still use a local guy. Why would you need that? We've got GPS satellites. I could tell you within four feet what direction you were facing when you took the photo. You know, there's chances of fraud, but the industry is moving so quickly with technology and why would you wait for an inspector to walk out on site to make sure the house is there? You know, so there's there's a lot of cool things that are you just have to get out of the n the traditional space. Yeah. So Yeah. My early years were in banking, so I I understand ⁓ the the the environment and being risk averse. ⁓ you know, it's ⁓ you always have to prove why you're doing it, you know. ⁓ which which makes sense in some cases, but it must be a little bit frustrating when you're you know, when you see that there's ⁓ opportunity and I don't have that problem. Like I I never talk to a builder and say, Explain to me what you do. Like when I see the builder, I know what they do. If they're panelized, if they're SIPs, I know how they want to get paid. And again, you know, the the the friction that's created in the industry is a modular builder doesn't know where to place his his lending and he's lending with the wrong partner 90% of the time. And they're creating friction. And a lot of times when they're creating friction, you know, because we shouldn't be explaining what modular is. It's a method of construction, not a Not a type, that's manufactured. You know, so we're just a we're just a a stick built house that's built inside and that's just delivered over here. I mean, and you know, if you if you really want like some good like optics, it's like w ever the entire industry is predispositioned that buying a car from a factory is a good thing. Right. Would you ever go and have your car built in your driveway? No. You would never do that. But housing for some reason we wanted built in the on the spot rather than in a in a controlled environment. So yeah. Yeah, we were w in the conversation with Tom last week, we were chatting about how like in Japan their most of their homes are built in modular, but it grew out of their auto manufacturing and their manufacturing, you know, like right. And so that I I've thought that was really interesting. I I knew that the They built most homes modular, but I didn't know that it came out of like the automotive and the their manufacturing mindset. So ⁓ they don't look at regulation the automobile industry doesn't look at regulation as the enemy. They look at regulation as just part of the solution. You know, and consistency and quality. So we always view regulation in say housing, you know, but again, if you I mean, honestly, there is too much regulation on some things. I mean ⁓ and we need to you know, the the average cost of a home probably has a hundred thousand dollars in regulatory issues just built into the price. That's where the problem is. ⁓ but if it's standardized and we're all building to the same code, ⁓ you know, there's argument for and against it. I'm a banker, so anyone who's yell yelling at the screen right now, you know, it's you know, it's like I get it. ⁓ but and you get that it's Different states have different weather or different concerns or yeah, there's there's all of that. Right, right. So I just want to go back to one thing. Like if I were a builder and I was looking for a lending partner, you know, and I I was either doing modular or planning on doing modular, like what would I look for in a bank? Is there a special division typically or specialists like yourself? Yeah. So in in my world. ⁓ specifically like you know I run like off site slash modular, you know, ⁓ I will dabble into manufacture, but there is a gentleman here, Jason Huffman, who like he's the guru of the manufactured world because you can do other things and manufacture like chattel and stuff and it's a whole other language. But ⁓ diving in as a new builder or old builder in Modular, you really have to question your relationship and what are they preventing you from doing. You know, and and you know, it traditionally I would take a knife to the construction gunfight with companies that I've worked in and around, but I we did it very successfully. however, today I walk into a knife fight with a howitzer. I mean, it's not even close because you know, the things that I've been exposed to in the last two to three years, ⁓ certainly with my new role that I have with Calcon, is you know, there's so much more out there to ⁓ lending, including ⁓ like overlays. Like most banks will throw an overlay out onto their lending capability and we don't. So to give you an example, I have a a a builder ⁓ who, you know, he's courting me. I'm courting him. ⁓ he's like, you're gonna really love our clients. And ⁓ I'm like, why? He's like, well they're all 10% down and they have six eighty credit score. And I'm like, well wait a minute. Who do you work with? Well he tells me the bank he's working with. I'm like, well you're losing business because you're working with that bank. Because we can do loans at a hundred percent financing, we could do loans at ninety-five percent financing, I could do loans below six eighty credit score. That's that bank's preference of lending. So that really means that he had a client that could have actually built with him, but because he's sending it to this particular lender with that particular underwriting guideline, he's passing on it. Doesn't even know that he's actually turned away a client that he could have built on. So for the last three years where he's had this relationship, he's probably he's declining in You know, because I've looked up the skirt, so I know what's going on. He's declining in sales because he's using the wrong partner. Wow. Is that important? Yeah. That makes sense. I mean, you most people ⁓ need loans to to purchase ⁓ homes, so ⁓ that makes a lot of sense. I mean, here's an easy one to grasp. I mean, you take a veteran today, veteran guideline is there is not a credit score requirement. A bank might say, Hey, we're not doing veterans. You know, there's banks that choose not to do VA for various reasons. It's not because they don't like ⁓ It's more because of like maybe a compliance issue. It could be a risk issue. Some might say we'll only lend a veterans with a six sixty or better, or six eighty. ⁓ some six twenty, some five eighty. But the technical guideline on that is they don't have to even have a credit score. If they qualify, they qualify. So when we actually look at it, like that's like the like that's where like I'm coming through the ceiling like the Kool-Aid man going, Yeah, you know, because ⁓ I can do that. You know, and I could put a construction loan on it, which you know, the builders are in shock. So now you're giving back to the people that give to you by saying, Look, we know we're willing to lend because the loan is guaranteed and we gotta build for, you know, in housing. So so there's a lot of like really kind of cool things that are out there, but it's it's understanding where is the build like where are you getting friction, whether you're site building modular or other, where's the friction coming in? And why are you losing business? And when you have a really harsh, direct conversation with the builder, it's usually the builders creating his biggest problems. And it's actually caused by his poor choice in lending relationships because they like going down to see Susie down at the branch office, who they've had coffee with for the last 20 years. She may not be the most qualified person, you know, because she's you know, she's probably not even doing the loan. She's just the teller or the bank manager, whomever. Yeah. But you're passing on a lot of really good business. So interesting. Interesting. Now, you know, everybody's been impacted by higher interest rates. ⁓ where do you think that's going? And, you know, what's what is your perspective on that? I don't have interest rate problems. So you know, I think that the and you know, you're like, really? You're the only guy I've ever talked to who said that to me. So I keep hearing it's depressing, you know, ⁓ demand to a certain extent. So the builders that I've partnered in and I have premier building relationship with, first of all, rate is not the question, and lowering the price of the house is not the answer. Because you're never going to move the house low enough to actually impact the client's desire. Well, you know, you know, it's a big misnomer that. ⁓ housing's not attainable. By the way, they changed it from affordable to attainable, you know, when I was in DC. Okay. Yeah, it's now attainable housing. So we might as well get in front of that one, just lean into the punch, right? Yeah. you know, for for rate, rate is only part of the equation. Okay. So the deregulation could help. ⁓ moving to, you know, you're not gonna go to a cheaper cost to build. It's not gonna be easier to get stuff. You know, let's be realistic. You know, the cost, if you really go back and look at some of the statistics, you know, everything's skewed. You know, housing affordability has been a topic of conversation for nearly sixty years, longer than I've been alive. So it's not a new topic. People like to think it's new. It's great for, you know, votes and clicks and everything else, but it's not new at all. The you know, America actually needs to you know, you know, when I I have two young kids, you know, they're nineteen and twenty-one. ⁓ you know, I'm in the business and it's it's math. Read good books that tell you how to actually build your credit, read books on how you don't need You know, you didn't have Instagram, you didn't have Starbucks, you didn't have, you know, whatever the fancy stuff that people use, like ⁓ Uber eats. They're wasting money every day on stuff that they so it's it's not the issue of rate. It's your first of all it's your spending habits and your savings habits. And I look at people's credit all the time. So you start there, education is the number one thing, then you move to, okay, you know, why do you need to build a two thousand square foot home as your first house? Well, you didn't do that in nineteen fifty. Okay, so the issue isn't this it's not that, it's the size of the home that they're being and then you want to have all these high tech ⁓ items that drive the cost up. You know, yeah again, you so you know, you have a lot of issues running up to now let's talk about rate. Okay. So counterintuitively, let's talk about ⁓ higher sale price, lower rate. You don't go buy a car today and walk in and say, What's the rate on that red one over there? You say, what is the monthly payment on that? So surprisingly, to most everybody out there, it's about monthly payment. But for someone 30 years in business, monthly payment is all we talk about to clients. What controls monthly payment? Rate. What ultimate what ultimately pays payment? Sale price. But most of my builders work a forward commitment, which means they buy the interest rate in advance down to $499, 475, or $399. So any builder right now that has A forward commitment with me today, we don't care if the rates are at six, we don't care if the rates are at seven or eight. They're offering four nine nine. And the way they do that is they build it into the house. Well, you increase the sale price of the house a little bit, and a client saves five hundred dollars a month. It's it's it's miraculous. It's math. Yeah, it's mass mathematical, it's mathematical, you know, ingenuity or however you want to call it. But to me, my builders are not having runoff. That rates move up or down. Because again, if you they they're beating the builder up for $10,000 in price because they're so focused on what? Monthly payment, right? You knock it down for $10,000, it moves them $60. On a $500,000 loan, I move the rate down to $499. You can raise the price $10,000, and you can actually have a payment that's $500 a month less. They stop arguing about what the sell price is because now all of a sudden they're doing some kind of you know, mathematical ingenuity going, ⁓ you know what? I can actually upgrade my kitchen. Because they've already spent in their mind. Like my builders that come in, the clients that come in are shopping a price because they've already talked to a lender and the lender already told them it's six and a half. And they know that at six and a half, their monthly payment's going to be, say, fifteen hundred dollars. And that's the magic number. So they're shopping at a two fifty sale price, say. Well, okay, you move the rate down to four point nine nine. You know, first of all, the client has twenty percent buying power. So the client from 200 now can buy at 250 for the same price that they were just shopping. The client at 250 now has a payment and they can't object to the rate. And or they're going to upgrade even a little more because we're going to, we might have to sell that house from 250 260 to make up for it. But let me tell you, I don't have rate problems. And that's what makes me successful in grabbing more builders. And it I to me, I think you got to get the focus off that because again, you know, the car industry does it. The RV industry does it. Almost every other industry, it's zero percent financing or five thousand cash back. No one ever asks how it works. All they see is zero percent financing and a payment they got. They don't care how it works. Right. Right. Right. No, that's that's a great explanation. No, it's true. I also think like, you know, when I worked in banking many years ago, I think prime rate was eight percent. And people forget like that was That you know, we just so used to it. Just like, you know, especially if you're in the refinancing mode where, ⁓ I got it down to three something, that seems so high, but it really historically that's not the case. Right. It's it's a payment question, not a rate question. And rates are not gonna move as fast as people want. You know, no one is is projecting rates into fives today. Maybe later, but you've got other bigger issues that we can't control. But you can control. How you structure and market. And again, it's an education thing, but my like I have builders right now that are up twenty five, thirty-five percent this year. This year in terms of their sales or in sales and units, yeah, because of the fact that they're doing forward commitment and the amount of leads that they're taking from this is what the big boys do. The big boys remove the friction, they control the they control the rate, they control the offering, and they control, you know, and and you don't necessarily have to control it with a a a an arm. You know, they can just say, here's the rate with a l recommended lender. You can shop anywhere as you want to go, but why would you go someplace else for six and a half when I'm at four four and three quarters? No, there's no reason to do that. So ⁓ it's it it's all logical. And they don't even shop builders. That's the other thing, because they can't. They can go down the street, but the builders at prevailing and they look at the same product. We're all I mean, we're all using the same baseline, right? Whether it's modular or slight though, we're still using the same materials. There's not this magic wand that all of a sudden I'm gonna move the one and it's gonna be dramatically cheaper. ⁓ but controlling the rate and controlling how how we incorporate that into the structure actually is what makes the most sense. So Right. This podcast is a production of builder lead marketing. If you're a home builder, modular manufacturer, contractor, or construction industry professional looking to generate more qualified leads, improve your online visibility, and grow your business through proven digital marketing strategies. please visit builderleadmarketing.com. From SEO and Google Ads to social media, email marketing, content marketing, and lead generation, we're here to help you build a stronger pipeline and close more projects. Now, how about for the home buyer? Like what's the typical process? ⁓ you know, ⁓ cause it sounds like you you kind of boiled it down where you're not necessarily showing them every little like your example of the car payment, you know. you're kind of showing them exactly what they would end up paying. ⁓ and I don't know if that's your unusual though. Like what's a typical process? Like I want to buy a modular home. You know, what what is this going to look like on the financing side? I mean, you know how does a construction loan work or like just, you know, like how does like as if I don't really, you know, like I know what it took to get a mortgage to buy a pre existing home. ⁓ I don't really know, you know, what that would look like. And and maybe it's the same as a site built home or a stick built. It I mean, in my opinion, it is. ⁓ but again, I'm unique. I'm definitely a unicorn for sure. ⁓ the you know, especially with the things that I juggle, but like financing for the borrower looks really similar, but there's definitely some like pieces that they They just don't understand like the the main thing. So let me explain. Like the the the W twos, the pay stubs, the bank statements, the traditional loan, whether they're purchasing, whether it's on-site, off-site, refinance, that's all the same. It's all the same mathematical, you know, ⁓ gymnastics call it, right? You know, we we kind of dial into a monthly payment. Take forward commitment out of the equation because that's only for premier builders that want to do it, right? Or recommended builders or builders that choose to do it. You take general financing and it is mathematical gymnastics. This is the loan amount you're looking at. This is where the payment cycles end. Purchase business, when you're buying a house, it's very easy because taxes and home insurance are very defined because you could find that information, the house is existing. New construction, we kind of have to get a little more granular and say, okay, where do you think the taxes are going to be based on millage rates? Where do you think it's going to appraise? Because you might build for 500, it might be worth six, it might be worth 550, it might be worth 450. 450 is bad, 600 is good. You know, we kind of have to look at all that. So equity rich areas, you know, but that's stuff that needs to be covered because in all lending everywhere we use appraised value, right? I mean, all like residential, we're talking at the moment, right? ⁓ but all the lending, you kind of have to say, This is all based on the future value. ⁓ so the borrower has to kind of look and say from ⁓ a lot of things, are am I overbuilding, am I not overbuilding? ⁓ you know, like they kind of have to do a little bit of analysis on their own and they kind of tend not to ⁓ do that. ⁓ but we kind of have to guide them through that. So the the process itself is I think you should start with a basic pre-approval. Whether you're purchasing a home, building on-site, off site doesn't matter. Do a mathematical gymnot gymnastics. Look at your credit. Make sure you fit the programs. You know, make sure you understand it. How much money do I need down? Like again, you could do a hundred percent financing, three percent down, five percent down in new construction today. You know, your bank might be telling you twenty percent down, call a different bank. You know, so interesting. You know, so and again, that's where that overlay is. Someone says you need twenty percent, they're lying to you. You can do it with a hundred percent financing, you do it with ninety seven ninety-six and a half percent financing. But you have to find a lender that's able to do that. And it and again, there's not a s there's not a tr there's not like a nationwide bank that has one guideline. And we don't want to argue for that, you know. So Yeah, sure. ⁓ but yeah, and I think you have to understand what you can afford too, right? Like that's ⁓ the the bottom line. That's the mathematics. That varies by person, you know, it could be I wanna do a hundred percent financing because I have plenty of cash and you know, like I ⁓ Whereas, you know, maybe I wouldn't want that kind of risk if I'm just starting out, you know, like Correct. And and that's where the analysis comes in. ⁓ then then you go back and then I think you kind of engage in your builder for initial conversation. Well, my lender's saying that my monthly payment where I want it to be is gonna give me, you know, 300,000. Like can you know, where do I where do I fall in that range? And then you kind of figure out how many bedrooms, how many baths, is it on a basement slab? How you know, again, whatever and then again the the modular piece, the big thing is. You have to have that conversation early with your lender. Majority of people I talk to talk to their lender and find out, hey, I'm building modular and guess what? My bank doesn't do it now. Well, you wasted all that time. You didn't get it out early enough. You know, or you have to explain to the bank president, hey, this is what modular is. Or you know what? We you know the the loan officers are hungry and desperate, so they want they don't want to give up that client. They're actually gonna get a modular contract and then convince the client not to go modular. Builders don't realize. Yeah, that's dangerous. Okay. Exactly. And and that's where, you know, where the insurance companies, same thing. They're gonna come in and they're gonna say, if they don't know modular, they're gonna confuse it with manufacture. And then they're not gonna have the policy because they don't do manufacture. But they've confused it's not manufacture, it's actually modular, which is you know, ICC, IRC code, you know, and all of a sudden you're going, Okay, they've created friction. So we we take all that friction out of the You know, we don't we don't like the insurance companies, so what you know what we did? We bought one. You get you get our commitment and you get an insurance quote. Now do you have to take it? No. But you got a yes right away. Right. And you have somebody who understands modular. Yeah. Most people that I talk to, I don't want to say most, but there's people I talk to who don't apply with me or my company. Well, that's okay. But you know what they heard from me when they talked to me? Yes, I can do it. Right. And that's all the builder wants. The builder wants to hear, yes, I can do it. Whether it's up to me to fight for it and get it. Because I'm not the only guy out there. And there are other companies that are willing to take a the leap into this business, but you have to say yes. As soon as you say no, or you don't understand what modular is, you're creating friction that doesn't need to be there. We should never have like the the builders a lot of times say, Hey, I'm a modular builder. Well, why would you just think that? I'm a builder. Yeah, you're just a yeah. You're a builder. Well, ⁓ you know, it's it one, it sounds like there's opportunities out there, like if some of the banks could take the time to understand modular, ⁓ you know, they'd become more comfortable with it. ⁓ but I'm not surprised by the misconception. ⁓ I shared this with Tom last week. So I was on the phone or on a Zoom call with one of the largest ⁓ real estate platforms in the country for a marketing opportunity and The guy was like, ⁓ no, you it's not available to ⁓ a modular builder. And I said, Well, why not? So he starts reading me the like his ⁓ policy from the company, and they had confused ⁓ manufactured with modular. And he was talking about how it's not on a permanent foundation. he showed my shock face. Yeah. Yeah, right. He showed me the pictures of ⁓ like he's like, ⁓ you know, and I was like, I think Those are mobile homes. That's not what I'm talking about. And I brought ⁓ over to my client's website and he kept saying, That's a modular home. That's a we're looking at like four or five million dollar homes in some cases. Like these beautiful, beautiful homes. So every day. Yeah, there's modular is amazing at what it can do. ⁓ and there are some really top notch modular manufacturers. And then you have other modular companies that are really building rectangles. Right. There's no quality. Right? I mean there's good quality. Yeah. You know, but you also have stick builders building, you know, small houses too. I mean, or small you know. Yes. I work with a modular log company. Solid solid walled modular log. Looks like it came out of, you know, out of the forest and was built, you know, by Paul Bunyan. Log modular. Like it's and they're the only ones in the country. And let me tell you. When I show that to like a you know, people who aren't really aware like, ⁓ no, that's a log home. I'm like, it's modular. And they're like, It's not it's not log sided, it's solid log. And they're like, What? I'm like, Yeah. It's you know, the the the the engineering today is if it could be built on site, it could be built in a factory. They'll they'll they'll engineer it. Right. You know. I mean, honestly, as somebody who's coming from marketing, it is a little frustrating because I think there's so much opportunity if The communication could be education. Yeah, it's education. Yeah, education. That's what we preach to to our clients. ⁓ well, you know, I'd like to just take a couple more moments of your time. ⁓ I got plenty of time, yeah. Okay. I cause I I you you had an interesting comment about now the new word is attainable instead of affordable. ⁓ so I was just curious, like, well, why Why the change in terminology, but also, you know, where do you think this is all heading? You know, what are there initiatives to make housing more attainable? Is it just creating more homes? You know, how is modular fitting into this? Well, I mean, I think ⁓ the the the the swing in the terminology, I just think is because the affordability has been debunked, you know. Okay. With the stats, you know, so they they have to change it from you know, like it like it's it is affordable. But you have other huge impacts and you know then now they have to count you know, like affordable kind of moved whatever political bar they needed for a while, now it's attainable housing, you know, you know, which again, ⁓ it's just you know whatever politician decided we're changing the word they did. ⁓ it makes action sense. You know, affordability is relative, right? I mean what I can afford at sixty, I couldn't afford at twenty. Right. Just the way we live, right? ⁓ you know, what I can afford based on a you know, like if someone has a half a million dollar income versus someone that has, you know, a thirty dollar an hour or twenty dollar an hour income. Right. So affordability is kind of too broad. It's attainability. You want to attain the home, right? ⁓ my personal opinion is I don't think everyone deserves a home, you know, you maybe to own, okay, because not everyone wants to take care of a home, right? Because there's other responsibilities that come into play. They deserve a place to live, but not necessarily ownership because ownership is hard. And you know, and there's responsibility, you know, ⁓ multiple facets of it. ⁓ but I think the attainable part is going back to again, rates and it goes to structure and again setting proper expectation with the client. You know, sometimes I do have to say, look, you're not a you I start actually my interview with folks of like Where do you want your monthly payment? Which is a really weird way to say, where do you want your monthly payment? And they're and I go, and I caveat caveat that by, well, I know the answer. The answer is as cheap as possible. I got to do mathematics. Which where are you thinking you want to have your payment? Because they applied with me and they asked for a $300,000 home, but they actually tell me, Well, I want to be at $1,200. Well, that math is impossible. Okay. Yeah. So you need to pull them off of the ceiling and say, okay, if you're targeting twelve hundred dollars. Today's rate, you know, you might be somewhere around two hundred grand. So let's start with that there. Now we have to kind of get them from the two hundred grand to the three hundred thousand dollar, you know, number and kind of keep squishing them into where their comfort, because I know what my comfort zone was when I purchased was two twenty five and I was in the business. But my wife informed me that I had a three twenty five budget, which I didn't want to go to. And I'll tell you that she was right. But it was a mental block that I had to get to because that 225 house I kept looking at was not the one that I wanted. And I wouldn't have been happy. And the 325 got us almost everything we wanted without going overboard. So that's where the mathematical gymnastics comes into play. ⁓ for again, really doing the you know the attainability. Now the modular, you know, there's custom modular, which is a full blown custom impact. And then you have the modular that's kind of, hey, choose one of our three models. And they're a little more attainable because they're not really going crazy. You're keeping people focused at a 150 or a 250 cost or a 350 or a five it just depends on the area. But the the idea is ⁓ you know you know, really I think the modular solution is the guys like and again that are really sticking to like here are like they're gonna solve it faster than the the the custom guys. Custom guys are gonna still do custom, they're just gonna get it there faster and cheaper or you know, whatever. Whatever they claim that their claim is, right? Right. But the the guys that are in the innovative side that are kind of rebuilding, like if you look like a Levit Town, Long Island or some of the places that came up post-World War Two where you built the same house a hundred or three hundred or a million times, that's where you're kind of getting. And there's some really smart people, way smarter than me, that are working on that kind of model where You know, if you think about it, if you gave me the presentation to go buy every car out there, I would never ever buy a car because it's just too many. But like when I walk into like the dealership at Toyota and I I have four forerunner options for me to choose, I can make my choice. I don't want to see thirty, I need to see three. And and I think getting to that where you're you're limiting, you know, maybe and and again you're targeting the first time buyer, the move up buyer. There's some really innovative guys that actually do ⁓ like modulars, you know, where they'll do one for like when you're single and you're you know, you need a studio and then you could kind of have enough land that you kinda know that you could buy their next unit and attach to two and now you have it and then when the family grows you add two more on top or I mean that's really smart thinking. Yeah. There's really cool stuff out there that decent like grow with you kind of as you as you evolve with the family and yeah they they talk about aging in place, right? For old people. But what about aging in place for young people? Like if I like my neighbors, I want to stay there. Right. I don't want to go find new neighbors. Like sometimes new neighbors is a problem. So being able to expand a house easily is good. Yes. So yes. Well, one thing I learned ⁓ from one of our clients is that if you have a stick built home, you can still potentially have a modular edition and they've done some amazing like second story where I'm like, I can't even believe it's the same house. So ⁓ yeah. Yeah. That to me was not intuitive at all. Like to think about But think about it. Like if you have Like I I've seen this, you know, you have like one half of the house is where like ⁓ kitchen and bath mostly runs, and the other house is just kind of fluff, you know, it's bedrooms and stuff, and they'll hack off, leave all the high-end items there because they remodeled the kitchen, and then you could just basically plop in like a two-box, four box mod, just stick them in there, and you have a brand new house and they could redesign it. ⁓ I've got guys in like ⁓ high density areas where they're actually craning over the front of the house and putting the modular edition in the backyard. I mean it's wild to see. Yeah. Yeah. There's great stuff out there. So No, there there really is. ⁓ so tell me what industry trends are you most excited about over the next five, ten years? ⁓ I again, ⁓ I think that we we don't have enough skilled labor. So again, you know, in and we don't have labor just in general, ⁓ for any industry. My industry is struggling. ⁓ I really see going into the trades as much, right? The that's the biggest ⁓ whether or not they do it, you know, ⁓ I come from a traditional background of go to school, go to college and get a good job, right? Like kind of that's generation X, right? That's what we were talking about. Yes. ⁓ I raise my kids going do whatever you love, but you might want to look at being a plumber or an electrician. Right, right. You know, or a home builder for that matter. Because my kids had my my one son has mad hand skills. It would be a waste for him to be sitting here talking on a bl a podcast about financing, to be honest with you. Because he's he's creative. now, you know, whether they do that, it's their choice. But to be a modular the the modular industry is is again, it's taking the like unskilled labor and skilling them into a factory, which is good. It's quality control and it's solving for, you know, site issues. Which are gonna come down the pike. And even though we're like guys like Mike Rowe, who I think are brilliantly smart, been pushing people into the trades, you know, like if you look at the salary, like I pay my I actually pay my electrician in Wyoming more than I pay my doctor Yes. Yes. We just we just had our kitchen done and I was amazed. Yeah. I mean, and I'm in a town of three hundred work, you know. So like it's it it's you know, my electrician is way more important to me than my doctor. You know, so but it I mean you kinda have to ⁓ I I think that's what I'm excited about is really like I think the the innovation of the industry, these like again I I'm I'm on the upper side of old or or young. I guess I would be younger side of old. I don't know what w hopefully that makes sense. But I I think the younger people that are looking at this and and again solving for lack of labor, a housing issue, ⁓ you know, affordability, attainability, ⁓ You know, it all these infill areas that they can go in, like, look, do you want to coordinate twenty people on a job or three? You know, I mean you know, you got a site work guy, you got a modular manufacturer, and then you've got someone kind of you know pulling the strings to make it happen. You know, it you know, and again, when there's a problem in the manufacturing facility, they can identify where on the line that came down a problem. When you have twenty people on a job site, where's the problem? You know, like you know, did the electrician, you know Or plumber, you know, cut a stud because he wanted to put a pipe in there. I don't know. They're all gonna be pointing fingers, no one was watching it, you know. So Right, right, right. Now how about AI? Like, is that, you know, how do you is that impacting staffing or, you know, what do you see it in looking technology and AI? So this is a true story, and I had a conversation with one of my builders not even an hour and a half ago. A year and a half ago I sat with her and her family. ⁓ out to dinner, I was coming through, she was in Ohio, I was heading to a ⁓ a meeting in in Pittsburgh, and I said I stopped in and they said, Hey, come out to dinner with us, and they were talking about chat GPT. I kid you not, it was a year and a half ago. Yeah. And I'm like, what the heck is chat GPT? Now the entire room gasps, including everyone at the bar. Like, what kind of idiot doesn't know what chat GPT is? Well, one, I never used it, my kids never used it. I would I'd heard maybe about it, but I'm like, what would I ever use that for? Right. So let's start with the basics. So they gave me a quick their twelve year old son or ten year old, I don't remember how he was young, shows me what he can do on ChatGPT in like three seconds, and I'm like going, wow. Okay. So you fast forward 30 days later, I use Chat GPT for something. And I send her an email and say, hey, you'll be proud, I'm growing up, I use ChatGPT. Now you fast forward to like innovative companies. Like we've been on the AI world for years. We have our own AI, we have bots ⁓ now my industry is lagging and will always lag because of this, you know, like again, if you look at where I was when I first got into my career, I had to carry a laptop that was separate to the corporate laptop because email in this company's mind was inherently gonna go away. It's not secure, we can't use it to communicate. But my clients wanted to communicate on email. So I bought my own computer so I can talk to my clients via email, even though corporate wouldn't let me do it. Okay. ⁓ wow. So think about these banks are the same way with AI. Yeah. Now today I use AI about every thirteen to eighteen seconds because my builders, my builders send me leads, the leads get dumped in my AI. My AI CRM chases them to schedule an appointment. It has conversations giving them information. It's giving my builder information. Everyone knows that they're being touched, even though I'm not touching them. Then when I talk to them, I get to enter in the data that I need. Okay. So, you know, AI is not going away. AI gives us the lot location. It gives us the ability to scan it, you know, the ability to place a house. I mean, there's software for all that. You know, my AI bot, actually, I could just say, Hey, you know what? Send Mary an email. And I want it to say, buh-buh-buh-buh-buh-buh-buh. Thank you very much. Give me an example. Here's her email address. And I dictate it now while I'm typing another email to somebody else. I could do two or three emails at the same time, and you get a touch all the time. Like those kind of things where we did it manually using spreadsheets and Excel ⁓ and followed up. We don't have to do that anymore and then take it to where AI is able to scan a home, you know, give a really close, accurate like cost breakdown of how many linear feet of wood is needed, what's the best way for studs? ⁓ there's companies out there that have pre-cut, like they literally load in a plan. The plan then says, I need this many two by fours, this many two by sixes, you know, I need this many two by sixes at eight foot, twelve foot, and you just load wood on this machine and the machine goes and it actually cuts it down for the entire home to where you have limited waste and then everything's labeled A, B, C, and D, so that like you're just, you know, again, making it easier on site and everything is precisionally cut. Yeah. That's exciting stuff. Well, the productivity is incredible and just you know, like and I think from what I've seen, I think it's just really the beginning for the building industry. You know, ⁓ you know, our clients are using it for renderings now, like things that they would have to hire an artist for. ⁓ you know, and there's some good and bad 'cause obviously, you know, the the artist now is unemployed, but you know, ⁓ Hopefully able to find some other, you know, ⁓ employment. But ⁓ I mean we'll we'll digress a second. I mean, my younger brother is a famous Western painter. You can Google Bob Coronado, okay? He's his work yeah, his work hangs in the Smithsonian, okay. So he's got, you know, I think seven works in the Library of Congress. I think he has nine paintings right now that are hanging in the Capitol. You know, so ⁓ in his world he's very big, but we're fighting AI in and have been for years. Because AI art is actually a thing. People are buying AI art think it's actually created by a human and it's it's soulless and it's not. ⁓ and there's some you're some Western painters getting high commanded ⁓ dollars. But like really there's the good thing about AI is I could tell you what, when I I needed something the other day from him, and if he's listening, he's gonna get, you know, ticked off. But I couldn't go wait for him to jump into Photoshop and change the one thing I needed. And it was like it wasn't anything of his artwork, by the way. But I I grabbed it and I just stuck it in the chat GPT and said, change the date. And it changed it in like forty seconds. And I'm like, think about having to have to wait for that. and that's what you know can be done. Now there's gonna be so our jobs are changing where we still have to be the human overseer ca is AI isn't always correct. Like I signed one of my emails on AI signed it as Tony Coronado. I don't think there is one, but there might be one out there, but it definitely wasn't me, you know. So you still have to humanly look at it and make the adjustments. And I think that's the same as we kind of grow. But there's gonna be a shift in all aspects of all types of businesses. And and again, maybe that pushes the people that shouldn't be sitting behind a desk somewhere back into the construction field to see an armor. You know, that's I'm okay with I was thinking that I think there will be even more opportunity than there is for, you know, s like somebody like an electrician or a plumber, you know. I mean You know, modular, by the way, just like as a sidebar, like I'm in a remote section of the in of the country. Like you have to think of I need a plumber. A plumber is a hundred and ten miles away, one way. ⁓ wow. Okay. So modular is actually something in the in the more rural sections of the in of the country, something that actually is gonna grow, I think, faster where it's not. Because it's you know, you could coordinate like the simple parts. Yeah, of the connecting of the house and things. But you can also get a like a higher quality not always, not mutually exclusively, but you can get a higher quality build when you go to a place that like again, if I was building in a modular manufacturer in Minnesota where there's a hundred thousand people, I'm gonna have hopefully better skill and better opportunity than trying to draw from the four thousand people in my town. Right. You know, and and I'm not knocking any of my contractors who actually are good. It's just when I need like a bullnose finish or some can like some kind of coffered ceiling or, you know, crown molding, there there's probably a guy that's a little more qualified in a factory who can actually ship it and then all all my guy's doing is, you know, connecting the marriage walls, you know. Right. Right. Yeah. And you benefit, you know, like 'cause they're really managing the staffing and you know, ⁓ and the skill and they can get the skill in for the specialty item. So Yeah. Yeah. Well listen, I I Always like to first all, it's been a great conversation. Thank you so much. But I always like to end by, ⁓ you know, well first of all, if somebody wants to connect with you, you know, how would they do that if they have questions or wanna reach out? Is LinkedIn the best way? I would say LinkedIn is probably an an easy way. ⁓ you know, I I don't I'm not on it all the time, but I'm Thomas E. Coronado. It's the guy with the cowboy hat when you find me it's C O R O N A P O, right, you know, so it's not a D O. ⁓ you know, that's an easy way. I mean, you know, hunting me down on Facebook also works and with CalCon. ⁓ you know, there and Calcon is part of One Trust Home Loans and part of Warp Speed Holdings. That's the mother company. ⁓ Okay. You know, so it but it's it's under Calcon Mutual Mortgage. Yeah, though I mean in and email like look, I'll I'll talk to anybody about anything and help them. I'll help other banks. you know, get over their issue of of modular lending. ⁓ I do that consulting kind of conversation, you know, because the more people that jump into this industry, the better and and more it grows. ⁓ you know, I surround myself with kind of ambassadors of the industry, ⁓ and I I have to be one as well. I mean, that's the only way we're gonna grow. It's not a there's so much of this business out there that one lender cannot do it. No lender in the country can do it. We just need more lenders to understand to grow the builder's business. So Right, right, right, right. Well listen, thank you so much. ⁓ I really, really appreciate ⁓ you coming on today. And ⁓ I wanna thank everyone for listening and ⁓ we'll catch you next time. Before you go, I have one quick favor to ask. If you are enjoying the Builder Lead podcast, would you take a moment to leave us a review on Apple Podcasts or Spotify? Your reviews help us reach more builders, manufacturers, and construction professionals who can benefit from these conversations. And if you're watching on YouTube, Be sure to subscribe and click the notification bell so you never miss a new episode. We have more interviews, marketing strategies, our webinars, and industry insights coming your way. And we'd love to have you join us. Thanks so much for listening, and I'll see you on the next episode of the Builder Lead Podcast.