The Data Driven Real Estate Podcast #5 – Wall Street Hard Money, Homevestors and Real Estate Investing with Tim Herriage

Tim Herriage and Aaron Norris

For nearly two decades Tim Herriage has been on the leading edge of the Real Estate Investor space. This includes being the Founder of 2020 REI Group, Founder of B2R Finance (a Blackstone Company), Founder of the REI Expo, and a Franchisee and Development Agent for HomeVestors® of America. Through his ownership in various companies, Tim aggressively invests in single-family houses, primarily in the North Texas area. Tim has completed well over $1 Billion in real estate investment transactions, including the acquisition of more than 1,300 houses.

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Show Topics

  • 01:05 How Tim Herriage was introduced to real estate
  • 03:03 The real estate investing book that launched his career
  • 08:18 How long has Homevestors and the We Buy Ugly Houses brand been around
  • 08:57 How the we-buy homes franchise companies work and what to expect
  • 10:50 For the We Buy Houses Franchises, do you own an area?
  • 11:23 We Buy Houses Companies: franchise vs. advertising costs
  • 11:52 The benefit of leveraging advertising dollars and experience of We Buy Houses franchises
  • 14:19 The benefits of separate ad councils and making hyperlocal marketing decisions
  • 15:12 Owning a territory for We Buy Houses vs commitment to advertising in the territory
  • 16:15 The importance of learning about conversions and what We Buy Homes franchisees learn about mailers, billboards, and other forms of marketing 18:47 That one time a creative mailer to landlords had the cops called
  • 19:38 The one kind of real estate investor the We Buy Houses brand might not work for
  • 22:44 Why aren’t Homevestors and ibuyer brand like Opendoor best friends?
  • 25:14 The genesis of B2R finance and Wall Street hard money at Blackrock
  • 26:34 The issues Wall Street had understanding and working with Main Street investors
  • 30:00 the biggest mistake Wall Street hard money made early on which led to financing less real estate investors? Hint: mission creep!
  • 32:33 Will Wall Street hard money kill off Main Street hard money lenders?
  • 33:22 Why Main Street hard money always has a place
  • 34:39 The one thing Main Street hard money lenders should be focused on to succeed
  • 35:18 Key features and services allowing local hard money companies to charge more
  • 37:14 Where the first company to do property-backed, single borrower securitization
  • 37:39 The journey to getting securitized pools of hard money loans was not easy for this reason
  • 39:00 Wall Street didn’t event know that NARPM existed!
  • 39:59 Did Blackstone and Wall Street real estate buyers ditch buying at the trustee sales?
  • 42:23 How Invitation Homes got started
  • 43:39 What changed for trustee sale buyers in 2013 and why the trustee sale buying business is so brutal
  • 44:06 A new business model shaking up the hard money loan game
  • 44:48 Who is holding the bag of hard money loan pools fail?
  • 47:14 Has Covid impacted rentals? What might change that concerns Tim?
  • 49:44 Are California investors moving to Texas?
  • 51:52 Why Tim decided to slow down
  • 52:33 The number one source for real estate deals in Texas in 2020
  • 55:00 The call average response rate and conversion rates for real estate investor mailers
  • 56:26 SEO strategy for We Buy Houses pages for real estate investors
  • 58:00 SEO vs SEM for real estate investors and how to improve
  • 58:39 The importance of defining your audience as a real estate investor and one of the worst mistakes investors make
  • 59:29 An easy way to get better at identifying real estate investing opportunities in your local market
  • 1:01:47 The number one data point real estate investors should be focused on right now that will be profitable for the next few years
  • 1:02:19 The one urban trend real estate investors should be watching in 2020
  • 1:03:00 Trends Covid-19 is having on the real estate market and features consumers are wanting

In Data Driven Real Estate Podcast #4, John Burns mentioned the Single-Family Rental Index. John Burns Real Estate Consulting is looking for real estate investors with at least five properties in an MSA. In exchange for a survey, you get insights into that MSA. Please see their JBREC Rental Survey Information and how to get involved.

Show Transcript

Aaron Norris [00:00:02] Hey, welcome, everybody, to the Data Driven Real Estate podcast, the podcast for real estate professionals dedicated to driving business success using data. I’m your host Aaron Norris. And with us today, we’ve got Tim Herriage. For nearly two decades, Tim has been on the leading edge of real estate all over the investor space, actually. This includes being the founder of 2020 REI Group, founder of B2R Finance, a Blackstone Company, founder of the REI Expo, where I met Tim, and a franchisee and development agent for Homevestors of America. So we get to talk a lot about a lot of different stuff today. Through his ownership in various companies, Tim has aggressively invested in the single-family housing space, primarily in northern Texas. Tim has completed over one billion in real estate investment transactions, including acquisitions of more than thirteen hundred houses. So hey Tim. Welcome to the show. Am I doing here? I am so good. I’ve always been impressed with the breadth of your experience in the industry and it started with REI Expo’s how I met you. But let’s go back way further. How did you even get into real estate?

Tim Herriage [00:01:05] Well, my grandmother would have told you I tripped into the business. But in all honesty, when I got out of the Marine Corps in 2001, I was looking for a job. And I posted my resume on a Web site called Military Hired Dot Com. And another former Marine actually hired me as his project manager. So I had a little bit of construction experience. I had a lot of experience managing people in combat, not really construction. But, hey, you know, sometimes there’s no difference. And that’s how I am. I mean, yeah. And that’s how I got started. The business I started out managing the projects, the remodel projects, and then just slowly morphed into acquisitions and then went out on my own.

Aaron Norris [00:01:49] So you didn’t even have any background with construction or no family and real estate. You just you really did trip and do it.

Tim Herriage [00:01:56] No, no, no, I, I didn’t finish the quote from my grandmother. She said I tripped into it, but I cut my teeth on it. So my grandfather was a real estate broker. My dad’s a real estate broker. My mom’s real estate broker. My wife’s a real estate broker. Real estate is very much a family.

Aaron Norris [00:02:16] It was in your blood.

Tim Herriage [00:02:17] But investing wasn’t there. There were no investors in the business. So were the family. You know, the glorious story of why I went to the Marine Corps wasn’t. Post 9/11, it was in some need to serve the country. It was because my family had no money to send me to a school and I had bad grades. So the Marine Corps, they and they did not discriminate against either of those issues. So they were an obvious choice.

Aaron Norris [00:02:45] Fair enough. I love hearing everybody’s path into the business. So. So that’s where you got your start. And let’s talk about how it evolved. I mean, you’ve been involved in so many things then over the last decade and a half or so. How did it transform?

Tim Herriage [00:03:03] I think it all got started. Three parts. One, when I got to the Marine Corps, my gunnery sergeant, who was the guy kind of directly in charge me, gave me Rich Dad Poor Dad the book. And it may have been the second book I ever read. Maybe third. I’m not sure. I didn’t read much for that book. Just kind of spoke to me because I wanted to be rich and I didn’t have a rich dad. And here was this, you know, Rich Dad Poor Dad thing. So that book kind of got me interested sitting at home late at night. I bought a Carleton’s sheets course, never opened this book. Pay the three hundred and something dollars. I actually did over there. But then when I opened it, you didn’t know what book to read or CD to use first. And there was a big pamphlet that said call for customer support. And as soon as you call, they want another thousand dollars. And then they would tell you which book or take to listen to far. So from there, I said there’s got to be another way to get in this real estate. I want to be rich. I want to be wealthy. I love real estate. And I think I did at least. So I went to a local networking meeting a REIA here in the Dallas Fort Worth area was called Aereo back at the time. And I just remember being struck that this is I was 21, 22 years old. We all see those kids walking in there now. And it was just amazing. People were willing to help me. People were positive, people…And there are all these resources and nobody wanted a thousand dollars or me to give them a credit card, it was just. Just really help of people, so, I mean, that’s kind of it was exposure through the book and desire through the infomercial and then opportunity through the networking group. And that’s actually had from there. That’s what got me to really put my resumé out. If I were really cause I hold the life insurance in the first of the Marine Corps, so I put my resume out, wanting a ruleset job, and that’s how I met the other Marine. So I started managing properties for them. And then about six months later, he taught me the acquisition side. And then I got to start buying. And so now I was buying and fixing and doing this. Owner finance sales. This was back in ’02. So what is that, 18 years ago? And then that was before Dodd-Frank or even the Texas lease option, Bill. We were still allowed to do contract four days back then. Yeah. I mean, after a year, I decided I wanted more. And that’s where I called a guy at Homevestors I’ve been buying wholesale properties from. And I said, I want to, you know, come work for you. And he hired me and I was number one in the nation is by acquisitions for him. And then I’d met his hard money lender that we had done business with over there. And I called him to be my lender. So that was going to go on my own. And then he offered me a partnership because he goes, I like the way you do business. Let’s partner. And so then we built a portfolio of about sixty-five houses in two years because, you know, and I feel I was making six figures a year, but I was like I had only like six bucks in my bank account because I was young and making a bunch of money. So it was really nice to partner with someone like Scott Horn, who was very well versed in the industry and had a lot of money at his disposal to kind of help me grow up over the next couple years. And then I got back home busters in ’05 when I met my wife, Jennifer. She had a franchise. I bought a house from her. The joke is that I made more in the house than she did. So we got married to keep it all in the fan.

Aaron Norris [00:06:59] So Homevestors is also a matchmaking company. I did not know that.

Tim Herriage [00:07:03] Yeah. Yeah. Yeah, it is. So you go from there. After the recession, we made it through the recession, you know, with our marriage and finances intact. The Great Recession, after the recession, all the real estate clubs have dried up. And that’s when I just decided that I miss Homeinvestors. I miss the annual networking events, and I miss the involvement with the local group. It wasn’t altruistic or anything, I wasn’t trying to give back to the community, it was just a great idea, I thought. So that’s when I started the REI Expo. And then through the REIT expo, I met a lot of people like yourself and other influential people in the industry outside of Dallas. That’s when I got to speak it along. How did I get here? That’s how I was invited to speak at the Five-star Conference. And then that’s where I’d met Blackstone when they recruited me to help start to ah. And then I ran that for two years and I said enough. And I came back to Dallas and grew a beard and stopped wearing a suit and tie.

Aaron Norris [00:08:14] And you went back to regular old real estate?

Tim Herriage [00:08:17] Well, yeah, pretty much.

Aaron Norris [00:08:18] Well, let’s unpack it a little bit for people who aren’t familiar with the Homevestors brand. Where have you been, first of all? Because the “We Buy Ugly Houses” has been. How long has it been around now?

Tim Herriage [00:08:30] They started in ’96, think so? Twenty-five to six years probably.

Aaron Norris [00:08:35] And they’ve never really given up on the sort of the outbound marketing experience between billboards and radio and TV. They’ve really been one of the biggest players in the space even during the downturn. I remember seeing their billboards in the Southern California market here where I’m at. They’ve always invested in those. So for people who don’t know how it works. Talk a little bit about a Homevestors and what being a franchise even means.

Tim Herriage [00:09:04] I think, you know, Homevestors is a really good ramp into the business. If you’re ready to go full time, you know, it’s they pay a franchise fee. It’s been a while since I’ve been on that end of it. It was fifteen fifty thousand. I’m sure it’s still somewhere in that range. You can do that like a full-time franchise of the part-time Associate’s franchise. And you paid these. You had to do this monthly advertising commitment because that’s a big, big part of the model you’re going to generate leads. Right. And I tell people, I’ll tell you, if you want to be in this business, you’ve got to be generating leads somehow because, you know, someone’s not going to come knock on my front door and offer to sell me a house right now that they’ve got to know about me somehow. So it is with Homevestors there’s some really intense training is a lot of support. Their technology is ever-evolving. With regards to these cool ipad apps that tell you exactly what to pay for the house and then you buy the house and you typically pay a fee, a transaction fee and a royalty fee when you buy and sell the house. So, I mean, that’s the gist of it. Typically, it was a five-year contract and a lot of people would leave after the use of fifth year. A lot of people, I’d say, if I remember correctly, it was between about a third would leave after their first contract or during or after their first contract and another third would stay for another period. And then, I mean, you know, you’ve got a good bit of people and some of the top guys in the system have been there for 15, 20 years.

Aaron Norris [00:10:50] And you don’t own an area, and I know out here in the Inland Empire, I think the last time I heard there is seven different franchisees. So if somebody were to call off a postcard or a billboard, it’s in an 800 number, if you will, and it sort of does the round-robin and whoever picks up the phone. So but it’s just so interesting to me because depending on what market you’re in advertising L.A. versus the Inland Empire or Dallas versus Galveston, you know, it’s it does the amount that you pay for the franchise vary depending on the market.

Tim Herriage [00:11:23] No it’s the same fee across now, where it’s going to vary on the market is the amount of cost per lead. Because like you just said, advertising in downtown L.A. or downtown Manhattan going to be very expensive. Advertising in the Inland Empire, less expensive. Homevestors has a pretty good, I mean, I love their system and I’m sure they should still do this way. It’s kind of every month, like thirty, forty-five days before the month, we would sit down as an ad council. And at one time the Dallas Ad Council had twenty-five people and we would all talk about our budget like. So this is you know, we talk about our budget. Forty-five days from now and we’d make a commitment. So I may commit to spend five thousand dollars in October. And you would commit five thousand dollars in those kind of part-time guy, would commit one thousand dollars and we’d all pool our money together and that’s how we would go out and buy the ads. And so then the call rotation software was kind of a weighted distribution. It is a round-robin, but it’s weighted off of the amount of money you spend rises. Picture Wall Street, where I know you have some experience right in your capital stack, right? And you own a slice. And so you may get the eight, fifty, and the twenty-second call. Right? I mean, that may be where you sit in the stack, whereas the big guy that was spending $20 grand a month, he gets the first, the fourth, the eighth, you know, and he’s really shrunk in the way this time. But he had to pay. Right. And he had to put the money up sometimes 60, 80 days in advance of when the final ad runs or when you’re going to get that phone call. So I always found it was when you don’t know, as you know, a lot of times investors that really have to make some harsh decisions between which advertising medium or which list or which message. And so the nice thing is, is that Homevestors literally for two to three thousand dollars a month. I don’t know what the minimum was, almost twenty-five hundred that you could really get a potential to get a lead from multiple, you know, from billboards, from TV, from Internet radios, print to the Yellow Pages, that kind of thing. So I think it lowers the barrier of entry for someone that’s interested in the direct sales approach of kitchen table buying because you’re able to let a national marketing four firm was almost 30 years of data, makes the advertising decisions for you based off your budget.

Aaron Norris [00:14:07] That’s what I always thought. It was really interesting and I just wasn’t sure at the model. So down at the local level, you guys are the ones making the advertising decisions that are more specific to the market.

Tim Herriage [00:14:19] Yeah. Yeah. So each kind of MSA would have it as ad council and everyone and every active franchise was a member of that ad council in Dallas, Fort Worth, we had the DFW Ad Council because what would happen is it’s the same TV market. So we had to agree to the ad company. Adbusters would come in and make a recommendation like we think you guys should spend one hundred fifty thousand dollars this month. And that sounds like a lot of money. But remember, you’re dividing that among 25 people. And let’s say we allocate this much for TV. But, you know, Fort Worth is its own territory and Dallas is its own. So you guys got to agree that Dallas is going to pay 60 percent of the TV. Fort Worth is going to pay 40 percent. So it’s a business. If it gets fairly complex. He would ask earlier, if you owned the territory, you don’t own the territory, you actually are committing to only advertise the business in that territory that you bought the franchise. So I wouldn’t have been able to advertise back in the day. And I haven’t seen the new UFO story in all franchises have a offering circular. So I haven’t seen it. I’m not disclosing anything. Insert legal jargon here. I don’t care. The way it would work is I would buy a Dallas, Plano, Arlington franchise and the MSA. And if I got to lead in L.A., I could buy that house. I was allowed to buy anywhere. I just wasn’t allowed to advertise outside of my territory. That’s the way it worked.

Aaron Norris [00:16:07] And where I found some of the franchises that I knew that where they got frustrated as they were also creating business on the side. And the only reason I bring it up, because you’re very familiar with Homevestors and I know there’s other ibuyer brands out there, but whatever leads you created outside of the brand, you were still paying a fee to the company, correct?

Tim Herriage [00:16:27] Oh, yeah, yeah, absolutely so in the franchise agreement back in the day, I think you could have one or two exemptions per year. As long as it was a personal property. Yeah, but it if it was any transaction, whether it was your mom’s house that you were buying from the family, you’re gonna flip. You owe the transactions fee.

Aaron Norris [00:16:51] I’m just really interested from a data perspective. I mean, with that much sophistication, sophistication at the national level. Thirty years of experience in the space. And then also that I didn’t realize that’s how I set up the ad council approach where you were getting some input from National and they would see across the entire country what was working and what wasn’t. Did you see them change a lot of what was converting as far as marketing, whether it was the mailers or the billboards? Any thoughts on that?

Tim Herriage [00:17:21] Oh, absolutely, because there was always a marketing fund that you paid into as well in the marketing funds, and that was like seven hundred fifty or two dollars per closing. But I love paying that money because that money went into this pot. Every franchisee nationwide would pay it. And the ad company was always beta assessing a letters. New lists, responsive landing page is different internet copy. Different… if you ever see the billboards, you can really go to Dallas. There’s always a new billboard being tried out. And they’re always tracked. And they’ve got Charlie Calise runs the advertising company that does Homestors. And that guy is a genius and is his ad science platform is something that I’m very envious of. And so. Yeah. So that was a nice thing, right. You know, many investors, they get into this business and they start all that new green postcard, yellow postcard, red postcard. What’s a… you know, and you did have someone from National coming to every monthly meeting telling you what they thought you should do and tell, and showing you the response rates of the beta says they ran in Sioux Falls or they run a beta test in Dallas and Atlanta and Jacksonville simultaneously to make sure that all samples kind of responded the same one time we sent out a, this one was not popular. We sent out a pill bottle to landlords like, “tired of the rental headache, call Homevestors.” Yeah. So they called the cops instead it was a test if it was not a good beta test. But, you know.

Aaron Norris [00:19:04] Creative.

Tim Herriage [00:19:04] It seemed like a good idea.

Aaron Norris [00:19:07] What was inside the pill bottle. Just the letter?

Tim Herriage [00:19:10] Like a pamphlet that, you know, you said, please call, “Tired of the rental property headache, call Homevestors.”

Aaron Norris [00:19:14] Just the wrong kind of conversion. OK. There you go.

Tim Herriage [00:19:20] Yeah.

Aaron Norris [00:19:20] Well, just to have that kind of insight, especially if somebody is new. It just it’s interesting to hear how it works knowing that there are several 1-800 Offers. But the We Buy Houses, We Buy how Ugly Houses brand has been definitely out here, that I’ve seen, in the market the most prevalent for the last decade or so.

Tim Herriage [00:19:38] Yeah, they’re training, support and resources… I haven’t seen a single platform that touches it. I mean, they guarantee you the financing if you buy along their numbers. They have his iPad app I guess they still have it, it’s been four years now where they just import your comps and you just walk through house and hit buttons and it tells you what you know is your maximum allowable offer and it never fails. You get a new franchisee that would go way over that because they thought they knew everything and then they get mad that they couldn’t get financing. So it is if you’re too creative, home busters may not be right for you because it’s a system you’re paying a lot of money, which fifty thousand isn’t a lot of money. But by the time you get an office, in part by advertising and things like that, it ends up being a lot of money. So you’re paying that money. So you might as well follow the system.

Aaron Norris [00:20:37] And to have somebody that really looks at the conversions and what’s seeing what is I mean. Fifty thousand dollars if you had to pay a full-time marketing person, that’s. Yeah. Anyway.

Tim Herriage [00:20:47] Right.

Aaron Norris [00:20:48] It’s just interesting to know how it works. OK. So you’re no longer part of their brand at all, right.

Tim Herriage [00:20:55] No, I was a franchisee and development agent, which meant I bought houses for the county with the come computer, the company. But I also had about 40 offices nationwide that I had sold them their affiliates, their small version of the franchise and I kind of manage the mentored and helped them. So it was, I guess late, 2016. I sold that franchise and my development agency. But that was, you know, again, it was about a year after I resigned from Blackstone. And I was just at a point where I was kind of ready to live that life that we all talked to investors about.

Aaron Norris [00:21:45] Right. Well, it’s a lot of work. I saw I saw you hustle. I was very impressed when you were working on REI Expo. You were great at the relationship-building side. You were very specific in your approach, REI Expo as an expo, that education expo that you put together. I think several spots that I watched you do it in California and you eventually ended up selling that to Think Realty. But to execute the kind of success that you did is not easy, especially coming into an area and finding the partners to make it successful. It’s not easy. I mad props to you driving numbers is not easy. And you were able to pull it off. And in the years to you’re right, real estate investment clubs really went down. I think we learned, we learned quickly who were speculators versus investors during the downturn. Especially in markets where we got hosed. You could be breathing and make a lot of money in there were right years if you were holding. But, man, if you’re holding in the wrong years, not cute at all.

Tim Herriage [00:22:43] Right.

Aaron Norris [00:22:44] I ran into the CEO of Homevestors at the National Association of Real Estate Editors. They have an annual conference and he spoke. And it was a first-year I had seen him on stage. And then ibuyers were on stage and I was just like, this is a match made in heaven. And I talked to I think it was Opendoor later that day. I’m like, why are you guys not partnering with the Homevestors brand? And they, at the time, were so they were spending so much money in the advertising space, they’re like, we can’t take the risk of handing this to somebody who isn’t going to back our brand into a close. They were being control freaks. And it’s interesting to watch how that morphs as they’re trying to vertically integrate, realizing, I can’t spend one hundred thousand dollars a month per market on advertising and not say Yes to every lead that comes through our door. So if I’m spending one hundred thousands dollars in the Sacramento market and I’m like, yeah, we can’t buy your house and I don’t have somewhere for that lead to go, that’s not going to work. So if you’re a.

Tim Herriage [00:23:40] Well, it’s funny. It’s funny you just mentioned, too. So I’m very familiar with OpenDoor. When we were with Dwell Finance and I asked in the Blackstone Company, we ended up giving them a line of credit. And obviously, I’ve done a lot of business with them and met with them here in Dallas. It’s funny you talk about two companies that blame not doing business with each other for protecting their reputation. And funny, frankly, it frankly, if they go online and read about their own reputation, they may give them some homework to do.

Aaron Norris [00:24:15] I understand where they’re coming from, but you’re right. The amount of money that they both spend on marketing is really good for Main Street to watch. I mean, they’re very sophisticated. They spend a lot of money on sophistication. Let’s go to B2R. You are, I mean, you transition into the Wall Street space. And it was so interesting to me to watch. I was invited in Las Vegas. to the American Association of Private Lenders, Apple, AAPL, had a conference where B2R came out and talked and you were the translator at the time. Wall Street was talking about Wall Street, and it was interesting to watch them speak and then sort of you in the room sort of talking to the rest of people, trying to get them to sign on. And the conversation when they first showed up was, we’re gonna take over the world. We’re going to refinance everybody and everything. So much to talk about. What do you think about let’s just talk about how so B2R it started with Dwell? Is that what you said?

Tim Herriage [00:25:14] Well, no. No. So B2R actually started out as B2R. We ended up acquiring Dwell from We acquired well from Gregor Watson out in California. So we got it all sorted out to B2R Finance and the whole idea would be to our finance was going to be we know we’d like you said, we were going to refinance the world and we tried. You know, we and we did a good job of it. But, yeah, I mean, my role there, I was head of acquisition. I was head of sales, marketing and business development. So my role was really to get the customers in the door and then get the customers to understand the products and get them all the way through the finish line. Then go to those and go develop strategic relationships to generate more customers. But yes, I was Kind of a Navajo code talker for a couple of years, because one is one example. I’ll never forget I’m talking to this guy, that was one of the, he was the chairman and I’m I will say his name, but they’re right. Everybody in the room is talking about Bips. At this point. I bought over a thousand houses and I had no idea what a bip was. So it’s a basis point. We all know that now. And they’re talking about DSCR off. And I had no idea what DSCR no idea in. They’re talking about LTV and I’m like, I know what LTV is. They’re talking about SS… yeah, well, hang on, though. And they’re talking about SFR and the SFR. I’m like a single-family residence. Got it. So I stop the conversation. And I’m like guys, I don’t really understand some things you’re talking about. I got it, SFR single-family residence. No, single-family rental. And, I’m like, you sure on that one, because like those of us who’ve been doing this for a while, a single-family residence and MFR is multi-family residence, not multifamily rental. But they changed that term like literally that acronym now, five years later, means something different now. I mean, according to Wall Street, SFR is single-family rental. And so then you can talk about that, then I go to LTV. Look, guys, I know what LTV is. LTV is just percentage of what the house is worth. And, they go no, LTV is a percentage of what they’re paying. And I’m like, no it isn’t, it’s loan to cost? And so literally in the commercial world and the Wall Street world, value was whatever you were paying for it. Whereas it a single-family investor world value is like what it’s going to be worth, you know. And so that was that I got out that I what’s a DSCR are there like, you know, the debt service coverage ratio. Yeah. You know, so I don’t know that you’re going to have to teach me. I’ve never they’re like, why haven’t you gotten a loan from a bank before? Yeah. Five hundred. And then they’ve never talked about a DSCR. It’s always been a loan to value in the loan to value. Had nothing to do with what I paid for the loan. The value had to do with what the appraisal was worth. And then I had this whole bip thing or you saying blimp up a bip? And they were like, you know what basis point? I’m like, no, I don’t know, basis point like I mean. So, yeah, I mean, it was I fit in well there. Because, they all got to laugh at me a lot. But also I was not afraid to say what I didn’t understand something because I’m a constant learner. And I learned a lot in that two year period. And I think I was able to teach them a lot about how to work with these customers, because if I didn’t know it at my experience level, the odds were, Mr. Joe, that had five houses or one house definitely wouldn’t.

Aaron Norris [00:29:29] Well, I’m a marketing guy, so I will tell you now, it changed markedly when you came on board and you really did act as their interpreter, because I remember seeing their very first booth there with their marketing materials. And like, this is terrible. This is a room full of hard money lenders. And we don’t even know, like we don’t speak this language. And sure enough. You came onboard, definitely help. So what did they. You said, you know, the goal was I mean, I remember them saying, oh, we’re gonna refinance the universe. What would happen? Why why didn’t that work?

Tim Herriage [00:30:02] Well, we were on our way. We had done a little over a billion in loans in early 2015 when Blackstone just hired this new CEO. And president, John Beachum, who now, I guess has probably bought more hard money paper than anyone ever in the United States was. He was running the company. I was a managing director. I reported technically directly to him, the chairman for a while there. We were on this mission. We were interested in other things, but we were really focused on making our product better and getting more people to borrow money. But the new CEO came in and we bought and we bought Dwell Finance and we bought Jordan Capital Finance. And there was this article, I think, in The Wall Street Journal, we were gonna start like financing dishwashers and like all the household goods that investors put in the houses of this customer ecosystem. And before, you know, there is this new CIO and this new CFO and this new CEO, this new CMO. And, you know, I’m getting put out to pasture. It is, you know, the founders always the dumbest person in the room. And, you know, they tried to just recreate the wheel and turn the company into something it wasn’t. It failed miserably. And now and now it’s all simply, Finance of America commercial. And now it’s doing great because it’s now it’s back to let’s just loan investors money. So they’re doing bridge loans. They’re doing new builds construction. They’re doing the old portfolio loans, are doing a one-off rental loans. They’re doing really well. And it’s nice that they had a residential mortgage company that’s kind of steering the ship because didn’t the leaders there, they speak our language. They’re not to say they’re not the Park Avenue office types that are going to really make it too complicated.

Aaron Norris [00:32:17] Mainstreet definitely, to me, has a very different feel from Wall Street. So it was, I was very interested you sort of word insider in the real estate space sort of showed up. And it was an interesting journey to watch. He definitely improve them. I just didn’t know what happened on the tail end of that. What do you think that they… Is there room for Main Street hard money? I mean, I don’t think Wall Street’s going to go away. I think Covid-19 is interesting. I know here in California, they disappeared right quick. But I don’t know how you start a, you know, a foreclosure division quick in states like California, where the state of emergency, you’ve got a problem because our governor pushed it down to the local level. So you can’t process a foreclosure. You’re not allowed to evict. If you do it wrong, you could be fined a thousand dollars. I mean, holy cow. A loss mitigation department? Overnight? Wow. I think they’re going to come back. Just because with interest rates being so low, people are going to look for yield. I mean, what do you think as far as Main Street versus Wall Street and the private money space moving forward?

Tim Herriage [00:33:22] You know, I used to tell the guys on Park Avenue that this is a relationship business. And just look at the PPP loans, that first round of PPP loans. Any real estate investor that had a good relationship with a small bank. They got right through, got their loan. Those that were in line waiting for Chase or Bank of America or Capital One, they got left out in the first round because they’re too small to have a relationship with that big of an institution. Now, Ruth’s Chris, they’ve got a big win from Bank of America because they were a massive company. So I think that Main Street hard money always has a place. I mean, at the end of the day, I think all this sophistication has taught us all something from leverage to warehouse lines to warehousing to selling loans on the secondary market. So I think it’s helped push what was a comfortable closet industry into a little bit of professionalism and probably. Probably normalized things a little bit. But I think as long as a hard money lender focuses on relationships with their customer, as long as they focus on not charging, I mean, you got to remember in ’09 oh 2010, the going rate for hard money was 18 percent interest in two percent origination in Texas.

Aaron Norris [00:35:03] 18 percent?

Tim Herriage [00:35:05] Yes.

Aaron Norris [00:35:06] Wow.

Tim Herriage [00:35:08] I mean, literally, like in now, you can get it for 10 all day long…

Aaron Norris [00:35:14] All day long.

Tim Herriage [00:35:15] As a newbie.

Aaron Norris [00:35:15] Yeah.

Tim Herriage [00:35:16] And so I think it’s helped the investors. And I think a lot of I also know some guys here in Dallas that are charging 12, 13 percent. But they close in one day. They don’t require appraisals. They always have the money. They answer their phone and go look at the house. And within 24 hours. So I think my answer would just be there. There’s always a place for Main Street in this business because Wall Street can never move fast enough for all the transactions. And then our people, right?. The Main Street people. My people are lazy. Right. We’re unorganized. And we’re ADD afflicted individuals. So if you make it easy for us, we will pay an extra couple points just to know. You know, I didn’t have to fill out my get my kids birth certificate to figure it out the next one.

Aaron Norris [00:36:22] Yeah, they still want a lot of paperwork, don’t they?

Tim Herriage [00:36:27] Yeah, I mean, and they have to because they’re warehousing the load. It is amazing the amount of due diligence that the warehouse providers do on every single loan that is put onto those facilities. I mean, it is just crazy. I’ll never forget we had this big warehouse line with Citibank and they were like, oh, no, we’re gonna need to see credit scores. And now they roll to the list of like, what? I mean, we’ve already done the loan. They’re already in. Blackstone is guaranteeing it. They got like five hundred billion dollars. Why do you need to see Billy’s credit score? You know. But that’s just. Yeah. And like when we were doing the first securitization. Yes, we did the first Blackstones Invitation Homes unit, did the first-ever rental property-backed single borrower securitization. We did that. Who are the first multi-borrower securitization. When we had, I want to say like two hundred and forty million dollars worth of loans. It was like one hundred fifty-two hundred borrowers, the average loan and it’s that was in April 15th. And I’ll never forget the year before that. We’re getting ready. We’re trying to get ratings from, you know, Fitch and Moody’s and Kroll and all Morningstar and all those painful individuals. And we’re sitting in the room, Beacham’s in the middle because he’s the president, right? I’m on the left because I’m the investor. Jeff Tennyson’s on the right because he’s a mortgage banker and directly across the street from Beachman is the managing director. Of sort of, you know, whatever rating agency. Well, that person’s left will be the Resi team, the residential securitization team. And to the right, will be the commercial securitization team. Because no one could figure out what the heck this was that we were asking them to rate. It’s commercial paper on a residential property, but it’s backed by commercial income. But we’re underwriting it’s like a residenial loan. Like what is this? Or an object. Those were some of the longest days of my life.

Aaron Norris [00:38:44] Got a few more gray hair than you wanted.

Tim Herriage [00:38:48] Well, I’m literally sitting across the table from this guy who’s never left Manhattan. Right. Well, I’m sorry he had to fly to L.A. So he’s flown over America. Has it ever really been anywhere? And he’s asking he’s like, well, what if this person in St. Louis, his property manager, quits? Who are we going to get to manage the property? They’re like really worried about that. There’s like probably 3000 property managers in St. Louis. We’ll just call one of them. Do you really not know that? I mean, you know, but they didn’t. They had no idea. They’re like, Oh my God. And I was like. Here’s Nakao, the National Association of Property Managers. Look look at all these names. And they’re like, wow. I mean, they were like, really impressive. More than one person in Missouri knew how to manage a rent house. Because of the arrogance Aaron, and they think it’s like they thought they created this b. They thought like nobody owned a rent house before Blackstone. Yeah. It goes back to the Babylonian times. People owning houses and renting them out. It’s not a new thing.

Aaron Norris [00:39:59] Well, and, did Wall Street get bored with buying at the trustee sales? And is that why they started the hard money side of the business or are both of those going full steam ahead?

Tim Herriage [00:40:12] They’re no different than any investor I’ve ever met that started loaning money. And it’s just a natural progression, and I bet your dad is this way. You know, they start out by and some houses. They like it. They start making more money. They like it. They start making more money. They like it than they realize with all these banking relationships and their knowledge of the houses. Damn people would pay them twice what they can borrow the money for just a loan of money and help them get a deal done. And. You know, Blackstone was doing well with the securitizations and the buying his trustee sales, obviously, as the sellers market started heating up, they were losing not only the good deals because you remember there were times they were paying par.

Aaron Norris [00:41:01] Oh yeah.

Tim Herriage [00:41:01] A lot of their acquisition criteria had to do with: what’s the replacement cost of the home? And as you know, probably from your data, almost always a house goes back up to the value before the last recession, before there’s another dip. And so they were just they were kind of marking it to market. They’re like, all right. This was $350k. Now it’s $250k. Everyone’s saying it’s worth $250k. You couldn’t build it for less than $325k. That’s a good deal, let’s buy it. And as that number got kind of up to the $325k and they figured that the top of that market was like $350k. Then they figured it wasn’t going to provide the long term yield that they needed. You know, they use these fancy term called the gross margin. I’ll never forget this billionaire is asking me all these questions about gross margin and what gross margin I buy houses in Dallas and stuff, and I’m over there on my phone Googling it because the billionaires in a room I don’t want to say I’m stupid. I’m like, what is the gross margin? I had to look it up. Oh, OK. Yeah, I had, like, figure it out like, OK, so that’s what it is. What do I know? I don’t know. So it was fun? No, I think that they are now just more opportunists vs. carnivorous. I mean, they saw the story behind the Blacktone buying thing is one of the co-founders of Invitation Homes ends up in a neighborhood in Los Angeles. And we’d like a flat tire. And one of the neighbors says any parts of cars may far proceed and park his driver, park some part of the house. And they’re changing the site in their struggle. I think they’re waiting for a tow truck or something out on the oil. Neighbor somes out and says, hey, if you’re here about the house you’ve already sold last week at auction. And the guy goes, Yeah, what for? He told him, he goes, well, what could you build that house for? The gays like, yeah, twice that amount it would cost to build. That’s simple. And so literally, this founder, like, ends up in an airport meeting room with John Gray from Blackstone. And they’re like, why don’t we buy a billion dollars worth of this stuff? And they’re like, OK. And they shake hands and they buy a billion dollar for the house.

Aaron Norris [00:43:23] Now, it’s interesting to watch the market mature. You’re right. Here in California, they went hot and heavy. I think it was 2013 and they were buying for almost full value at trustee sale. So knowing that they…

Tim Herriage [00:43:36] We all call them stupid, didn’t we?

Aaron Norris [00:43:38] We sure did. We sure did. Well, it definitely squeezed the trustee sale buyers. You really had to know what you’re doing is we joke on the podcast that it’s just a hard business to be in. If you’re an amateur, it’s really hard to show up. They’ll run you up just so you never come back. You better know what you’re doing when you show those cashier’s checks. It might not be fun. But, you know, they got out of the California market, so they’ve been moving. And then the hard money loan came up and now I. About a year ago, I was introduced to an intermediary. I talked to John at Toorak. And there was another one who approached me that was going around to hard money lenders and buying their paper. What they told me at the time is like, oh, yeah, there’s lots of people doing it. We’re very conservative. We only take on 10 percent leverage. Like, wait, you take hard money, loans and leverage it. He’s like, yeah, one of our competitors takes on 90 percent leverage and we packaged it up and sell it to Wall Street for bond rated paper as bond rated paper. I’m a what? So you’re telling me you can sell this pooled with leverage to pension funds? They’re like, yeah, everybody’s so desperate for yield. I guess I’m scared that, you know, I’m looking at Covid-19. I’m looking at the government. What they’re doing with evictions and moratorium’s right now, private money is not protected. We are not backed by a federal entity. So who’s holding the bag?

Tim Herriage [00:45:03] I mean. That’s… that’s a good question, Aaron. I mean, I went on record in March saying that I was predicting house values would go down at least 10 percent. A lot of that’s probably the scars I got. No way. Right. Really, in 07 when it all started. But. I don’t know. I mean, this is the most confusing time, the most when you read what smart people are saying, DOW is up. And. And we’re just Mark Dotzour said on that webinar I did, he said, helicopter money. We can’t just keep Tritton helicopter money flying around neighborhoods, dropping money out of the helicopter. But that’s what we’re doing. And it’s about to happen again. We’re about to spend another couple of trillion dollars. Aaron, I mean, have you heard that the news the EIDL, if you didn’t get the ten thousand dollar grant you’re going to get no matter what.

Aaron Norris [00:46:08] Oh, wow.

Tim Herriage [00:46:09] You’re going to come back and oh yeah, that’s what they’re talking about in there. I mean, like literally like. So like. Oh, and by the way, it’s for every company you own. So I applied for five companies for EIDL month and I only got like a thousand dollars for a company because I’m the only employee in the company.

Aaron Norris [00:46:26] Oh, that’s right.

Tim Herriage [00:46:28] So I’m like forty-five thousand dollars extra in grants. So I don’t know. They keep giving me free money. I guess people don’t have to pay rent. And, you know, my grandkids just live in Moscow.

Aaron Norris [00:46:42] It is very few. Well, tell us about the Texas market. How are you guys adjusting to covered and are your art? Do you only do flips? You also have rentals.

Tim Herriage [00:46:52] I got a lot of rentals.

Aaron Norris [00:46:52] oK. I had one tenant that I’m. I have real estate in Florida and California. As far as the hard money business, we’ve had two people ask for help as far as rentals. I’ve had one tenant ask for a little bit of a break. I mean, what’s Texas been like?

Tim Herriage [00:47:14] We’re 100 percent occupied. We have 100 set payment rates. Not one person has been like we’ve had. I think I’ve renewed seven or eight leases since Covid started. I think what you’re going to see is, except for those low-income people, you probably never should have run to anyway. People are really valuing where they live right now because we’re all being told to stay there a lot more. So if you’re the type of landlord that my wife and I are, we provide a quality product and we treat people with respect. We’re not slumlords. I think, you know, I and I’ve always said this is it’s never more true than now. Right. There’s three, they taught this in school. There’s three basic necessities in life: food, water and shelter. Farming is way too erratic and now is only for the big boys. I don’t know how the hell you sell water and make a living. But by God, I know how to provide shelter. And that investment, it’s an it’s the best place, an inflation-indexed annuity with an underlying asset. So I love my rules. We’re doing great. We just like you, we told everyone, if you’re having problems, let us know. So far, it’s just an amazing life. One tennis. We were going to up the rent. One hundred dollars a month. The backstory hasn’t been increased in eight years. And we were planning on moving out this summer. They wanted to stay anyway. They said, well, how about we do seventy-five and we’ll do a two-year extension> And I’m like, done.  So yeah. I mean. And we just replace air conditioner, stuff like that. So they’re really what we’re seeing is by being good landlords and treating people with dignity and respect and providing a good place to live. Our rentals are really performing well now. What happens when the six hundred dollars extra a week runs out or they start dropping money out of the sky? I don’t know. This whole thing, it’s like I’m in a movie that was written by a two-year-old. There’s no plot. No, I can’t even understand where we’re going.

Aaron Norris [00:49:39] It is very difficult to follow from the federal, state and local level. Are you seeing a lot? I know there’s a lot of Californians sort of diversifying out of the state, and I know Texas is one of them. Do you see a lot of investors coming your way?

Tim Herriage [00:49:55] You know, we have for 10 years now. And you just see expect to keep sitting there. The wall, we need to build these to be like around California. We need to keep you all there. And here’s why. Looks like we’re starting to turn blue. So the whole reason all y’all are coming here is about the change. You see, we’re going to have a state income tax. It’s just driving me mad. No. Yeah. I mean, obviously, Texas is a great place to be. The market still on fire. The last, so we flipped several houses during this pandemic, the zombie apocalypse. And I’m sure you watch the news this week and you know that Texas is a hot spot. It’s worse than New York. But there’s no one dying outside my house right now. We’re out and you’re selling above asking price in record days, still. Mortgage rates just dropped to, what, two and a half percent. So I think we’re going to see prices continue to climb until our government stops printing fake money and making everyone happy and just deals with this thing. I think you’re just going to see a continuation of the status quo. I’m just worried about the backside of it because eventually, they have to stop.

Aaron Norris [00:51:12] And are the appraisals coming in for those price increases?

Tim Herriage [00:51:16]  Well, yeah.

Aaron Norris [00:51:20] That makes me nervous long term. The same thing has happened in California. I’ve a lot of flippers that are reporting that, like, I’m getting fifty thousand dollars more than I thought I was gonna get. But you’ve got an empty product. You don’t have to deal with people now going to the house that aren’t qualified. Just a really interesting time. We’ve only got about nine minutes left. I want to get a little bit more into what you’re doing. You sort of slow down a little bit. You’re not doing the Wall Street thing anymore. The Homevestors thing. Why? Why did you decide to pare down?

Tim Herriage [00:51:51] I mean, it is kind of. I went around talking at seminars and things well. Be your own boss and spend time with your family and all. I spend a lot of time not with my family and other people, they could be their family. And then my oldest was about to graduate high school. He graduated last year. So just kind of late ’17 and early ’18, I said, you know, I’m to spend as much time with him as I can. I have a 10-year old that I want to spend some time with. I’m only forty-two. So we want to get rid of the 10-year-old. I’ll be in my 50s and maybe I’ll work hard again then. I’ve got a great team. Aaron, I mean, just an idiot and they don’t work for me. We’re all just kind of partners. So we actively send 5000 postcards a week. We spend eight to 10 grand a month on marketing. We buy anywhere from three to five houses a month. Typically keep one is a rent house. Take one is a flow. And then also the rest. And so I don’t look at houses. I don’t sell the houses. I’ve got a great father-daughter team that does all that for me. I own an insurance company. We insure houses for real estate investors across the nation. But I’ve got a great partner and that’s been an insurance agent for 30 years that has already sold two companies. We ensure a little over one hundred and seventy-five million dollars worth of assets across the nation. We’ve got about seventeen hundred customers. We’ve got the best coverage out there. It’s all replacement cost. It’s also Lloyd’s of London with earthquake coverage, wind coverage, water coverage, hail coverage. It’s great. It’s great. It’s actually the Home Busters preferred insurance company. And that’s where I knew from when I left home dusters I couldn’t use a product anymore. So I called the CEO and said, let’s make this available to everyone. And we did. So it’s great. It’s a great product. I use it myself. It’s always great when you own a business and you can say I’m a Men’s Wearhouse guy, right? I mean, not only a customer I’m also.

Aaron Norris [00:54:06] You’re vertically integrated.

Tim Herriage [00:54:06] I’m also more vertically than I was also customer number one. You know me because it’s all technology-based. And if I can’t figure it out, then my customer can’t. And I’m not telling my customer about it until we get it right where it’s easy for me to explain.

Aaron Norris [00:54:21] If I go back to your rentals… So your form of marketing right now, is all your deals are all coming because of mailers?

Tim Herriage [00:54:28] Yes.

Aaron Norris [00:54:29] What’s your response rate to mailers right now?

Tim Herriage [00:54:34] Um, I don’t know. Three to five houses a month.

Aaron Norris [00:54:38] We call those conversions. So good for you. OK.

Tim Herriage [00:54:42] No, I can tell you. I can tell you. I wouldn’t say I know the numbers, man.

Aaron Norris [00:54:48] I always get asked. This is the Data Driven podcast. So I know it, it’s going to come up. If people gonna give me a hard time if I don’t ask. But, you know, three to five.

Tim Herriage [00:55:00] We get about a one-point three percent response rate of some of those. Let’s just call it one percent to make easy math. Of those 50 to 60 calls a week, we get we go on anywhere from 15 to 20 appointments. We really screen we do a really good job of not screen. We just set up that. We set up the sale. And if they’re not really motivated, we don’t go, because if they’re not really motivated, they’re not going to sell at a number that I’m going to buy. So we just sold them. So if you were doing the sales fall, right. We sent 5000 postcards. We get about 60 phone calls. Let’s just call it 50. So it’s an even one percent. We get 50 phone calls. We go on 20 appointments. So what is that, Aaron? And that’s 40 percent. So then we go on 40 percent of lead-to-a-appointment ratio. And of the 20 appointments we go on each week, that’s 80 in a month. We buy five on average. Well, we bought four on average. So it just took four such as, what, 20 percent?

Aaron Norris [00:56:14] Yeah, yeah. OK.

Tim Herriage [00:56:16] And I could trickle that through a spreadsheet and tell you my conversion rate, but I just haven’t done it.

Aaron Norris [00:56:20] No, it’s good. So you don’t do any SEO or paid ads online?

Tim Herriage [00:56:26] So I’ve been working, and that’s actually money projects starting July eight. I’ve been publishing new Web pages every day, two new ones every day. Kind of. “We buy houses” in “blank city” in “blank county” kind of built a template. And I’m just optimizing it. I’ve been really happy with the, and I am so on Monday, marketing Monday, I sit down and I go through and create the new Web pages. I kind of thought about hiring someone to do it, but they just couldn’t understand what I wanted to happen. So it’s been fun. My impression is I’ll give you a no real quick. So after three weeks of consistency, I’m opening up the Google search console right now. They recrawled my recrawled, my site day, on performance. So on July 8th, I had one impression. On July 26, I had one hundred and fifty-nine impressions. So that’s, you know, my average present positions up to 52, which sounds horrible, but that’s again, three weeks worth of work. So I won’t have, you know, my quick.

Aaron Norris [00:57:38] Right. I going have to follow up with you next year because I worked for a company in the construction space where we almost had somebody not come work for us because we had a bad Web site. So, you know, if conversion if somebody gets a mailer from you and starts looking at you, looking for you on the Internet and you’re not there. It’ll just be interesting to follow the next year with you.

Tim Herriage [00:57:59] Yeah, so, I mean, you know, I’ve got several pages that are raking in the top 10 and position on Impressions, and that’s just in a couple of weeks. So that’s kind of not my little focus right now, is the bill at the SEO. And I’m running about 10 dollars a day and Google pace of foot and just letting analytics run in the background to really look at customer behavior, see where I’m losing people less the learning machine learn and then to go to my company and say, ah.

Aaron Norris [00:58:27] Nope, good way to do it. What kind of stuff are you looking at as far as trends? What do you look at as far as data in the business?

Tim Herriage [00:58:39] You know. People really have to learn to define their target customers and who they’re converting and then go chase that customer. Don’t just market to zip code because that’s the zip code you are. You can make money on. And I’ve seen a lot of people really honing in on kind of their farm area and picking an area that they convert well in and really trying to exploit that area. You know, data trends, obviously now you can overlay demographics and even financials underneath the tax parcel data. You know, I that’s getting better and better every month. So you can really look at LTV in the last time they refinanced and how long they owned the house. And, you know, what people should do is even if they’re just not that active in the direct advertising, get on the bunch of wholesalers lists.I tell people this all the time. Look at the properties that there are marketing and then go research the underlying characteristics of that property and figure out because that’s you know, it’s a subject it’s a target case of someone that sold to someone really cheap. So even if you don’t have a large enough sample size by observing the marketplace, you can start doing your research and you can form the datasets that can then kind of build yourself a smart list and you can do less with more help.

Aaron Norris [01:00:15] Love it.

Tim Herriage [01:00:16] Or more. With less. Yeah.

Aaron Norris [01:00:19] Yes. Thank you. More with less.

Tim Herriage [01:00:23] I do less with more because I’m lazy and I have money.

Aaron Norris [01:00:27] There you go. Well, if you want to connect with you. Where should they go?

Tim Herriage [01:00:32]

Aaron Norris [01:00:34] Very good. One final thing. Just because if you had to start over from scratch. Brand new. Where would you start?

Tim Herriage [01:00:46] I would have got… I’ll tell you where I would have started in this business, when you’ve gone along long enough, there’s all these neighborhoods in your town that you drop by. You never neighbor house that you sold. And now that house, the dirt would be worth 10 times what the house is worth ten years ago. I would have kept one more house here. That’s it, one more house a year, because this is a marathon, not a sprint. As I know your dad would say. And if I’ve just kept one more house a year, I did the math the other day. I’d probably be worth about three point five to four million dollars more.

Aaron Norris [01:01:27] Coulda, shoulda, woulda. I hear that a lot. I’m the same guy. Wish I would bought more in ’09, but hey Tim, I really thank you for taking the time to do this. It’s been a fascinating journey through so many different facets of this business. Any ideas on trends coming up? Technology that you’re excited about?

Tim Herriage [01:01:47] Yes. Yes. You’ve got to find the bottom third of the market. You’ve got to use leverage PropertyRadar, or whoever. Whatever market you’re in, find someone that can give you the data. Find the bottom third of the market. The bottom third of the market is going to be the hottest segment of any market for the next two to three years. Interest rates have made it super affordable. They have there it’s going to be price way below replacement cost as construction prices are going through the roof. And I mean, I just that’s what people are going to want to live. And the other trends start looking at data for vacancies in urban areas. And I think people are going to work more from home. So all this technology allowing people to be remote, you know, if you really want to find a good market and get your image now, you can get out of L.A., you can go way up into the Inland Empire and you get to have the same job, make the same amount of money, but now you don’t have to go to work. Well, actually, in person.

Aaron Norris [01:02:45] You can move to Texas and still work in California.

Tim Herriage [01:02:49] Yes. And you can as long as you’re in Dallas County where all those Democrats are. You can say that. But no, I mean, like literally like this technology is going to allow people to live in places that are more afforable. And I think the priority is people are going to have some consciously on where they live is making sure that they have a yard with some personal space where they don’t have someone, where they don’t have to wear a mask, you know, walking down this stupid sidewalk. I mean, hey, I live on three acres. I don’t have to wear a mask when I go outside. And I live in Texas. So it’s actually still optional, even though it shouldn’t be, probably.

Aaron Norris [01:03:29] Probably, but. All right. Well, no, that’s a good point. We’ve got. We’re watching that trend as well. Migration trends. But now covered related migration trends even within the same state, county to county. It’s going to be really fascinating to watch. All right. I had to sneak that one in. I’m going to post all the links on our community. And if you’re on YouTube, you’re going to be able to link through that. And I really appreciate you doing the show, buddy.

Tim Herriage [01:03:54] Aaron, it’s good to see you again, man.

Aaron Norris [01:03:57] Thank you for listening to the Data Driven Real Estate show. You can find show notes and links to some of the resources mentioned in the show at click that join the community and you’ll be forwarded to our community where you can even ask questions for upcoming guests. Ask questions of current guests. We monitor there and we’d love to engage with you. Please don’t forget to like favorite subscribe and share on any of your favorite platforms. It helps us out a great deal. Thanks for listening and we’ll see you next week.