Passive Income, Active Wealth - Hard Money for Real Estate Investing

Bill Fairman (00:01): Hi, folks. This is the time of the year that you hate. It's called Setting Your Goals for 2023. We're gonna have more about that right after this.   (00:33): Thank you for joining us on the Real Estate Investor channel, hard Money for Real Estate Investors. We are Carolina Capital Management private lenders in the Southeast for real estate professionals. If you have a project you'd like us to take a look at, go to carolina hard money.com and click on the Apply Now tab. If you're a passive investor looking for passive returns, go to the accredited Investor tab. Oh, and you must click it as well. Don't forget the like, share. So subscribe. Hit the bell, sit there and look at it. , don't forget, Wednesdays with Wendy. Wendy sets aside 30 minutes per person to talk about anything real estate related. On Wednesdays, there's a link to get on her calendar. She's typically booked up pretty far in advance, so get in while the giddings. Good.   Wendy Sweet (01:36): excuse me. So Wendy, you had the Quest Con thing, and I'm pausing, I feel like the president when I'm reading a speech pause here,   (01:59): .   Bill Fairman (02:01): So tell us about it. How'd it go?   Wendy Sweet (02:04): It was a great, it, the whole event was incredible, but the panel was terrific. I was just so honored to be with the two panelists that I was on there with, that their, their brains are incredible. What was really cool is that were all three lenders and we all three underwrite a little bit differently. And, and that's really what we talked about were the, the different things that we look at. So you can still buy a recording from that event, so it's worth it. If, if you do that, it's well worth it.   Bill Fairman (02:40): Is there a URL that you know of where people can   Wendy Sweet (02:43): I'm sure there is one, but No, I don't know of it. But if you get on Quest Con Live 2022 on the, of course the internet Googles it, as we say. Well,   Bill Fairman (02:56): I'm, I'm pretty sure it'll materialize   Jonathan Davis (02:58): In our comment section.   Wendy Sweet (03:00): That's exactly right. . But that'll, and, and then you can buy it at a discount too with Carolina 15, I believe is what we had that I'm sorry,   Bill Fairman (03:11): I said sweet. Yeah,   Wendy Sweet (03:12): That's   Bill Fairman (03:13): Me,   Wendy Sweet (03:13): Not you. Sweet . Well, I, you know, it, it pains me to see you guys with that background of, you know, the beautiful   Bill Fairman (03:23): Tropical, tropical   Wendy Sweet (03:24): Plant. Sure. Yeah. It's cold here.   Jonathan Davis (03:27): It was, it was really tough to set out there this morning.   Wendy Sweet (03:32): I feel bad for you   Jonathan Davis (03:32): Guys barefoot while, you know, the sun, you know, was just beaming over the water.   Wendy Sweet (03:38): Just amazing how you guys constantly just take it for the team.   Bill Fairman (03:41): ,   Wendy Sweet (03:42): ,   Bill Fairman (03:42): Those who don't know, we're in Fort Lauderdale at the family office event. Yeah. It's called the Family Office Club. There's ultra high net worth individuals office here. Yeah. there's institutional investors as well as people that are trying to raise capital and people who are trying to deploy it.   Jonathan Davis (04:01): One of the great things, if, if you are interested in learning how to talk to or approach family offices, this is a great event because there's many panels with the, the managing partners of those family offices, setting there, telling you what they're looking for and how they look at things. So it can give you an insight into how to approach a family office, which is, which is is a great resource for a lot of people when you're looking f to, you know, a little bit more than buying or selling one or two loans, you know, kind of scaling.   Bill Fairman (04:35): Yeah. Quick tip. One pager and a one liner on what you do. They don't wanna see a whole blown out email your slide deck and all that. They're not gonna look at it to get inundated with stuff.   Wendy Sweet (04:46): Awesome. To explain just for a quick second, what a family office is, because many people may not know.   Jonathan Davis (04:53): Yeah. Family office is just it's a aggregation of family a family or multiple families. and they typically have a minimum of 10 million net worth.   Wendy Sweet (05:07):  well jump change.   Jonathan Davis (05:08): Most of them are probably closer to the a hundred million plus smart, but minimum of 10 million to kind of make the metrics work to start a family office. And it basically just helps you propel your wealth forward through multiple generations so that you can create a legacy. I mean, that's really it.   Bill Fairman (05:29): Well, most, most people that are in a family office or at start one, they want the money to last at least five generations. Mm-hmm. and unfortunately ultra net, high net worth families tend to run outta money in three . So it takes planning,   Jonathan Davis (05:52): A lot of planning, a lot of money, but yeah, no, it's, it's great to, to be here. we've enjoyed a lot of the connections and conversations and, and really the insights, I mean, on how to capital raise and how these, you know, we, we sat in on a panel with six different family office members, and they were judging and rating the one liners and the one pagers that were submitted. And it's so, you know, it's so interesting because you would get ranged from, oh, a scale of one to 10. Someone would give it a three, another person would give it a nine. Huh. And it's, and it's, and it's because it's just knowing who you're talking to because like, a family office isn't a family office isn't a family office, they're all different and they're all looking for different things. So it's just knowing who you are, knowing your voice and setting it for that. and, you know, that's, that's really it. And just being clear and concise. Yeah. Like Yeah. Oh, a one-liner should be a one-liner, not a one paragraph or .   Bill Fairman (06:50): It was funny, they were judging this one that took up the whole freaking slide and it was supposed to be a one line. Yeah. And it just went on and on and on. And the, the guy's holding up a three, he goes, yeah, you could have stopped after the first four words.   Jonathan Davis (07:06): . Yeah. So it's, it's, it's been insightful. So really good, you know, and the weather makes it a little more enjoyable. Yeah.   Wendy Sweet (07:14): four guys.   Bill Fairman (07:15): Yeah. Here's how I suffered. I had to come here and get into a t-shirt because I had already soaked through my dress shirt. Had to take off my sport coat because it was so hot walking over here. . Wow. Yeah. Isn't that awful? Yeah.   Wendy Sweet (07:28): That really is.   Jonathan Davis (07:30): Well, and to, to segue this, you know, a little bit into what we're talking about goals. So one of our goals is to, you know, partner up or source more capital from mult or from family offices. So that's why we're here to learn how, you know, how they think, what they're looking for. Right. Because that's part of our long-term goal.   Bill Fairman (07:50): Right. Right. Good, good segue. Yeah. All right. Before we get started with goal setting, however, we do have a little bit breaking news talk about, and when I say a little bit, I mean a little bit haven't been keeping up with the news much this week, but I did see that the consumer price index, CPI and the ppi, that's the producer price index, all came in this week. And I'm not giving you exact numbers, but I can tell you that they were less, a little less than expected mm-hmm. , which is better   Wendy Sweet (08:37): Than expected.   Bill Fairman (08:38): Yeah. Less inflation than inspect than expected. Right. And it, it's kind of given us an indication that maybe we've kind of hit the, the peak and hopefully it's going down from there.   Wendy Sweet (08:54): Can only pray fairly,   Bill Fairman (08:56): Excuse me, fairly certain that the Fed raised the rate another 50 basis points today mm-hmm.   Jonathan Davis (09:05): , and you know, it's not, you know, I, I got a nice little headline. what is it? The, the, the buying sentiment. So people who believe like now is a bad time to buy has reduced, it's reduced from 80% of people think it's a bad time to buy down to 79   Bill Fairman (09:27): to buy what?   Jonathan Davis (09:29): To buy real estate single family, like they're primary residents. Yeah. Yeah.   Bill Fairman (09:34): Well, also it has to depend on people, you know, what are they doing with their next house?   Jonathan Davis (09:40):  well, yeah. The people who wants to sell, and   Bill Fairman (09:42): If they're, if they're moving up or they're having to change jobs and or they don't have any choice if they're changing jobs and they have to move. Yeah.   Jonathan Davis (09:50): Well, the, the, the sentiment of selling, the percentage of respondents who said it was a good time to sell increased from 51 to 54%. So 1% people think it's or, you know, there's, you know, better time to buy and 3% think it's a better time to sell. So maybe it's starting to move in that in a good direction.   Bill Fairman (10:12): I think it's, prices come down a little bit, that'll change, but it, it's really all gonna be reflected in how much can I forward per month. So it really has a lot to do with interest rates. Interest rates come down   Jonathan Davis (10:25): $900 more per month is what it costs   Bill Fairman (10:28): You. Yeah. So we, we've already proven it doesn't matter how much the house cost, it's how much can I forward a month? Mm-hmm. .   Jonathan Davis (10:34): Yeah.   Wendy Sweet (10:34): What's, what's the cash flow too?   Jonathan Davis (10:36): Well, on the assessment side. Yeah. What's, you know, what's, you know, what's the house produce. Yeah. So, I mean, and that's, you know, we, we, we beat it into the ground all the time, but

Bill Fairman (00:01): Greetings, everyone. We are live. Thank you for joining us. Wendy will not be with us today. She is currently at, I don't know, 30,000 feet on, on an airplane. So we're gonna talk about the year end review, even though the year isn't over with yet, but I don't know what much more will transpire between now and the first. So we're gonna, I'm do a, I'm, we're in a review today and we'll get to that right after. It's funny, that graphic we're showing the, the passive income gang. Yeah. With all the money flying. I'm going, that looks kinda active to me. ,   Jonathan Davis (00:59): He makes so much money passively, he just actively throws it away. Is that what Yeah, I guess that's   Bill Fairman (01:03): The, so by the way, welcome to the show. We are what is the name of the show? I keep forgetting? It's real estate. Real Estate Investor Show Hard Money for real estate investors. We are Carolina Capital Management private lenders in the Southeast for real estate professionals. If you have a project that you would like us to take a look at, please go to carolina hard money.com. Click on the apply now tab. If you're a passive investor looking for passive returns, we have a place for you as well. Click on the accredited investor tab. Don't forget to like, share, subscribe, hit the bell. And don't forget about Wednesdays with Wendy, since this is Thursday. She's not here. . So Wendy Dev devotes 30 minutes per person on Wednesdays to talk about anything real estate. Yep. She's usually booked up in advance quite a bit. So there's a link to get on her calendar.   Jonathan Davis (02:07): Yeah. She's usually a month or two out. Yeah.   Bill Fairman (02:09): Yeah. Take advantage of it.   Jonathan Davis (02:11): Mm-Hmm. . Absolutely. Well, a month in review, or a month in review, A year in review, that's even worse. But   Bill Fairman (02:18): First   Jonathan Davis (02:18): Yeah.   Bill Fairman (02:29): I always like freaking out our production group.   Jonathan Davis (02:31): I love that. Yeah. I mean, we'll, we'll get to the, we'll get to the breaking news in a second. But yeah, I mean, just kind of a, an over overarching cap. Like we   Bill Fairman (02:39): Had a lot   Jonathan Davis (02:39): Going on this year has been Wow. It's just, you know,   Bill Fairman (02:44): Yes.   Jonathan Davis (02:45): Not to, you know, the same, the same investor loan that would've captured over 4.1% in January is capturing an 8.7% rate in December. I mean, it's, that's a big swing.   Bill Fairman (02:58): Yeah. And if you're, you know, if you bought a piece of property and before you get it finished and then the numbers don't work out for you mm-hmm. you're gonna have to readjust. Yeah. Obviously.   Jonathan Davis (03:10): Yeah. I mean, I think the, you know, if you, you know, $400,000 investment in house, you know, typically, you know, you need about $1,800 of rental income at a three and a half percent rate to cover it. And with the rates jumping where they are, and now you need $2,700 in rents to cover the, the payment Yeah. Rents while increasing didn't increase that much. Right.   Bill Fairman (03:34): And they will eventually. But, but do, do you wanna lose money until then? No, you always have to have cash. It has to cash. Even if it's only $200 a month.   Jonathan Davis (03:48): Even if it's only $50. I mean something, you know, 200 is better than 50, but Yeah. Don't have a negative cash flow. Yeah.   Bill Fairman (03:55): But like I said, in the long run the rents will eventually outpace. Mm-Hmm. And then, you know, at some point rates should come down and then you can refinance and improve that.   Jonathan Davis (04:09): I love the certainty of the wood. Should makes me not think of that. Never know. What's that phrase? Don't should all over me.   Bill Fairman (04:16): Don't shit all over me. It's nice. All right. But before we get to this year end review we have a little bit of breaking news. I a little, oh, the corner. You guys can't see it from here, but we got an emoji of Oh my gosh. What are you talking about,   Jonathan Davis (04:46): ? Well, so, you know, not necessarily breaking, but you know, it's news nonetheless. What is interesting is the days on market or the inventory market in, in a single family is 1.6 months for October for the prior month, which is almost,   Bill Fairman (05:07): That's not even close to normal,   Jonathan Davis (05:08): Not even, but for the last five years, that is the lowest days on market for the last five years.   Bill Fairman (05:18): Is that nationally?   Jonathan Davis (05:19): Yes. Nationally for the last five years. So that even, even with what we're going through, higher interest rates, low, you know, low supply, we still, you know, loans are, houses are still closing and they're closing fast.   Bill Fairman (05:34): So as we always say here, a stable market is six months worth of inventory. Mm-Hmm. . And so now we're talking about still less than two months. Yeah.   Jonathan Davis (05:42): Yeah. Absolutely. also, you know, you know, just wanna throw out North Carolina, Charlotte, and Raleigh they made it into the top 10 best markets for growth for multifamily and single family. So looks like Raleigh Raleigh came in at nine and Charlotte came in at seven. Wow.   Bill Fairman (06:06): Yeah. Well that just goes to show you all the people that are migrating to these parts.   Jonathan Davis (06:11): Yeah. And notables, you know, Tampa came in in the top 25. So did Atlanta. And those are also places that we lend in. Yeah. so, you know, we love that. And then, you know, the top five multifamily markets to invest in, just released by, who is it? Yardi, Yardi Matrix. Number one is Atlanta. You know, we get that. But number four, Charlotte. Wow. Yeah. So, you know, even, even with everything going on, you know, it still rounds out the top five for markets to invest in a multi-family.   Bill Fairman (06:44): Yeah. I, I lived in Atlanta in the very late seventies and early eighties while I was going to school down there. And I was always told if you can't get a small business off the ground in Atlanta, you'll not be able to get a small business off the ground   Jonathan Davis (07:01): Anywhere. That's true. There's a lot of small businesses in   Bill Fairman (07:03): Atlanta. Cause it was just a market that even in those high I mean that at that time they were high interest rate. We were in the middle of recession as well.   Jonathan Davis (07:14): Yeah.   Bill Fairman (07:15): And people were still very optimistic about you know, business growth in the Atlanta market. Mm-Hmm. . And that has really kind of translated into most of the, the southeast, because Yeah. A lot of people are migrating here. You got anything else?   Jonathan Davis (07:30): Just, you know, I thought it was interesting. Maybe you all will as well. I did not know exactly how many hours the average renter had to work to pay for their rent. Mm-Hmm. it's 62 hours. Yeah. 62 and a half hours.   Bill Fairman (07:44): For the month's rent.   Jonathan Davis (07:45): For the month's rent, they have to work 62 and a half hours to, you know, to pay their month's rent, which is now, which that is up six hours more than it was Yeah. Before the pandemic. So, you know, you have to work six more hours to live in the same place. I, I like, you know, equating those things together, it's like what, you know, we, we can say it costs $200 more, but, you know, or it's, you know, you know, we like, you know, we like the expression of time returning time return on effort. You have to work six more hours to stay in the same place.   Bill Fairman (08:15): Well, you think about that if you're trying to qualify for a mortgage, your housing expense can't be more than what, 28%?   Jonathan Davis (08:26): Yeah. Yeah. 28. Yeah. I think that's right.   Bill Fairman (08:29): Brian, if Brian's listening, he'll   Jonathan Davis (08:31): Go correct it. Yeah.   Bill Fairman (08:32): He'll chime in. But I, I think it's in the 28% range, so mm-hmm. that's much higher. 62 hours is much higher than what it's gonna be to qualify for a mortgage. Yeah. So rents are going up higher than your affordability for Oh yeah. Buying a home.   Jonathan Davis (08:52): Yeah. You know, and they'll say like, rents have, you know, have slowed down. They have the rate of appreciation or arising has, has slowed down, but they still rose seven over 7% year over year for October. Yeah. Which is, you know, yeah. You know, more than average, but, but slowing down.   Bill Fairman (09:12): Okay. So let's talk about the, and I'm gonna talk about single family prices first or home appreciation for the year in review.   Jonathan Davis (09:23): This is the year in review. ,   Bill Fairman (09:34): It looks like a heavy metal here in   Jonathan Davis (09:36): Review. I love it. I only did that cuz I like to throw bill off.   Bill Fairman (09:39): That's okay. It's easy to do. So peak home appreciation hit in June of 2022 at an annualized rate of 20%.   Jonathan Davis (09:56): Did you round I think it was 19.8.   Bill Fairman (09:58): Yeah, I rounded it. Yeah. 20%. That's incredibly high. And as we always talk about here, unsustainable   Jonathan Davis (10:07): , 20% growth. Yeah. Was is unsustainable.   Bill Fairman (10:11): So what what's funny, I, I hear a lot of the, the pundits talk about this and how all the markets are overvalued, which they are for the most part. And as the things shake out, they believe that appreciation will drop all the way down to between two and a half and three and a half percent.   Jonathan Davis (10:31): You mean to normal,   Bill Fairman (10:32): Which is been the normal rate of appreciations. It's the fifties.   Jonathan Davis (10:36): It's terrible. It's going to, it's gonna just crash. The market's gonna crash, it's gonna get down back to normal appreciation.   Bill Fairman (10:43): 2022, I also saw record energy prices.   Jonathan D

Your 2022 In Review! Visit our website: https://www.CarolinaHardMoney.com Join Bill Fairman, Wendy Sweet, and Jonathan Davis, LIVE! every Thursday at 12 pm ET for the Real Estate Investor Show - Hard Money For Real Estate Investors! As 2022 is nearing its end, the Carolina Capital Management team takes a look back at the relevant real estate events that occurred this year. What have you learned and accomplished this year? What are the preparations you need to look out for in order to survive the ever-unpredictable real estate market? Be up to date, be informed. Be educated. Learn the numbers and data. Discover the best niches of the real estate business where you should invest.

Today's Market and the Non-QM Loan Join the Carolina Capital Management team LIVE every Thursday at 12 pm ET for the Real Estate Investor Show - Hard Money For Real Estate Investors! This week, Bill Fairman, Wendy Sweet, and Jonathan Davis are joined by Bryan Maddex of AmeriFirst Home Mortgage to discuss Non-Qualified Mortgage Loans! With over 20 years in the financial industry, Bryan used his experience and insight to help get financing and loan products for his clients, many of whom are first-time homebuyers and real estate investors. One of his top priorities is providing consistent and frequent communication. His team ensures that the buyer knows exactly where they are in the mortgage process, as well as their agent and listing agent. Amerifirst works with many clients who have not been successful in getting loan approvals from other lenders. They take the time to educate their clients on overcoming prior obstacles to achieve success as they navigate the steps to homeownership, including the pre-approval process. It is not unusual for Bryan to work with his customers for a year or more to help them get their credit mortgage ready, and for him, it is especially gratifying to share in his client's joy on closing day. Amerifirst offers a full line of flexible loan products including FHA, VA, USDA Rural Development, renovation, and conventional mortgages. They also offer a range of non-traditional products such as Investor Cash Flow Loans and Bank Statement Loans. Bryan is proud that his Amerifirst team includes his wife, father, and brother, and they feel truly blessed to be able to serve their clients as a family.

Join Bill Fairman, Wendy Sweet, and Jonathan Davis LIVE! every Thursday at 12:00 PM ET for the Real Estate Investor Show - Hard Money For Real Estate Investors! Brett Sims, the Head of Growth of Renovo Financial, joins the Carolina Capital Management team to talk about the current market updates, especially the DSCR loans. Renovo Financial: Their story begins in 2011, at the Starbucks on Sheffield and Armitage in Chicago's Lincoln Park neighborhood. It's here where Co-Founders Kevin Werner and Daniel Rosen met to discuss founding a new real estate investment company. But this company would be different. They wouldn't simply throw money at clients and expect them to figure out the rest. No, they would take the time to assist their clients through the entire process, never sacrificing service to make a quick buck. With the help of Granite Creek Capital Partners, the initial equity firm that back Kevin and Daniel, they were ready to start growing their new company, Renovo Financial. With support from Granite Creek and caffeine in their system, Kevin and Daniel began slowly and carefully lending in Chicago and building their team of rockstar real estate lenders. For the first five or six years, they focused solely on the city of Chicago. Today, however, Renovo is rapidly expanding across the country with local lenders in more than 10 markets stretching from San Diego to Boston.