Dec 20, 2022
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.
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. <laugh>, 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):
<laugh> 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,
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. <laugh>. 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):
Bill Fairman (03:13):
Wendy Sweet (03:13):
Not you. Sweet <laugh>. Well, I, you know, it, it pains me to see you guys with that background of, you know, the beautiful
Bill Fairman (03:23):
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. <affirmative> and unfortunately ultra net, high net worth families tend to run outta money in three <laugh>. 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 <laugh>.
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):
<laugh>. 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):
<laugh> 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. <laugh>. 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 <laugh> 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. <affirmative>, which is better
Wendy Sweet (08:37):
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. <laugh>
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):
<affirmative>, 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):
<laugh> 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 <laugh> 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. <affirmative>.
Jonathan Davis (10:34):
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 it's, you know, it's not what you sell the house for. It's what you buy it for. So yeah, there's still good deals out there. You just have to find the right motivated buyers and or Right. Motivated sellers rather. And, you know, apparently there's being a few more of those popping up.
Wendy Sweet (11:01):
Well, as a matter of fact, I, I've had deals literally dropping in my lap just this past week. and it's just a amazing how it really just flipped and flipped so quickly. That's amazing and exciting. And I mean, and they're deals, they're,
Jonathan Davis (11:20):
You're getting these from wholesalers who have had, you know, someone fail to close or, or how are, how are you sourcing these, or how are they dropping in your lap?
Wendy Sweet (11:27):
Well, you know, when you're in the lending business, you kind of hear about deals first. And when people are backing off of them and don't want to buy them, you know, they're wholesalers are just reaching out to anybody else just so they don't lose the contract. Yeah. so, so, you know, a lot of that tends to, tends to occur pretty quickly. but just people, I know, people I've been talking to saying, Hey, if you wanna sell it, I'm interested. And it, it's amazing how that's, how, how it's really changed. Like, I have three of 'em sitting here for, for this week that that I'm pretty excited about. And Don Harris says he's a hundred percent ready either way. I love that. <laugh>.
Bill Fairman (12:13):
So we, Don's always that way.
Wendy Sweet (12:15):
Yes, he is. And he is al he's always ready to go and ready to perform. We love Don Harris.
Jonathan Davis (12:22):
Bill Fairman (12:23):
So let's move on into our segment for this week. it's best time of the year when you wanna start setting up your goals. you know, we'll have our annual meeting in January mm-hmm. <affirmative>, but, and each year we, you know, we're setting up goals for the, for the upcoming year and, and you need to do that. Mm-hmm. <affirmative>, I know. It's, it really is a pain. People hate it. Well, most people hate it. There are people that love setting goals. I'm not one of 'em <laugh>.
Wendy Sweet (12:55):
I like it.
Jonathan Davis (12:57):
I like it too.
Wendy Sweet (12:58):
I like having a target.
Jonathan Davis (12:59):
I mean, so, I mean, I'll, like last, last year when we set the goal of, we wanted to fund 50 million in, in loans, and we set that in, when did we set that? Jan? It was right around January. Mm-hmm.
Wendy Sweet (13:13):
<affirmative> the beginning.
Jonathan Davis (13:14):
And we're like, and yeah. Remember, do you remember that meeting? I
Wendy Sweet (13:17):
Thought you were
Jonathan Davis (13:18):
Nuts. You, you were like, you, you and everyone else were like, oh, this is crazy. We're not gonna hit,
Wendy Sweet (13:22):
There's no way. Why are we setting it up so high?
Jonathan Davis (13:24):
Because the, the, that year prior, we had just closed out at 33 million I think it was. That's right. 3 million. That's right. And they're like, we're, we're not, like, you're not gonna increase by 50%. Come on now. so, you know, it was like, you know, we'll, we'll set it. and then we're closing out this year right. At 80 million.
Wendy Sweet (13:42):
Yeah. That doesn't suck.
Jonathan Davis (13:44):
Bill Fairman (13:45):
So we were sandbagging
Wendy Sweet (13:47):
<laugh>. Yeah. Jonathan, what were you doing, <laugh>? Well, the thing is, is, you know, and, and we should, you know, we're talking about this, but we should let people know we had an additional stream of income through a long-term product mm-hmm. <affirmative> that we didn't have the previous year. We were actually had just started a previous year, and that's really what we were thinking or what you were thinking when you came up with that 50, 50 million to be funded. So that did occur mm-hmm. <affirmative> and did make a big difference. But the over and above didn't come from that. It came from really a different portion or a different segment of an asset that we really got much more into. And that's the small commercial type loans that we were doing.
Jonathan Davis (14:34):
So, you know, to, to break it down, we've, you know, we did 30, 33 million last year in total originations. And if we break it out for this year, of that 80 million, 45 million is our short term construction fix and flip, small balance commercial. It's not the, the long term loans that we added. So we almost hit 50 million with just what we do on the short term side. Right.
Wendy Sweet (15:05):
Jonathan Davis (15:05):
Bill Fairman (15:07):
And if rates hadn't gone up in the middle of the year, we had really blown it out of the water.
Wendy Sweet (15:11):
Bill Fairman (15:12):
That's it really slowed down that that revenue stream because everybody kind of paused on, you know, longer term stuff Yeah. Thinking it was gonna go down, or I don't know what they're thinking.
Jonathan Davis (15:24):
<laugh>. Yeah. Well
Wendy Sweet (15:25):
That's, that's one of the things that a lot of, some of the other companies, other, other hard money lenders or private money lenders are running into that we're depending on those long-term D S C R products to grow. You know, they did really well this past year too. A good majority of them are now out of business because those programs have been pulled. So I mean, that's a great example of, you know, be careful what you're concentrating on. You have to have the multiple streams mm-hmm. <affirmative> of income to be able to, to, to turn that ship when it, when it needs to be turned. And, you know, I'm, I'm very interested in seeing what's gonna happen, especially in the first quarter coming up because it, it, from how it looks to me is we're just actually getting back onto the normal track of what it was two years prior, which is, you know, it's gonna slow down in the winter, the middle of February, light turns back on and things start to sell again. So I'm interested to see if that's the path that we're back on. It appears to be, but you know, our, our site is so short in front of us at this point that it's really a week to week. We don't know what's really gonna go on, but that's kind of what we're planning on. That's what we're hoping on and planning on.
Jonathan Davis (16:46):
Bill Fairman (16:47):
And just to make sure that we keep with some additional revenue streams. I run down to the stoplight in front of our office at lunch, and I clean people's windshields.
Wendy Sweet (16:57):
<laugh> got that big cup that says raising funds, <laugh>, we'll work for Food <laugh>.
Bill Fairman (17:05):
We're, we're trying to grow that part of the business. <laugh>.
Jonathan Davis (17:09):
Yeah. I mean, but you know, part of, you know, our goal setting and part of our, just our overall goal is that we want to be as much as we can be in control of our destiny and in control of the returns to our investors. now, you know, Wendy alluded, you know, these people who are going out of business on these DSCR R loans and other, other brokering, they're dependent on somebody else to say yes or to, you know, here's the funding, here's your line of credit, what have you, you know, warehouse facility, whatever it is. when you, like, for us, when we run it through a a fund model, we are in control of those funds and how they're allocated out, which also allows us to control the returns back to our investors. So, you know, while these people are dropping on the D S C R programs and either other, other short term programs, we're still able to keep moving forward lending and while also getting outsized double digit returns to our investors.
Wendy Sweet (18:17):
Jonathan Davis (18:18):
So it, like, that's one of our goals and always has been. And that goal has, and I think a lot of people's eyes made us s kept us smaller than other people. Mm-hmm. <affirmative>. Mm-hmm.
Wendy Sweet (18:32):
Jonathan Davis (18:33):
But right now, I'd rather be smaller. I
Wendy Sweet (18:35):
Smaller and solid <laugh>. That's, that's the key. You know, the other thing too that I think will pertain to a lot of people that are listening is, you know, not only only are we pretty vanilla in our lending category, but but solid in that. But personally, our, our personal investments with the self-storage mm-hmm. <affirmative> and single family long-term rentals are, you know, we've been building that as well. you know, all of us individually, whether it's 30, 60, 90 days or long term or, or you know, Airbnb, whatever, whatever those models are, and we do all of those. it's, it's important too that we stay diverse in that market as well because you have to jump from what's hot to what's not
Jonathan Davis (19:33):
Mm-hmm. <affirmative>. Well, and you have to, you have to be able to move, but all within the scope of what you're, of, of your expertise and your lending, you don't want to just be jumping from place to place. you know what, what Wendy's saying is, you know, you wanna move, you have, you have a couple different buckets that you have, and sometimes you fill one bucket, you know, halfway, and sometimes you fill the other one up all the way, and you just move between those, depending on what the market's doing, they're both your inside your wheelhouse. You're not just trying to go find a different bucket that you've never done before.
Wendy Sweet (20:05):
That's right. Right. You know, I, I'd like Scott's question over here, you setting weekly, monthly, annual multi-year goals? And the answer to that is yes. Absolutely. we, we meet quarterly to change to, to evaluate and change any goals or adjust goals that we may have. We also meet monthly, you know, for, for our financial and our dashboard to see what's going on there. And absolutely, we go multi-year. We have a three year target. We have a one year target, we have a three year target, we have a five-year target. And, but that target's always moving because we have to adjust with what's going on in the market.
Jonathan Davis (20:47):
Yeah. And, oh, bill,
Bill Fairman (20:49):
I was was gonna say,
Jonathan Davis (20:50):
I can fill him, just,
Wendy Sweet (20:52):
It's amazing. He hasn't talked <laugh>,
Bill Fairman (20:54):
<laugh>, I'm learning. So you have to get, you can get very granular with this too. So, you know, take that year end goal and then break it down into 12 months, what you have to do to achieve that, that goal. And it's easy to go backwards once, once you set the goal, then figure out in smaller segments what you have to do to achieve that number. Mm-hmm. <affirmative>, I, I want to talk about the, the book the Gap and the gain. And I'm sorry, I didn't have the author pulled up right in front, but while I'm doing this the, the basics of the book, the gap in the gain is that not enough people celebrate the smaller achievements. They'll set a goal, and I'll give you an example. Let's say your goal is to walk to the horizon. Well, we know you can continue to walk to the horizon and you're never gonna get there, but when you turn around and look behind you, you've seen the progress you've made so far, and you need to celebrate those wins. thank you Scott <laugh>. So Dan Sullivan and Benjamin Hardy,
Jonathan Davis (22:09):
I would, you know,
Bill Fairman (22:10):
I, funny enough, Benjamin Hardy was the, the keynote speaker at CG this past couple of weeks ago.
Jonathan Davis (22:18):
I was just gonna say my commentary on, you know, setting the goal for the horizon and looking back to, to appreciate all, you know, that's actually, you know, setting an unattainable goal and looking back and seeing how you can never get there. Like you just saw all your failures when you look back,
Bill Fairman (22:32):
<laugh>, <laugh>, no, because you have progressed quite a bit. It, it just hadn't gotten to you that particular goal that you have. But this is a, a great short read, and I recommend it highly if you are into audible, like I am. It's a couple of trips to working back <laugh>.
Wendy Sweet (22:52):
Yeah. Well, you know what I like too, Jonathan, that you brought up failures. I hate to use that word failure. because really it should be something that's a learning lesson. And so many people think that failures are, are bad.
Jonathan Davis (23:12):
Wendy Sweet (23:12):
Great. They're a great opportunity to learn and to move forward and to be more cautious. you know, we had, we had issues from December s 2017 through the entire year of 2018, having to take back a bunch of houses and all the disposition. And Don Harris was a big help in, in making that happen for us in on the good side when we were recovered <laugh>. But it, it's it's been the best lesson that I walk with every day, you know? Really, really I, I refer to it every day in my brain, you know, how, what, what did I do then that we need to change now? Mm-hmm. <affirmative> and, and so, so when you have these meetings, going back and looking at, at your, at your wins is important, but looking at your losses and scars are really important because that's what will make you so much better. It's like shooting for the stars and coming up short, but you hit the moon. I love that.
Bill Fairman (24:17):
Good job, Ron. that's why we call it failing forward. Yeah.
Wendy Sweet (24:21):
Jonathan Davis (24:22):
I mean, every, everything is what you make of it. I mean, you know, every experience that happens, you get to choose how that shapes you. It can be your destruction or it can be a per, like propulsion forward. Just what do you want to, what do you want? How hungry are you? how, how important is that goal? you know, and one of the things that, that we do and I think a lot, I hope a lot of people do, if you don't start, is when you set those, like, know what you're like, we'll talk about lending or, or real estate investing. Know what you want to invest in and don't deviate from that. Right. Right. You know, like, like put it, you know, put it on your whiteboard, whatever you need to do to help it stay in front of you. Like keep it there because you don't want to deviate from that. Because as you start to deviate, not only do you, you lose your goal inside of your goal and achieving it, you also find yourself in riskier unknown waters. So stay, write your goal down. Write what the asset you're after or, or the mechanics of that asset and how you want to achieve it, and then keep it in front of you every day.
Bill Fairman (25:30):
<laugh>, there was a, a panelist today that was asked the question in, in real estate investing, there's so many things you can get into and clogs your brain. And you guys stay on track. And the one guy said two letters, N and o <laugh> learn how to use 'em together. Yep. <laugh>.
Wendy Sweet (25:52):
That's exactly right.
Bill Fairman (25:54):
So said. it's important to set goals. If you don't set goals, guess what? You'll never achieve any of them. The map
Jonathan Davis (26:04):
<laugh>. That's right.
Bill Fairman (26:05):
You do need a rudder. we highly recommend the EOS system for those who are in business, even if you're just one person or a three person shop. Mm-hmm. <affirmative>, it helps you set up matrix that you can follow KPIs. So you know, when you've you know what data to look at and see how you're achieving your goals.
Jonathan Davis (26:29):
What's KPI mean?
Bill Fairman (26:32):
Jonathan Davis (26:33):
Key performance. Thank you. Indicator.
Bill Fairman (26:35):
Wendy Sweet (26:36):
Knew it was, and then, and then that book to learn about EOS is by Geno Wickman, and it's called Traction. Yep.
Jonathan Davis (26:43):
Yeah. Traction. Very good stuff. Yeah. I mean we would love to know kind of your all's goals if you wanna set 'em in the comments or, or, or shoot 'em to us directly. We would love to know that because we would love to be a part if there's a way, you know, your goals helping us achieve our goals.
Bill Fairman (27:01):
Mm-hmm. <affirmative>. And by the way, with that yep, there
It is. We can help hold you accountable if you, if you send them out to us and we put 'em out here in the ether then you have to keep up with them, right.
Wendy Sweet (27:14):
Or you sign up with the Wednesdays with Wendy. We can talk about your goals and Yep. And you
Jonathan Davis (27:21):
Get together all the time, don't
Wendy Sweet (27:23):
You? All the time. Yeah.
Bill Fairman (27:24):
Yeah. So we talk about be Hags, which is your big, hairy, audacious goal.
Wendy Sweet (27:30):
Bill Fairman (27:31):
Let's hear what your be ha is and we'll, we'll make sure to help hold you accountable to 'em. All right.
Wendy Sweet (27:38):
Bill Fairman (27:39):
Wendy Sweet (27:40):
I'm good. Are you good?
Bill Fairman (27:42):
I'm, I'm, I'm really good.
Wendy Sweet (27:44):
<laugh> <laugh>. You're better than me. You're in 80 degree weather. <laugh>.
Bill Fairman (27:49):
Yeah. I'm not coughing as much, so that helps.
Wendy Sweet (27:51):
Bill Fairman (27:52):
All right, now I said
Jonathan Davis (27:55):
That, that Uhhuh.
Bill Fairman (27:58):
All right. folks, thank you so much. hope this was helpful. we are what are we,
Jonathan Davis (28:07):
Bill Fairman (28:07):
Capital Manager. Yeah, I know. I'm trying to do the, damn, what do you call it? No, I'm not doing that one. Thank you so much for joining us on the Real Estate Investor, show Hard Money for real estate Investors, <laugh>. Now we are Carolina Capital Management private lenders in the Southeast for real estate professionals. If you would like us to take a look at one of your projects, go to carolina hard money.com. Sorry, I didn't mean to mess you up, Scott Carolina hard money.com. Click on the Apply now tab. If you're a passive investor looking for passive returns, click on the accredited investor tab. Don't forget to like, share, subscribe, hit the bell. See you guys next week.
Wendy Sweet (28:47):