151 Ryan Andrews – Hiatus Homes on Passive Wealth Show | Hard Money Lenders

here hello we're back again hi it's bill fairman with the passive wealth show um have you guys ever wondered uh about relationships with different funds smaller and larger and how they trade their loans recapitalize at the same time we had on a guest a couple of weeks ago with hiatus home that were the tiny homes and wondering how you can scale that business as well we're going to cover all of that right after this greetings again welcome to the passive wealth show i am bill fairman this is jonathan davis wendy is traveling and won't be able to join us today is jonathan's birthday do we have any celebration for him in the background any graphics maybe nice very awesome so we are we are carolina capital management we are lenders in the southeast for real estate investors if you're a borrower interested in borrowing money in the southeast go to our website carolinaheartmoney.com and click on the apply now tab if you're a passive investor and you're looking for passive returns click on the accredited investor tab don't forget to like share subscribe hit the bell and by the way we have a comment and questions section either on the right hand side of your screen or underneath depending on the platform you're viewing us from so don't hesitate to answer a question or ask a question jonathan will have to follow up with those because i am at the airport and i'm using my cell phone to light my face it's covering the comments section of the screen that's funny some people would say you might as well just leave the light off your face it's not that great anymore right bill you you do you wouldn't be used for a radio oh thank you i'm taking my happy birthday back you definitely have the voice for it no thanks okay so uh what we got going on today oh we have ryan andrew a good friend of ours he and and i want to say hiatus homes but also kyc and phoenix um ryan has a ton of different fingers and pies there's only one other person i know that's not involved in as many uh ventures as he is so i i don't know how you keep up with it ryan welcome to the show hey guys happy to be here thanks for having me and fun to see you again you you have children right i do i've got i've got three little girls uh seven four and two almost three um and two schools cancelled this week and so a couple of them are downstairs right now so you might hear them like i don't know scream and bang on my door at any minute but uh yeah so three little girls that keep me super busy that's all right we we have some screaming children behind jonathan as well so it's okay yeah i i know the i know the the feeling three girls here too and they're all downstairs i'm just amazed at all the all the ventures that you're a part of um how to keep all that organized i'm terrible at organizing i have people that are organized for me they just they just point me in the direction here handle this now yeah yeah it's fun i've always uh i really enjoy having a lot of different things going on and i kind of i break it down into two basically two halves of my business so the one half is uh working with kyc phoenix and managing that fund primarily which is what our relationship really started out on and is based in then on the other half of my business i i uh do a lot of sponsor basically development projects um so i act as a cfo and sponsor for all kinds of development projects most of that is within the hiatus homes brand um and so what we can chat about that a little bit more today i know you guys connected with my partner jesse russell a couple weeks ago and had a really cool interview around the philosophy and everything behind that and so yeah we can cover that we can cover you know certainly the the private debt space uh which i've spent a lot of time in and and we've all spent a lot of time talking about and structuring our relationship around so um yeah happy to jump in kind of wherever you guys want to all right well listen i'm going to go ahead and start off with kind of explaining our our relationship currently so it's a smaller fund we try to grow and we don't always have enough capital to make our loans with and what do you do so we have relationships with other funds that will come in and buy uh blocks of our loans so to speak we still service them and keep the relationship but that allows our fund to continuously uh recapitalize uh have enough money to lend with and at the same time we still have uh decent returns for for our investors you guys are doing this uh in a lot of different areas of the country aren't you we are yes so we're so uh so our fund that we've invested with carolina capital management with invests across the country all of our capital comes from offshore um and then is invested into u.s real estate loans private loans originated by groups like you guys uh and so we've picked a bunch of different geographies around the us that we love because of lots of different momentum factors and we have this really cool technology behind our fund that's basically a big data algorithm that crunches 30 to 40 different data points in each zip code in the us and then spits out a bond rating of which zip codes do we like and which ones do we not like and um the region you guys are lending in the southeast especially the carolinas uh ranks just really high on our um in our big data algorithm and so you know i guess we've been working together for about a year now um but before that i've been looking for lenders uh in your guys region i was like all right where are you guys where are you guys we've got to get some exposure to this market we never originate loans we can't because of our structure we always partner with a local or regional originator that knows the market knows the borrowers knows the neighborhoods and is able to really cultivate those close relationships with borrowers and then service the loans and you know folks locally are able to do that so much better than we are um when we're trying to have this kind of national reach but we then act as hopefully a great partner and a capital partner um to come in and provide capital in large more institutional type chunks to allow funds like you guys to grow and so yeah you guys have been an awesome partner over the last year we've probably bought 30 or 40 loans from you and uh we're working right now and finalizing a new structure that'll help that grow hopefully uh you know hopefully double in size or so so yeah i'm excited to get uh get that kicked off hopefully in the next just couple of weeks um and uh it's been fun to work together over the last year yeah and to touch on that you know you all you know in my opinion you're doing it the right way you see so many um funds come in and they create this credit box so that they can you know lend or buy nationally without knowing the localized market and not having boots on the ground or people who understand those markets because even inside of a zip code you have good areas and you have bad areas inside that zip code um in neighborhoods you know you have good streets and you have not as good streets so you need you need that local knowledge and and you all i think more than most understand that and that's that's a great asset to i think you're all success is you understand real estate is local which is which is great yeah real estate is definitely local it's just you know it's hard to compete and if you think about it if you're a national lender you're trying to lend everywhere you go into a market you might end up uh lending to you know lending on a project that all the local guys passed on because they're like oh that's a bad borrower or bad street bad neighborhood for whatever reason the momentum isn't going there but if you don't know even if you fly in on a plane and spend an afternoon in the neighborhood you're not going to learn everything and so you risk making mistakes and making bad loans to bad borrowers if you don't know the region and you're not in the region and so yeah for us always super important to partner with a local group that's way more efficient for us to have a national reach through local and regional lenders than it is to try and do it all ourselves and then again our our software that kind of backs our platform um a just acts as a guide for us to be able to have a good idea of where we want to target and where we don't and then it also gives a cool discussion point of where sometimes it doesn't usually it always matches up with what our lenders you know are seeing in the market but when it doesn't then it opens up a cool dialogue between like okay well what's actually happening here on the ground um where maybe the model doesn't capture everything and so you know where can we pick up a good uh debt investment anyway um kind of on the fringes of the model so yeah yeah i appreciate your guys local knowledge and so i was down there with you what is this been a couple of months ago now is january this year and spent a couple of days i don't know we probably drove 250 miles around the greater charlotte area looking at projects you've done not done new stuff uh you know existing stuff that was in our portfolio that just gave me an outstanding feel for the area and a lot of confidence um you know when in the deals and streets you guys are picking and all so uh yeah we came back huge fans of your guys of your guys region even more so well thank you good to hear you know it's it's funny um there was a discussion uh last night about uh ai helping in the health field and one one of the things that they pointed out is you always have to have that human factor in there and this is what you're talking about you have to have the boots on the ground the people that know the area because your algorithms might say one thing but i definitely don't want a computer saying or diagnosing me without having an actual human in there looking at it because you could have two pixels can make a completely different diagnosis and you know the same thing's going to work with your um your algorithms it's it's a guide it's it's not written in phone and that's that's why you have a lot of people there um yeah yeah you bet great i just got a warning that my internet is a little slow uh yeah that should have had that should have had that warning earlier right um ryan let's uh let's let's go to the the hiatus homes things that we talked about before we love the concept with the tiny homes you can turn those into apartment buildings you can turn those into subdivisions but when we ended our conversation we were starting to get into how do you scale that nationally so you have some ideas on that yeah we do and that's definitely the goal uh with that brand so yeah it's just a little bit of a recap on on the hiatus homes business model so hiatus homes is a fully vertically integrated land developer through construction um so we acquire our own property we entitle it we do our horizontal we do we're general contractors so we build our vertical construction and then we even handle all our marketing we don't just throw our units up on an mls and hope for the best we handle all of our marketing to drive interest from a specific type of buyer that wants this home and so these are small homes a couple different models between 400 and about 1200 square feet that go from like studio lofted studios to bedroom models and we try and build basically high density detached or if we're doing multi-family do a really tasteful and efficient high density um then the other piece is the energy efficiency so we build to net zero um on our projects uh so super good insulation um they're solar ready electric vehicle charging in the garage so that's kind of our ethos underneath it and so that appeals to a lot of people in the new basically kind of emerging housing movement where people are looking for smaller homes they're looking for good locations um energy efficiency smartly designed houses instead of you know kind of big sprawling homes in the suburbs per se and so we're appealing to that it's been really successful in the pacific northwest um i live in bend oregon so this is where we kind of pioneered the model it required some uh um some code changes in the city building code initially for us to even be able to do this which we worked closely with the city of bend um to do and now the state of oregon has even kind of picked up this flag and recently passed a bill to allow this type of you know small higher density detached housing and residential zoning and all and so this is definitely a growing movement um across the u.s so that's kind of all the tea up to answer your real question of how does this thing scale and so you know i'd almost it was almost a perfect segue to talk about how um the the phoenix debt fund scales by finding local partners because we recognize we can't be present in every single market and get that the competitive advantage from having local knowledge so with hiatus homes it's really the same business model in that you know we're building a fund here which we can talk about the structure of that and kind of the unique structure for a um for a capital or a development fund but basically we have the plans we have the structure we have construction we have the project management we have the know-how to push things through entitlement and engineering and layout design we have the marketing piece and so we know we can sell our homes to these you know huge waiting list of people in different regions that are looking to buy our unique product they're not just looking for any home and so uh we have all that and then we also have the capital backing so because of the hiatus capital fund where we've brought a bunch of individual investors into our uh our equity investment fund that acquires the land and entitles the properties um we have the capital to be able to do these but what's missing if we're going to scale is a local partner and so as we grow even you know across oregon across pacific northwest and then nationally hopefully this is you know over the next five to seven years i would say um we want same thing we want a local partner that's a local expert in you know zoning local planning commission knows the people on the city council and and you know can grab coffee with them and talk about the value of this kind of housing and we can set them up as like okay that's our local quarterback uh that's in market but they don't have to go pioneer the model and market it and figure out how to do it and build it or raise capital for it that's all done and we can provide all of that and so it can create a unique partnership to hopefully um you know port this model all over because one of the one of the biggest things we're getting uh from our marketing that we initially geared our marketing toward people that want to buy our homes um and are looking for this type of home well that marketing has gotten out to a lot of people that own land trax of land in phoenix arizona or texas or pennsylvania and um and they call us now and are like hey i really want you guys to build your development product on my piece of land how do we do this and so that gives us a unique way to access and acquire land parcels where landowners don't want to just sell to anybody they're like oh i love your guys unique hiatus homes product that's what i want my parcel how can we work something out we're either we partner with a land owner and a local developer or they become our local partner that knows the city council or you know we have some kind of terms that allows this to work and so that's been another unique part of this that really helps this thing scale so again we're not scratching our heads like how do we find a piece of land in south carolina like somebody comes to us with a great tract and that's what draws us into the next market gotcha a couple questions if you don't mind on on the uh like the end user two two questions on that are they typically like millennial aged or what who are you selling these homes to primarily yeah good question so uh and it was funny our first development uh called hiatus venom here in bend oregon was 22 small homes so 400 square foot footprint dual loft we thought we were going to sell those to a lot of bend is very much like a tourist community we've got a ski mountain 15 miles away and mountain biking and you know rivers and fishing and everything and so we thought we were going to sell them to service workers because these homes sold for between 230 000 and 330 000 the median home price in bend at the time was about 500 so it was like you know half the median home price so really affordable on a dollar basis and so we thought you know initially all right we're going to sell these to people that work in the service industry people that work at the mountain or bartenders or whatever are finally going to be able to buy a home well we probably would have been able to do more of that if we had 122 of them uh but with 22 of them they got snapped up really quickly and it was a mix but it was mostly you know educated people with a professional career either either young and so kind of like at the beginning of their career but you know still wanting to buy a home or people that were in kind of like their 50s so you know later in their career but single uh they didn't have a lot of space requirements they just wanted this cool model and because they were single the these um the community aspect is a really important piece of this so the homes weren't built like row homes all next to each other they were potted in like kind of semi-circles of five homes overlooking a community garden or a little pond or a fire pit and so it also attracted people that were like hey i'm single but i want to meet other people and have almost like a you know a community that i'm with in that environment and so um so it attracted a couple different genres of people and then what we've noticed so we're just finished we're about halfway through our second development called roanoke which is ten two-bedroom models um they're 900 square feet uh plus a one-car garage and uh those have sold very well and again those those have sold a little bit more to like couples although some single folks but one of the things that was funny is there was uh two of the people that had bought the small homes in the original um benham community started dating and we're like well we want to move in together we want to be together like we need a little bit bigger home and so then they moved out of that one and bought one of our two bedroom homes on the other side of town and so it was just kind of funny that community aspect actually resulted in two couples and then one of them actually upgraded into one of our other homes that was a little bigger but same philosophy and so you know that's the um it is some millennials young professionals it's definitely some older single professionals as well and then it's been some couples that like live in portland but use it as a second home in bend and because they're not here full time they you know they're fine having a small home without you know a garage and storage and all the like the larger things that we have um so yeah that's that's a couple different profiles of who's been buying our homes that's awesome my other part was so because and excuse my ignorance here how is the financing for for a home like this what is that what does that look like is it like this can you get the same kind of financing as you would a regular single-family home what does that look like yeah like the buyers financing yeah the buyer's financing yeah you know there are some interesting iterations on this the short answer is it's traditional financing totally normal traditional mortgage because these are on foundation uh homes on their own tax lots they own the land they're on foundation stick build homes now originally you know early on in the model we're building tiny homes on wheels which kind of your traditional tiny home you know a tiny home on wheels well that's almost impossible to finance because it's not attached to land it's not stick built it's permitted by the dmv not the housing department like it's it was so hard to get financing and so again even though those are really affordable it's really hard for folks to actually buy them unless they have eighty thousand dollars in cash um and then once they have them it's really hard for them to find a piece of land to park them on because zoning inside most city limits around the united states says well you can't do that you can't have a trailer or an rv or you know whatever it is that you're living in and so those were unfinanciable then the second state the second iteration of this was on foundation but modularly built so we're having these things built in a factory and then uh and then shipped over a factory over in eugene um on the other side of the cascades from us then shipped over the mountains backed onto the foundation attached and this sounded like really smart and efficient because you know you build it in a factory but jeez it ended up being a nightmare the transportation cost was excessive getting it on the foundations was really hard and then it put height limits on us where the loft was then only four and a half feet so you're ducking down you know nobody can stand up on that and so once we started stick building them on foundation on their own tax parcel uh we're able to just qualify for a regular mortgage and it removed so many burdens but the but the hurdle we had to cross to get there was we needed city building code to adapt to two things basically one being the really small lot sizes that we use to put these small homes on and then two allowing a small home you could not have a 400 square foot footprint in the city code and band they did not consider that a dwelling unit and so city of bend really pioneered this cottage code which lots of cities across the united states are starting to adopt versions of this cottage code which allow you to build small units and meet this need and so that's kind of the evolution of like the finance how the financing went and what we learned and so now the financing is easy but we had to change building code to get there it was that you know that drastic uh in a business model so you know this thing's been six years in the making as you know the regulatory environment has had to catch up with the market demand well that's usually what happens the regulatory environment has to catch up with uh with actually what's going on in the world that reminds me of the um you know the carriage house movement started back about five years ago where um a lot of cities didn't allow to have a separate dwelling in the backyard and right they're still trying to have affordable housing for the people that work in the cities and you can you know build a two-car three-car garage and have a carriage house above it and it'd be a separate dwelling and a lot of the municipalities went ahead and changed those rules and allowed that to happen as well they did and that was a big deal too and that's something that we look at also and take advantage of so um bend pioneered over here on the west coast we call those adus accessory dwelling units i think the east coast they get called carriage houses and then somewhere in the middle they get called mother-in-law units a lot but yeah it's all the same thing kind of like a detached or sometimes attached but like separate suite so our next development um which is also here in bend uh it's a little 12 unit infill detached project it's really cool but what we're doing on that is we have individual tax lots and on the back half of it we have our two bedroom model and then on the front of it we have our little um like studio model that's of the lofted apartment um what we call our loft and so that's the adu so you have a little center square foot adu with a 900 square foot two bedroom home on the back they're detached separated by a cool little courtyard that they're both kind of looking into and that housing type in ben just is sees so much demand because you can either live in one work in the other you know live in the small one rent out the big one live in the big one rent out the small one have it as a guest house for family to come in have multi-generational living you know where you have grandparents or uh your millennial children whatever you know living on site with you and then uh or do airbnb short-term rentals so you know something like that that might be cost a little bit more you can offset some of that mortgage cost um at least initially by renting that out or having that extra space but again for us it's going to be detached and that was a new change to the code on the adus is at one point they didn't consider if it was detached it wasn't an adu you weren't allowed to do that so now that that change has taken place um we've been able to take advantage of that and so we look at our different types of buildings and we just plop them on land like they're lego blocks we're like okay we want a little one here and a big one here and a big one here and a little one there um and so you know that's been a a part of our evolution as well and again it's a great way to create higher density housing in residential areas because all of a sudden you get two uh residential units two little households um on a little infill lot here instead of you know trying pushing those people further out into the suburbs or a bedroom community or something um so yeah a big fan of those changes in code as well and we're watching those so jonathan keeps hitting his mute because he's got noise behind him it's okay everyone watching has children too so yeah yeah not a big deal the best part that's the reason we all do what we do right yeah 100 yeah yeah well i'm curious on the what's what is the the lot size that that you are doing on on these tiny homes so uh we can do like 1500 square foot lots um on these and so pretty small lots compared to you know a traditional minimum of like four per acre or something in a residential zoned district um we also there's two other pieces that are that are kind of in flux right now one is with this state uh bill house bill 2001 um that's going through or i think was actually just passed by oregon like a month ago uh it allows building like our type of unit in residentially zoned areas and instead of our home counting is one our home counts as 0.25 so when you're doing your density calculation of seven units per acre ours only count as 0.25 so we can actually get 28 per acre now can you practically get that many on well it really depends on your layout that would be pretty tight but again the ability to put you know maybe it's 25 units in what was previously you could only put seven is a huge increase in density and yet you're doing it in this really cool detached energy efficient attractive way instead of getting that density through just like multi-family apartments or commercial development or mixed use or whatever which isn't a fit for every neighborhood um and so yeah so there's there's technically um in some of this coding in some of the building code no minimum lot sizes uh but a lot of times we're at about a 1500 square foot lot on these homes that's that's amazing wow i know i know you know just kind of dovetailing off that we're involved in the development of a like a it's not a tiny home thing but uh it's kind of like when that's not a town home it's it's homes they're all about 2 000 2500 square feet but it's all with an organic farm and and it's built around the organic farm so like i think 30 of the produce from that farm the residents get to utilize the other 70 gets sold to local markets or stores um but yeah it's it's like that kind of community aspect that people are trying to build i i think there's a big demand for a lot of people want that and especially coming out of this whole social distancing isolation thing you know yeah no you're exactly right and actually it's really cool that you bring that up i'd say that's probably the number one thing i just hear anecdotally from people especially if they know i'm involved in like real estate development and building communities and all they're like oh you know what my dream is it's to build a community around this theme and have all my best friends move into it like literally everybody has that idea everybody wants that and yet nobody's actually developing that and building code isn't generally friendly to that kind of idea but but um so i would kind of nickname that like thematic development communities and so you build a community around a common theme that everybody loves so everybody's into you know organic farming but nobody wants to run their own organic farm like you're talking about so you build a big community garden put you know 20 homes around it and they all kind of share it and and it attracts people that want that and that's like the amenity that they're looking for um they're not looking for a gym amenity or a pool they're looking for that organic garden that they can share and get in the dirt with their uh with their co-community members um and so i like people have suggested the most bizarre hobbies that they want a community of all their best friends to live into some of that that i'm like yeah no that'll never happen but some of them are really cool ideas um the areas where i see these have actually happened is kind of like you see oh like tennis communities and even like pickleball communities and then certainly golf uh but to a little bit a little bit different than we're talking about because like living on a golf course and then like living in a community that's kind of surrounded one theme or kind of two different themes but um uh anyhow yeah that you're on to something too so it's cool that you that and that you've heard that anecdotal demand man whoever pioneers that business model is is gonna make a buck or two i i think it's i think it's great because actually what they're doing is you know there's an hoa for those homes and that hoa pays for the maintenance of the organic farm so that the people there don't have to do actually if they want to they can but they don't have to do the work it's you know they they hire out people to come in and and you know pull weeds guard you know you know garden it and i'm not a i'm not a big gardener so you know and do all that stuff so i thought that was pretty cool yeah totally yeah no that is awesome and that's how you got to do it uh it was funny i was in utah just a couple of weeks ago looking at some huge master planned communities that are um starting to be under horizontal construction there and and have like having like some different themes so one of them had a series of pawns in it that they'd filled with water and they're like oh we're gonna stock these with trout and people can come and fish and i'm a big fly fisherman i love fishing and so as soon as i heard that i was like that's my community that's a bike fishing community that has it like creeks and rivers and a bunch of little ponds full of trout or whatever that you can just go fly fish in all the time you know i don't want to play pickleball or garden necessarily but you know man i'd fish for an hour after work every night uh um so yeah we all have our own little hobby and it would be very cool if the evolution of development moved toward almost like tribing up around those shared you know the shared hobbies and passions that people have and uh there's totally something there um so yeah that's fun yeah you know it's funny you talked about pickleball and now you're talking my age demographic so totally yeah yeah i know have you ever played pickleball no tennis for the elderly yeah there was that locally here um a couple years ago somebody pitched the development of a of a pickleball community to me and at the time i think i'd heard the word pickleball but had no idea what it was and i scratched my head and was like that'll never sell who wants pickleball but turns out there's a lot of demand for pickleball community people yeah the reason i never heard of it either until i started researching properties in south florida they're all over really right they got pickleball in every community it's so funny everywhere that's funny yeah it's just like one of those things you you turn 65 and like the knowledge of pickleball just appears in your mind and yeah you don't need to learn it it's just it's there that's hilarious yeah coupled with a strong passion to play pickleball every day well ryan you're into so many things and we're gonna have to have you come back again and talk about some other stuff uh i would like to get you to talk about mobile home parks as an investment as well unfortunately we are well past our normal allotted time and if you were you had such great stuff i didn't want to end it uh but that gives us that gives us an excuse to bring you back we're going to have to bring him back i mean i i called ryan uh the other day to pick his brain about mobile home parks and and how to structure uh um you know debt and equity on it so it was a great conversation and i'd love for us to put that on on video i know yeah i'd love to yeah we should have that conversation again and talk through it so uh yeah big fan of the mobile homes especially with an affordable housing angle um and one of the investment funds that i manage uh is about a third invested in mobile home parks and so that's an asset class i'm a big fan of uh for lots of reasons so yeah let's talk about that one another time all right awesome thank you so much for joining us by the way folks thank you again for joining us on the passive wealth show we are carolina capital management we are lenders in the southeast if you're interested in borrowing money for fix and flipper we have long-term programs now as well carolinahardmoney.com click on the apply now tab if you are a passive investor click on the accredited investor tab don't forget to like share subscribe hit the bell hit the bell hit the bell and uh lastly make sure you book some time with wendy i'm going to pause momentarily for our awesome graphics wendy does free mentoring uh 30 minute zoom call with her on wednesday she's usually booked out a couple of months in advance so there's a link to her calendly account and schedule yourself a call um i think that's just about it you guys have a wonderful week yeah coming soon january is with jonathan happy birthday cause july's with jonathan was just was coming too soon and i i needed january you weren't prepared it wasn't for so happy happy birthday what are you doing for your birthday uh going out on my boat excellent hope you catch some big ones thank you and i hope you don't run out of gas me too all right see you guys next week you

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