This week we've got Upright's (formerly Fund That Flip — it's official) COO, the one, the only, Jon Andrews.
Jon stops by the pod for the first, but certainly not the last time to talk about the real estate investing, how the market and industry has changed, the Fund That Flip/FlipperForce to Upright rebrand, jet-skis, and the best things and best restaurants in some key investment metros.
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Brendan: Welcome back to Real Estate Investing unscripted, where we get real with real estate investors and experts throughout the industry. I'm your co-host, Brendan Bennett, and with me as your co-host David Dugan. David, we have an in-person recording today. For the first time.
David: This is fantastic. I love it. We're all here. We've got an awesome show today as well. We've got one of, one of my favorite people, one of the, the biggest personalities, not just here at at Fund That Flip but, one of the bigger personalities I've ever met, Jon Andrews. Welcome to the show.
Jon: Thank you. Thank you for having me.
Brendan: Jon, if you don't mind, tell listeners a little bit about yourself. how long you've been with the company, the roles you've done with the company, what you do for us today.
Jon: Yeah, so I've been here about eight years. met Matt through a mutual friend, in, 20 end of 2015, early 2016, and started in February of 16 and done a little bit of everything here. So one of the things that's been super beneficial for me, Is having had the fortune of learning the business slowly by trial and error and by doing so, when we got started it was, underwriting the deals, ultimately moving forward to, to kind of putting terms in front of the customer, and then taking it all the way through closing.
And, all the way through receiving the FedEx package in our Cleveland office of the signed loan docs and figuring out what file cabinet to put 'em in. so for me, invaluable in terms of learning the business, came, came from a, you know, lending background, big bank, commercial lending, but, certainly not, you know, real estate investing.
And, you know, working with the type of developer and kind of more, mom and pop owner that we have today of, all the folks that, read the BiggerPockets blog and, value kind of that creating the, the financial freedom that is, owning their own time, right? And, and being really passionate about real estate.
So that customer was foreign to me, you know, when I started. It's been awesome to get to, to learn about those folks and their business and kind of understand their journey and hear their story, and then help build the business around it. So today we run the operation side of the business largely, you know, kind of the lending business, if you think about it that way.
'Cause you know, we, we've kind of over the years evolved into doing a little bit more than lending. But, that's what I oversee, right? Is making sure that, when somebody needs a loan, that we're able to issue that and deliver an extraordinary experience to that person and make sure it's a good loan that's gonna perform, perform really well for, for us.
David: You have one of the most unique experiences of, of anybody with the company. Just 'cause when you came on, I mean, how many people were here?
Jon: How many people were here? When I started, there was 1, 2, 3, 4, 4, 4 people would've been here when I started.
David: And we are over 300 now. Right? So you, you kind of talked about that growth that you saw in the eight years you've been here from a, from a high level, but. I'd love to hear more about that, just like what that was like from four people up to where we're at now and, and maybe some of the, the major changes that you saw along the way.
Either on how we view deals as a company, how we underwrite deals, the, the client base that we work with, the investor base that we work with.
Jon: Sure. So, so one small correction there we're over 200, not 300. That would be just a lot of people. But look, I, I think we've, we follow the money, follow the people, follow the jobs, follow the need for housing. That's what we've done as a business. So when we started, I think that, you know, when legislation got passed in the JOBS Act in, you know, 13, I think it was 2012, legislation got passed in 13.
That's when, you know, groups like us, companies like us, real estate investment firms like us, could really get started. And you, you saw it online before that it was hyperlocal, it was all true private money handshake. A lot of golf course type deals, right? Where, where those folks had a small circle of people they trusted.
They'd earn that trust through execution over the years and would borrow money from those folks and do the projects. so really, you know, when I got started making those first few phone calls, people didn't know who the heck we were. the thought of borrowing from somebody that they didn't know was very foreign to them outside of like a bank and, you know, us not being a bank.
It was kind of a foreign concept. And, as I think about having gotten started back then, you know, I, I think when I first started kind of the, the, the, the big name out there that we used to hear a lot was, Realty Shares. And they were out on the west coast and, they were kind of, one of the first ones along with us that had really kind of taken that online approach to, using the internet, using technology to solicit, both investment, from folks that wanted to deploy capital into the space, as well as folks that might want to borrow that capital and execute the project.
And to see it go from that where people kind of didn't know kind of who we were, what the space was, or how it worked. To today, you show up at any kind of industry event. you show up at any, you know, the, the, the IMNs tend to be great conferences in terms of meeting with a lot of real estate investors.
There's, you know, I think, I think we had some folks do the, do the reconvene of, you know, if, if you're a Twitter real estate guy, you know, go out to that one in, in California last year and some different things. Everybody knows about the space. Everybody knows that there's, a lot of capital, that has come into the space that wants to get into.
Smaller deals, you know, single family up through small multi-unit. Whereas traditionally, I think when I got started, so much of that was big bank moneyhattan type high rise deals. and you've seen through the need for housing, the proliferation of like the build for rent, the single family rental strategy, the D S C R loan, you know, that kind of came about here in the past, you know?
I would say five years, but really three years at scale. and that's just, none of that existed, when I got started, which is crazy 'cause it seems like it was such a short time ago. you know, and the other side of that is like an acknowledgement that we, we, we, you know, have really only ever operated up until about the past year in the hottest real estate market of all time.
Right. I mean, like, if you think about it, part of that growth trajectory, it'd be, it'd be very arrogant of me to say like, look what we did and. And how helpful we were to all these customers and looked how we helped 'em grow their business. Like, I believe that at the same time, like it's pretty, pretty good freaking time to buy real estate.
Coming outta oh eight into 2012 where some of that stuff kind of settled and then it, it getting disposition and it making its way back into the market, early 15, 16, 17. You know what I mean? And then, the, the new construction boom here over the past couple of years is, is just the need for that housing.
At, at the low rates. that's a big piece of it too, is acknowledging that some of that growth was fueled by man. Our, our, our customers tend be really smart and they're gonna figure out how to make, how to make the deal work for them. Right. And so I, I think we saw that as, as the, as the end buyer existed, whether that's a retail buyer or a lot of that institutional money that was buying those houses or guys keeping it in the, in the now popular bur method.
If they could make money, they were hitting the gas man and, and putting, new homes on the market and or renovating homes. that slowed a little bit here, I think, since kind of April, may of last year when we started the rate hikes. But I think, you know, what we've seen David in that growth is the market gave that to us.
So it started my answer by like, hey, follow the, the people. And we've seen that growth in the Southeast. You come out of Covid and, and everybody's left the Northeast and the Midwest and California. And man, they've hammered the Texas, Florida, Georgia, the Carolinas. you've seen our loan portfolio grow there.
We, we've resourced there, we've staffed there. it's a, it's a market that we always believed in, but then you got that, you know, kind of fuel on the fire element of the post covid world or whatever, whatever you wanna call it, right. Of like, a lot of people relocated the work from home, that sort of thing.
So we followed that and that, that, you know, when we got started doing a lot of housing stock in the, in the Midwest, Okay. That's, that's old housing stop. It is renovations. When you get into the southeast, people are building new, right? And so doing those new construction loans, doing the infill development, we've just kind of followed what our customer base has told us, Hey, I see an opportunity here.
Here's the numbers. It's a good deal. Can you help me fund it? I'm gonna grow my business this way. we've tried to fund that. We've tried to stay aligned with our core mission of working with great people and the money. You'll find good deals and, you know, continue to believe that and see it play out today.
Brendan: Jonny, you set that up really well with kind of what we want to talk about, for a good chunk of the podcast. So as a lot of people within the walls of Fund that Flip know, what might be breaking news is some people that are listening. we are gonna be rebranding here soon in the next couple of weeks, depending on when this, when this goes out.
So we'll, we'll, we'll save the, the unveil the name when we, drop another podcast here in the next, couple of weeks. But I think a lot of what you talked about, how we kind of try to skates where the puck is going, but also maybe get ahead of it, in some cases has caused a lot of that reason for the rebrand to make sure that our brand speaks to our customer base.
So if you could just touch a little bit on. again, that 20 14, 20 15 timeline to now, how have the needs of those customers changed and why does the rebrand make sense for us?
Jon: I think there was, I, I think it's harder today. it's harder today than it was two years ago, three years ago, five years ago, eight years ago, to flip a house. And I think, I think the reason for that is very simple. I think the inventory to acquire is lessened, the space has grown like, like let's not kid ourselves.
The industry has grown, right? You look at the, the, the gurus, you look at the. Coaching programs. You look at the online blogs, the the real estate podcasts, real estate Twitter, right? I mean, it is everywhere, the TV shows, right? You know, they make it look pretty easy on tv, but like, how many TV shows are there about, flipping a house or real estate investing?
So many people entered the space over the last eight years. So many people, the Weekend Warriors, you know, call him Chuck in a truck, right? The guy's got an F150, so by definition he's a real estate investor. And those people over the past eight years were able to find success as a function of the market.
Maybe they weren't the best operators or the best deal, but the market today, those deals don't exist. It's, housing stock is tough to come by, which is why you've seen so much new construction. But it's just, it's harder to flip a house today 'cause you can't acquire it at the discount. Right. You have retail and buyers acquiring what traditionally would've been a, a fixer upper themselves.
'Cause they can't, they can't get anything else. Right. And as the affordability. Kind of issue, crisis, whatever you wanna call it, has been exacerbated by the rate environment in that post covid world. people are buying some of those houses that traditionally would've been fixed up, and they're just, they're living in 'em.
So, we have been seeing it. we continue to see it. And so what do you do? We, we could sit here and say, Hey, let's have a smaller business. Let's help less people. Let's not grow, because there's just less houses out there to flip in the sense of the traditional renovation and bring it to market.
Or we could listen to our customers and pivot. And so what we heard was kind of a barbell effect of, Hey, I'm gonna build new construction and force that value creation and thus realize my premium by building a new house and bringing it to market. And whether they're selling it to the end buyer or to the institution or renting it or whatever, right?
They're, they're, they're creating that value through, the new construction element. And a lot of people think the new construction is building it. That's part of it. You gotta be a capable builder, but to know where to acquire the dirt, what's the process in that, given municipality of how to get that approved, what kind of density can you get approved?
That sort of thing. Tremendous value creation there. And then I think the other side has moved to the other end of the market, which is, hey, maybe I can't find the margins in the, in the, in the flips like I used to. Can I acquire housing stock that cash flows, be it a long-term rental or short-term rental?
And build a portfolio of cash flowing assets. And put long-term debt on that and kind of grow my business that way. We've seen the market kind of move there and thus we've moved with it. So you had asked about the rebrand, and I think it's as simple as, you know, over the years we've followed the market and done so much more than flip houses, and fund that because that's what our customers have asked for.
The rebrand is kind of, near and dear to me because like people have been making fun of the name. You know, flip for, for the past couple years when I go to the trade shows to fund that flip. And they're like, oh, that's all you guys do. And I, and I found myself answering a disproportionate number of questions of, we, we probably do as much, you know, infill development, lending as anybody in the space.
Right. and the name didn't reflect that. And so it was important that we kind of, put something in place that was a little bit more reflective of, of what we do and how we serve our customers. on through kind of the acquisition of the SaaS business, you know? Right. That. It's now a part of the company and we'll, we'll show up in our new brand, so that people can better analyze deals, right?
And so that folks can better manage their business. And, you know, we continue to work on the development of the functionality there of how, how do we, how do we serve their needs? Right? Is there a need for, better accounting kind of software or better construction management tools or, is it a deal finder?
Is it a deal analysis? That sort of thing. And can we combine that all into one place, which is where our, our customer, our borrower, our partners would interact and run their daily business. And so we wanna have a name that was reflective of that instead of just, you know, a name that was reflective of kind of what our business looked like five, six years ago.
David: So that, that's good stuff. And, you've done a awesome job of, of talking about kind of the evolution you've seen over the last eight years and really the, the change in the company from growth of the company to, change in borrow appetite or at least borrower composition of, used to be.
Single family home asset class. Right. Still a core competency of ours, but it's gone into new construction quite a bit. We see a lot more of that. Geography has changed quite a bit in your time here. Right. What about, you mentioned software, right? Software and tech, that, that's become a big part of what we do.
What about some of the things that are relatively unchanged, some of the, the staples of our business that you've seen kind of stay steady over the last eight years?
Jon: acquiring right is, is the golden goose. If you can acquire right, you got a chance to make some money, right? And if you acquire wrong, your deal's not gonna work. Everything's an if then statement, right? You overpay for it on the front end, or you pay market. If I can get my materials for less, if I can get my, my, my work done quickly, if I can get a fat appraisal on the out, you know what I mean?
That, that's a lot of ifs. Acquiring right, has never changed. Hyper-local, street by street, block by block. In some markets, you know, more than others. the best investors that we work with know their market, intimately. they, they just. to assume that you could, and I think you saw us play out and we're, we're not gonna talk bad about anybody on the podcast, but like may, maybe some national companies that tried to do the, like, eye buying strategy of homes and flipping and stuff like that.
That's, that's freaking hard. That's, I mean, we have people that, that. They feed their family by transacting real estate in their given market. That's how they put food on the table. Right. And and David, I know you kind of run the Midwest for us, think about Columbus, Ohio, right? You're telling me that crew in Columbus, Ohio is, it's the same dozen 15 players that really get first look at every deal and we know that, right?
And they're good and they're established. You're telling me that, that some group, you know, via technology is gonna come underwrite properties from afar desktop and be able to acquire. In the, and know the streets and know how close it is to school and where the new everything is. Man, it's, it's proven us really hard and we haven't even talked about how they're gonna manage labor from afar.
Right? So I think the hyperlocal element of real estate remains unchanged. I believe that will will remain unchanged. The best operators know their market better than anybody else, thus being able to acquire, right? I think those two things really fundamentally, just like building blocks of our business, of how we serve the customer.
Remain unchanged. And the last thing I'll tell you, it's a people business, right? This is a people business. There's only so many ways you can put numbers into the spreadsheet. There's only so many ways you can, you can write an offer on a property. Materials are materials. Shop at Lowe's, shop at Home Depot, right?
Order direct, whatever the cost is. The cost. it's a people business. It's gonna come down to ultimately that handshake. does this person have a perspective on their deal? Are you confident they're gonna deliver? can you do for them something that they can't get somewhere else? 'cause if you can't, they're not gonna not gonna work with you.
And at the end of the day, it's, you know, they gotta know that when they shoot off that text message or pick up the phone, you know, the only guarantee is, I say this all the time, our, our value prop is, you know, shit's gonna happen. It's gonna happen, something's gonna go wrong, something's gonna come off the, the rails.
How do you respond to that? And so with every deal, with every closing, with every something's gonna come up, something's gonna come up, title's delayed, or appraisal came back, $5,000 high, low, whatever, contractor's slow, right? Whatever it is. And how do you show up for the customer in that moment?
How do you show up for your partners in that moment of you gotta be transparent, you gotta pick up the phone, you gotta talk to him. You gotta come up with a good plan. Because what you can't do is hit the brakes and say like, oh, everything's frozen. 'cause like, Time kills deals, right? And, and time is what, really is valuable to these folks.
They can figure out how to get it done anywhere, but how can you do it in a way that they keep their time? So I think knowing that you're working with someone that you trust is critical. That's who I wanna lend money to. that's who, who I want to build the software product for, and ultimately, you know, help someone run their business, someone that I trust.
And so I think that's never changed, and I think it continues to be if we, if we. Work with great people, we get a great result. If we continue to hire great people to join our team, we get a great result, right? You could put, you could put every training program and perfect tool and solution in place that you want.
But if you hire C caliber people and give 'em A plus training, they, they can't get past the C plus. If you hire A plus people and you just give 'em bare minimum training, they figure out how to be A plus people 'cause they won't tolerate anything else. And so, like, we wanna continue to hire those people and continue to put them, you know, in contact with our customers and forge those relationships because man, if they know their market hyper-local, they can acquire, right? And if they're a good person, a good operator, and motivated and ambitious, you're gonna get a, pretty good result.
Brendan: Jon at our, at our most recent company summit, we talked a lot about customer expectations and how we set some of those expectations with the way that we communicate to our customers, but how our competitors also help set those expectations. And in our space, it's not just our competitors, but also a lot of private money lenders, which while they are a competitor, it's more of a, you know, massive group as opposed to any individual.
Can you talk to, 2015. When, when you were originating loans, across Midwest and the other areas you were focused on, what was the table stakes at that time? What was the customer's expectation of, I need this from my lender if I'm going to do business? And what does that look like in 2023? Because I think, at least from mine and David's perspective, it, it's a stark contrast from a technology standpoint, a process standpoint.
So if you could shed a little bit of light of what made a customer super happy and excited in 2015, and what does that take now? How much have the stakes changed?
Jon: Well, well, we're dealing with checks, in, in. the spring of 16, like checks were coming to the office, you know, to, to pay deposits and, checks. Were coming to the office to invest in deals from some of our capital partners. so to think about it, like really the, the table stakes have changed dramatically, right?
Can you imagine? I I, I don't even have a checkbook anymore. Like, I, I think my wife keeps one. Like, I, I wouldn't know where to write a check, right? And so like you think about that. you know, the industry kind of running off checkbooks. I was doing everything on a Word document, sign here right?
Kind of thing. It's in the Word document and like we did it on the F and up, right? But it's me doing word docs and sending out Excel sheets saying like, Hey, this is how I'm kind of thinking about your deal. I think if you did that today, you'd kind of get, you kinda get laughed outta the room, right? time is everything.
So how quickly can you respond? do, do they have a one click functionality to order their construction draw and tell you what they need? can you do a closing, smoothly and in a short period of time and, and kind of, quarterback that from their title company through their closing, turning across the finish line.
Whereas I think, you know, as I think back to 15, it was very much like, Hey, here's this, here's this term sheet of what I intend to do. I think much less binding than, than today's, right? I think I very much appreciate some of those customers that have been with us since back then it was a lot of like, Hey, trust me, I won't screw you and let's see if we can get this to the closing table.
But without the, the, I think the documentation that's reflective of the amount of big money that's kind of poured into the space over the years and like to, to access that big money, which I think our customers appreciate from the standpoint, if they get the scale, they get the pricing power, they no longer have to spend.
You know, a disproportionate amount of their time raising money. 'cause they know us and there's other, there's other good companies out there, right? Have them and can get them to the closing table and get 'em closed up and, you know, in exchange for that, right? They, they've become accustomed to, having some of the formality that comes with the big company, right?
Some of that one click functionality, some of that knowing they can send a text message and they expect that they're getting their, their draw in a timely manner or, that someone's gonna be able to answer their question. I'm not saying we were, we were, bad at servicing back in the day, but it was different, right?
It was like, yeah. Checks in the mail, literally. Right. And we'd wait for the check to arrive to service their deposits to move forward. And I just, I can't imagine doing that today. Like I, it'd be, I, I think we'd get laughed at, you know what I mean? It's a different world.
Brendan: And not just us, right? If you look at some of our competitors themselves from 2015 to now, like they've probably had similar challenges. And, and growth and things that they've, they've really been focusing on. I think the good thing about that is it elevates everyone's game, right? So if you see a competitor starting to do something that's very digital based or, bars being able to take their own photos for construction draws, things of that nature, it's things that continue to elevate what people interpret as good, which I think forces us to evolve, which is kind of part of why the brand expansion happened.
David: Yeah, and you guys are talking about something I wanna dig into a little bit more like. You mentioned what we've done for our borrower base, right. And how we've, we've helped their experience and the relationships involved there and putting good boots on the ground in different markets to service kind of the mouthpiece for those borrowers.
But, but one of the areas that we haven't touched on much, which Jon, you have experience in, like you've both, that client facing experience as well as dealing with the investor side of the business, right? You're, you're familiar with that, you touch that every now and then. I'm sure that looks a lot different today than it did.
Eight years ago when you started. Right. I know. We've, we've, it's no secret we've put a lot of effort into growing our, our retail investor base of accredited investors, as well as some institutional partners. Talk about kind of that evolution, if you can, and, and you know how we've grown those and maybe some changes that have happened over your course of time.
Jon: I, I think much like the, the borrower side of things, it was an unknown industry for a lot of those people. You know, the, in the, in the early days, most of the investors that were deploying capital, you know, on our platform and, and ultimately into these projects. Had already been private lenders, you know, usually at a hyper-local level, right.
And had lent to some guys, had lent to some folks that had done deals and they'd earned a return, return profile. And they knew they were seeking diversity, right? Geographic diversity, project type diversity. Right. Borrower diversity. and they were unsure if we'd be able to deliver the quality of loan profile that they themselves underwrite.
And so I think early days was just proving, That we knew we were doing and would execute. And, and if you look at, I think we still post this, this blog today, the dogfooding blog where Matt, you know, who's our founder and c e o and it was his money and first still talks about the investment profile that he has, on the platform and shares that with folks.
You know, for us it was always very beneficial to say, our money's where our mouth is. We've already funded the deal, so we don't need you to raise capital for us to execute the deal. We've already funded it for this operator and we're happy to, you know, hold it if need be. but to, to serve ultimately that developer.
You know, or the rehab or, or the, or the flipper, whoever it is, that scale and capacity was crucial. So being able to recycle that capital we're constantly raising, ultimately benefits that person and, and drives down the cost from the borrow and things of that nature. I think early days it was, it was so manual, to update those folks when they had a question, you know, picking up the phone, calling him back, telling him what was going on with the project.
Whereas today, I think, you know, we do a really nice job of proactively trying to provide updates on every deal. You get all the photos for every inspection. you get a narrative. You get all of the, all the, statistics and data we have when we make a lending decision. It's posted publicly for consumption.
We, we saw that appetite change from folks even saying, Hey, I don't wanna just choose my own adventure. I don't want to just pick. And some people love it, right? And they still love picking their own deals. Others said, Hey, can you put me in a fund? You know, so we, we've had a couple different offerings. Our PFNF offering, our RBNF offering today, our Horizon Fund offering, right?
Where we give people the ability to, to, to deploy their capital, you know, less on a deal by deal basis. And more so a Hey, hey, FTF, soon to be Upright, formerly known as Right in the new company, take my money, put it in this product, gimme a return profile of this with a fixed maturity. I really like that.
So that was, that was directly kind of born outta the feedback of folks saying, I want to invest more. I wanna deploy capital more. I'd like to do it in a product that looks differently than what you're offering. And so we did that. And what that ultimately results in is, is, is hopefully that, you know, call it the flywheel, right?
Keep spinning of, hey, if we're, if we're able to raise capital efficiently from good partners that understand the space, and we're able to provide them the level of transparency and updates that they need. And the same thing I talked about with the borrowers. I mean, you gotta pick up the phone and answer when, when a deal doesn't go well.
And that happens. And you gotta tell the, you gotta tell the folks that investing in that deal, what you're doing about it, why it didn't go well, and then ultimately when it's resolved and, and you work your butt off to, to get 'em a good resolution. 'cause that's the only, that's the only thing you can do.
It's the only way you can sleep at night. And then you tell 'em what you learned and you tell 'em what, what, you know, kind of you've put in place to make sure it doesn't happen again. and, and ultimately ask for their trust. You're gonna continue to deliver at, to high level, and the next time something bad happens, you're gonna tell 'em about it and you're gonna tell 'em what the plan is and you're gonna tell 'em why it happened and what you're doing to make sure it doesn't happen again.
You just keep doing that until you, until you limit the number of those things and have a really good, strong kind of policy in place of, how you make loans and how you deal with every situation. but I think the, the amount of information that they're able to consume, David, that that wasn't available to him back then, I think is.
You know, light years from where it was. And we try to be proactive with that. got the different loan offerings. And I think the other thing is we've gone from a place where no one even knew about the industry, right? Or how it existed. People's exposure was only like the big publicly traded REITs, right?
And the thought of putting money into these single family homes and how does this scale and. What's the opportunity, I think was different. Now we've gotten to this place where there's, there's upheaval in our industry, right? We've got some, some big names, some companies that are, we, we've got a bankruptcy out there.
We've got some media reports of a, of another company. And like, it's, it's unfortunate. It's unfortunate for those folks. It's unfortunate for the investors in the company. But it also puts a spotlight on our industry. And, I view that as a good thing. So while there's some negative press out there, and that stinks, right?
And, and you hope that that doesn't happen. it's business, right? Some companies will do this and some will do this, and, you know, up, down. And how do you navigate that? I think for us, a tremendous opportunity to say true to kind of our core set of beliefs and how we've always run the business and, and be that direct originator that does great loans and brings great, you know, great people into the fold such that our investors have an opportunity to deploy their capital and get a great return.
But, You've gone from the total unknown to the cycle all the way up through the market, you know, being super hot to the market, being a little tougher right now. And then you've seen some people kind of, kind of fizzle out, or, or maybe be battling some, some headwinds. And now our customers, the, the, the investors, the passive investors, the lenders, you know, the folks deploying the capital, they've got a different set of questions and, and we, we damn sure better be prepared to answer 'em, you know, as to how we're gonna make sure that we're not in the bow to some of the others.
I feel really confident in the answers that we have there. And you know, I think our performance speaks for itself and, you know, if you have a question, you can get somebody on the phone and we'll figure it out. but I think that's a change. It went from unknown to like kind of seeing everything in the industry and everything in between.
How do we navigate that, right? What do we do with that information and how do we continue to be transparent? You know, Brendan said earlier, skate to where the puck is going. How do we make sure we're out in front of, Hey, here's some of the things that happened. Here's what we're doing to make sure.
We're not impacted in that manner and can still still provide great returns, great risk adjusted returns to folks, that wanna deploy capital into the space.
Brendan: Jon, come September 1st, let's call it, I think somewhere around that time we'll be launching the new brand. Mm-hmm. Aside from a new logo, aside from a new, new name, what can our customers expect from. Us on a go forward under this new brand. Obviously some of it's still core to who we are now as, as fund that flip, but if you're a customer, hearing this news that we are now under new name, what should that expectation be and what should they be excited about on the horizon?
Jon: I think the expectations should be, you know, business as usual. The first day, right? No. Nobody's going anywhere. We don't have different people coming in. We don't have new capital partners. We're not, you know, bought, sold anything like that. We're gonna fund the loan. You're gonna see a new logo, right?
That being said, the reason for it is we did acquire a software company. I don't think a lot of people know that. We have launched the long-term product, a DSCR product, right? That for years we just said, Hey, we're really good at what we do. And the bridge loan space, and we're gonna do that.
Probably, and I'll own this, probably my fault that I didn't push forward the DSCR kind of product earlier, right? But the customers have spoken loud and clear, they need that. And then as we navigate, you know, material costs are higher, rates are higher, deal flow is less, margins are smaller.
So what do we do? Right? We just do thin margin deals and hope for the best and kind of cross our fingers and say, let it rip. It's a bad plan, right? Hope's a bad plan. We're not gonna hope for something to happen. So let's take some action. Let's find the best software in the industry, right? That helps people analyze deals.
And, and let's bring 'em into the fold. Let's acquire that company. Let's make sure that they're their, their folks that run that company. The founder of the company, the engineers that company are, are part of the team, right? And they're now getting plugged into, you know, Brendan's team and David's team, and the folks that are on the street talking to customers every day.
Saying, Hey, what do you need from a, from an analysis tool perspective, how can I help you be, you know, that much better? You know, cleaning up, you know, finding that margin in your business, finding the, those extra couple pennies so you can do two more deals a year instead of being capped at six, eight deals mean, can you find a way to get to seven?
Can you find a way to get to 10, whatever it is, and let's get that software integrated right into what? Into what that that customer base does on the other side, as Dave alluded to. We have enough track record now that we can really go raise money at scale, I think from even some different avenues. we've always worked with, institutional capital, whole loan buyers, institutional capital, the one to participate on the platform just like our accredited investors, you know, kind of up and down the spectrum.
So we've been able to say, Hey, we've worked with, you know, this publicly traded REIT for a number of years, and here's our performance. Hey, we've worked with this, you know, alternative asset manager, that runs, that manages funds for, public universities and foreign government pension and things like that.
So some really institutional capital. We've got that track record. We're able to listen to those folks as well and say, what kind of product would you like to see? Where would you like to put your money to work? What does that look like? and on the accredited investor side, the same thing. Continuing to raise the bar on how they receive information from us, how transparent we can be, how proactive we can be in terms of getting 'em that info so they can make informed decisions in this space, because it's not going away, right?
The way I think about it's, you've got, you've got in order, right? You've got, probably water, food, shelter to stay alive, right? We're the third one. We're shelter, right? We're helping make sure that comes to market. You've got, the millennial generations, the biggest generation by population size, the one behind them, I don't know what they're called, bigger, right.
And so you think about like, these folks are gonna need a place to live. Maybe they'll rent it, maybe they'll buy it, whatever. I, I don't know. but as, as the need for housing continues, right? somebody's gonna have to recreate it or build it, you know what I mean? I mean, we're, we're, we're in Cleveland, Ohio, in our Cleveland office, average home, here's.
36 years old, you know what I mean? So we're not even talking about getting the all white kitchen that the wife likes and things like that. We're talking about the mechanicals and we're talking about structurally like these homes have to be renovated so it's not going anywhere, right? And so as this money gets smarter on how they can participate in this space, we need to continue to give them product, give them flow, give them transparency so they can, they can, make informed decisions as they're deploying their capital.
and, and this branch should allow us to do that, should allow us to convey to people we still fund the fix and flip house. We also have, the opportunity for you to invest in some of the infill development, right? We've got some spec home building. We've got some, we, we have, we have beach homes, you know what I mean?
We have, we have urban, you know, building a rental portfolio. We have Midwest building a rental portfolio. So like, you name it, whatever your thesis is on where you think the market's headed, we wanna be able to provide that. opportunity for you to invest in, because what I do know, as I said earlier, at a hyper-local level, our customer, that's a borrower, our real estate investors, they're gonna figure out how to monetize the opportunities in their market, and they're gonna do a damn good job of it.
And we wanna make sure the capital's there to fund it so they can, where they see that opportunity, they can act with certainty and get it moving.
Brendan: Jon, before we get into the speed round, the theme has been very customer focused. I, I was wondering if you'd be so kind to share maybe one of your favorite customer stories, over the years. You can, you know, share as much or little detail as you'd like, but just give the listeners a little insight as to, who our customer is and, and maybe like a core memory that you have from one of our customers.
Jon: Oh man. Okay. My head, my head immediately goes to some of the people that have been really, really successful. seeing some of the, some of the folks, take off and, and, you know, unit count, you know, through the roof. It comes to mind. we were, there's a guy in Columbus, Ohio that's really built a heck of a single family, you know, rental portfolio for himself and growing his brand and to see him.
You know, featured in some, some more prominent publications. I remember a little picture of him on a boat, you know, Yahoo Finance. That was pretty cool to see that and, and know that we were just a small part of maybe helping that guy out. You know, we did a container home for somebody that sold that and had an awesome out sell.
Some folks in the Carolinas that have really hit some impressive numbers, you know what I mean? In, in terms of like the homes they've been able to build and profit realize, and things like that. So my head immediately goes to, That sort of thing. But I'd say my fa my favorite story is, we, we were visiting with a customer in, you know, a more rural location in North Carolina, and he's about 15 minutes late to the meeting.
And, I was with one of our guys here, Pat, who's been with us better part of five years, and excellent at helping out customers on both sides of the business. And I was kind of annoyed. I like Pat with, you know, I'm hot, sunny, you know, I've been driving for three hours. I said, where the hell is this guy?
Pat texted him. He says, I’ll be right here. This dude pulls up with two jet skis. And I’m like, Dude, I thought we were touring a job site. What are you doing? And he's like, y'all wouldn't believe it. I was at a gas station. He's like, guy said he was selling these. He's like, I offered him, you know, I think he was trying to sell 'em for like three grand or something.
He's like, I offered him two grand cash. Hitched 'em up to the truck. Here I am. He is like, sorry I'm late. So the guy actually came to the meeting with two new jet skis. And then we went toward some houses and at one of the houses, he unhitched him and, and put 'em, you know, in the, in the driveway and was kind of doing the photos, staging the house.
It was on the water, you know what I mean? It had water entry. So he threw the jet skis on there and I was like, where the hell are we? And what are we doing? And this guy just picked up jet skis at the gas station and showed up to our meeting and he's put 'em in the house taking pictures.
And I, I, I think A), it was hilarious. And B), I think speaks to, our customers tend to be deal guys. They love a deal. Great negotiators, right? They're, aggressive, you know, in terms of if they see something, they're gonna go get it. And then the fact that the guy always has it on the brain about how he can put it in the driveway and take some photos and market it as, you know, water entry, water access ready.
I mean, it was hilarious. And, I'll never forget that one. 'cause it was, it was, it was back in the day and I just, I remember thinking to myself like, this is insane. You know what I mean? Like, we're, we're, we're running late and I'm gonna end up being late to my flight 'cause we're. Gotta go see five job sites for this guy.
He's buying damn jet skis, you know, pulling up to the meeting. And I was like, this is, this is crazy. But it's also, it's what it, meeting the people and hearing their story and finding out what makes 'em tick and what they're trying to do. That's the whole, that's what makes it fun, right. I,
David: Oh yeah.
Jon: I'm not a spreadsheet guy.
I'm not, you know what I mean? I can't tell anything from the spreadsheet, but you go see 'em and see how they operate and it's, it's pretty cool.
David: So stuff like that, which is why I love what I do. 'cause like that's awesome and hilarious. Also not surprising at all.
Brendan: I'm sure each of our TMs have a story. Yeah, somewhat, somewhat similarly. Oh yeah. Just hilarious. It's never boring. No, it's never boring. All right, so we'll get into the speed round and we'll get you outta here, Jon. So, we are gonna jump into the NHRA speed round, sponsored by the Michalek Brothers Racing.
An NHRA-champion drag racing team that Fund That Flip sponsors. So, Jon, we're gonna give you 15 to 30 seconds. I'm gonna give you four different metros. I want you to give us a quick summary on maybe like the top redeeming quality of that metro. And I want you to gimme your favorite restaurant. I know you're well-traveled, you go to a lot of restaurants in these different places.
I wanna see if you can come up on the spot top restaurant in each area. So I'm gonna go with, we're gonna start with Dallas 30 seconds.
Jon: Dallas, 30 seconds. I mean, it's grown like crazy, right? There's no end in sight. So as far as redeeming qualities, You got job growth, strong economy. We got a lot of space to expand. you could say Nick and Sam's kind of, kind of fancy right on the steakhouse side. you, you got, you know, RNAs again, I'm gonna come off as bougie with the steakhouses, but I'm trying to think.
There was a, I'm trying to think. There was a, pecan lodge over there on the barbecue side is pretty good. And then there's this like, fried fish place and I forget, I forget the name of it up there in North Dallas. I'm gonna have to find it. but that, that place is cool. A little kind of more hole in the wall, local, you know, they fry everything, but it's as good as heck.
Brendan: All right, metro number two, we got Charlotte.
Jon: Charlotte, again, you're talking business friendly. They've been growing for, it seems like they've been growing for forever. But if you look at like, now they're even developing on the, would that be the, the western side and over by the airport? I mean, Charlotte, the amni year stretches down to Columbia now with that GR down through Fort Mill and into the south.
I mean, it's just crazy. And what they've done up on Lake Norman, I know. You know, my, my, my friend Eric up there on Lake Norman, you know, what they've built up there is just, is just incredible. And people keep moving there. relative to, it's still cheap cost of living, right? It's still, it's still affordable for people.
which is, which is awesome. And, you know, they've got that moderate climate, great travel that airport's accessible everywhere. so that's a great market. And then, what am I missing? Restaurant, that one that they, they turned the church into the restaurant, I forget the name. ate there. Ate there with Roy.
man, I forget, I'll come back to you on the name of that, but it's, it's in town and it's a converted church into a restaurant man that plays super cool and great food.
Brendan: Love it. All right, Miami.
Jon: Joe Stone Crab, right? Joe Stone Crab Redeeming qualities. It's Miami, it's South Beach. That's a, that's a heck of a lot of fun. but really, I think, I think what you've seen is like New York, new Jersey's just relocated to South Florida. tremendous, tremendous growth. Job growth too is like some of these folks that moved down there are fluent people, people that have money.
It's rich guys, right? It's who picked up and moved and went to South Florida Tech scene coming on startup scene. you know, there's new kinds of jobs than the traditional Miami jobs that I think are happening there. and with, with some super cool neighborhoods. You know, my friend Jose turned me on to Wynwood, you know, several years ago and.
And to see that kind of do what it's done. But I mean, it's just opportunity. I think a lot of people that have lived up north for a long time and you get down to South Beach, it's, it's tough not to like it. Yeah. yeah, it's what is there not to like about Miami. Right. And so, cool. Last one is Cleveland.
Cleveland. So first thing that comes to mind is like affordability. So all these people will make fun of Cleveland 'cause of the weather and things like that. Like, yeah, it stinks for three months outta the year weather-wise, but from an affordability perspective, blows away anywhere else. Our summers are outstanding.
You cannot beat, you know, this region of the country, the Rust Belt, both sides of the river. Northeast Ohio, Western PA, right down into Central Ohio. And you follow the river all the way down to Cincinnati. Man, if you, if you like fall and you like, you know, the beautiful foliage, right? And you like some, you like some dang football and some high school football, right?
You want your big portions and you want your pierogis right, and you're gonna hit Slimes over there and you know, you also have the lakefront, and you have some great universities here. Cleveland, I don't think people understand was at one point, I think the second richest city in the country and the Rockefeller days and some of the architecture we have on the East side, you're not gonna find anywhere else in the world.
World-class hospitals. and you know, I think the art museum here, we got two zoos. There's two airports. Like Cleveland has a lot going for it that people don't, people don't think about all the time. And it, when you, when you really explore that juxtapose to the cost of living, not all that bad of a deal.
Yeah. You know what I mean? And snow's pretty in the through December and Christmas time after that gets a little ugly. But you get, you get the four seasons.
Brendan: All right.
David: Preaching to the choir. I love it here, but you know, listen, I'm, I'm biased, I suppose. This was awesome. You wanna put a bow on this thing
Brendan: Yeah. Jon, we appreciate you coming on and, and sharing a little bit about the rebrand and, and our customer base. And, we'll have to have you back on, you know, six months, 12 months from now. Kinda do a check-in, but, thanks for tuning into this week's episode. Make sure to let us know what you think and write in with some suggestions and topics for the show at podcast, at fundthatflip.com
David: And make sure to like and subscribe to the podcast so you don't miss out on any episodes. And leave us a five star review. That'd be awesome. Thanks.