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Here at Upright, we are lucky enough to get to work with our territory managers and investor relations team who have their boots on the ground in the territories they serve. We recently attended a Zonda Q4 Housing Market webinar and thought we would weigh in through the lens of one of our largest and fastest-growing markets: Texas Y'all! 🤠
We brought on one of our Texas Territory Managers, Bridget Tindell, as well as podcast favorite and real estate investor/investor relations director Donovan Adesoro to give us the scoop on what's going on in their neck of the woods in this week's Real Estate Investing, Unscripted!
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REIU The Texas Market Nov 2023
Brendan: Welcome back to another episode of Real Estate Investing Unscripted the podcast, where we get real with real estate investors and other experts throughout the industry. I'm your cohost, Brendan Bennett. Uh, and usually with me is our other cohost, David Duggan, but David is actually on the road in Columbus meeting with borrowers, shaking hands, kissing babies, getting some business.
So today we have a special guest cohost and a former guest of the show. Doug Dvorak, VP of Capital Markets. Doug, welcome back to the show. Uh, how you feeling being on the other side of the table, asking the questions instead of getting interrogated? How's it feel?
Doug: Yeah, hey Brendan, feels good. Good to be back. Big shoes to fill. Obviously, same initials, so maybe that bodes well, but uh, asking the question should be a breeze given how knowledgeable our two guests are in the market we're going to be talking about. We'll be discussing all things Texas real estate investing and how that economy's been moving and shaking throughout 2023, so, um, this all came about after our sponsorship of the Zonda Q4 Market Outlook, uh, Housing Market Outlook specifically focusing on the Texas market.
Yep. Yep. So we'll be going over some information we heard and adding in our two cents.
Brendan: Yes, sir. So really excited to dive into the conversation here. Um, instead of a super lengthy intro, we have two guests today. Uh, I'm going to give the quick spark notes and each of the guests, and then I'll give them each a minute or so to fill you guys in on, on wherever I miss. So our first guest is a repeat guest on the show.
His first episode was one of our most listened to episodes to date. Uh, we have Donovan Adesoro, investor relations director here at Upright and also an active builder and developer in the Houston market with over 30 units built in the last year. That the number might be a little bit shy. I'll let Donovan, uh, fill me in on that later.
And our second guest is Bridget Tindell. She is local to the Dallas market, uh, has a pretty extensive background in the insurance franchising industry prior to joining the upright team. Uh, she's a current territory manager for us for several of our Texas metros, but a specialization in the Dallas Fort Worth area, Donovan and Bridget. Welcome to the show.
Donovan: Thanks for having me.
Brendan: Of course. So Bridget, if you would be kind enough, uh, I know I did a really short and sweet intro, give the listeners a little bit of background on who you are, what your role for upright is and, how much you know about Texas?
Bridget: Yeah, I'm excited to be on today to speak just to the market, which is very much just a reflection of all my meetings with A1 operators. Builders, developers, fix and flippers, and primarily the DFW market is where I reside, but I also will go into the Houston and Austin, San Antonio markets as needed. but it's cool because these guys eat, sleep, breathe real estate with boots on the ground, so just hearing it directly from the source.
Brendan: I love it. Donovan, give us a little bit more info about yourself,
Donovan: Yeah. Thanks for having me again. Um, yeah, I think the first episode I'd dive deep into it, so I'll keep it short, but yeah, one of [00:02:40] the switched over to the investor relations side since my last time joining the show. Um, it's been super exciting talking to our investors who earning monthly passive income through our kind of outsourced due diligence arm for them, right.
Where we can underwrite the loans and give them some, some passive income to enjoy. So yeah, looking forward to talking about Texas today.
Brendan: So as Doug mentioned earlier, uh, we got some really cool statistics and other learnings from this Zonda webinar that, that Upright sponsored recently.
we had Nick Schoolis, who was an economist at Zonda on one of our earlier episodes, uh, maybe six months to a year ago at this point. And we also did another market recap for the DMV market with Antonio and Ryan on the team. So what we're looking to do is Doug and I want to share different learnings with you guys that came out of that webinar and have a discussion based on your guys each unique experience to Texas, Donovan, especially to Houston and Bridget, especially to the Dallas Fort Worth area and see what kind of colorful discussions we can have and how that's related to your guys day to day within Upright, but also the things that you guys are doing, uh, on the side and real estate
as well.
Doug: Yeah, I love listening to Allie Wolfe, obviously, you know, her bringing in guests like the gentleman from JPMorgan on this most recent webinar. You know, they touched a lot on, obviously, the national market, but specifically just the markets within Texas, which can vary so greatly, starting to see that between Houston and Austin, with housing inventory down, Three million to five million units, depending on where you're reading and rates continuing to climb and obviously difficult to plan around some of the volatility we've been seeing in the markets.
very broadly speaking, Donovan, how would you say that's affecting the Dallas Fort Worth and the Houston markets that you reside in?
Donovan: obviously 2020 and 2021 were blown and going, right? I mean, anything you put on the market would, would sell instantly. and now it's, it's slowed down a little bit in the sense of it may, instead of you getting 10 offers, you may get two. So things are still. Progressing just again, like you mentioned, due to the deficit of inventory, um, there's still population growth is still strong as Ali mentioned on the podcast.
Um, so I think Texas is a little, little insulated and in the sense of compared to like a, you know, California or a Washington where, we just have the population growth supporting that, uh, those prices staying somewhat elevated. But, yeah, so hopefully that answers it a
little bit.
Doug: Yeah, so some of that population growth, I think, you know, they talk about kind of the, uh, the lag behind actually, you know, migrating to these cities and then Starting to build their roots and, you know, get their jobs and get their feet under them and then to purchase their properties and seeing, you know, some of those jobs that are being taken more in the, uh, the blue collar spheres, if you will, suggesting that perhaps affordability may not be in that higher luxury space and those higher, price points.
Are you, uh, seeing more of the same kind of with pivots, with developers in your area, with your own developments, uh, to maybe some more modestly priced, uh, homes that can weather the real, the, uh, the interest rate storm?
Donovan: Yeah, absolutely. Um, like you mentioned, I think that's part of the reason why Austin's getting hit a little bit harder than Houston and Dallas is because a lot of the tech jobs are obviously in Austin, um, and a lot of the blue collar jobs, obviously Houston and Dallas. So yeah, I mean, you know, sticking to that really sub 500 K sub 600 K range.
In, in Dallas and well, in Houston, especially in Dallas, it might be a little sub 700. but yeah, I think that's really where we're seeing a lot of activity. I think on the, the very low end of things, it's hurting, hurting buyers, right? If you're the lowest price point, you know, 250. just a little bit tougher to qualify.
But I think if you're in that slightly, I'd say median price point, which in Houston is about three to 300 to 450. Stuff is still moving.
Doug: Right.
Brendan: And Bridget, from your perspective, are you seeing a lot of the developers that you're meeting with in the Dallas Fort Worth area? are, are they getting nervous at all about the 8 percent interest rates? Obviously rates have been on the rise since, uh, early this year. Have you seen people pivoting? Are they, you know, maybe switching from a rent and refi exit strategy where they're selling most of their, their product that they're bringing to market?
Um, what kind of things have you picked up from those guys?
Bridget: I would say here 90 percent of my book of business is all new construction, and majority of the builders that I'm meeting with, like, for example yesterday I met with a builder and their price range on the market right now is 1. 2 to 3 million dollar homes and she's She's a realtor her husband's the builder and 68 so from last quarter 68 of the people that walk their homes were all cash buyers that didn't need any type of Other financing so that's just they're seeing they're building spec homes that are Two three even I have a guy that builds seven million dollars spec homes in this market and they're still going off the shelves, but it's very much still proving like they do say It can sit longer on the market, but they are still very much in a seller's market of being able to keep They're asking price and lead the negotiation
Brendan: yeah, that's a great point and kind of brings up a open question for any of the three guys. I'm curious, maybe there's some data on this or what you guys just think to Bridget's point. If you get to a certain level, your buyer pool is a little bit different, right? Where they're, they're likely coming with a 50 percent down payment.
And in some cases, like Bridget said, a hundred percent, where do you guys feel like in Houston and Dallas, what is that threshold? Right? So like, when do you reach that upper echelon of buyer where the 8 percent interest rates are not as impactful to like the speed at which I probably get sold.
Bridget: I would say nine hundred thousand eight hundred nine hundred thousand past that Um, but that's just feedback from literally people in market and what they're telling me in the meetings
Donovan: Yeah, I'd probably echo that. I mean, a little bit less than Houston, probably again, like above the, the six, 700 mark, but you know, in that in between market, I think Bridget brings up a good point. It's like, you know, for you, Houston, like five, 10, 5 to 50 is where I think it's a little, little slow because you're like, payment's going to be X amount higher, why don't I just get a slightly smaller product and pay 4.
50 and my payment would be the same as a year ago when rates were at 4 if I bought something at 6. 50. So, I think that's some of the... Um, the math that these
buyers are doing.
Doug: Yeah, that was something interesting from the webinar itself, specifically touching on incentives. Right? And so, you know, going a lot further to buy down the interest rate or to, you know, put money towards those closing costs or, yeah, I mean, just helping with, with the, the cost of kind of furnishing a new property and getting in there and feeling comfortable kind of with the initial investment there to make it your own, touching on something a little bit unique and, and Donovan, I know you've been doing this for a while, but something that seems to be spreading throughout.
Texas is, is, you know, uh, is the, uh, the zoning laws there, right? So, you know, ultimately, Houston has been a very developer friendly state, or city, if you will, in regards to allowing multifamily properties to infill and to, attack that significant supply shortage. we saw that compounded this, this month.
It'll actually be initiated, but compounded by some Fannie Mae policy that'll allow a lower down payment for some of those future househackers, right? That, that will be the end buyers for some of those units. curious to kind of hear, Donovan, I guess you were kind of at the forefront of it in, in Houston, but hear how, uh, you think this policy could even spark a, a, a more drastic investment in these types of properties, and if you have any concerns with, with some of the, uh, you know, the trends that could emerge.
Donovan: Yeah, no, I'm obviously ecstatic about the upzoning coming across, um, not just in Texas, right? But all over the country, right? We saw it in Minneapolis. We're seeing it in Washington. Um, so this, this opportunity exists really nationwide at this point. Um, yeah, it's exciting because, you know, FHA has been traditional, you know, mortgage product.
If you were going to buy a, I'd say you could do conventional with the duplex, but If for sure, if you're three to four units and you were an owner occupant, you're almost always going to FHA because the down payments were 25 percent for a conventional mortgage, even as an owner occupant. And the other thing with FHA is you have to, it has to meet the self sufficiency test.
And what that means is the other units in the, uh, in the structure have to essentially cover your mortgage. So for example, if you have a triplex, those other two units that you're not in have to generate enough income to cover your mortgage payment. to meet FHA's requirements. Now, with the, the 5 percent down conventional, there's no longer that, that, I guess, constraint, right?
So, it should lead to more buyers being able to qualify, and with the upzoning should allow more developers to actually build and hopefully, you know, help, help combat the housing shortage. So, yeah, I'm super excited.
Brendan: And Bridget, it might be a little bit too soon, just given it just went into effect. I think later this month, or maybe right now in November, have you started to get more requests for funding on those two, three, and four unit properties yet in the Dallas area, or do you anticipate to see more of that now that there's probably a little bit more liquidity in the space for buyers on that two to four unit product
Bridget: Sure, definitely We get a ton of requests for if they can just get more bang for their buck and somehow even split up the lot more to make it multi family
Brendan: and Donovan, are you seeing the same thing in your area? Some of the other competing builders, maybe they're, uh, you know, if they were doing a lot of single family, is there more? People rushing to the space to do two to four units where they otherwise would have done maybe a townhome or maybe they would have done a sub development or something of the sort.
Donovan: Yeah, definitely. I mean, we're seeing, there's one builder in particular who, We, we both build in a similar area. They've traditionally done single family homes and they, they do a heck of a job. They pretty much almost switched exclusively to duplexes. So, now they're building them a little bit bigger than I am, but yeah, they're realizing that, you know, there's just a lot less competition.
So, you know, if you're going to sell these things. You're competing with maybe, you know, maybe one or two other builders versus if, you know, single family homes, you're competing with Pulte, you know, D. R. Horton, right? There's just so many single family homes, um, that, yeah, just a little bit, a little bit easier potentially, and then to add on to what Bridget was saying, I think Dallas has some upzoning in the works, or I believe it might have already passed, where, and I'll have to, I'll have to double check on that, but yeah, I would expect Bridget to see a lot more requests kind of next year or so.
Um, with those, these new reforms coming.
Doug: It helps to have some cash flow, right, especially, you know, you have insurance premiums, not only in Texas, but insurance premiums continuing to skyrocket and restricting, you know, affordability there. touching on that a bit, you know, rising housing expenses in general, how do you both feel this is affecting kind of the real estate industry at large in Texas?
Donovan: Yeah, it's making it, you know, tougher, obviously in combination with the rates, you know, because as most buyers do, right, we look at the total payment. So, you know, whether the house is... 250, 000 or 500, 000, what you're probably going to be concerned with is what is the ultimate payment between the mortgage, you know, PITI, principal insurance, taxes, and interest.
So, you know, definitely slowing things down a little bit. I think In Houston, we're starting to get used to the slightly elevated insurance, um, it's been here for a couple of years now, but yeah, on the property tax side, I think there was, there was some relief through the, I'm not sure which exact body of government enacted some sort of property tax relief, but there was a statewide thing passed in Texas to help alleviate for homeowners.
So it's making it tougher. But again, you know, yeah. Ultimately, what the rent, what these buyers are doing is comparing it relative to to renting a home, right? Do I want to rent this apartment for six, seven more years and not have any equity built up? Or am I willing to maybe stomach a little bit higher of a payment due to interest and property taxes in order to start building that generational wealth? I think everyone's kind of Trying to seek so
Brendan: And I think another main focus of the webinar, they, they, they hit a lot on, uh, Dallas proper, Houston proper, like all the major metros that everyone, uh, can kind of recognize and a, and a headline. Um, what I'm curious to get from you guys, so Bridget for you for Dallas first, um, what are some of these like sub markets outside of, um, downtown Dallas or downtown Fort Worth that you see heating up?
You're seeing a lot of your developers go to, can you mention just a couple of those areas and maybe what's so attractive about that suburb that's drawing a lot of attention by the builders?
Bridget: Yeah, like, Terrell County, Denton County, Coppell, like, all of these areas just around DFW that are growing, like, there are cities in itself. Frisco, Plano, like, those are all bringing in headquarters, like, PGA, FedEx, Amazon's building a new warehouse. So, not only is just the focus, like, oh, Dallas proper, um, all of those are bringing in even more, just more people into those areas making its own little mini metros.
Brendan: Yeah, and you're seeing some of your builders probably being able to find land at a little bit cheaper cost, 20, 30, 40 minutes out from the city. They're still able to get that commuter that is still traveling into Dallas or into Fort Worth, um, maybe a little bit better cost to build. And you're starting to see a lot of people push out to that area.
Are you seeing house prices in that kind of suburb area a little bit more in that like 300 to 600k starter, mid starter home range, Bridget? Or what would you say the range is there?
Bridget: Yeah, I would definitely say, like, Sherman, that area's been blowing up right now, and I think they brought that up on the Zonda. podcasts, like definitely you can get a starter home out there for 280 to 350. If you're looking more of like a Plano, Frisco area, those are already so developed in itself, um, that that's starting to look more like a Dallas proper pricing of upward of 500, just for your starter home.
Brendan: Gotcha. Donovan, for you in Houston, what are, what are some of the areas that you're seeing either that you're building in or that you're seeing some of your competitors build in that uh, maybe are a little bit overlooked that, that are not as, as sexy on paper?
Donovan: yeah, so one that immediately comes to mind is a place called Magnolia, Texas Which I barely heard of it until like a week ago So I know probably nobody listening to this has heard of it unless you're living there, but
that's been Oh, well, sorry, Bridget. No, no offense there. Um, no, I'm sure it's, yeah, it's a great area.
I think what happened was it was a place where, um, builders had scooped up some relatively cheap dirt and I'd say relatively meaning probably at a 50, 60, 70 percent discount compared to what you can get an infill lot in, in Houston proper. And I think what we're seeing is that because they, they built up these master plan communities, not only can you get an affordable price point home, meaning like low three hundreds or high two eighties.
But they also have great school districts. So that's what we're, that's what I'm seeing is a place that's overlooked that not many people are, um, have been looking to build besides the big guys, like, you know, pull TDR Horton, whatnot.
Brendan: Yeah.
Bridget: Magnolia, because like, my grandfather's business is like, in, it's in Magnolia, but it's the very back of the woodlands, so it's right there, 2978, um, and 1488, so you're basically in the woodlands, which as everyone knows is like prime real estate to get, so if they can just be five minutes outside of that, it's like a win win for them,
Donovan: Yeah. And just to add onto that for the, the Woodlands for everyone who doesn't know ExxonMobil, obviously the huge oil and gas company, they pretty much bought up that entire place, like. 20, 30 years ago, and they built up that entire place almost single handedly. Um, and so it's become a really high income, high, you know, great schools, right?
Great everything. They have all the amenities you would want. Um, and so I think that's part of the draw too, like Bridget mentioned, because it's how close it is to the woodlands. You could live in Magnolia, commute to the woodlands. Still have your kids go to a great school district, but still get a great price point.
Doug: Yeah, on the back end, Donovan, you talked about in the beginning, you know, joining the investor relations team that's near and dear to my heart over on Capital Markets as we, we disposition these loans, and I think a lot of what we've already touched on is going to answer your question here, but we continue to see as our, our platform grows in size, uh, significantly month over month, that the Texas properties that we put up there are typically the first, if not the second or third properties to be taken down, uh, in the same day due to, uh, being filled out by passive investors that just see the opportunity and, um, you know, Believe in the fair risk adjusted return for that market and for, you know, the planned execution to sell that property to execute on it first and foremost and to sell it.
Um, but specifically, you know, I wanted to ask you, those passive investors, those accredited investors at upright. us that are investing in the Texas markets, what do you think that, one, they're looking for and prioritizing and, you know, why are these markets ultimately so valuable to them?
Donovan: Yeah, for sure. I guess first off, shout out to the IR team. I mean, we're up over to 200 million active dollars invested, um, into these deals. So, I mean, the investors are liking it. We're pushing out tons of money each month and distribution. So it's, it's a great time. Um, but obviously kind of like to the, the points you alluded to Doug, you know, when you have a market that's.
You know, affluent, are constantly growing, population growth, job growth. The same reasons why our borrowers like it, the same reason why Upright likes it, are going to be the same reasons why the investors ultimately like it as well. So, um, they love Texas. Um, they obviously love a few of the other southern states as well, right?
Like the Carolinas and, and whatnot. But I think Texas in particular has a, has a good draw because of the affordability. obviously Houston and Dallas are some of the, I think, highest populated cities. But also, most affordable, right? So if you, I think it goes, you know, New York, LA, Chicago, Houston, right?
And if you looked at the, the median price point for those, you'd see a huge dip when you get, got to Houston. So, there's that kind of mindset going into it. Like where are people going to move and continue to move? And I think they're, they're kind of playing that, that
long game.
Doug: Yeah. And to add to that, I think that the same appetite that our accredited investors have, our institutional partners have as well. And so, you know, a lot of that is, is just the fact that, you know, we, we've been a, a, a new construction heavy shop for a while, I would say, uh, but, you know, Texas just lends itself to that even further.
And so by mitigating that, that risk of not knowing what you're going to come across mid project and that could throw your budget out of whack or really cause a delay in the term of, of completion and exit, you know, it's, it's, it's something that, uh, Uh, we really couldn't originate fast enough in the Texas markets, I would say, so.
Brendan: and to that point, I think what's really interesting is, Bridget, you've been part of the team for, you know, a quarter, quarter and a half. and I think you guys have already found a lot of success in finding quite a bit of origination volume in a short period of time. So we've been in some of these other markets for, you know, 3, 4, 5, 7 years in some cases.
And I'm looking at our quarterly numbers right now. Texas. Isn't like second or third right now for our total originations by state. So I think it speaks to what Doug and Donovan are saying, where there, the appetite is there on the backend from the capital market standpoint, but you're definitely seeing the appetite from builders, developers, flippers.
On the, on the other hand, can you just speak to that a little bit of the different types of investors that you're working with, are most of them new construction builders and if so, are they doing townhomes, like what's contributing to this success that you guys are finding in Texas?
Bridget: building anything and everything, um, just because of the shortage and the demand, and everyone wants to come to Texas now, I think the secret's more than out, um, but I would say, like, or just getting more bang for your buck, like, here in Texas, you can take an actual structured house down that's, 85k, and then build knock it down and sell something for 350, 000, 400, 000.
Um, so just speaking to like those numbers, I think that's why, like from the passive investor point, why people are so wanting to put their money in the DFW market. Um, and then I would say just for me, it's 90 percent all new construction, sticks and bricks, pop them up, um, as quickly as they can and get it on the market.
And most of my builders are all pre selling. Their stuff even though I know the whole consensus is like things are sitting on the market longer Like the more that they're putting themselves out on social media and already having the realtors like tapped in they've been noticing that they're able to pre sell most of their stuff directly off the market with cash buyers
Brendan: one other question I have kind of for all three of you guys, both Donovan and Doug from the investor relations capital market side and Bridget, if you have any knowledge on the, uh, the Austin, uh, market, what was interesting in the Zonda webinars, they said, while Austin was predicted in 2023 to have some of the worst metrics out of all the metros in Texas, they said that it as bad as it seemed.
So like people were Assuming a 20 percent decline and in a certain statistic, it only went down 10%. Are you guys seeing that people, while it is declining still, it's better than expectations. Is there liquidity coming back to Austin in a little bit more of a meaningful way? Are we seeing demand from capital partners, Donovan?
Are you getting phone calls from accredited investors asking about Austin and bridge? I know you've, you've looked at a couple of loans in Austin. I think we've, we've written a couple. so Donovan dug first. Can you guys give me your perspective in the bridge? And I'm curious to get yours
after.
Doug: Yeah, I'll, I'll start here. I mean, we've never been out of Austin from a capital markets perspective. It's mainly just, you know, when you have a period of uncertainty, you have to rely back to, you know, on experience, right? And so you're, you're attracting a higher caliber, a more proven developer. and perhaps being a little bit more cautious on overall ARVs.
You know, we do have trouble. In Texas, being a non disclosure state, really getting real time information on actual sale prices at the time that those sales go through, so a lot of it is historic information, um, that may be three, four, six months old on the actual sale prices, or using listings to really determine, you know, what is this developer truly going to sell this property at when he's finished with the project, and so you really rely on experience there.
You perhaps dial back a little bit on leverage during a period of uncertainty, but You know, to your point, we, we started to see that subside and, and so Austin's not going anywhere. We've all spent a lot of time there individually. I think we would all move down there. I, I personally know that, that I would, um, family aside, but, you know, the, uh, the, the demand is there and it's back.
And so, you know, it's never gone away. And, you know, our, through our passive investors, I don't necessarily wanna answer this for you, Donovan, but. They're trusted, they're trusting us to really attract those types of developers. And so as we put, you know, one of four that we've originated in that market onto the platform, they're seeing the same things that we've underwritten to, which is that experiences, that leverage point, is that, uh, that buffer, if you will, on, on what that ultimate value that, that after repair value is going to be.
So,
Donovan: yeah.
Just to add on to that, obviously, as I mentioned to all of our, our credit investors, we have such an amazing underwriting team where they're seeing what things are, are doing in real time. Right. And so because we're lending at 65 to 70 percent of what the final value is going to be, say we lend at the property is going to be worth a million.
We lend at 600, 700, 000, maybe the developer sells it at 900, 000. Not ideal for the developer, right? But our loan is more than protected, right? So I think that's some of the conversations I'm having. Like, yeah, maybe the developer had to contribute 20k for seller closing, but there's still plenty of cushion, um, from, from our loan standpoint, which I think, you know, helps investors feel a little bit more comfortable.
Brendan: Yeah.
Doug: As I add to that again, new construction, right? So the chances of really uncovering a large expense that you didn't scope out and factor in on the initial underwrite is few and far between. And so,
Brendan: Mm.
Doug: our investors can feel comfortable with that cushion.
Brendan: Yeah. And Bridget, what are you seeing from demand from borrowers with, uh, loans and products in Austin?
Bridget: I would say that it's definitely picked up, but majority of my inquiries have been the [00:26:00] townhomes, for the Austin Market All New Construction.
Brendan: Yeah, that makes sense.
Donovan: to add onto that, I think Austin just recently upzoned or they They went to a Houston style, um, minimum lot size. So up until last week, their minimum lot size was 5, 700. Um, as of, I think this week it's 2, 500. So a place where you could fit one home, you can fit two. So we likely will be seeing more inquiries from Austin.
And the nice part about that is because the smaller lot size, they can probably sell it for less. So they can help kind of keep those values a little bit. on the lower end and be able to exit those projects even quicker.
Brendan: Awesome. so a big value prop that we have at Upright is, you know, [00:26:40] we're founded by a real estate investor. A lot of us are real estate investors or have passions in real estate.
so I'm curious to get your guys perspective. Donovan, I know you hit this on the last podcast a little bit, but maybe now having a little bit more time in the IR seat. How does your experience as a developer, uh, show through on the phone or show through in the meetings that you have with accredited investors and Bridget, how does your background in insurance, uh, and in some cases, property insurance, and also your passion for real estate and the fact that you're in market, which is pretty unique, not, not a ton of lenders actually have, sales reps in market that kind of get the beat on the street.
Can you guys each touch on how that shows through to the customers you interact with on a day to day basis? Donovan, if you can kick us off.
Donovan: Yeah, I think for me, obviously sitting in the IR seat, being able to explain to the credit investors who may have not done too many real estate projects themselves, like, what is going through the borrower's mind in terms of you know, why do they want to do this project? Or let's say they're, they, let's say they see a project on the platform. mean? 50 percent of the rehab is completed. Why, why should I care? What does that mean to me? Well, that means, you know, half of the execution risk is essentially off the table, right? If they've completed more than half of the rehab, they only have a little bit more to go.
They're on the home stretch. You can probably feel a little bit more, comfortable. compared to the beginning, when there was nothing completed, um, about how their project's ultimately going to finish. So, that's some of the insight I try to give just to, maybe, explain a little bit what's going on in some of the, deals that we have on the platform.
Bridget: I would say for me being in market, they want all the tea. Like, they wanna know, they wanna know about like what the builder in the next lot is doing, or what is the take on what are these guys next project gonna be, or can you give me intel on, who bought the lots across the street. Like now we want to buy the lots over here.
So I think just like having the boots on the ground, they're able to almost filter through, what everyone else in market is thinking just because they're not necessarily always interacting, um, with other builders or with other like real estate professionals in market. Cause there's so zoned in on their own.
business models. Um, and I think a value prop for us is just we try to mirror the borrower's process and fully understand how does their business cash flow, how do they want their draws, how do they get their materials, what is their end goal for the project. So by us being able to understand that as a partner on the funding side is really crucial and I think is not found or is at least few and far in between with the other lenders in market.
Brendan: Absolutely. I think, and Doug, this speaks to your point earlier, right? If Bridget's boots on the ground in Dallas, she, she knows the ins and outs of the main markets and sub markets. If she gets a deal in an area that's a little bit, uh, less desirable, you might not be able to see that on an appraisal.
You might not be able to see that on, an underwriting loan tape, but Bridget will have that context by being in market, talking to other investors that have tried that, uh, Strategy in that area that flows all the way down to you and Donovan and capital markets and I are where Other investors that might be local to that area that would otherwise put money towards that deal or saying hey Why did you guys do that deal?
So I think it's really important. We have both sides of the house talking I think it's what we've gotten really good at Bridget becoming a specialist on her side and then sharing the information all the way down So Donovan has the right information on the IR side
Doug: Yeah, that feeds through our performance, right? I mean, it's a reason why a lot of our institutional partners have been with us for the long haul. It's a reason why a lot of our accredited investors continue to earn a significant amount of income here during their retirement years and earlier, right? It is because of that insight.
They're not bringing us deals that they don't believe in. Um, but this pumps me up. You know, you guys, Both fill such, you know, a large piece of the puzzle to your respective customer. I mean, Donovan, you're filling in gaps in understanding. They have the access to the asset class. They have the money to invest in it.
Uh, they just don't know what they don't know. Right. And so you, you're able to fill that. And so they're able to do well while, while they're doing good, if you will. Right. And you know, Bridget, to your, to your point again, like. Being able to be that, their eyes and ears for the capital space, you know, what, what these, uh, lenders care about, what the capital markets care about it from these developers, what they need to show, um, how they should button up and spend their time, uh, to make sure they're presenting as, as strong a project as possible when they're looking to get financing and then being able to play that, that contact within the space to truly be somebody they can lean on to, you know, expand their reach and, uh, perhaps get a little bit of a nuggets of information from, from, uh, some of their competitors or, or fellow developers.
So that's
Bridget: yeah.
Doug: you.
Brendan: Maybe.
Doug: Richard doesn't run away with
Donovan: Yeah.
Brendan: right. I know.
So we got, we got, uh, we got six or seven questions for you guys. Doug and I go back and forth, asking, and I think, I think we'll go one at a time. So I'll Bridget, I'll throw a question to you, Don, we'll throw a question to you, we'll see who gets the most from right at the end. Maybe if there's a tie, we'll have to come up with a tiebreaker on the fly Doug. So we'll see what happens.
Bridget: the easiest
Brendan: All right. So first question, I can't give this to Donovan cause he definitely should know that, but, largest city in Texas by population, Bridget
Bridget: Houston.
Brendan: one point for Bridget
Doug: that's an easy one there, Brendan.
Brendan: that's an easy one. That's easy. I know
Bridget: Alright, guys. We're getting
Doug: All right, Donovan, what, what Texas city is nicknamed Cowtown?
Donovan: oh my gosh, um, all of them? I mean, uh, let's see, San Antonio?
Brendan: it is Fort Worth actually.
Donovan: Yeah, I would have never guessed that.
Brendan: I w I wonder what the history behind that is. I don't know. We'll have to ask
Bridget: stockyards.
Brendan: Is it? Okay.
Bridget: I think.
Brendan: All right.
Bridget: Fort Worth, like, you'll see there's like cows walking all around the stockyards.
Brendan: See, this, this is, this is why we have Bridget. She's, she's got all the, the facts for Texas.
Bridget, second question to you. What is the official state dish of Texas?
Doug: Even I know this one.
Bridget: Chili.
Brendan: Chili. She's all right. She's going up two oh Donovan. Two oh.
Donovan: Goodness,
I'm getting killed.
Doug: Donovan, what is the name of the popular dance associated with Texas?
Donovan: A line dance?
Brendan: I feel like that's close, but it's not the tech, Bridget, see if you can steal.
Bridget: The two step.
Brendan: Texas Two step
That's it.
Donovan: yeah. I'm not much of a dancer.
Brendan: All right, Donovan, I'll, I'll give you a, I'll give you a chance to redeem yourself here. Let's see if you get this one. Which Texas Lake is the largest manmade Lake...
Donovan: Lake... Travis?
Brendan: No,
Donovan: Houston?
Brendan: Bridget. You know that one?
Bridget: Is it a name? Is it a
Brendan: It's
Bridget: somebody?
Brendan: Nah. N could be. I don't think so.
Bridget: Largest lake? You know what I mean?
Brendan: Lake Texoma, anybody? Does that sound familiar?
Bridget: Is that what it is?
Brendan: think it's just texoma, unless it's a typo.
Bridget: wouldn't have known that. But I'm
Brendan: Okay.
Bridget: person, really, so.
Donovan: are too hard.
Brendan: I know Donovan. I should, uh, I should caveat Donovan is from Minnesota. He's recently relocated to Texas. So this is a little bit unfair advantage to Bridget, but we'll, we'll, we'll roll with it.
Donovan: It's all
Brendan: Uh, all right,
Doug, hit him with the last question.
Doug: All right, Bridget, which Texas river is the longest?
Bridget: The longest is the San No, the Rio. The Rio Grande. Right? No?
Brendan: Brazos River?
Bridget: Oh. Is that the
Doug: We might need to fact check these, the answers to these questions.
Brendan: I've been, I've been to Texas like once, so I don't, I'm just going off, I'm going off the sheet. I don't really know. Alright, I think we had a winner. Bridget, you are the, uh, the resident Texan. Congratulations to yourself. thank you guys both for, uh, Jumping on the podcast with, with Doug and I, the webinar shared a ton of really, really good information about Texas.
We wanted to bring our resident experts on Texas onto the show to talk about it. appreciate you guys joining. And before we sign off officially, Bridget, where can people get in touch with you if they want to learn more about our offerings on the loan side?
Bridget: do you guys like drop my contact link
or something below? Okay. Yeah, or hit me up on Instagram be underscore Tyndall, feel free to call me with any questions or investment inquiries
Brendan: Awesome. Donovan to you. Where can people learn more about you or get in touch with you if they need to?
Donovan: Yeah, I mean, our, our loans are available for any credit investor to see on upright. us. But if you have any questions, just shoot me an email at donovan. adesaro at upright. us and we'll get in, get on a phone call.
Brendan: Awesome. And Doug, a special thanks to you for jumping in as a, as a last second co host, appreciate you coming back around and, uh, letting Duke and do his thing down in Columbus and hopefully drumming up some
business for us today.
Doug: Anything I could do to help. Thanks for having me.
Brendan: again for tuning in to this week's episode. Make sure to let us know what you think or write in with specific suggestions or topics for the show at podcasts at upright. us. And a special thanks to Doug for stepping in to co host today to learn more about the housing market. Check out our past episodes, wherever you enjoy your podcast.
Doug: And make sure to like and subscribe to Real Estate Investing Unscripted, so you don't miss out on any episodes, and leave us a five star review if you like the show.
Brendan: Flawless execution.
