Subscribe:
http://thealternativeinvestor.libsyn.com/rss
Visit our website:
https://carolinahardmoney.com
YouTube Channel:
https://www.youtube.com/channel/UCYzCFOvEt2n9TchgECLwpww/
Facebook:
https://www.facebook.com/CarolinaHardMoney/
Listen to our Podcast:
------------------------------------
Bill Fairman (00:03):
Hello everyone. It's bill Fairman with Carolina capital management. We are here, live at Charlotte Douglas airport. And if you want to know why we are here at the airport, stay tuned right after this, we'll let you know. Greetings everyone. I'm Bill Fairman, Jonathan Davis, right next to me, Wendy Sweet. Sorry. You're below us. But not really. Just on the screen. This is the Active Income, Passive Wealth show. We are Carolina Capital Management. Our website is CarolinaHardMoney.com . We are lenders in the Southeast. So if you're interested in borrowing money, click on the apply now tab. If you're an investor looking for passive returns, then you can click on the, what is that called? Accredited investor tab!
Bill Fairman (01:04):
That's a good name, Bill.
Bill Fairman (01:04):
And now, I'm still drinking coffee. I haven't started with the other types of beverages yet. Don't forget to-
Jonathan Davis (01:18):
You'd be wrapping the show quickly.
Bill Fairman (01:18):
Don't forget to like share and subscribe, hit the bell, all that good stuff with our show. If you have any comments or questions, we have a comment section either to the right side of your screen or underneath, depending on the platform you are viewing us from. Welcome. Welcome. Hello everyone.
Wendy Sweet (01:34):
Hello.
Bill Fairman (01:35):
They can't say hello back and I have to wait for you guys.
Jonathan Davis (01:38):
They can't but I see Steve over there. He says he's got us now. So I think he's seeing and hearing and [Inaudible].
Wendy Sweet (01:46):
Awesome. You know what? This is the anniversary, you know what this is the anniversary of? One year ago, we were going to the same event, which is the trusted advisor event for Freedom Founders and I call this our mastermind on steroids because we're actually masterminding with other trusted advisors that are also members of this Freedom Founders. So last year, if you'll remember, it was pre COVID, you know, it hadn't really come out yet and they gave us a headline to deal with. They gave us a great exercise and said, if you had a newspaper at your door this morning and it told you that your company was gonna was losing 50% of its value, 50% of its income going down 50% and what would you do? We sat there a little dumbfounded. I don't know, you know, that can never happen and you know, what would we do? And we did a full exercise on what we would do when we came up with steps. You know, we did, you know, this is who we'd keep. This is who we'd let go. This is how we would communicate our lenders to our borrowers. This is how we would change our loans. This is, you know, we'd hoard cash. We just had a list of like 10 things that we would do and we did this as a group, all coming up with how we would handle it. And literally 30 days later, what happened?
Jonathan Davis (03:16):
Yep. And how valuable that exercise was, you know, not so much for the answers that we, you know, fumbled together in that group, but it was to get your thought process in the place where it needs to be and, you know, because of that and Bill sensor me, if you need to. But because of that, we returned above preference turns in our fund all year long, we have more liquidity than we've ever had. We're not leveraged in our fund.
Bill Fairman (03:51):
Before you, it go any further, this is for educational purposes only,
Wendy Sweet (03:59):
Disclaimer, disclaimer,
Bill Fairman (04:01):
Your investment may vary. I'd say your, your mileage may vary. You must read the PPM before any investment and consult your attorney before do. Go ahead.
Jonathan Davis (04:16):
Right. We returned above pref the whole year and it was all-
Wendy Sweet (04:21):
Pref means preferred return.
Jonathan Davis (04:23):
Yeah. And it was all cash distributions. And we are not leveraged. So we, you know, the only people that we had to pay were they investors.
Wendy Sweet (04:34):
That's right.
Jonathan Davis (04:34):
And hopefully a little bit of it. We got to pay ourselves. So that was nice too so
Wendy Sweet (04:39):
Well. And we tightened our loans up. We never stopped lending. We tightened our loans up, meaning we lent less. We raised the credit score we were looking for. We raised the cash in the bank that we were looking for. So we tightened things up, kept on lending and really ended up doing, in fact, this past December was the best month we've ever had. It's been crazy. Now our business certainly dropped through the year of 2020,
Jonathan Davis (05:11):
April, May and June. I mean, for everybody, I mean, those are like, we're going to call them the last month though, you know, but even with that, we still finished out strong and we exceeded previous years, um, this year 2020 with a national or a global pandemic and we've exceeded profit margins and units and production in prior years.
Wendy Sweet (05:40):
It's just crazy.
Jonathan Davis (05:42):
that mindset that we took in that, in that room with all those advisors was the foundation for our success in 2020.
Bill Fairman (05:50):
And all of that is valuable. However, I think the biggest value is, you know, we always talk about, uh, return on effort and because we had a blueprint in place, we didn't run into the anxieties of figuring out what to do. We already had the blueprint, so we just had to implement it.
Wendy Sweet (06:10):
That's exactly right. And that's what was so cool about the whole thing is, you know, all of a sudden we're shut down overnight. You know, we can't go to work or employees can't come to work. And, you know, we're literally shut down overnight locked down and we were able to just be calm, cool, and collective and go, okay, here's the first thing we need to do. You know, here's who we need to let go. Here's who we need to keep. We need to start hoarding our cash, you know, making sure that we keep more money in the fund than we normally do. We need to let our lenders know, we need to be prepared for borrowers who are going to claim they don't have the money to make that payment, you know, and how we were going to handle that? So it was, it was so, we didn't freak out. It was so refreshing to be that comfortable.
Jonathan Davis (07:01):
Well, I want to make sure that I heard you right and maybe everyone else so kept more money in the fund so that meant that you probably lent less money in the fund and you still returned above pref to the investors.
Wendy Sweet (07:17):
That's right. That's right. And a lot of people can't say that we have a, of that's right to toot the horn, but we have a lot of labels,
Bill Fairman (07:28):
Not only that. We were still able to redeem folks as money that, still wanted to have money returned to them. So there wasn't a freeze on redemptions either.
Wendy Sweet (07:40):
Yeah. So chicken, chicken, bok, bok
Jonathan Davis (07:42):
So you return, money, you paid out money and you held on to more money, but you still got above your preference turn to all your investors.
Wendy Sweet (07:51):
That's exactly right. And we owe so much of that, to this incredible mastermind that we go to through freedom founders being able to, I mean, we're so blessed that we are in a inner circle of really smart people, way smarter than we are, that, you know, have been through events similar to this and, you know, they may not be lenders like we are, some of them are. Very few, but some of them are, but they're in this business, they're entrepreneurs, they're visionaries, they're people that are able to share what they've been through and help us look at things from a different point of view, because, you know, when you're in the weeds, it's kinda hard to see what's going on. But when you can stand back with other people, like can say, Hey, wait a minute. Let's look at this from a different angle. It really, really helps and that's the value of having access to such an incredible mastermind or an inner circle. Even people that, you know, were in your city, maybe you meet as a subgroup or, you know, a small little group having coffee four or five people, you know, you have to have those trusted advisors that you can bounce things off of.
Jonathan Davis (09:08):
Yep. You're right. Yeah. Experience is the best thing that you can surround yourself with. Anyone can study a market cycle in college, or right now, if you want to know study market cycles and you can consider yourself smart on what happens in, you know, in the market or when predicting what will happen. But I would bet someone who has lived through four or five, you know, four cycles and has made it through them. And, you know, maybe not always pretty, but I would bet their knowledge over in any kind of like smarts that someone thinks they have.
Wendy Sweet (09:46):
That's right.
Bill Fairman (09:49):
Some of the things you have to think about too, is this is a team sport. You can't do it on your own. You need help all of us, well, the groups that we're in, we're small business owners, entrepreneurs, you still need that board of directors. You still need people to look at a problem, or maybe some headwinds that may come your way and look at it from outside of your business to get different perspectives and that's why we're always pushing to allow the, your team within your organization as well, to be able to voice their opinions and to make sure they know and understand what the big plan is. So you can empower them to make proper decisions, but also take into account what they have to say, because it's funny, we go to these things because we get a nugget of something from everyone that we go to and there's a lot of, Jonathan and I were talking about this too, with Collective Genius. We're out there and you've got these 20 something year olds that have been out there, for gen away and some of us that are a little longer into it too and say, Hey, you can't do it that way and we're wrong. So you need to have an open mind because they have ways of doing things that we never thought of.
Wendy Sweet (11:15):
They have a lot of energy too,
Bill Fairman (11:20):
But you need to keep your mind open your team and other professionals that you surround yourself with as well, just make sure your team, you're putting together your team of people that are gonna help raise your game. You're you always want to hire people smarter than you. Don't feel like you have this, and we're always talking about the attitude of abundance, not,
Wendy Sweet (11:43):
Scarcity.
Bill Fairman (11:45):
Scarcity. Well, you can't be a micromanager and think that, you know, everything either. And the smartest thing you can is hire people smarter than you, because it makes your job a heck of a lot easier.
Wendy Sweet (11:58):
That's right, Jonathan.
Jonathan Davis (12:02):
Steve jobs said that, you know, don't hire people to tell them what to do. I hire people to tell me what to do.
Bill Fairman (12:09):
Absolutely.
Wendy Sweet (12:10):
And it's amazing. You know, what we learn when we go to these masterminds, not only about, you know, our business, but what's going on across the country and that's important, you know, we survived 2008. And one of the things that I remember clearly in 2008 is how that disaster started in one part of the country. And you could just see it going from spot to spot and how it took us over. So, you know, we were able to see what was coming down the pike, um, because of the people that we have that are in the real estate market throughout the country just seeing what was going on. And we saw that with COVID, you know, as things were really starting to shut down, different States were having different laws and different, just different things that are happening. And even now in today's market, we covered last week, we talked about the migration map, how everybody's moving to different areas. Well, you know, especially when we meet today and tomorrow, and on Saturday with this group, we're going to be able to see what's happening across the nation. We hear what's in the news, but we really get to hear what's happening. Boots on the ground, what's happening across the nation in different types of real estate.
Jonathan Davis (13:29):
Yeah and see the data. I mean, that's, you know, the, you know, people in this group that mean they provide such great data. I mean, you can hear something on the news and, you know, you don't get to see the data that supports it, seeing that data is, it's great. It let you, you know, like, Oh, I get it. Like, okay, so here's where the movement is or here's why it is or what it is maybe.
Bill Fairman (13:53):
Yeah. It helps. It's helped him. It helps to know the people that actually have boots on the ground too, because every market is a little bit different and then you get the micro markets that you're dealing with. We had a guest, Ryan Andrews, for a couple of days from he's in bend, Oregon, and most of their investments are West coast centric. And he came in to Charlotte, drove around for a couple of days. Jonathan took them out to a few properties that we were doing loans on, and he was absolutely amazed at what was going on in our area. But, you know, unless you get boots on the ground or see it for yourself, you have no idea. And that's what this provides us with. So let's talk about what they're going to talk about while we're there at this little mastermind. One of the things that they want us to concentrate on or what we think the upcoming headwinds are going to be, what is it that we think are going to be roadblocks for the next year here and a half? Jonathan, what do you think? What do you think the roadblocks are going to be the, some of the headwinds?
Jonathan Davis (15:08):
You know, red tape, bureaucracy, you know, bureaucratic red tape,
Wendy Sweet (15:16):
Ridiculous minimum wage.
Jonathan Davis (15:18):
What's that?
Wendy Sweet (15:19):
Ridiculous minimum wage.
Jonathan Davis (15:21):
Well, I mean, you know, I don't know. Every state's a little bit different to, you know, like now there's going to be New York is going to see a correction in real estate prices. For sure. I mean, everywhere is seeing some kind of, well, right now there's a lot of appreciation, but there will be a correction. And, you know, to say, like, I don't know. I mean, I guess to get into it like a universal minimum wage, I personally don't know how much since that makes given the, just completely different markets that are, have different costs of living, but I mean, someone can probably make a good point and you can win me over, I'm open on it. But, you know, that could be one, you know, the moratorium on foreclosures on evictions is definitely a roadblock that we're going to have to get through.
Wendy Sweet (16:22):
And how about when they lift that? What's going to happen with that?
Jonathan Davis (16:25):
When they lift that, what happens? I mean, do the foreclosure mills and so your judicial States, do they just get bombarded with all of these foreclosure hearings and what does that look like if COVID is still, you know, limiting how many people can be in a room or how many people can gather and then in your non judicial States, you know, do your foreclosure meals get flooded and, you know, like does, does it slow down across the board? Which probably will, I don't know. I mean, Bill, what do you see?
Bill Fairman (17:06):
I had to cough, you asked me as soon as I'm getting ready to hit mute. All right. So for me, I've seen the roadblocks being inflation. Things are going to start costing more.
Wendy Sweet (17:22):
Gas already went up.
Bill Fairman (17:22):
We just had, and that was because, the president killed the Keystone XL pipeline. So what does that do? That makes energy more expensive,
Wendy Sweet (17:37):
Job loss,
Bill Fairman (17:37):
And at the same time, you have losses of jobs, but what it makes, what's worse is the higher cost of getting the resources to the refinery. Now, those resources are still going to the refinery cutting off. The pipeline doesn't change that what it does is it changes how it gets there and they're currently using rail lines and giant tankers on rail lines and if you don't think that eventually a rail line is going to derail and you're going to have all over the place on the way to the refinery, and what you're doing is you're cutting efficiency and that is going to raise the cost of energy so you're going to have an additional tax on you with the energy costs, excuse me. So as inflation kicks in, you're going to have higher interest rates to offset that, which could, excuse me again, slow down the housing market. Now. It doesn't mean it's going to stop. What we're going to see, and there's nothing wrong with, interest rates going up in my opinion, because I think it will add a little bit more normalcy to the home prices that have been appreciating way more than they typically do over the past, I think since 1950, the average appreciation on single family homes has been about three and a half percent, and we're at seven, nine, 10% annualized right now, and that's not sustainable and it's driven that way for demand, number one and number two, the really low interest rates. So as interest rates rise, you're going to see people not able to afford as much house. And again, if the cost of living goes up as well, that's going to also have people that are only going to buy smaller homes or less or more affordable homes. And when fewer people are buying, then prices will naturally start to come back down again. I don't see them going under especially once foreclosures start hitting. I don't see them anytime soon, losing value. I see the rate of growth slowing.
Jonathan Davis (20:09):
Are you saying that interest rates are gonna rise this year? Or are you just saying that's a roadblock in the foreseeable future?
Bill Fairman (20:14):
I don't have a crystal ball. I have no idea, but the ball has already started to roll because we're automatically right now making energy costs higher. What is the energy costs due to the average person? It's an additional tax, right? And guess what, energy costs are not figured into the rate of inflation,
Jonathan Davis (20:35):
They're not.
Bill Fairman (20:35):
Food and energy are not included because they say it's too volatile. So they don't include it. So that's kinda where I stand. I just see more regulation means higher cost of goods. And, eventually that's going to start bringing the value of properties down. Now, that's not, again, that's not a bad thing. The only time it's a bad thing is if you're the seller and it's your primary residence and it's your, your income investors don't really care that much about that. Yes, they'd like to get as much as they could if it's a fix and flip, but your reputation in a fix and flip, if you're priority for cashflow, you don't care. The house doesn't care how much it's worth. You're just worried about the cash flow part of it, right? So that shouldn't be a.
Jonathan Davis (21:24):
[Inaudible] finances.
Bill Fairman (21:24):
Right.
Wendy Sweet (21:27):
You know, that I think is great too is we get to go to this event, we've come up with some roadblocks that we say, but when we get in this group with these really intelligent people from other parts of the country, they're going to throw out some roadblocks that we haven't thought of and they're going to bring them to the forefront and when we get back, we're going to share it with all of you and let you know what we've learned. So you two can be prepared for what's coming down the pike because, you know, none of our crystal balls work anymore, but history tells the future and when we see signs, we really need to look back at history and see how things were handled and how it worked out.
Jonathan Davis (22:11):
Here's a great way to tell the future in a very opaque way, but does.
Bill Fairman (22:17):
So, and what we expect in return for giving you this information is that you can donate to the Fairman foundation for our travel and our membership fees. All right, well, let me leave you with this. We are Carolina Capital Management. What is it that we can do for you? On the lending side, we lend money for fix and flip properties in the Southeast. We also do ground up construction for many properties in the Southeast. If you're a buy-and-hold customer, we lend money on acquisition and fixing up of a investment property that needs to be ready for rent with your exit strategy strategy of refinancing it and getting cashflow from it on the commercial side of things, we do value, add loans on a smaller, and I would say under $3 million, multi tenanted properties, such as multi-family self storage. So we'll do value, add bridge loans as well. On the investing side, we sell notes. So if you're looking to put your money to work, we have loads to sell. And if you're an accredited investor, we also have a 5060D fund. Again, this is not an offer for purchase or sale. This is all strictly educational, but in return for all this great information, you can still donate to the Fairman, I'm just kidding. Our website is CarolinaHardMoney.com. If you're interested in borrowing money, you want more info on that, click on the apply now tab, if you'd like information on our fund or purchasing notes from us, you can click on the accredited investor tab. Don't forget to like share, subscribe, hit the bell. Did you guys have anything to add before I close it out?
Wendy Sweet (24:12):
Check out in the chat are the cashflow expo.
Bill Fairman (24:15):
Oh, yes. Thank you for reminding me. We're going to be in the cashflow expo, February 18th and 20th. I have no idea when we're going to be on there yet, but there's between 25 and 30 speakers and there's a link here in the chat to register for that event.
Wendy Sweet (24:35):
That's less than a hundred dollars.
Bill Fairman (24:35):
Less than a hundred dollars and the a hundred dollars, the $99 ticket fee and you can get early bird for less than that. And you get the recordings for the two days as well so sign up there and Wednesday with Wednesday. Right?
Wendy Sweet (24:52):
That's right. And that's we're in the cat as well.
Bill Fairman (24:55):
So we have a link for setting up a time to speak with Wendy again, free of charge, but you can donate if you like.
Wendy Sweet (25:01):
And let Jonathan answer that question about the LTV on commercial.
Jonathan Davis (25:05):
Yeah. It looks like Arthur asked a question LTV. So it depends.
Bill Fairman (25:11):
The attorney answer, it depends on what kind of commercial property it is.
Jonathan Davis (25:15):
So, so we, when we do a lot of repositioning loans, which has a value add component, we can lend up to 90% of the purchase price and a hundred percent of the rehab assuming that we are at or below 70% of the stabilized value. So if you're looking for bridge loans, we're probably not going to be the, like a bridge loan to cover you on a commercial loan. We're probably not going to be the best fit for you, but if it's a repositioning loan where you're doing a value add, I don't know too many people who are more competitive on that than we are.
Bill Fairman (25:55):
Right.
Wendy Sweet (25:55):
That's right. Awesome. Thanks.
Bill Fairman (25:58):
Don't come to me with a hotel though,
Wendy Sweet (26:01):
Or gas station or a hotel
Jonathan Davis (26:03):
Come on, covert a hotel into a multi-family. Right?
Wendy Sweet (26:06):
That's right.
Bill Fairman (26:09):
All right. Folks. It was a pleasure, sitting here in the airport, talking to you guys, and I apologize for the stream, if it froze a little bit on you, because again, we're broadcasting live from the airport. We don't have a direct connection into the internet. We're using wifi. Have a wonderful week. We'll let you know, uh, how everything went with our meeting this weekend on the next show. Have a great day. Thanks.
No comments:
Post a Comment