Epic Real Estate Investing - EREI 065: Richard Haynes, the Shifting Market and What You Need to Know

Episode Date: September 15, 2013

Matt is joined by long-time friend and expert real estate investor Richard Haynes of Southern CA to discuss how his business has drastically changed since his last appearance (EPREI #19 & 20), why it changed and what's going to continue to make it change. Real estate is a moving target and you don't want to aim where the target is, but rather aim where it's going to be. On this episode you'll get valuable insight on how to preserve the future of your business. If you havne't done so already, download Matt's free course "How to Do Deals: No Money Required" at FreeRealEstateInvestingCourse.com If you don't have an Internet presence and you need the tools to capture the information of motivated sellers and all cash buyers, go to EpicRealEstateWebsites.com If you don't have a buyers' list yet, you can borrow Matt's private "all cash" buyers' list at EpicWholesalers.com To your success! Learn more about your ad choices. Visit megaphone.fm/adchoices

Broadcasting from Terrio Studios in Glendale, California, it's time for Epic Real Estate Investing with Matt Terrio. Yeah. Awesome show for you today. Welcome. Hello, and welcome to another episode of Epic Real Estate Investing where I show people how to get out of the rat race using real estate. And it all begins with just a simple shift in mindset, a shift in focus. Simply stop focusing on creating piles of cash. and start focusing on creating streams of income.

What we like to call here in the real estate world, we call that cash flow. And I created my financial freedom in less than four years. And I created a free course for you to show you exactly how I got started, to show you exactly how if I were to do it all over again, how I would get started all over again. And you can access that free course at free real estate investing course.com. Free real estate investing course.com. Okay.

Hey, today I'm joined in studio by a very good friend and expert real estate investor. He has appeared on the show before. In fact, we had to split his last show into two shows because there was just too much good information shared during that interview. And, you know, I'm not sure if we'll be able to duplicate that. It's a tall order, but we're going to do our best in the studio, ready to rock, ready to crush it, Mr. Richard Haynes. Richard, welcome back to the show. Matt Terrio, thanks for having me. Really excited to be here.

Me too. Super excited. You know, this is quite possibly could, we could have an entirely different conversation today than we had last time. You know, the market is quite a bit different now than it was when we last spoke, isn't it? It's definitely a lot has changed. It's not your standard real estate market anymore. It's more like the stock market getting changed in every few months or so. And we're going to get to that absolutely in detail. So to refresh everybody's memory, you know, about two years ago when you were on this show, What was your main strategy then and what did your business look like then?

You know what? Our main strategy then, it was quick flips, flipping stuff as fast as we possibly could. The market wasn't white hot like it is today. It was something where you wanted to get your hands on it and get rid of it as quickly as you could before a bad comp came through the market. I see. So today it's a lot different. It's moved to where you can't find deals anymore.

all and you're actually okay if you hold on to it a little bit longer. So a lot of different strategy when it comes into that. Right. So, you know, when you were flipping and you're going to flip fast, you were, what area and what type of properties were you looking for? What were you basically focused on then? That's a good question. You know, with the quick flips. I have more of them, by the way. You have more one? Good questions. Oh, good questions. Of course you do. So, you know, the, where we were focused on and how we were doing it were the trustees sales. I think we talked about that, bidding with cashiers checks, purchasing right on the spot, didn't take a long time.

And we were focused on the low to middle income areas, areas where it was pretty much lipstick on a pig, everything was the same. You'd buy the same three-bedroom two-bath house, you'd do the same fix-up, contractors would know what you wanted and you went in in a month and you were out and hopefully had it in escrow two weeks after that. And the reason why we did that is because FHA was the only thing that was working right then. People were having trouble qualifying with conventional or jumbos and there just weren't comps for there.

Anything in the low to middle income areas, you could get appraisals because it just couldn't get any lower. And you had people where it was like, oh my goodness, I can buy. and it's cheaper for me to have a mortgage payment than it is to rent so you could move this stuff and that was really what was working back then. Got it. So bring me up to speed now. Fast forward.

How are you acquiring your properties now and what areas and what types of properties are you looking at? So today how we're acquiring our properties is we have to work a lot harder. We used to be able to go to the MLS two, three years ago and say, I like that one, I don't like that one, and you could choose whatever you wanted and you made an offer and you got it. Today, you got to work a little bit harder. You got to slide in on a short sale that's falling out of escrow. You have to have a really, really good connection to an REO agent if they are even getting Rios anymore.

Or you have to be on track for inside deals or you have to do direct mailers and talk with sellers directly and do that grunt work that pretty much. no one else is willing to do to dig up deals in today's market. Additionally, the hedge funds and all the other investors and all the positive news in real estate now has driven up the prices in the low income and middle income significantly where they're buying it for cash flow. So we aren't even playing in the low and middle income game anymore. We've actually moved to the higher end homes. We've been flipping million dollar plus homes because of just the market forces and the way hedge funds and people buy for cash flow, you can't buy high-end homes and cash flow it. So there's a little bit less competition. And there's now buyers out there to buy that stuff.

Got it. Okay. So what were some of the signs that you saw in the market that suggested that things are or are about to be different? Was it gradual or was it immediate? So it was gradual on the fact that. that we were getting our butts kicked at the trustee sales and not being able to do it. And we went from being able to buy two or three properties a week to maybe one every three weeks.

And it was gradual that way. But in real estate terms, it happened rather quickly, you know, six months where like this just doesn't work anymore. And as that, you know, I heard a great investor one time who ended up selling, he was a big apartment investment manager, like a couple hundred million dollar fund. And he sold all of his apartment buildings in 2006 except for two. And he said, it wasn't that I predicted the economy would go down. I didn't predict that the credit crisis was go down. He goes, it just didn't make sense to buy anymore anywhere. And he goes, so we became sellers.

And with the middle income and low income game buying and flipping, it just didn't make sense to buy anymore and flip. So we sold that idea and we said, well, no, look, there's still some pretty ridiculously good deals in the high end. And what we saw were is there's a lot of wealthier individuals, you know, vice presidents at companies in Los Angeles that live around the beach cities that make $200,000, $300,000 a year, but they're just building their balance sheet. They've maybe got $300, $400,000 in the bank.

They can buy a $1.5 million home, but they can't buy a $500,000 fixer, scrape it, and build a brand new home. They need the finished product and they don't have the time nor the patience nor the experience to put in the house like that. So we saw kind of a niche there that wasn't being fully served and went after it. Awesome. Awesome. So just to be clear, everybody that's listening, Richard is operating in the Southern California market. That's exclusively right now, right? Yes. Okay. And you have moved from a lower income area to more of a luxury type home area, right? Correct. So when you make that shift from one type of neighborhood to another type of neighborhood,

how do you, how do you, I don't know, maybe how are your conversations different? How have your resources had to change? It's actually changed a lot. The main principles of investing are still there. But the differences of getting that finished product or your, you know, your completed house is a lot different. Really the same rule that I apply to when doing these flips is you make money when you buy. If you buy it at the wrong price, I don't care what's going on, whether you're in low income, middle income, luxury or super luxury. If you buy it wrong, you're going to get hurt no matter what you do.

So that principle still stays in place with the luxury home flipping, with these million dollar home flips, they end up taking a long. time because you can't necessarily buy a house that's lipstick on a pig because someone else who's a retail buyer will buy that and they say no it will put 50 or 70 grand of our own money and it'll be a great house in this market you needed to add square footage or you needed to build brand new it was more like urban infill so you go to areas where there's you know one one and a half two million dollar homes around the beach that are 2,000 3,000 4,000 square feet and right next to it's an old 1940s, 800 square foot two bedroom one bath home that needs to be brought up to its highest and best use.

So rather than looking at a thing where you go, okay, this house is going to cost me five grand for a bathroom, this for a house, and the low-income areas, now you're going, you've got to have a really good contractor who knows high end, who can look at stuff at price per square foot because you're going to be adding 50, 80 percent more square foot. a second story or maybe even building ground up. So you got to have a whole other set of tools in your toolbox to be able to come in and write your numbers out properly. Right.

So definitely different contractors that you have working with now than you were before, correct? My low-income contractors, get my low-income deals, my high-end contractors, they are completely different, they both have completely different skill sets. I don't call one or the other unless it's a deal that's up their alley. Got it. So when you find a deal, you know, you're working a lot harder to find your deals and you found one and you submit your offer, you get it accepted and you're ready to start breaking ground with your contractors. Do you have multiple contractors or you just have like one guy that you like to work with?

How does that process work? Because I know the materials are much more expensive. There's a broader range of what you could use and some might, you know, show you a good profit and others might, you know, break you. Right. You know, for my first deal, I actually just got a bid from one guy, but he was a younger guy around 28 with a great resume. And he just had a really good eye for high-end luxury flips, and he really had no investors, and he really wanted to get in with an investor. So I went around, and after he gave me his bid, I shopped it to some other luxury flippers that I had networked. with and they were going, holy moly, that's a great price. So, you know, I didn't necessarily have bids going against him, but because he was there

and spent 15 days during escrow going over every single little detail with me, I felt confident enough in working with him. And he was just, he was a sharp guy. So I don't recommend that route, but I definitely double-checked his numbers. Another thing that allowed me to go forward with him is he was willing to be able to put his balls on the line and wrote a fixed contract. So there's a lot of contractors out there who will write, for instance, the deal that we did was about $410,000 of a construction contract. Most guys will give you a bid, an estimated bid, and then they will give you change orders,

and that's where they make their money. A lot of the old gray hairs who have been the contracting business for a long time, they give you a bid, and then you get change orders. Well, we thought you wanted this and then you went with that and that's more expensive so we got to do a change order on this. This guy, even without engineering and soil reports and things like that, put his balls on the line and in the contract, if he went over, he would have to eat it. Nice. So that really gave me some confidence that this guy wanted to grow with us and do a good job for us the first time so that he could get more business in the future.

submit the bid and we submit our offer based on that bid because that kind of dictates what price we can purchase at. And, you know, if it goes over, it's up to them. They got to take care of it. Exactly. It's a great way to do it. It's a good structure. And I would highly recommend that to anyone that's looking at working with contractors for the first time to suggest that and, you know, almost, almost demand it. Sure. There are plenty of contractors out there looking for work and you can get those terms. Absolutely. Awesome. So basically what I'm hearing is, you know, you just, it's the same as any business. You just have to be in touch with what the customer wants.

And you've just started serving a different customer. Correct. It was really just an underserved customer. And the beauty of it was is that, in my opinion, luxury tends to recover a little bit later in the cycle as a low end and the middle end start recovering. People start reading about that. and the luxury home buyer starts feeling a little bit more comfortable. So it's really just a whole new customer.

If you've ever fixed and flipped before and you're focused on the middle and low end, it's a whole different game because now we bring in interior designers, high-end stagers. You're looking at fixtures where you go, oh, buying some knobs at Home Depot for 50 cents a pop that we're going to put in, you know, this low-income house. That doesn't work anymore. You know, you might have an $8 knob that you need to put in these things. And they really do make a difference.

I never thought, you know, I went from going to a stove slash range that I pay 500 bucks for to a Viking stove that cost me $12,000. Right. And I'm going, really? Someone going to pay 12 grand for a stove? And the more luxury comps you start looking at, you see the houses that don't have a Viking stove in it. Yeah.

Don't sell for as high. And so it's those little things that you have to pay attention to, and you have to have a fabulous team with a good eye. Because on a luxury flip, you could have all the right things, square footage that match up with that sale that you're trying to get. The location's the same. And if you screw up on the fix-up and the decisions you make, you're dead. You lose big. Right. Right.

So as you shifted and you started noticing these little nuances, I know the market that you're investing in, where I was actually a real estate agent. So I understand the Viking and the Viking appliances. I understand that the sub-zeroes and stuff like that, and that did add a significant value to the property, at least the emotional value. So when there's motion involved, people like to spend more money. How did you, you know, you're so used to purchasing, you know, 50 cent knobs. And now what kind of research or what kind of education did you go through for yourself,

did you put yourself through to discover that, you know, no, I need to buy $8 knobs? So it was really, you know, you look at it and I hate to say it, but it's almost common sense because if you walk through a low-income house and you walk through a high-end house, there's a difference. You can just tell by the cabinets. You know, you go into a lower-end house and it's just they're pumped out on a machine, they open, clothes, they kind of stick some places. In the higher-end house, you open it up, it's smooth. You push it forward. It's got that soft clothes. You can feel the difference.

So if you're going into a high-end house and going like, hey, I can put in what I put in this low-end house, then real estate investing is probably not for you. You might not have that knack. I think most people do once they get over the feel or the fear of doing their first couple deals. But it's really just going, look, you can feel the difference of some of these products. and it's really just that. And then you lean on your contractor to educate you because you go, all right, we can go with these really nice custom windows or we can go with these mill guards

and there's a huge price difference by like three or 400 percent and windows are expensive. Right. And you go, well, no what? Do people really get windows? Do they not? Does it still look the same? And those are the decisions that you have to make to save money in certain places.

Cool. So as you kind of open saying this, that the basic principles of real estate investing are still intact, regardless of which market. And it's still just a math equation. You know, you got what you bought the property for. You got what the repairs or rehab is going to cost. Right. And then you carve out all the expenses of the transactional expenses. And then you carve out your profit there.

And then boom, that kind of gives you what you think you, what you're in it for. And then you just subtract that from, I guess, what you think you're, you're in it for. from, I guess, what you think you could sell it for, right? Exactly. Basic. It's the same thing. Got it. And I kind of want to put that out there because, you know, you can add an additional

zero or two to the properties that you're purchasing, and all the principles are exactly the same. Yes. Perfect. Perfect. So this shift in the market, I want to talk about this a little bit, because I know you do a lot of research. You do a lot of reading.

You're a follower of Bruce Norris, a very recognizable and notable economist. here in Southern California. What's going on right now? Let's let's back up just one step or two. What led to this shift in market conditions over the last two years? And then what does it look like right this second? Okay.

That's a good question, and it's maybe you've got to give me a little time to answer it. Sure. What led to this market shift was not only investor buying, but there's also a lot of, of manipulation in the market. Okay.

If you look at the numbers and Bruce Norris, you know, I got to cite him on a lot of things that I'm saying, but if you looked at the amount of foreclosures or homes that were in default that should have been foreclosed upon, it's unbelievable how many weren't. You had a lot of the banks and the government working together to hold back those foreclosures. You read those stories of saying someone's been their home for 500 days, 600 days. That wasn't a mistake. Without making a payment. Without making a payment, right.

In foreclosure, it's because the banks didn't want to take a hit. And if they absolutely took a hit and foreclosed on every house that was underwater, every bank in America would be bankrupt and gone today. And real estate could have literally gone to zero. It was that bad. And so they didn't foreclose. Markets been manipulated by low rates. The banks are starting to sell a lot of their defaulted paper to note buyer. So things that should have been foreclosed upon are now getting purchased by outside investors, and they go back to the homeowners, and they rewrite the paper.

And these people may have had $400,000 mortgages, and now they have $250,000 mortgages. So something that should have gone to foreclosure to a trustee's sale buyer or an REO and then back into the market is now getting rewritten. And you have people who borrowed way too much that are now with a great mortgage at a low interest rate. and the guy who bought the papers making a killing off of it because he bought it for 30 cents on the dollar. Right. So anyway, go ahead. I was just going to say so that the investor is going in the backdoor and buying the note on the property instead of the property itself, yeah, it doesn't make the headlines.

It doesn't create the panic and it doesn't drive the properties down to zero. Right. Right. So it's preserved everybody. Yeah. So you've taken away all this supply. and you've taken away people wanting to buy homes for the last three or four years. So this pent up demand, there's been no building.

And then you've got hedge funds and investors like myself eating up all the other properties. And what do you get? You get a one and a half month supply in Los Angeles County. And that's why we're going up. And as long as those factors are at play, you're going to have low supply and prices are going to go up. Right. So do you still think that's happening right now? Yes, I do, because as you have prices going up, you're starting to see people come out from being underwater.

They can sell their home now and not get a ding to their credit. Now, this isn't for sure, but if they've been able to hold on to their home over the last five or six years and moved up in their job, they're starting to make more money. Their investments have now recovered in the stock market, and that's a whole other topic. I mean, if you look at the stock market was almost at 6,000 back at the depths of the recession, and now you're at 14,000. So you have people who their portfolios have more than doubled over the last few years. Everyone's feeling more wealthy, et cetera, et cetera. There's just a lot of factors that are driving this market, and it doesn't look like it's going to stop for a while. Right now I'm looking for a specific tweet that I saw this morning.

and it cited that um guys c m yates do you follow him i've heard of him before i do not follow him okay uh he he posts every 30 seconds so it's like he's hard it's hard to to track down what he posted but he did post a a tweet this morning that was a headline about um

the housing recovery might not be what everyone is thinking it's going to be and it was the first piece that I really saw from the media, say, in the last year and all of the economists out there that are predicting the market and everything, that where it was like maybe it's not. And that's kind of where I have stood the whole time was, and he decided two things. I'm trying to find this so I can give you the other reasons because I never even thought of these. But my first one was talking about employment.

And, you know, the unemployment, it seems like the media really is, or a lot of the media has the back of Obama. and they want to show that he's doing a good job and he's adding jobs. And when you start looking at that and dissecting the actual numbers, it's not really the case. We haven't really added a whole lot, regardless of what the numbers are done. Or we go three or four months up and then we lose it all in one month type thing. And then the other thing was talking about interest or not interest rates, but, you know, the ability to get a home loan. It's still very challenging. As low as the rates are, as great as they are, you know, the housing market absolutely would recover if more people could get

access to the money, right? So, you know, out there, you're in the real world. How do you see those dynamics coming into play? So the thing that I think is a big factor, and it's not the only factor, but is housing affordability. That's a number that really sticks out, and it's another thing that, you know, we referenced you got to cite Bruce Norris on. And he talked about how in the worst part of the recession, affordability was at a 50% of a few. which was never heard of. It was crazy. And now I believe we're down to a 36.

And what Bruce said is that a 36 is back, goes back to the last time we were at a 36 was in 1999. So right at the beginning of that up cycle. So even though employment maybe hasn't recovered quite as much, people can agree that it's starting to slowly get better, maybe at a minute place, or at least we've at least cut the jobs from being cut anymore, and we're kind of just bouncing along. If you're at a 36 and at 1999, I look at 99, 2009, 2,002, that's as the market just started to go up. And then in 0405-06, it was fueled by crazy lending standards that allowed to push it to bubble territory. So I look at it and go, if you've got affordability, even with not so great employment, we still have some

room to run. If employment doesn't get better as affordability starts to go down, down, down, then we've got ourselves a problem. And then to your point about the loans and saying how hard it is to get loans, I agree. If you don't have over a 700 credit score, you're going to have a real tough time getting a loan these days. Even the credit score is not sufficient, though. I mean, it's just a portion of the equation. There was a time where the credit score was all that you needed to get approved. And now the debt to income ratio is looked at with such greater scrutiny. Well, and actually, as how hard it is now to get a loan, I think that's another argument as to why the market will still go up. Because lending can't get any more difficult than it is

today. Right. And so what I'm starting to see is, and normally what gives you the cue is how many emails I start getting from hard money lenders. And how many hard money lenders are going, oh, we'll finance your non-owner-occupied investment property 90% at under 10% for a couple of points where I'm, where was that two years ago when we really needed it? So lenders are going to start loosening their standards because now that real estate's back, lenders are fighting over each other for loans. And if you can get 10% return on your money as a hard money lender, and you go, well, I can lend 90% and the market's going to jump 10% next year.

I feel pretty comfortable. So as that starts coming in the market, lending's going to get easier. It may not come from Fannie, Freddie, or FHA, but we're going to start seeing private money, I think make things a little bit looser for us and you're going to start having people buying properties maybe at 8% interest rates,

but their debt-to-income ratio doesn't have to match up. Right. Good point. Good point. I found this article. It's on NPR. are posted today August 15th. And if you want to look this up, the title is pent up demand is boosting home sales,

but can it last? So that's the whole article, but I'll give you just the bullet points. They talked about, and I've heard about this a lot frequently, and I'm not sure exactly how it's going to affect home sales, but they talk about one of the factors that might, you know, stifle the growth is bloated student debt. I'm not a big economist. I don't understand how all that works. But that's another thing.

Declining birth rates. I think that would have to take, since we had more babies born in 2007 than ever before, that declining birth rate, I think, would have to take a while before that really affected, I would think, unless they're just speaking of families growing and their need for a house. But I think we have enough demand here walking the earth to fuel us for quite a long time. And then it talks about elevated unemployment. They actually just say it's elevated. It's not improving at all.

Tight credit. And then here's another thing. This is also very interesting. Changing attitudes about homeownership. People are starting to notice that maybe owning a home is a little riskier than, you know, what they were raised to believe. Any notice, I mean, you're a younger generation. And, you know, I know you're still in touch with your college circle and your network. You have a large group of friends.

Have you heard any kind of conversation like that that would lead to think you, that attitudes about homeownership were changing? What I'm finding is, is my echo boomer generation, as they like to call us, is delaying homeownership. So I don't disagree with that at all. And I think it's going to take a while for the echo boomers to impact the market. But what I am seeing of my friends, you know, people don't get married as early these days. But of my friends who are getting married, they want to own a home.

That's the next step in their life. So I think you're going to see a delay from Echo Boomers, whatever, you know, the projections of our saying, oh, they should start buying in their mid-20s. That might happen in their early 30s. So that's not a huge concern to me. I do think attitudes have changed about home ownership where people are happier to rent, but you've still got so many people that were foreclosed upon or kicked out of their home that are now renting who still want that American. dream. They're going to recover just fine. And they're going to want to go out and buy a home that was cheaper than when they bought it back in 2006. So it's hard for me to project because I'm not an economist. I'm not a, you know, I'm not a demographics guy. But to me, L.A. and the United

States is just too good of a place to do business that we're going to, I think it's too hard to see falling demand. Right. Right. I actually think that too. I think about NPR, you know, who their listenership is. It's a little bit more of a liberal listenership. You know, I think you and I come from the world of capitalists and conservatives. So, yes.

You know, regardless of how fast or when the market is going to recover, I think we both are in agreement that it will, right? We agree to agree there. Sure, absolutely. Absolutely. And, you know, I think there's a window of opportunity for us to seize

because even if we've experienced some decent amount of recovery or at least measurable recovery in the last year or two, still, the conditions right now are better than they've been in a really long time to start acquiring real estate. Absolutely, right? So I know you're, I'm focused a little bit more nationally. You're very focused here in Southern California. How do you see the California market, or have even thought about it, how you see the California market affecting the rest of the nation? Or are they completely separate? you know what i think the the nation it's everything is so interconnected these days you know the world

is flat well you know the united states is flat um california you know from what i've read in the past because i'm not you know a guy who's been through a lot of cycles but it used to boom and bust on its own now that the mortgage market is securitized and run through wall street everyone kind of plays by the same standards and hedge funds are going after properties in L.A. to Buffalo, to Memphis, you know, to Texas. So I think we're going to see real estate rise and fall, but I think you're going to see California bust the worst and bubble the most out of all of them. And that's why I like to play in the market for appreciation. For cash flow, I think you're going to see California start affecting markets that you work in because you used to be able to get cash flow back in 2010

if you were willing to get your hands dirty and a lot more active management in California, which sometimes is scary. But as the prices rise in California, the prices in the Midwest and the regions that you work in, they've been recovering, but not at a crazy pace. And if California is starting to go nuts at a crazy place, those other markets are still going to follow. So I still think it's a good time to get into the Midwest because you can still get that great cash flow and you still, I think, have room for appreciation that hasn't started to take off yet. Right, right. And the other thing I like about the Midwest and the South, and I actually

want you to ask this question about California since you're doing so much building. The reason I like the Midwest and the markets that we're working in is because we're still purchasing at about 50% of replacement costs. Are you able to, here in Southern California, are you able to build new and sell for a profit yet? You, well, if you're talking about big

subdivisions and brand new housing, you know, developments, maybe. That's not really my expertise. If you buy a deal in what we call urban infill where you've got the big mansions by the beach and then an old beach home, you can

build, but it's very competitive. With what you're saying, because I don't know the Midwest markets as much, if you're buying at 50% replacement value, it's a no-brainer. It's an absolute no-brainer to me. As long as you've got a city that you're confident in the economy, I don't know anything about Detroit, but I know three or four years ago, it went down and people got hurt, but then there's other Midwest markets like a Kansas City or a Memphis that have strong economies or I've heard good things about North Carolina, whatever. I'm just throwing

cities out there. If you're buying below replacement value, when that market fully recovers, you will sell your property for replacement value plus land value and you're going to make a good amount of money. Will it happen as quickly as California? Will it go as high as California? No, but if you want a safe, steady investment, buy below replacement value. I mean, it's a no brain. You could buy below and replacement value in California in the depths of the recession. That is gone now, and I was going, man, I wish I bought a hundred times more because it's incredible when a market goes back to normal and building becomes profitable again. That's when you bought below replacement value, you just doubled the value. If you're buying at 50% replacement, you just double the value.

At least. At least. Absolutely. Absolutely. Cool. So that's why I was kind of curious because, you know, one of the indicators, one of the, you know, I guess the measurements or the headlines that I'm really looking for is to really notice when. new home builders start entering the market again and when they start to start to build again and you're seeing that you're seeing housing starts up 18% housing starts up 12% um but if you look at where they're

measuring that from you know here in southern california this is actually from bruce norris and forgive me if i got the numbers wrong but i'm going to get the principal correct is that last year there were only 10 new homes built and if it's up 18% this year okay so there were two more homes built exactly it's minuscule yeah exactly so it's nothing to get all excited about yet, but, you know, it would appear that it's moving in somewhat the right direction, and that window would be closing slowly, is how, that's what I'm deducing from that. There's not a lot of supply being at it. Right.

Exactly. Right. So, yeah, awesome. You know, Richard, right now with your business, I'll give you this opportunity. There's a lot of people listening. We are now the number one real estate investing podcast on iTunes. Mr. Real Estate Radio, big upgrade from the last time I was here. This recording studio is unbelievable, Matt.

Thanks, but it's nice. And you look good over there in your headphones. Thank you. So do you. Anyway, you know, is there anything specifically that you need or want that you'd like to throw out into the universe? Well, you know, I mean, the thing that we're always looking for are flips. And in today's day and age, I know you educate a lot of people on this show on wholesaling and digging up deals. I know personally you've dug up wholesale deals and you've even.

wholesaled me a deal that we bought. You know, so what I'd be looking for, and if there's any, you know, first-time real estate investors out there, you know, wholesaling tends to be a place where you get started and make your first kind of massive income. I'm looking for luxury flip deals in L.A., the beach cities. If you've got a great deal that you've dug up that could use some value add with square footage or I could scrape and build a brand new home to flip, talk to me. I've got a couple million bucks I want to spend right now and would love.

another project so and hopefully uh you know someone digs up a great deal and we can we can make them a lot of money as well awesome and so if they should find such a deal yeah how would they contact you you know what they could go ahead and uh call me on my office line that's awesome 310 get your pens and paper ready 379 1724 310 370 1724 give me a little time to get me a little time to get back to you, but if you've got a good deal, just let me know the area that it's at and any interesting details that you think I need to know. Beach City area of Southern California, L.A. County area, that's really what we're looking for. Got it. Super. Well, thank you, Richard, for taking time out of your busy schedule and sharing your words of wisdom with us.

Thanks for having me, Matt. This is great. Yeah, it was a pleasure. So if you happen to have a question, comment, or concern that you'd like me to answer or address here live on the show. You can share those with me at on the Epic Real Estate Investing hotline at 1-888-891-7203. That's 1-88-8-8-91-7203. So that's it for today, another episode of Epic Real Estate Investing in the books. We will see you next time. So to your success, I'm Matt Terrio, living the dream. You've been listening to Epic Real Estate Investing, the world's foremost authority on separating the facts from the BS. in real estate investing education. If you enjoyed this show,

please take a minute to visit iTunes and share your thoughts. Thanks for listening. We'll see you next time here at Epic Real Estate Investing with Matt Terrio. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com.