Latest / Real Investor Radio Podcast / Ep 56 | Realtor to House Flipper: Residential & Commercial Real Estate Journey with Neil J. Timmins

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Ep 56 | Realtor to House Flipper: Residential & Commercial Real Estate Journey with Neil J. Timmins · Real Investor Radio Podcast

• Craig Fuhr (00:12) Hey, welcome back to Real Investor Radio. I'm Craig Fior joined as always by Jack Bavier. Jack, what's going on today, man? Jack BeVier (00:21) Doing great, man. Good morning. Good to see you. Craig Fuhr (00:23) We got an early one here today, Jack. Yes, we do. So don't know what time you all are listening to this one, but it's nine o 'clock Eastern right now. And Jack, I'm full of coffee. Got the got the Zins ready to go. Don't tell my wife. But anyway, we're rocking today. And I wanted to start off with a couple of stories. One is just fun, Jack. And then the second one is pertains directly to what we do for a living here at Dominion Financial. Neil Timmins (00:30) Okay. Craig Fuhr (00:53) So I was just, you know, I've been taking a deep dive lately, Jack, into AI and how it can not, you know, it can help so many people, but I've been looking at it specifically for marketing promotion and for organization. You know, we, we speak with hundred, sometimes hundreds of investors a day here in the office. And, Jack, I gotta be honest, I'm old. And so I don't always remember. you know, every person that I spoke with, but I take meticulous notes and usually it's on, you know, a legal pad with paper and pen. But I've been looking into AI and how we can use that to call through all the notes essentially, and then basically, you know, search those notes for the person who I want to speak with it that aligns with criteria that I'm looking for. And it's been it's been Very interesting. Can't say I've mastered it yet, but just on the AI note front, Jack, here's a fun one for you. You know the Olympics are coming up this summer. Yes. Jack BeVier (02:03) Yep. My wife's a swimmer and so we've been following all the trials closely. Craig Fuhr (02:08) Yes, and anyway, I won't digress, but Al Michaels, the beloved Al Michaels, Jack, the great one of the great announcers, one of the great voices of all time. He's not getting any younger. In fact, I think he's about 107 right now because he's been around since Howard Cosell days on Monday Night Football. But still one of the great voices of all time. If you don't know who Al Michaels is, you're living under a rock. But So anyway, Jack, the story is quick. It says not long ago, it would have seemed like a miracle, but this sort of announcement is becoming commonplace. Peacock, owned by NBC, will offer a personalized daily recaps of the Paris Olympics narrated by the voice of Al Michaels. However, that voice will be completely generated by artificial intelligence. The legendary sports announcer gave his blessing to the endeavor. marveling at the AI version of him saying that it was perfect. So, you know, I just think that it's it's an interesting time that we live in. I think that we're going to not only, you know, three years from now, if you can imagine what we're doing today with AI, what will what will Al Michaels look like three years from now, not just his generated voice, but his entire persona generated by AI. So yeah, Jack, way in there. What are your thoughts? Jack BeVier (03:30) That's super cool. I love that idea. That sounds really fun. We could, you know, we'll eventually do is we'll just get, we'll just get AI generated versions of ourselves. We'll just do like whatever the real estate news roundup is of that week, feed it in there and have it just like do this podcast for us. Right. Like Craig Fuhr (03:45) No need to no need to wake up at seven o 'clock jack you can just show up as your AI self and somehow will you know will pack all of your brain into AI and perfect so. Jack BeVier (03:57) You just like a, like a, a little bit of a tangent on that. So like I've been trying to figure out how to use AI in business. Right? So like it's, it's a very popular topic. Everyone's talking about it. And if you're raising capital right now, everyone's some, it's amazing. All the syndicators somehow figured out how to use AI overnight because that was the buzzword they needed to raise money. Right. So, but like the real practical applications I think aren't, they're not like as obvious to me yet. Craig Fuhr (04:17) Mm -hmm. Yeah. Jack BeVier (04:24) you know, the customer service thing seems like the lowest hanging fruit and like an AI bot to ask people about guidelines or like, you know, ask questions about the process or whatever. Like sure. That, that makes kind of sense to me, but it doesn't like, but that's like nowhere near like the productivity gains that everyone is expecting out of this technology. Right. And the thing is like, one of the things I always struggled with even coming out of college was already great. I got all this book knowledge, but like, How do I make money with that? Right. And no one's publishing like people who were like at the top of their game from a business point of view, they're not publishing. Like you can't read what they're doing in a book to make money. Right. Like the, like the whole point of like, of capitalism is like staying on the bleeding edge of, of like innovation and figuring out what's going on. or, you know, figuring out what's what, what the wrinkles are in the economy to, or the, where, where there's an imbalance in the economy to take advantage of that. Like that's not stuff that's published and the journalists. So they're like the last ones to know, right? Like by the time you read an idea in the wall street journal, all the money has been already made right on that idea. And so the idea, so I kind of struggle with it. That AI is going to like replace the entrepreneurial mindset. I feel like the arch, like that's the thing that's it's not going to replace because it's always looking backwards as to what's already happened and what's published and just aggregating that. But by the time. By the time AI figures it out, it's old news, right? From a money -making point of view. Craig Fuhr (05:53) So are you saying that like if we took all of the book knowledge that you gained and loaded those books, you know, that incredible wealth of knowledge into some sort of, you know, chat, chat, chat bot, we couldn't get, you don't think that we're close to having sort of a predictive nature of AI that it can take all of that knowledge and then sort of predict, you know, based on where we are today, where we would be tomorrow or the next. Jack BeVier (06:21) Maybe. I mean, there's, I'm sure that there are some applications in that regard. If stuff gets like way out of whack, but a lot of like, I don't know, the stuff that we find is like get finding, finding, you know, a theory that there's some disequilibrium, right? Like just like, that's kind of like the, the fundamental thing, right? There's some disequilibrium in some real estate market, you know, either, either the actual real estate market or the financing market. And then we look for one of the sides that we think isn't being, is being underserved. And then we go, we inject ourselves, right. And try to go serve that underserved market. And the thing with the theory being that we can get paid well for serving that market because it's being underserved right now. Right. Like that's kind of like the thesis or that's kind of like the fundamental idea behind pretty much every little pivot we've done over the years. And so it, you know, like maybe it could get to the point where it's recognizing that though. I don't know. Like I have a hard time even explaining it, you know, explaining, like explaining it to the point where I think I could then code it into something, but then it's picking up the phone, right? It's like setting up operations, picking up the phone and getting those customers and figuring out what their pain point is. And then setting up an operation that's going to serve them. Right. And you get in front of 50, you know, 20 of those people and you're like, Hey, six of them told me the same thing. You know what? And then I build that operation, right? That's what, that's the thing I go set up. Craig Fuhr (07:44) Yeah. Jack BeVier (07:46) And, I'm just not sure that AI is going to be able to inject itself like that to come up with like the novel business idea. I feel like there's always going to room like, like, I don't think you can program hustle. You know what I mean? Craig Fuhr (07:55) I don't know about, yeah. No, I would say that just on the on the rabbit holes that I've gone down, what I find fascinating is, you know, call center technology. You know, obviously, if you've got the capital to really leverage AI, I think people are using it in interesting ways. But I think by and large, you know, it's being used for the mundane right now. You know, like chat GPT, please rewrite this for me. But what I find I'll just finish with this. What I find interesting now is that you can program the GPT to be an NLP, Harvard trained NLP expert, or you are this, you are a neurosurgeon trained for 25 years, bring in all of that knowledge and answer this question for me, which has produced some pretty. crazy results for me over the last few weeks of just trying it out. And so I'm anxious to see where it goes. Can't wait to hear out Michael's AI in Paris. That should be interesting. Maybe able to throw a Paris accent on him as well. Second story that I thought was interesting, Jack, is that Jack, over the last couple of weeks, I would say over the last week, actually, I've probably quoted I would say at least a half a dozen now Jack DSCR loans 30 year fixed loans for our customers in the sixes. Now am I at 75 % LTV on that quote? Probably not, but 70 yeah with good credit. Jack, I quoted one yesterday at six and three quarters day before six and five eights. I just couldn't believe it. And so Five year is on a absolute roller coaster right now with downward pressure. And just yesterday, the U .S. Treasury sold 70 billion in five year notes because that appears to be the two and the two and the five appear to be the, you know, where everybody's flocking to right now, Jack, for short term gains. And so, yeah, they sold at a around four point three one percent. They were thinking they would get Neil Timmins (10:11) Thanks for watching. Craig Fuhr (10:13) 4 .335 they wound up getting 4 .331. So interesting time for the five and 10 and two frankly. Jack BeVier (10:23) Yeah, I was going to ask you this. So it's June 27th today as we're recording this and it's, well, as of yesterday, as I closed business yesterday was 4 .32%. Yeah, that's great. I mean, it's God, I miss, I miss so much. Like even over the winter, it was down to 3 .83 % and I just didn't realize how great of an opportunity that was. Like I had, I missed that big, right? Like, and then it went up almost what up 90 basis points. God, that's a brutal ride. but yeah, good to see it back down to, to 4 .3. I would have broke four. I remember four being like, you know, man, if it gets above four, it's really going to affect markets and the world, the sky is going to start to fall. And like, it hasn't right. It's made everything like marginally more difficult and put more stress on everybody. But like now we're all excited about 4 .3. So hopefully, hopefully we get a continued decline. Fingers crossed. Craig Fuhr (11:15) It's an interesting time. I think if folks are thinking about refining right now or just terming out, you know, taking out a loan at a higher rate, I was talking with a guy yesterday who's, you know, he's got a nine and a half percent rate on a portfolio that, yeah, I think he's got a, you know, basically the bank rate of 25 year with a five year am or a seven year call, something like a five year call. And, When we were talking at like 6 and 7 8s, he was pretty damn excited. He was like, sign me up now type of thing. Jack BeVier (11:49) I did a, man, I did a survey recently of, of, of banks locally here in the Baltimore metro area and credit unions. And the best I was able to pull out, this was, this was, well, granted, this was like two months ago, but the best I was able to pull out was like six, 6 .75 for a credit union rate. And I was pretty, you know, like, I was pretty proud of that. The bank that I had been working at, they, they pushed me, they were like seven and a quarter for a, for a 25 year Ram 10 year. Craig Fuhr (11:56) Mm -hmm. Jack BeVier (12:19) tall five year reset. and I thought that that was like, well, and, and so the best I could find, you know, a month and a half, month and a half, two months ago was, was six and three quarters. and now that we DSCR is back to that range, I'm like, all right, sweet. Cause you know what hasn't gone down deposit rates, like deposits are still burning off. So like the bank's cost of capital is still elevated. So I just don't feel that banks are going to be pushing their cost of capital. back down. And I think that that just means that the DSCR market and other private lending markets are just continuing to steal market share from banks, especially as they've got now even increasing CRE pressure credit commercial real estate pressure. And it feels like the regulators are really kind of tuned in now to those issues and putting more acute pressure on, on boards on bank boards. Craig Fuhr (13:00) Mm -hmm. Jack BeVier (13:11) so, I mean, we're not really seeing any, any easing in the, their loan, the lending market. I'm excited to dig into that topic and a bunch of other stuff with our guests today. Today, Neil Timmons, he's a, a really good friend. He's a member of, the real investor round table, which is the mastermind that we talk about, that we put on three times a year. We do it as a nonprofit. We, you know, there's lots of masterminds out there. There's lots of great masterminds out there with lots of great people. And everyone's got their different approaches. And what we've tried to do with real real investor round table is we're there for the ideas, right? Like we run the mastermind because we want to get the best ideas in one room three times a year with people that we know who are, who are operators, who are thinkers, who are trying to be on the bleeding edge of, of, of, you know, real estate investing. And so that's kind of what we're screening for, right? We're not, we're not, we don't If you come in the room and you wave a check, but you don't contribute any intellect to the room, we're not that interested, right? It's not worth, frankly, not worth our time. and so I was really excited when Neil came because he's immediately, clearly an incredibly intelligent guy, tons of real estate investing experience, very outspoken guy. And, and he, and he's in a market that we're not in at all. And he does a lot of stuff that we don't do. So. I've really enjoyed spending time with Neil in RIR and it was really psyched that he agreed to come onto the podcast. So Neil, very welcome and thank you very much for joining us. Neil Timmins (14:48) Thanks for all the kind words. I sincerely appreciate it and I appreciate you guys extending the invite. Craig Fuhr (14:53) Neil, welcome to the show. It's great to have you. Thanks for taking the time. Hey, man. I pulled down a bio for you and I probably rewrote it, but I'm sure you probably could tell it better than I could. Why don't you give folks sort of how you started off in the business. I think if I'm not mistaken, you know, you were a banker for a bit and then you jumped into real estate because your mom was doing better than you were as a banker. So, man, bring us up to speed about your about your career. Neil Timmins (14:55) Greg. I'll give you, I'll try to condense it. How about that? 20 years now. Yes, I was a banker, graduated from University of Nebraska, Omaha. I was born and raised in Iowa, went there, played football, drove by Warren Buffett's person house every single day. Then I went to school there, it was two blocks from the university, it was kind of cool. And then came back here to Iowa, went to work for Big Bank for a couple of years on the retail side. And my mom, we were just talking one day and... Craig Fuhr (15:24) We've got time, man, do your thing. Neil Timmins (15:50) She's going, hey, you boys, I'm the eldest of four sons. She goes, you guys are out of the house and I'm thinking about going back to work. I haven't worked in 20 years or so. I don't know what to do though. And I was like, I thought about it for just a couple of seconds. I was like, mom, you should be a realtor. You, you know, you dragged me to more open houses than I can recall on Sundays and we never moved ever. And you like people. So it seems that's about, that tells you the extent of what I knew also of a realtor and what they did. Craig Fuhr (16:19) Spell right. Neil Timmins (16:19) She's like, all right, that sounds good. I'll go do that. So she went and did that fast forward a year. She makes twice what I'm making when I'm working at a bank. And I was like, well, you know what? If mom can do that, I can do better. So, you know, I've got three brothers. So it's a highly competitive household. So that was my entry point. I literally just weeks later, I was like, all right, I'm gonna go get licensed and go become a realtor. And it - Craig Fuhr (16:44) Well, that turned out pretty well for you. Neil Timmins (16:45) It fit like a glove. Rook of the year, sold 37 homes in my first year. Four or five years later, owned a Remax, became the number one Remax broker in Iowa. And it was, it was just, I found a, I found home is ultimately what I did. Yeah. And then, you know, that, that morphed on, I was, you know, really practice and technically I'm still an agent today, but practiced for quite a while and made some, made a couple of dollars. And then it was like, all right, where does it, where do the dollars get deployed? So stumbled across a handful of fix and flips through, you know, 2010, 11, 12, 13, but not particularly heavy until about 16, 17, somewhere in that range. And started buying more fix and flips, started stacking rentals, just got a comfort level for what that was. And then started plugging in from an education standpoint to learn more, to put process procedures in place. So I flipped. two to 300 at this point, bought dozens and dozens and dozens of rentals. And then about five, maybe six years ago at this point, bought my first commercial property, bought an industrial building, 17 ,000 square feet, and get a few months in. And I'm like, these people never call me. This is like the easiest, this is so much easier than buying these rental houses. And so went on and bought just, you know, have owned since then just about every asset class that exists from. retail, self storage, mobile home parks, to medical office, to regular office. Craig Fuhr (18:20) It appears that there is no asset class that you wouldn't be interested in if I guess the numbers were. Neil Timmins (18:27) If the numbers work and the geographic location, you know, for me, I'm in Des Moines, Iowa. I know this place. I've been inside of 10 ,000 plus homes as an agent in this place. I understand this place. When we get outside of here, it's pretty limited in terms of what my knowledge is from an asset cost standpoint and geography. We do buy out of state. Specifically, it's limited to industrial or flex properties only though. Craig Fuhr (18:52) Before we jump into your pivot to commercial, you mentioned that you, you know, obviously I would think you've got a pretty good education on single family as a realtor. But in terms of single family as an investor, how did you school yourself up? I mean, Jack says you're a pretty smart guy, I believe him, but how'd you school yourself up on sort of taking a crappy house and making it beautiful again? Did you have mentors or did you? just sort of trial and error on that thing. Neil Timmins (19:23) Yeah, yeah, trial and error. You know, being in the real estate side of things, you know, what I had a really good sense of is what's the ARV? What's this worth when it's done? And then I had to go solve for, okay, well, how do we fix it? What's that gonna cost? And then backing down the numbers to go, what can I pay for it? And so just did, just got one, got my feet wet and you start building confidence plus. Craig Fuhr (19:44) Mm -hmm. Neil Timmins (19:52) You know, some of this is too. I had made, I made some money early on. So it wasn't like some of these people go out, see their, where this is, this is their last dime. This is their first and last dime. So I was going, all right, well, let's go figure this out. And I don't, this doesn't need to be profitable on the first one. It should be, but it doesn't need to be. But I'm going to learn as we go here. And so just getting a comfort level for what that is. And then ultimately getting to a contract crew who's now done probably more than 150 for me, same crew, getting that dialed in to know when I walk into a home today and I line Adam out, you know, what I think needs to be done, I'm like 90 plus percent certain what it's going to cost without making the phone call. Yep. Craig Fuhr (20:43) Sure. Yeah, there's a real comfort level when you can, after you've done a hundred or so and you can walk into a house and you've seen it now, you know, 50, 60 times say this one's 45 grand and your contractor actually believes you and you know, it doesn't want to, you know, they, they agree. So yeah, that's, that's, that's generally the progression for those who are keeping track of the numbers as they go. Jump in Jack. Jack BeVier (21:07) Given the timeframe that you were buying there, where were you sourcing deals at the time? Was it because you were a real estate agent and you're buying on the MLS and there was just because of the timing in the market, there were still profitable deals on MLS there or were you doing off market stuff or foreclosures? Neil Timmins (21:24) I picked up a handful, I don't recall the exact number, but my first rental property that I bought, which I still own today, was on the MLS. I literally went to lunch with a guy, I had hired at Remax years and years ago, and we're just having lunch, just catching up, and he goes, by the way, I'm listing this thing coming out of probate, it's a piece of junk, it's not gonna be good for lip, but it could make a good rental, it's in this location. I was like, you know what, I kinda feel like I'm in the market for rental. And so get me in there. So I got in there before it went on the market. Next day it rolls on. So I bought it and I bought, I don't know, three or four like that that I portfolioed. And then it was, it was going as a result of plugging in some of the education that's out there. It was going, let's go direct a seller. And part of that is what's my background. My background on the realtor side is talking to people and making things happen. Right. So if I was an engineer, I got to I know a bunch of people who only buy from wholesalers and it's probably perfect for them and a lot of times it's because their personality lines up to deal with wholesalers, not to go out there and be dealing with the homeowner. And so that's what led me down that path, 90 plus percent, probably 95%, or ultimately source direct to seller. Jack BeVier (22:45) And then how did you figure out the real estate, like the construction estimating side of things? Did you just start with easier ones and get progressively harder over time? Or like, what's that learning curve look like in terms of the construction side of things? Neil Timmins (22:56) No, dude, you just start with going, anything we can think we can make money on, you just do. And then you figure out that there's a buy box that needs to get narrowed down. So what I found out is that my guys are no good. Ultimately, at the end of the day, we got the buy box down to a spot where it's 23 days from the day we close, the day goes back on the market, 23 days. If we can hit 30, anything past 30, my guys are like melt, like the wicked witch. I mean, they would, they'd be like, every, every new week they'd show up to the site on Monday morning. They're like, ee -or strutting into the place, like totally depressed. They just can't handle it because they don't see enough progression in the project to get them very excited. Craig Fuhr (23:33) So true. I always tell people that the time from demo to drywall, right from drywall to the getting your certificate certificate of your CEO that that can be twice as long. And there's one reason for it because it's easy to see the progress when the hammers are swinging during demo and putting in the rough and rough mechanicals and then thrown up drywall. You show up and you're like, wow, we got a lot done. But when you're doing those little mundane trim jobs, Jack BeVier (23:49) yeah. Craig Fuhr (24:13) that have to be done in 50 year old houses and you spend six hours on some stairs, base trim that just doesn't fit just right. And you show up the next day and you're like, what in the hell did I accomplish yesterday? And I think that's that source of frustration for most contractors at that stage, at that very critical stage of every flip. Neil Timmins (24:33) Yeah, we had a couple of projects just go forever, like four or five months, very involved, 100 plus some odd thousand dollar rehabs. It's because we get to the point I'm like, okay, this has to, I mean, I identified a problem, just can't do this again. It just doesn't work. Craig Fuhr (24:38) I'm shocked that it's just a couple. Jack BeVier (24:48) Yeah. Craig Fuhr (24:48) Yes, so as you're scaling the business, what and you figured out the, you know, how to source the deals, how to babysit the contractors and make sure that their pricing is right. How what was what was what were you using for capital in terms of your equity and debt at that point? Because it's pretty capital intense business when you're flipping. Neil Timmins (25:06) Yeah. yes, no doubt about that. So what we did is everything, all property acquisition got 100 % financed by a local bank and I funded all rehab dollars. Craig Fuhr (25:20) Yeah. Neil Timmins (25:20) just churn them. All the interest is paid at the time of closing, six month bullets for everything. So in the event we ever lasted six months, I had to pay interest, which I think occurred about three times in three years. It's rare. They were moving faster than that. Jack BeVier (25:36) How many properties are you buying at this time? Neil Timmins (25:40) Not very many, and I won't get into that. I think our goal this year was a half a dozen, so I think we're probably, we're almost there actually, so we'll exceed that for the year. Jack BeVier (25:52) Is that the, that's now. What about back in the day, this like, before you pivoted to commercial? 60 to 70 years. So you're keeping, and that's keeping that crew full time. What's your average rehab? Neil Timmins (25:54) As now, yeah. 60 to 70 a year. Yeah. Average rehab, 40, about 35 to 40. We're not, it's not that evolved. Jack BeVier (26:11) Gotcha. And it's like mostly new, yeah, mostly newer stuff. You're not moving walls much if ever. Neil Timmins (26:16) No. correct, yeah. Yeah, yeah. So that became the buy box, yes. Yeah, yeah. I would say not newer in age because we got a lot of stock that's, you know, we still dealing with a lot. Not like where you are, but still in 1950s, 1960s, 70s, somewhere in this kind of range. But yes, the intent is we don't wanna move walls. I wanna do essentially fixtures forward. Jack BeVier (26:20) that became the ByeBox. Yeah. Yeah. Gotcha. And then, so as the market gets more competitive and I mean, at least what we found is like, as the market got more competitive and we wanted to keep buying houses, well, we had to just lift heavier and heavier weights, right. In order to find margin, because the easiest, you know, easier stuff just was getting bit up until where the point where, you know, the margins just, you know, went from good to not non -existent. is that what precipitated? your pivot into doing commercial like that it just because, Hey, this isn't, is easy anymore. Let me go try something else. That's, you know, worth the energy. Neil Timmins (27:15) I'm gonna answer two different ways. One, we noticed a much more challenging environment about two years ago. So I'm curious as to when you saw that, but that's when we noticed it here. We just weren't getting the responses on the marketing pieces. There were a lot of people in the marketplace every time Dick and Harry trying to make a go and the real estate was on a tear, right? And so, I mean, it's just incredible. I remember one... don't call me on the year, but I think it may have been two years ago in May, where we had three properties go under contract pending that month. And I think total up all three properties, we made like 50, $51 ,000, $52 ,000 over our asking price on a total of three properties. Mike, 50 grand against greater than what you budgeted. Mike, it's wild. And so you're right. It got more challenging and then. Jack BeVier (28:00) Mm -hmm. Neil Timmins (28:13) I'm kind of old school and somewhat conservative. I wanna know we're gonna make money when we go into this thing. I'm not going to budget as if I'm the guy setting the new comp in the neighborhood. It's just, if it happens, great, but I can't budget for that, because I'm certain when the day comes, the market does churn, you're losing. I don't wanna be stuck with that bag. Craig Fuhr (28:35) Jack, I've been speaking with a few investors specifically in Florida lately where their houses are sitting. And when I asked them, you know, what what are you selling it at? And they'll say, you know, three seventy five. I'm looking at what's the address. And I just do a quick look on Zillow or Redfin or one of those. And I see, you know. let comp 310 315 and I'm thinking why 350 why 375 and they're saying well you know we we did a real great rehab and place looks amazing and and I'm like yeah that that strategy worked two and a half years ago I don't know that that strategy works today especially with inventory up as high as it is in some counties around the US right now over 40 40 percent year over year so Jack BeVier (29:20) Yeah, Altos has a have you guys seen the Altos research ALTOS they they're like affiliated with housing wire I think they've got some really good research on their monitoring what's you know, all the MLS data on a you know, literally week over week basis. And so I like watching their stuff in terms of Yeah, it seems to be that that seems to be like the the the more kind of like trending thing right now is inventory increasing. It's led to increase Craig Fuhr (29:27) Yes. Jack BeVier (29:49) days on market, obviously. But it hasn't but but how the case Schiller housing prices are still up 6 % year over year. And there's like three markets where there's where there's like negative housing prices year over year, everything else is still up. So like, yeah, inventory is building up, but housing prices are still going up. And so but it's you know, but the concern is, you know, as we are exiting the spring selling season right now, like does the does this is you know, does the summer Does interest rates continuing to come down, bail our asses out, right? Of this like increasing household inventory that's happening right now because buyers start coming back off the sidelines or are we going to keep seeing household, I'm sorry, inventory building up to the point where we actually do start to see material softening and prices. What are you seeing on those fronts, Neil, in your neck of the woods? Neil Timmins (30:42) You're, I mean, exactly what you just said. We're seeing the same thing is that housing prices continue to rise. Days on market does extend. So things take a little longer, but you're getting the same or more money than what you got a year ago. It's just not as rabid and the, you know, the across the board. They're not, you know, you're not into a multiple bid situation on average, right? But the average, there's just, yeah. No, go ahead. Craig Fuhr (31:05) Jack has a theory, sorry, Neil, go ahead. I apologize. Jack has this theory that I tend to agree with it. Like if it's grandmom's house and it hasn't been updated since 1977 and they're going out at sort of top of the market comp or just sort of average comp, those are the houses that tend to sit and sort of languish. But the nicely rehabbed houses where somebody's gone in and done a really nice job on it, super clean and priced right, those houses tend to still move fairly quickly. Are you seeing the same thing? Neil Timmins (31:39) I think that's fair. Some of that is, and I've said this for years, home buyers are credit rich and cash poor on average. And so they'll pay up, they'll get a good a property, that's all done. But even if you discount grandma's house, it takes a special buyer who's gonna even wanna go in, who even has the financial capability to go in and rehab that thing. Jack BeVier (31:59) Yeah. And like two years ago, everyone was like, had more, you know, much more money in their savings accounts than they do today. And so like, Hey, we're going to buy this house and it needs 15 grand. All right, cool. We got 15 grand of projects. Well, we're both working from home anyway. So like, you know what, we'll go do that over the course of the next 18 months today, those savings aren't there anymore. So like the premium and incremental credit is really expensive right now. So like the premium that a home buyer is putting on their cash. Neil Timmins (32:03) Correct. Jack BeVier (32:26) is much higher than it was even 18 months ago. Yeah, we're seeing that same thing. Also, like the kind of the crappy, like the, the less talented flipper, like, you know, the, the one who didn't do who either didn't do as good of a rehab because they're don't know what the hell they're doing. And they're just not construction rehab people or that they are running out of cash. And they started to cut corners that those are sitting. And like, so like when we're seeing like flip properties that have like 90 plus days on the market, you know, it tends to be like, you know, the pictures look fine and they've got, you know, 50 showings, but they got no offers. Cause you, when you walk through it, you can see like, you know, the joints aren't mitered and like they use the cheap carpet and like the uber tuba granite and you know, you know, they, you know, they, they skimped, you can tell that they're, that they're a little cash strapped and that stuff's sitting in those. I think those guys are getting washed out right now. like that's where we're seeing payment defaults and, And other lenders taking properties back is that category of stuff like like properties of the courthouse steps that I'm like, it's a private lender on that. And then you like, we go look at it and peek in the windows and we're like, yeah, it's a crappy DIY rehab. Neil Timmins (33:39) It's gonna, we watched some of the rehabbers out, it's gonna create a better environment for the rest of the investors, the professionals who know how to get things accomplished. Yeah, yeah. Jack BeVier (33:47) Yeah, on the other side, on the other side. Craig Fuhr (33:50) So, so Neil, I've, I've had the pleasure of speaking with investors all over the country, spoken at large gatherings and conferences. And the question that I would always inevitably ask, number one question is, why did you get into this business? And all the hands would raise every, almost every one of them. And I would say, you know, what's the word you're thinking right now? And they would say freedom, you know, Neil Timmins (34:15) Freedom. Craig Fuhr (34:16) I wanted to get out of my J .O .B. so I could get into real estate investing and really get that freedom that I was looking for. And I think that resonates with kind of where you were at some point with single family, not really getting the freedom that you were seeking. And so talk about that, man. I mean, you you you got into the business, did fairly well, scaled that business. And at that point, I think a lot of a lot of guys would aspire to where you were at that time. So, you know, figured it all out and I'm doing, you know, I've done 300 plus flips. What kind of freedom did that look like for you? Jack BeVier (34:54) Wait, okay. Okay, let me let me let me interject. Is that the that was because I was a very leading question, right? Like, is, is your is your answer freedom? Because I'm gonna say like, my answer wasn't freedom. My answer was I fell in love with the idea that two things one this seemed in back in 2007. This is I'm thinking like this seems like a very inefficient market. And like, and I just, it's a very inefficient market with Neil Timmins (34:54) on that. Yeah. Craig Fuhr (35:00) That was a softball jack. Jack BeVier (35:23) relatively low or pretty low barriers to entry. And I was like, that sounds like that sounds like a money making opportunity. And I just got excited for like the potential to be able to do deals where I'm getting overpaid given the risk that I'm taking. And I fell in love with the assets are big enough that you can make real money, but small enough where there's still inefficiency in the market. And if I learn how to do it, if I learn how this skill, I could move anywhere in the country, hell anywhere in the world. and I would have a certain set of skills that would allow me to put food on the table. So that's actually what I fell in love with. It was never for freedom. I was never looking for freedom. I was looking for dopamine hits, right? And that's what I found in Resy Real Estate. So I'm gonna just put this, you know, another theory of as to why people get involved in real estate out there, but what was it for you? What was it for you? Neil Timmins (36:12) You know what's funny is I recall when I worked for the bank I was I was working on my brokerage license and I was working on a through a series of tests and one of their one of the things was talking about market theories it relates to investments in the stock market world and the analysis thereof and the fact that all you know Everything is perfectly efficient in the market all the price that McDonald's trades for today It's because of all known factors that exist today All the details it's if it's it's highly efficient. And so the fact that they would go on to say that you're, it's a function of where are you at on the risk matrix, right? Some things are riskier, some things are less risky. And if you want to make more money in the stock market, you must take more risk. That's the only way to make any more money. The exception to that was real estate. Real estate, because it's so highly fragmented, because information does not flow in a highly efficient fashion, that on a risk reward basis, it can be all over the board. I still recall, I didn't do anything with that information for years. It just burned into my mind just because I think about things today on a risk reward basis. But to answer the question, yes, Craig's asking the question. I'm the guy in the crowd going, freedom, apps, 100%. Yes, that is, Craig already knows me. For sure, it's my answer. Yes, freedom, and that means a lot of different things. A lot of people get into real estate, become a realtor, become an investor. They don't want to work for anybody, right? Us entrepreneurs, we'll work 80 hours for half the pay for ourselves versus 40 for somebody else, right? Freedom of time, I think is the old pinnacle of my mind, freedom of money. There's no doubt about that. Yes, I wasn't quite as sophisticated as you, Jack, back in 2007, to give that enough consideration. But I do echo it. Craig Fuhr (38:05) Yeah. Jack, I'll just, Jack, I'll just share one of the most interesting things and you and I had this discussion, I think it was back in like 2016 in your office. And, you know, I, I don't know how many houses, Dominion properties owned at the time. you know, certainly not as many as today, but it was, you know, still quite a, quite a few. And I think my question to you was how big, you know, how big do you want it? And, and, and, and, and you said, it's not about, you know, as big as it can be. And I always got the sense, man, I mean, you still drive the same car. You still live in the same house. You, you know, like I think it's I don't know that it's ever been about the money for you. And, you know, correct me if I'm wrong. I always thought it was more about like, yeah, man, we're building a platform and we're going to see, you know, how big we can get it, how efficient we can make it, how well we can operate it and just keep going. Am I wrong? Jack BeVier (39:05) Yeah, that's right. That's right. I rock a 2012 white Toyota Prius with the with with a roof rack Craig Fuhr (39:09) Yeah, you do. Yeah, you do. Neil Timmins (39:13) That bottoms out every time I'm in it and we come out of the garage together every time. Jack BeVier (39:16) you Craig Fuhr (39:19) His wife has to stay in the car with him because it's such a chick magnet. Yeah. Jack BeVier (39:20) yet we come out of the - That's true. That's true. Yeah. yeah. And, but yeah, no, I thought the, the, the, for me, for me, work is the creative outlet, right? Like it's, I, you know, I'm, I like these ideas and this is, and, and the businesses are the place where I get to go apply ideas and see if those ideas are good enough to make money, right? Like, and so like, that ends up being like the, the measuring stick as to like, are your ideas good enough that They're, you know, that they're, they're, they're, they're, they're better enough that they're on the front edge of the curve of, you know, what's going on in the market. Right. And since the world's always changing, like it's, you know, it's, it's the perfect, it's the perfect, like Petri dish, right. To just like, you know, to try ideas and see if they'll, if they can be profitable. So that was always what it was for me. Craig Fuhr (40:11) You once said to me that you wanted the Dominion Group to be an idea factory. Jack BeVier (40:16) Yeah. Yeah. Yeah. Yeah. I like that idea. And we, and I try to attract people who, who, and I've, and I, and I love our staff. Our staff is freaking awesome. because they're all killers and they'd be killers. Anything, you know, anywhere they went anywhere they did. And we try to create an environment where you want to come, you, you have an idea and you want to go put it into action, walk in my office, pitch me on it and be like, and say, Hey, here's, here's how much money I need to go see if this thing's going to, going to work. But I think it's gonna, and here's the reason why. And Craig Fuhr (40:18) Awesome. Jack BeVier (40:46) We'll go back and forth, beating it up for a little bit. And then, you know, 20 minutes later you walk out and you're putting that thing into action. And those people thrive at Dominion and I got a bunch of them now and they're awesome. And, and I think they're having fun and we're having fun watching them, you know, play. So anyway, Neil, let's, get back to, get back to the, so, so, so what, what were you not satisfied with on the residential side? because. I've like played with the idea over the years of getting into other asset classes. And ultimately I like there's something in my personality that ends up recoiling and I'm like, I'll just do more in Rezi or do different things in Rezi. Cause I know enough about Rezi that I feel like it's safer for me to stay within Rezi, even if I'm like doing different things there. And like, so like for me, like there's something in my personality that won't let me jump asset classes with nearly the fluidity that you have. Like. Well, you know, teach me, how do you, how are you, how have you, how did you do that? How did you make that pivot and how have you continued to make that pivot? Neil Timmins (41:51) You know the first, yeah. Craig Fuhr (41:51) And first, why did you make that pivot? Jack BeVier (41:54) Mm -hmm. Neil Timmins (41:54) Yeah, so the first one got put in front of me by a broker. And you know, if you're flipping like I've flipped, you got a tax problem sooner or later, right? And so the first problem got put in, property got put in front of me and I just ran the risk reward. What's this gonna cost me? What's the downside? And it's like, well, the tenants in there and if they leave, the building's worth about 25 % more. because they're in a lease that's not very attractive from the landlord standpoint. It was an okay cap rate, but given the financing terms at the time, the spread was just fine. So I was going, okay, well, this is good enough deal and I can depreciate it, cost seg it and get that thing to go. And someday their lease, they got a long -term lease still. The day will come where they're out and the rent's going up sharply and that building's worth, I don't know, two to three acts more. Craig Fuhr (42:54) What was the asset? Just curious. Neil Timmins (42:56) 17 ,000 square foot industrial building, the largest grocer in town operates their bakery out of it. Jack BeVier (43:03) so it was like a known quantity tenant to you as well. Neil Timmins (43:05) yeah, yeah, high quality, yeah. Jack BeVier (43:09) The whole world of like the whole world of non credit tenant leasing, like small commercial, small retail strip centers, right? Like strip centers, like there's, that's a whole fricking industry. And I just cannot seem to get my head around like the lack of credit profile of the tenants. I don't know. Hey, I do section eight tenants. So like look at me talking, but, but at least they're the second, you know, the, the federal government is the one sending them vast majority of the wire, but like, you know, like Neil Timmins (43:14) Yeah. Jack BeVier (43:38) You know, how owning a strip center in a recessionary environment like just terrifies the shit out of me. Neil Timmins (43:43) Well, the second commercial property I bought was 11 ,000 square feet of retail. So I bought a strip center. So subway was there, Dairy Queen was there, and a vet clinic who had put a lot of money into their place, and then like four or five mom and pops, like straight mom and pops. Like they're not businesses, they're people with jobs. That's the easiest way to describe it. You got it, you got it, yep, yep. Jack BeVier (43:49) Okay, okay, how'd it go? Craig Fuhr (44:09) the nail salon, the barber shop, yeah. Neil Timmins (44:13) came through COVID with that. My intent there, terrific location, a transitioning area, a major developer had bought the two acres to one side of it, had leveled everything. And so I'm like, well, the day's coming where this whole area is gonna get improved. So I brought a third party property manager on there for that one. And this is block construction, like 1959 construction. I told my property manager, I said, when duct tape won't do, get two rolls. I said, the day will come where this building gets leveled. So I don't want to hear about anything else. We're not talking about anything new. All you're going to do is fix anything that ever goes wrong in this place. Because all its highest and best use will be dirt at some point. Yeah. Yeah. So. Jack BeVier (44:46) you dirt. Yeah, that's hilarious. Neil Timmins (45:07) I kept that property, we came through COVID with it, we sold it three and a half years later. First I bought it on some Unique Seller terms, which we can get into in a second, but anyway, I kept it three and a half years and sold it for, I'm ballparking, just about double what I paid for it. Jack BeVier (45:25) Was it, and it was on the market, it was on market, you sourced it on market or? Neil Timmins (45:28) This one was off market through a broker. Yeah, so building relationships with brokers in town, local people, that, yes, I'm an agent, so the first thing I lead with is I'm not interested in commission. I'm interested in you getting paid the commission. So I don't participate in commission at all. I'm looking to place dollars. I'm looking to acquire assets. Jack BeVier (45:31) How do you, through a broker. Craig Fuhr (45:49) and you just kind of let them know what you're looking for and you get the phone call. Neil Timmins (45:52) Yeah, yeah, then follow up and follow up and follow up. When the deal is good, the first person they call is buying the deal, right? Yeah. Craig Fuhr (45:57) course. Jack BeVier (45:57) You're still like. Hmm. So you'll walk me, walk me through that. Like the walk me through the mindset shift that I should make if I'm been doing residential and like what's been burned into my brain is if it's for at least for the past eight years is that if it's on market, it's not a deal, right? Like if it's on the MLS, there's no money in it. and so like the name of the game for the past seven years has been, has been off market deals. But the idea of sending postcards and getting some like multifamily owner, I've heard stories about it, right? Like I've heard that it has, you know, I've heard that it has happened, but like, but then I've had a hard time seeing people who then who have able to been able to replicate that over and over and over again, right? They do one, then they get it and then they do like, and then they don't do a deal for another like two and a half years. And I'm like, well, I can't build a business around that. So like. Neil Timmins (46:53) I think that's fair. Yeah, we bought an Apex off a postcard. I bought a mobile home park off a postcard. Trying to think, but they're so far, but you're right. They're so far in between. You know, before we said when we got online, I just do the unscalable. We just do these things and get them on occasion. I'm trying to think if we've ever bought any of these properties, if they've ever been listed. We bought one. Jack BeVier (47:02) You're that guy. Okay, great. you Neil Timmins (47:23) one property that was listed, everything else has been off market through a broker or direct to seller. Jack BeVier (47:30) off market or broker pre market. Neil Timmins (47:33) It's broker -premarket, that's what I mean, broker -premarket. Yep, yep, that's been the bulk of them. Jack BeVier (47:36) So the, so do you do that? Like, so, so for, for commercial, would you say like, is it, and is this multifamily and anything industrial retail office where the game is where you think the game is rather the game is that you like network with the brokers and stay in front of them so that they're the person that they think about when they get that, that magic call. Neil Timmins (47:59) Yes, for us it's, I love value add. Anything, just like a house, right? You love dented and scratched houses just like I do and I want my commercial the same way. Because I'm not gonna be the guy, you know, in today's environment, you're gonna go out and buy what? A stabilized seven cap and then I gotta go borrow at seven? I'm not employing capital that way. The risk reward matrix is so far out of whack. The average deal that I'll just sit in the sidelines and be patient, because today I'll come, the pendulum will swing. We'll go buy something else that makes sense. Jack BeVier (48:14) Right. Right. Neil Timmins (48:28) So yes, it's exactly like that. Just communicate. Here's what we're after. Here's what we're after. And then we would buy one, we just bought one. Here's what we just did. Jack BeVier (48:35) Did you ever do any self storage? Neil Timmins (48:38) I have one self storage I bought with a partner. He leads the deal. I'm just the money on the deal. It's in Indiana. It's our worst asset in the whole portfolio. Jack BeVier (48:47) You Craig Fuhr (48:48) That's it. Neil Timmins (48:48) Yeah, I just, I just, it isn't all rainbows, right? Yeah. Jack BeVier (48:52) So if you like, so how have you attacked the commercial side of things or has it been just like, Hey, we're going to like send a bunch of postcards and wait for the triple to call. Like, you know, we're going to hit a triple when you buy that property to call or like, is it, or is it like, did you get into industrial and then you got into strip centers and you were working that for a while? Or has it been like, Hey, you'll buy a deal and you're Neil Timmins (49:08) Yeah, I mean... It's been, it was a slow, just moving thing. I just, you know, bought the first one, then the second one, like eight, nine months later, then it was like, all right, this is easier. Who else can I talk to? Just building a few more relationships and stuff, it trickled in. If I can, you know, if I can build a couple of relationships and you can go buy one or, one deal every 12 months, one deal every 18 months, great. And then that's kind of evolved. And so last year, In the office it was like, you know what, let's do more of this. Interest rates, you know, the five year treasury doubled inside of a year. Well, it had never doubled in the history of the five year treasury in a year ever until it did, right? So my thesis is that sooner or later somebody's gonna roll off their five year commercial mortgage that is a balloon and they got a three or 4 % rate and they're gonna roll back on at seven or eight. Jack BeVier (50:16) Mm -hmm. Neil Timmins (50:17) and that there's gonna be some breakage. And so my intent was let's focus on commercial. I see an opportunity coming down the pipeline that slightly resembles the housing crisis when rates moved and all the cracking took place on the arms back in that six, seven, 2008 era. So last year was let's focus heavily on commercial side. Let's flip some, but not very much. and let's start building a network of investors so that when the opportunity comes, we can actually take down the opportunity. Craig Fuhr (50:54) Neil, I think that's part of the conversation. I'd love to jump in with you as well as syndications that Jack mentioned before we press record. Do we have you for a second episode? Can you hang out for one more with us? That's fantastic. Well, Jack, why don't we end this one here? Neil Timmins (51:09) I would love it. Craig Fuhr (51:13) I hope everybody's enjoyed speaking with Neil today, listening in. Please send us your comments, suggestions, questions. Love that. And we'll go ahead and end this episode and jump back in with Neil Timmons next. This is Real Investor Radio. See you on the next one.