Aaron Norris is joined this week by one who shares his name: Aaron Mazzrillo. He is an entrepreneur, a real estate investor, and a marketer. He also comes at this from a different angle than some people do.
Aaron asked him about his background. Interestingly, he said he was the high school delinquent who joined the military to escape that East Coast vibe. He was stuck in the mountains of Western Massachusetts and had no idea what he wanted to do. He served six years in the navy and was stationed for two in San Diego. This was ultimately how he ended up in California. This was his first time in California, and he was elated. He would be looking at Palm Trees while doing pushups. Planes were always flying overhead, so they would have to stop talking. Before that, he had only been to Florida once on a trip to Disney World.
It was during his time in California that he knew he wanted to live there. After the two years in California, he went to Japan for four years. After he got out, he stayed in Japan for a year and ended up in the jungles in Thailand trying to demilitarize and deprogram himself, which was something he really needed to do. It was pretty bad. He was in the jungle with dreadlocks down his back and flip flops. He was even eating bananas and papaya and hanging out with the monkeys.
Aaron asked him why he ever came back. He said at his core, he was always an entrepreneur. As a kid, he grew up with Michael J. Fox on Family Ties, and he loved his character. He wanted to do what his character did and do big business. He came from a small town of white Mountain people and hillbillies, so he was ready to get out of there and try bigger things. At one point, his then-girlfriend/now-wife and he were in Bali when he decided he needed to go back to the states and go to college. He left the navy with $60 grand saved, and not many people live the military with that kind of money saved.
Besides that, he was bartending, and he got paid because it was a government job. He was working for MWR – Morale Welfare and Reg. He got paid around 750 an hour; and in 1992/93, this was good money plus tips. Bartending, he never got less than a hundred dollars a day in tips, and he received military pay. He was also a rescue swimmer, so he got hazardous duty pay. He was in the Gulf for a year and a half, where there were no taxes. He lived off of just his tips because it was cash. He banked all of his money from the navy and club. After college, he used his G.I. Bill, so he had no student debt. He attended a state school in his hometown called MCLA where he was a double major in computer science and biology. He really wanted to get into cybernetics, which was like creating robot prosthetics. He was obsessed with this. At the time, there was only one school for a Master’s degree in that field, and it was in London. He had been to London before and did not want to go back there. He had his wife decided to sell everything in their house and move to California. They had yard sales for three weeks in a row. On the last day, he was giving things away. They loaded up what was left in a U-Haul and drove across the country in a Ford F50 work truck. It was him, his wife, a dog, and three cats in the car. They broke down in Arizona and basically hitchhiked to California after leaving their animals with a friend. Once they arrived in California, they were homeless for a little bit. They slept on the living room floor of a small bedroom house of a guy they rented from. He had no jobs or prospects, and he realized he didn’t like programming computers.
From here, Aaron asked him how he ended up in the real estate field. He said the man who had the lease on the house had actually started a construction company. They were window subcontractors selling windows. If you think you can make good money in real estate, windows is crazy. They were “wholesalers,” the market was less than 25 percent on the wholesale. His primary client was the Irvine Company, Fairfield Development Wormer’s Construction. They were doing huge apartment projects, which isn’t even the good money. It was good money, but the single family housing tracts is where the real money is. There’s three plans, three models, and then there’s a couple of different elevations for each model. You could end up with 12 different spreads of windows. There are twelve sets of window models, and they just repeated hundreds and hundreds of times. They were shipping windows like crazy, and they didn’t even get into that until the end. Even in the multi-family world, he was I was the only sales rat in the company, and he didn’t think there was ever a time where he was running less than 30 jobs all over the state of California. He was getting paid five percent. Long story short, he got into real estate because he had an income problem.
He had no write-offs, so his estimated quarterly taxes were somewhere around $30 to 40,000. Every three months, he would send those checks to the IRS. He was in his CPA’s office down on Beach Boulevard. He had a lot of professional athletes that he represented. His statments for his tax estimates made him quite unhappy. He tried to get write-offs on his ruler and pencil. All he had was he had leased his truck, which was around $350 a month. He straight-up asked his advisor what his other clients do when they are in this situation. He told him they invest in real estate. He decided here to go buy some real estate, and that is how he ended up buying his first rental property. It’s in Riverside, and he still lives in this house today.
This was supposed to be short-term. He moved to Riverside because he had dogs and was living in a townhouse in Irvine. He got tired of taking them for walks. Once the tenants moved out and his wife got back from out of the country, he surprised her by telling her they were living in Riverside now. He has been in real estate ever since.
Construction tanked in 2007, and he had already gotten in with the wholesaler that called earlier. He had moved up on his buyers’ list to the number one guy because most other people were tapping out. He didn’t know any better, so he just kept buying. You could still sell a house, and he got caught with a couple of them. He still has one of them. When HARP came out, you could call and get a loan over the phone. You just tell them you make $300 thousand a year, they will give you a loan. He was doing that over and over again. Wells Fargo and all these big companies were just writing loans. He met one lady at Starbucks and just signed all the paperwork there. They wired him $200,000 into his bank account. It was crazy.
It really was the Wild West of lending. People today don’t understand that. You hear a lot of them say the crash is coming. He asks how long they have been in real estate, and they will say eight years. They don’t really know. They just think that what happened was normal. He tells them to try to get a loan over the phone and meet at Starbucks to do the paperwork again. That doesn’t exist anymore. They were around ten-year interest only.
It has never returned. The last refi Aaron Norris did a year ago was 225 PDF documents. It involved every HOA, bank statement, property manager. A lot of Aaron Mazzrillo’s friends are doing refiis with credit unions. When he tries to go through that process, it’s such a financial colonoscopy. He had one property he ended working on with Craig and the Norris Group because he loves their service. Craig was amazed to see how long he had been in the business and the people he was associated with, and Aaron told them he could not have done ith without them. He had access to some HELOCs back then, but as soon as 2008 hit, they froze all of them. He would have been out of business, but The Norris Group was there for him. They still help him today. He has a house in Riverside that appraised for $475. He bought it in 2008 for $140. It’s a duplex in downtown, so it’s a prime piece of real estate. He only owes $60 grand on it now. When Craig asked him how much he wanted to borrow, he said $290 grand. They made this happen
Aaron Norris said this was his first cycle as a real estate investor. Before, he was an actor in New York, and he never thought he would work for The Norris Group. One of the most challenging times was in 2009. They were one of the first lenders that had a long-term program. They were one of the few hard money lenders still around and raising eight-year loans at 9.9%, which was so challenging. Aaron Mazzrillo always assumed they were just lending their money out from Bruce’s pockets that dragged a mile behind him on the ground. He learned more about them and what they do by Googling them and seeing them come up online.
A lot of hard money lenders think they’re crazy because they don’t pool money. There is some benefit to that, including they can be really flexible. They were the first with a sub seven percent interest rate on a loan in California, too. Florida is very different, but they change with the market. They now have a second program with accessory dwelling units. Aaron Mazzrillo complimented the Norris Group for always being on top of it. They always have a new program to meet what’s coming. They had that before it was even popular amongst investors. They rolled out the ADU and build-to-rent.
Aaron Norris said they’re having fun but also warning people. A lot of the investors that they know along the coast are doing high-end things and have really gotten a little bit more conservative, which is great. The Norris Group is not going anywhere and is definitely lending. There’s a lot of competition in the hard money space and a lot of Wall Street lenders. His favorite was talking to a Wall Street company that wanted to buy their notes because they were no longer happy buying a Wall Street lender’s notes. What’s really interesting is that with the locals, it seems like even Wall Street understands that there’s some expertise that you just can’t get into without boots on the ground.
Aaron Mazzrillo started buying in Riverside in 2007. The house he bought was actually a foreclosure, which was really weird that he bought it in 2003. It was just a three-bedroom, two-bath track house, and he bought it for fun. He bought it because he wanted depreciation. He only rented it out for about six months. He wanted to learn the business from the ground up. He wanted to do it because he knew he didn’t want to do the work. He had been on multi-family projects and huge construction sites. He had been out there and had been exposed to all these different trades. He didn’t really understand things from the single-family point of view. It’s a different animal. He would go in and just do a lot of the work himself and go out to the construction sites to find a drywall guy. He would ask him to come to his house, and he would pay him $150 to help him do it. He would get people to come out to help him, and it helped Aaron to understand what work involved was. Even if it’s just drywall, you have to get it from Home Depot to your house. They’re huge sheets, and there are things involved. Labor up being at least half, if not more, than your cost of rehab. It can also get expensive and more time when the Home Depot was all the way on the Limonite and you realize you forgot something. When you are rehabbing houses, you and your contractors start to figure these things out.
Aaron worked on that house every weekend for 4-6 months. Every weekend he was out in Riverside with an awesome set of tools. One of his friends came out, and there was an illegal addition on the house. There was a garage on the house that had these workbenches in there that they left behind. All these brand new tools were all laid out. Nowadays, he does not want to work with tools.
Aaron Norris got so busy raising money in 2009, and he didn’t start buying rentals until 2010. It’s still a good time. Aaron tells people he’s a union actor from New York City. When he retired, he received his defined benefit statement. He laughed because he thought that when he turned 65 he would get $165 a month. He had some catch-up to do. You can always go back. They hire elderly people to do that. 65 is not even elderly anymore. By the time Aaron gets to retire, “elderly” will be 80. Aaron Mazzrillo saw a great meme about how 50 in 1980 was one of the Golden Girls, and 50 today was Jennifer Lopez on a pole. It’s a different time. 50 is the new 20, apparently.
This is Aaron Norris’s first full cycle, and he has learned that he really enjoys being a landlord. Flipping stresses him out, he always overspends, and he is really worried that the accessory dwelling unit thing is going to cause a shortage of labor and might happen really quickly. Aaron said there are two people he’s worried about: the flippers doing rehabs and the builders. The state law basically says that the cities only have 60 days now. The ADUs are going to take priority. When you interview some local builders, you find out some of their permits are taking a year.
Aaron Mazzrillo had a terrible experience that he explained is why he is on social media calling out the fake housing crisis. He did a lot split in Riverside that was a corner law. The street was all developed. The main road had houses on it, but the right side was commercial and the left side was all single-family. His house was on the corner, and the street going down was probably early 90s track housing. Since his house was on the corner and the front door was on the main street, his backyard was an extra-long backyard. It was two lots on that side street. It was over on Mendoza and Margarita in Riverside. While Aaron was buying the house, the guy who was an old blind guy was telling Aaron he was going to split the lot and build two houses. He thought he could just rehab it and sell it. He just kept going on and on about how it had the perfect setbacks and it had the depth and the width. He thought there was something to this and decided to swing by the Planning and Building Department. Amen. He left three hours later, and they told him it was a perfect project and he needed to go talk to utilities. He spent three hours at all these different counters.
When he left, he thought he could split the lot and build two houses. This was an infill project, and everything was perfect. The lots had the exact minimum depth and width. It took a year and a week to get approval. The same weeds were growing on the lot when he bought it and finally got the approval to build on an infill property. They were bragging saying this was the fastest one they had ever done. He was probably burning bridges now since he was trying to do other developments in the city. It was not their fault, but it was really a money grab because it cost about $80,000. He had friends in Georgia that will buy a piece of land and break ground within two months. It’s the same in Arizona. They will buy ground and put up stakes. Aaron wondered why it would take 90 days, and the guy didn’t understand the problem. Aaron told him, “You don’t know where I live.”
Aaron Norris said in Florida they’re helping the people doing 1031 exchanges. The people who it’s right for is very specific, but it takes two months. It’s so important because when you’re doing a 1031 exchange. You have 180 days, so you can’t deal with those kinds of timelines. In California, it is really hard to do build exchanges. However, there are a lot of cool opportunities with ADUs and new construction.
What is interesting with the iBuyer stuff is there is going to be a lot of hype about it. Zillow has definitely dipped their toe in, so there’s four and they’re all active in the Inland Empire. Aaron Norris thinks the easy ones are going to get harder. They do beautiful marketing. They’re overspending on stuff, very much like The Norris Group experiences with the trustee sales. You have Wall Street buyers that are buying for a different reason. They are also great people to wholesale to. One thing Aaron has complained about is the data sources and how their data is going to be off in a year. They wonder why and tells them he has wholesalers whole selling to them. You have transactions that are going to show up more than once in the same year, and it’s going to screw up the data. He thinks the easy ones are going to get harder, but as far as he can tell, they’re not taking really big risks with really ugly rehabs yet.
They don’t want houses that have tenants in them. Aaron said they will contact him because he has a lot of rentals. They’re very vague and will tell you they are interested in buying your house, but they don’t generally give you an address. They probably hope you will call them. He called one business that was literally called Sundae. This was not a good name becaues if you Google it, ten million other results will come up. When he googled it, he kep getting results for ice cream. Nothing came up that was related to buying homes. If you want to capture the SEO, you need a good name that is very unique, like eBay and GOOG. These are weird and unique names for a reason. They’re strategic. When Aaron asked them how they came up with the name Sundae, they said their CEO picked it. Aaron wondered if he was on a sugar high. He is a part of Lending Home, and Aaron Norris wanted to know how they are buying since they are on his radar. He hasn’t seen any closes from them, and they won’t do any tenant occupied. The only way they will is if you get the tenant.
Last month, Aaron Mazzrillo evicted around 5-6 people. He joked that there’s a homeless population because of him. Murrietta was the top iBuyer for Riverside County, and in December they only bought four. When Aaron Norris looks at sales at two hundred nine for the month of December from IVAR, it’s a small fraction. Aaron likes the model, and he can definitely see why it’s going to stick around. We also have Keller Williams, EXP, Compass, and Realogy all launching their own versions. Aaron talked to realtors in that space, and they have all been talking about it, but he has not seen a massive rollout of any iBuyer stuff.
Aaron Mazzrillo thinks that model is interesting and is starting to take shape. Some little brokerages are doing it, whereas you essentially partner with the homeowner to rehab and flip their house. Derek Harms of Compass was on the radio show only a couple weeks ago talking about this. There’s also a team out of Pasadena that’s doing it, so there’s other people out there doing it. Aaron had actually come up with a name and a model and was going to do it, but he has some other things going on, so he is holding off on launching it. He is always thinking ahead. He has friends in the business that started around the same time, and Aaron’s net worth is a fraction of what they’re at because they’ve been very focused. Aaron has been here more for the entertainment value. He doesn’t really care about money and is never afraid to lose it. He knows he can make more, he doesn’t own anything expensive, and he is not materialistic. He just does it for entertainment. It’s his curiosity. He likes to see what he can do. He and his friend Ryan invented the real estate podcast. There was nobody out there who had it before them, even before 2007. He and Ryan were doing conference calls every Friday. People used to tell them they should do one of the podcasts. At the time, he didn’t even know what this is. They would record them and put them on the website for $1. They sold around 7. They did it for two years before moving on to something else. He is always trying new things.
The Norris Group originates and services loans in California and Florida under California DRE License 01219911, Florida Mortgage Lender License 1577, and NMLS License 1623669. For more information on hard money lending, go www.thenorrisgroup.com and click the Hard Money tab.