North San Diego Real Estate Investors Association Inc. President, Derek Harms- Part 1

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A Board Member since 2014, and now the president of the board, Derek brings a multi-faceted real estate skill set to the organization.   As a realtor, he is a leader in the San Diego market with Compass Realty. His savvy negotiations and innovative marketing strategies join uncompromising integrity as the emblem of Derek’s service.

Having over 10 years of experience and a young and fresh perspective on the real estate world has helped Derek stay ahead of the technological curve. Employing the most cutting-edge marketing tools and techniques available, he has consistently reached the most eyes possible with eye-popping material.

Derek, being an active investor himself, can view the market from an analytical perspective to ultimately solidify his clients’ bottom line. Real estate investment is more than an income stream for Derek, it’s a lifestyle. He is an active residential redevelopment specialist in many different San Diego neighborhoods. Adding to the successful single-family home “flipping” business in Southern California, Derek owns numerous properties throughout the United States.

 

 

Episode Notes:

 

Narrator  This is The Norris Group’s real estate investor radio show, the award-winning show dedicated to thought leaders shaping the real estate industry and local experts revealing their insider tips to succeed in an ever-changing real estate market hosted by author, investor and hard money lender, Bruce Norris. The Norris Group proudly presents our 14th annual award-winning event I Survived Real Estate, industry experts join Bruce and Aaron Norris to discuss evolving industry trends, real estate bubbles, inflation and opportunities emerging for real estate professionals. All proceeds from the event benefit Make-a-wish and St. Jude Children’s Research Hospital.

Bruce Norris  Hi thanks for joining us, my name is Bruce Norris. Today our special guest is Derek Harms. Derek is the President of NSDREI. Derek brings multifaceted real estate skill set to the organization as a realtor. He is a leader in the San Diego market with Compass Realty. Savvy negotiations and innovative market strategies join uncompromising integrity as the emblem of Derek’s service. Having over 10 years of experience and a young and fresh perspective on real estate world help Derek stay ahead of the technology curve. Employing the most cutting edge marketing tools and techniques available. He has consistently raised the most eyes possible with eye popping material. Derek being an active investor he himself can view the market from an analytical perspective to ultimately solidify his client’s bottom line. Real estate investment is more than an income stream for Derek it’s a lifestyle. He is an active residential redevelopment specialist in many different San Diego neighborhoods, adding to his successful single family home flipping business in Southern California. Derek owns numerous properties throughout the United States. So Derek, we welcome you to our show.

Derek Harms  Thank you, Bruce. Wow, what a long winded bio that I feel like I have definitely have a more tailored cleaner, newer one. But hey, I’ll take that.

Bruce Norris  Was there? Was there anything that wasn’t true on there?

Derek Harms  No, no, no, definitely not. I would say though, the biggest shift though, since that biopsy was out is that I’ve been focusing a lot more on the investment side of real estate over the past three or four years than I have on the brokerage side. And it’s funny how they kind of go hand in hand, and you can leverage one with the other. And that’s, that was always been the goal. It was brokerages always sort of a means to an end. But that said, I still do it a lot. I still love it. But, you know, I think you would agree, asset ownership is the key to wealth and the more of taste of it that you get, the more involved youwant to be.

Bruce Norris  Well, what’s interesting when you say that, first of all, I want to just touch on, how did you get into real estate first of all, because I mean, when did you graduate? What you’re graduating college?

Derek Harms  College was 2008.  Okay, so, I mean, you’re not 40? Or you’re close to it? I’m 35.

Bruce Norris  Not even close to it. Okay. The reason I, you know, I know, you realize you’re pretty unusual case, because at 35, the amount of success you had very unusual. Also to enter a business where like, what percentage of realtors have five transactions a year, it’s probably less than 5% of the whole pile of realtors. Okay, and then you add the investment side of it on and you know, when I speak in, like realtors years ago, I’m just you know, I’d asked for a raise of hands, how many guys invest in real estate? And there would be no hands and 300 agents who just going wow, I would it would make it a little bit easier to sell if the bought into owning it. You know.

Derek Harms  It’s true. And just a quick touch on that. I’ve talked to a lot of the, you know, the Top Producing agents in San Diego, and I’m always astonished when I asked that same question as to how many of them actually invest in real estate themselves? And, you know, some of them have pretty large portfolios and, you know, no way am I judging but I feel like if you’re in that position to take advantage of it is so, it’s so it’s not that hard to do. It’s an easy transition. And you just got to, you know, shift the mindset a little bit and I wish people would do more of it. But you know, it’s it seems pretty consistent across the board. I hear those stories a lot.

Bruce Norris  Yeah. And it’s, it was so much easier to say you should buy one of these because you know you’re doing it yourself. And so that just makes it as a salesperson, that’s one of the first things I asked somebody say I’m buying I’m in Florida. So, one of the things that’s unusual now is I don’t have any contacts. I have to recreate the wheel after doing business with the same people for 30 years. So, they go to a car dealer and I’m getting a test driver. Just curious what car, what kind of car do you drive? You know, if it’s not what I’m getting being shown, I’m out?

Derek Harms  Sure. Yeah, totally. That makes a lot of sense. And you know, I think to all the agents defense to though, there is a mindset that has to be shifted, and there’s this, like, ‘I can’t’ mentality, even if you do a lot of transactions, like ‘Oh, hey, I can on this, I can make the numbers work, I can figure out how to create great value’. I think there’s that, that mindset component that I think is the struggle and then once that happens, and it’s like, you know, when they’re just excited about it before, you know, they own 10 properties.

Bruce Norris  What came, what came first for you the realtor side?

Derek Harms  No, actually no. 2010 I bought a duplex in Barstow for 22,500 bucks. It was one of those Fannie Mae homepath properties remember that.

Bruce Norris  Yeah.

Derek Harms  Yeah. And I, I made an offer I and I, maybe I told you a story maybe not. But I know Tony Alvarez knows this. He smiles every time I say this, I went to a Tony Alvarez class back in 2010. And I started getting into phones right after it calling REO agents and I got a bunch of agents. Hey, man, you sound like you just went to a seminar. And this is a script. And I said, Well, it is and I’m like 22. And I want to know how to do this. So, you know, here’s what it is. And anyway, I ended up buying a duplex in Barstow 22,500, and I was bartender at the time. And I ended up flipping it for like 56,000 bucks, sold it to a regular at my bar. And so, that was the catalyst for me to get going. And I just said, screw bartending. I get this real estate thing shop.

Bruce Norris  Well, interesting. It always like to figure out how people went where they did. So, the bartending, that’s very personable, right. I mean, the more personable you are, the more you’ll get tipped.

Derek Harms  Absolutely. And you have to have social skills. And you know, and you get to learn more about people, they’ll tell you the bartender things, and I’ll tell her family, you know, so you start to get take the temperature of the room pretty quick.

Bruce Norris  Okay, so you got this first taste of being an investor, did Tony Alvarez continue to be you know, like your training mentor? Did you branch out? How did you deal with that?

Derek Harms  Yeah, I kind of branched out a little bit from there. And you would think after that I would just be satisfied with doing what I was doing there in California. But I didn’t, I went and took a tax lien certificate training. And I forgot the gentleman’s name that that was like the guy who did that. But I want to learn how to do that. And then I got interested in buying tax properties and tax deed sales in Florida. And I ended up buying one in Florida, all online. And it was, it was kind of a scary process. It was sight unseen. Although I did have some family in the area in Florida, so I was able to get some boots on the ground out there. Long story short, I bought a house. I don’t auction it was the worst house in the best neighborhood. Little did I know that there was over $100,000 of code enforcement violation liens on the property. The county, this house had been on the news, I didn’t know about it, the county commissioner, I went into his office and like basically pleaded and was like, ‘Look, man, this is my second deal ever. And I obviously like there’s no money in the deal if I, if I have to pay these liens’. He’s like, ‘you know what, sir, if you, if you clean this house up, like he said, you’re gonna, I will erase all of these liens. This house has been on my books for like eight years. And I don’t want to think about it again. So, you can do it’. And sure enough, three months later, I did it. And then the news came back that a news story on the completed project and turned out to be this huge blessing in disguise. And so it was just like, so the tax deed thing, and then with the flip again, and so that kind of got me really interested in, in the hole flipping process.

Bruce Norris  That’s a very cool story because not bragging on yourself, but I can say what percentage of people would be meeting that guy at the building department and having him say that?

Derek Harms Yeah, that, who knows.

Bruce Norris  Well. Yeah, we both know, it’s almost non existent. But, but, but that’s what separates successful people. I mean, almost every transaction when I was dealing directly with people, what are the odds of this happening? It seemed, it seems small, it, but yet, if you’re if you know you can do it, you’re always in that mindset, you’re finding you’re going to find a path. That’s basically how when I talk to people directly, I’m trying to understand why they might make this decision and why that’s in their best interest. So, your mind is going to mind, a mile a minute, in a way while you’re paying attention to them, trying to understand, you know, how do we make, how do we make this work? But that’s, that’s a cool story. Were you entrepreneurial at all when you were kid

Derek Harms  You know, I didn’t have this overwhelming entrepreneurial spirit. I can’t say that I like went to school and sold gum to people for…

Bruce Norris  Right. Exactly.

Derek Harms  I didn’t do that. So, I can’t claim that, but I’ve always been open to it. And I’ve always been of the mindset that I don’t really want to go to work for someone else. And I didn’t like doing that. Especially even at a young age early 20. So, I always knew there was something out there that could, that, that could allow me the freedom that I like.

Bruce Norris  Okay, so we’ve covered the got the duplex in the in the house, it’s totally wrecked in another state. So, would you say that you, you’re not risk adverse is that or you calculate? I, you know, sometimes your experience that says, ‘Okay, I’m gonna, I still will take risks, but I’m going to calculate them much more’.

Derek Harms  Yeah. And I think the older I get, and the more mistakes that I’ve made along the way, I get a little bit more risk averse than I was earlier on. And I think that’s probably natural. But now it’s, you know, after, you know, being part of groups and listening to guys like you and Reggie and Cantu, and all these guys that have been around the business for decades speak, you know, things resonate with you. And for me, one of them was I’d rather regret the deal I didn’t do than the one I did. And I definitely have regretted some deals I’ve done. And so now I really try to look through that lens before I sign any any purchase agreement or grant deed.

Bruce Norris  So, when you got into the world of real estate, it was already ‘Oh, heaven’.

Derek Harms  Exactly. Yes. And and that’s a good point. I haven’t been in this long game long enough, you know, 12 years now, to really feel the pain of a major market shift. And I try to be cognizant of that in my decision making and not get to, you know, willy nilly in my acquisitions, because I know that there, there is the other side of that coin that I’ve never, I’ve never seen.

Bruce Norris  Well, the other side of the coin that was actually going to get to was not, not the change of a, you know, into to a down market, but the change of who you talk to. So, you came into an REO world, and probably in a very short period of time. That world dissipated and you were finding, you had to find other way to find deals.

Derek Harms  Absolutely. It’s a great point, you know, it that shifts and I, you know, I feel like that is always going to shift from here on out it there’s different ways that the deal sources will will be coming your direction. And I think that’s part of the fun is, you know, shifting with the market forces, and the ones that are that are more nimble, I think, are the ones that come out on top time and time again.

Bruce Norris  When you, when we left the availability, easy availability of REOs, let’s say 2013 probably started to you know, head in the other direction. What did you do to source deals after the REOs in the short sale sorted right up.

Derek Harms  So, I took an interesting course. So, I started out on that investment side. And then what I haven’t mentioned is that after that, I actually got into mobile home parks and purchased a few parks around the country and got my feet wet doing that and really was, was on the front lines of swinging hammers and dealing with septic tanks and really doing all the dirty work that you know, it’s good to do when you’re young, you learn how to do it and at least moving forward, it gives you an infrastructure for hiring others to do it. But so there was a time where I wasn’t really in the whole single family acquisition mode with you know, with REO managers and, and you know, big banks and agents who control a lot of this, this, this inventory and then when I came back to San Diego, I actually started also growing my, my agent business It wasn’t until about 2013 in San Diego when I really got real back heavy into the you know, into, into the acquisition mode on the single family side and there were still quite a few REO managers out there and agents at that time that, that still controlled a lot of that inventory and you know, I I ended up working with some other successful ambassadors who were showing me the way and they had to be really creative even at that time to get properties. Now fast forward a little a few years after that. I really employed a lot of the stuff I’ve learned from a lot of the guys we know like I started doing direct mail and I’ve got some of the best properties I know of, you know, by that approach, and I still own some of them that have been some of the best, the best deals that I’ve ever done. I learned from Bill Cook about door knocking and did some great flips door knocking actually in a suburb here in San Diego and got multiple houses that way. So, I started to integrate the seller, direct seller stuff, but I will say you know one some of the research I did before coming on the show today I was reaching out to a lot of my friends here in San Diego, a lot of them are doing a lot of volume. I mean, we’re talking hundreds and hundreds and hundreds of house flips every year. And I think the it comes back to the largest deal source right now on everyone’s plate is still real estate agents, they are still the ones that control most of the inventory. These agents, everybody knows real estate agents, like quick deals, they like cash buyers, and they like easy and they like repeat business. And if you can be that source for them, well, then they keep coming back. And, you know, it’s, uh, I don’t know the exact numbers, but you got to think of all, of all the transactions every year how, you know, a vast majority, you know, I’m just guessing 90 plus percent of them are done with using a real estate agent.

Bruce Norris  Oh, absolutely. But a vast, vast majority of them are going to get bought by owner occupants. So, it’s like, if you have 100 agents, what percentage of the agents you think are, are open to I’m going to consider the investor that go to client?

Derek Harms  Well, if we’re talking about a fixer property, we’ll you know, which is what we buy then I think the propensity to go with an investor be much higher than for talking about some turnkey, but, you know, I feel like what I’ve been seeing lately is a lot of agents and their clients will say, hey, let’s, let’s get a few offers from some of the investors you trust, and then see how we feel about it before we go to market. So, they are at least getting opportunity, but maybe it doesn’t necessarily make it and honestly, like I’m straightforward with, with agents and sellers these days, and I say, look, the market, the market dynamics are in your favor if if you put this on the MLS, I’m sure you’ll probably end up getting more money, you’ll probably get more offers, but that’s not what I’m able to offer you maybe we’ll offer you ease of doing this transaction and you’re done deal etc. You know how the show goes. And, you know, I again, going back to what Cantu would say, you know, sellers will never give you equity, but they will trade it for something.

Bruce Norris  Yeah, you know what’s funny, I talked with Mike Cantu. I just called him out of the blue. And I felt like I had a seminar in 15 minutes.

Derek Harms  That’s so amazing. I love it. It’s so true.

Bruce Norris  I mean, I can’t remember the last time I flipped out. I didn’t have any notes. I would I just had a piece of paper. He kept on coming up with gems. I would. Okay, wait a minute. I mean, I’ve known this guy for a year. You know what’s funny, I don’t know if you know the story, but he did not like speaking in public. That was not his thing at all. And he was a student of all the people that did very well in Florida. And one of them asked him to, you know, share with the audience and he calls me up and he’s just, oh, Bruce, I would pay you five grand to take my place. So we went, we had lunch, and he had written out his talk word for word. I said, ‘Oh, Mike, I said, you can’t you can’t do it that way. You don’t need to. There’s nothing in the business. You don’t know’. I said, You’re so full of stories, funny stories that teach lessons, tell a story open up with a story that you don’t have to look at a note. And he calls me after, you know, he had about an hour talk calls me up. He says, Oh my God. Now I know why you do this. He got a standing ovation. It was so cool.

Derek Harms  Oh, wow. That’s cool. I’m sure he’s got a lot more of those since then.

Bruce Norris  Well, he stil,l I don’t think it’s on his top priority list to do this through the teaching. But I would have to say, per minute, there’s more gems that drop out of his head. We go to lunch, once in a blue moon now, but we used to do it kind of regularly. And I asked him one day a question and he said, he said he think about the answer. I said, ‘What’s, what’s the one prior priority in your day that will not you will not break?’ And he said, ‘Let me talk to you. Let me think about I’ll talk to you tomorrow’. He called me up. He says it’s reading. So, this guy has studied this industry for over an hour a day for 40 years. I mean, that’s, that’s a pretty tough mountain to climb, or to or to you… So, it’s like, I think I’ll ask Mike. That’s a good idea.

Derek Harms  Like, is there anyone else that does that? I don’t know. Like, maybe not.

Bruce Norris  Not that consistently. I mean, it’s so funny talking to him. He’s like, ‘Yeah, he said, I had a hurt back. And now for 480 days in a row. I’ve done this, because it’s on his goal list’. You know, it’s just like, Oh, my God. I, his day seems to be very regimented but it’s, it’s not he’s just, he just is leading the life that he wants and he said something very interesting because he still has a big set of goals. He said I’m more comfortable on the climb. So, he doesn’t calculate, okay, it’s over, because he doesn’t want the climb to be over here. He enjoys it too much. He doesn’t need a thing. Of course, it’s just that he enjoys the the deals. And so, it’s just that was a fun conversation. So, you know, that’s at 35 you know, that’s, you’re in an interesting, an interesting place, you know, with, with amazing future, but you’ve been under from a very different point of view. Very few of us were realtors in any sense. In other words, we just were, I have a real estate license because I have a loan business. I didn’t pursue clients to list properties. Now, is that something that, you have done that correct?

Derek Harms  Absolutely. Yeah. At a high level and I’m really glad I did. And I still do. But it’s, it’s definitely not my main focus. And no, like I said earlier, it’s I think what I’ve learned in that has helped me in the investment world, because it might go saying, we get a lot of deals from agents. So, if you think like one and know how the rest of us think, well, you can you can structure your, your deals your offers, etc, to, to be easy, easily acceptable, and you know how to like not not play any games, and you just you just know what to do what other agents want and, and you meet a lot of people. So, I think that’s the other thing I didn’t mention is that, you know, I can’t tell you how many deals we’ve done with agents that have been in the different offices of brokerages that I’ve been at just simply by, by mingling, and then getting to know you as the investor in the office. And it’s, it’s just been incredible.

Bruce Norris  Well reputation too you’ve got a great reputation. So, I love that when it when something pops up and said, you know, okay, we got a call there. I mean, that’s just you’ve earned that, right because they want to, they’ve already pre thought out what’s the easiest path to a commission check. And in an easy transaction, if your name pops up in the first list on the first page, and at top of the list. They don’t need 10 of those, right. They need one.

Derek Harms That’s right. Absolutely.

Bruce Norris  Yeah. So that’s pretty cool. What percentage of your deals do you think come from mailers versus the agent world?

Derek Harms  Lately, probably less than 10%.

Bruce Norris  Of the mailers? Okay

Derek Harms  Yeah, absolutely. And they’re taking longer to, to facilitate and Bruce, I will say, when you do need to get one, you’re it seems like the returns on the margins are fatter than what we’re getting from agents, and, and they’re all more fun in their lives. Sometimes I won’t wear hair on them, and you have to give them more creative. But it’s, it’s, it’s not it’s not nearly as much as as even was maybe a couple of years ago.

Bruce Norris  Do you have a process to improve your mailer?

Derek Harms  I wish I had a really good one. But it really just comes down to the data set is where we focus on on improving the, like our mailers and like getting a better, getting less fine tuning trying to get work different wrinkles that other people aren’t too aware of. I think there’s always stuff that the ways to improve that the actual letter itself and the physical component of the mailer, you know, we’ve looked at all kinds of different things and looked at the new writing machines that do it for you with a pen.

Bruce Norris  We’ve done that.

Derek Harms  Yeah, see, and I know a lot of people that have and honestly, we stay pretty old fashioned with it. We I have a full time assistant, and she actually has someone that she hires that comes in, it’s an old, retired gentleman who’s disabled and he just loves handwriting. So we’ll come in and he’ll actually will handwrite the addresses on the envelopes and put the stamp on and like so they’re actually really handwritten, the letters are not their, their form written and, you know, we’ll, we’ll have a handwritten signature in there. But, but you know, it’s working for us, Bruce, it has for years. And it you know, it’s a, until it doesn’t work anymore, we’re not going to change it up too much.

Bruce Norris  When a phone call comes in, who is receiving that call?

Derek Harms  So, it used to be me, and now it’s a gentleman named Drew, he’s performing acquisitions for us. And he’s acquisitions director, and, and now he answers it. And, you know, after a while, initially, it was the learning curve was, you know, a little sharp, because you have to learn how to speak the language, so to speak, but he’s gotten pretty good at it now. And so, but I used to actually really enjoy getting those phone calls. And, and being able to, you know, talk to someone and you know, talk them off of a lead so to speak initially, they’re very on guard, guarded. When someone first calls you, at least for the most part, but when you tell them, you’re just a normal person, that they usually goes away.

Bruce Norris  Yeah, you know, this wasn’t a technique it was, for me. I worked for a company that very first, my first experience in real estate investing was kind of distasteful because the guy was really mistreating the owners. At the end of the closing, they would never end up with what they were supposed to even on the net offer. And so when I started doing the business I started having phone calls come in from ads. And it wasn’t, it wasn’t a ploy, I was happy that I understood some of the business. And so they would present me with a problem. And I would say, Okay, I said, If you tell me what your situation is, let me just give you solutions, every one of them that I know, and only one of those would be sell it to me. So, you know, why don’t you just listed with a realtor? And you know, and I found out the properties that I was ending up buying, were saying no to those other things, because they wanted speed, or they had an opportunity or something like that but I think in a way of built trust, why are you telling me this? Because that doesn’t include you making anything. You know, because if I were on either side of the table, what’s what I would want? And it just made me, it just made me so happy to get a phone call. Instead of stressed out. I was like, Okay, I’m either gonna buy a property, I’m gonna help somebody, what? What’s wrong with that then? It feels good.

Joey Romero  So, you got some questions for, for Derek about the market. But what we’re still talking about here, there’s a couple things that I want to ask if that’s okay. My first question is, you know, being a college baseball player, being a baseball player, we always talked about baseball, and sports mirroring life has had lessons that you learned on the field to help you in business or in life more.

Derek Harms  Um, I think you can apply them to both. And I remember just getting out of college and not knowing exactly which direction you want, you’re going to go. Yeah, I had gotten into the investment world, real estate world young, but, you know, you’re looking at interviewing, you’re talking to people and putting a resume together. And, you know, at that time, I actually realized how much playing college sports helped me in business and life right, I think, two main things for me, it was at least being coachable. And if you’re able to be coachable, it’s going to compress your timelines. And you know, there’s needs to not be an ego in this business. And the minute you think, you know, it all, well, you know, and you’re in the wrong business, but it’s, I think that’s number one. And, and really, I think, um, you know, the, the ethic and the strive to always get better has, you know, was was really, it was really important to me. And I’ve always wanted to be the best at, at, you know, at the game, I wasn’t the best at baseball. Same with real estate, I always try to get better, whether that’s educational events, or networking, or reading or whatever it is, I always want to get better. And then lastly, I think it’s, it’s a team team effort, right? Like, if you learn how to work well with others real real estate is is a team effort in general. I mean, if you just reverse engineer and transaction, look, how many components are there that were in that transaction to get the deal done? There’s just so many people involved. So, you know, those three things, I think were really instrumental that I took from playing college sports.

Joey Romero  My other question has to do with a demographic in San Diego. I know that being as close to the border is there’s a lot of, you know, folks that live in Mexico coming to work, or vice versa. When I was doing insurance, the San Diego insurance offices, we used to call them to one in North, instead of setting up things like how much of the transactions that you’re part of come from, like, let’s say, the Latino network, or folks that are, you know, coming from or working back and forth.

Derek Harms  And when it comes to deal flow, I don’t think I have a good answer on that. But I can tell you wholeheartedly that when the borders are shut down, like flashback COVID, when we had border shut down, and it’s been shut down, but off and on here and here. And then between between March 2020, when COVID started, it was really hard to get labor and we would have renovation crews that would just not be there. And there’s nothing you can do and our foremen would say hey, I’m sorry, my guys are stuck at the border behind the border, they can’t get back in. And San Diego, obviously, our proximity to our southern border here. A lot of, a lot of labor comes from across the border. And you’d be surprised as to how many people travel daily between Mexico and San Diego to come to work. And I didn’t really know, I understand how how big it really was until it started to affect me and I wouldn’t have guys shown up on job sites.

Joey Romero  When you think about those things, you know, yeah, there’s just a general label for it, but you’re like in the middle of where it’s, I mean, so accessible and very, very real.

Derek Harms  And once that happens, you start reaching out to your networks and seeing how other people are affected and and everyone felt the squeeze like it really does congest you know the the ability to, to get quality guys on site and then now you’re you’re pulling guys in tile guys to do drywall or you know, something like that. And It’s not nearly as good as it should be, because that’s not their trade. And we had to do that for a little bit. And, you know, some of the quality of the projects would show and you spend more time and money at the end fixing all this stuff.

Bruce Norris  Did you guys have supply issues? For I mean, I’ve been building new homes, basically, here. So, we definitely had supplies change price, tough to get on the rehab side, you know, you’re dealing with mostly, mostly it’s there already. But how did that impact the business?

Derek Harms  Absolutely. And it’s right now, it’s still very difficult to get appliances and, and I’ve had calls with a lot of the, the big house flippers in town lately, and everyone is like, Hey, who’s your appliance guy, you know, like, kidneys and where you know, it’s musical chairs on every house to see where you can get them. And some of my assistant now spends a lot of time trying to line things up beforehand, before before we even need them. We’ve had to store appliances, at, at properties and safer neighborhoods to deliver to ones that are less safe later, just you know, just to have them because you don’t know if you’re gonna be able to get them lumber obviously went up. And then it’s it’s kind of it’s kind of gone back down quite a bit since then.

Bruce Norris  Correct. Yeah.

Derek Harms  So, we I was having this conversation with one of my contractors just two days ago, we were looking at a framing budget of one of the renovations and we’re like man, this framing budget was if we just would have budgeted this today and bought the lumber today, we would have like a 25% lower budget for framing on this house or whatever. It was a big deck we were building for this one house and it’s amazing how volatile that was and how the supply chain issues really disrupted. You know, so a lot of progress here in San Diego, but that and then labor to talking to a friend that runs a very high volume shop here in town yesterday. He, he was we were laughing about about renovation costs and how we we haven’t been able to sniff the same pricing we were getting even a year ago today. And it’s so labor materials both have gone up and you know it’s compressing margins and so you know, either A, we got a buy for last or B sell for more. And you know, so it’s made us re, reevaluate how we underwrite.

Narrator  See I survivedrealestate.com for event details, information on all our generous sponsors and to connect with our speakers. For more information on hard money, loans and upcoming events with The Norris Group, check out thenorrisgroup.com. For information on passive investing with trust deeds, visit tngtrustdeeds.com.

Aaron Norris  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.

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