Charles Karich is a local California real estate investor, realtor, and broker who has been serving the real estate market for over 43 years. Charles began his journey with Century 21 Masters in Walnut, Ca. before moving on to South Coast Properties.
He was instrumental in building South Hills Properties to one of the leading independently owned non-franchised firms in Southern Charles’ knowledge, expertise, and background in the residential resale market are extensive. Long-standing working relationships with banks, financial institutions along with a network of experienced real estate agents have made Charles and South Hills properties a company well known for its exemplary service.
Charles believes in giving back through volunteering and financially supporting local and international charities that include Habitat for Humanity, the Sheepfold, and Royal Family Kids to name a few. Helping others in need is part of his company’s heritage and a core pillar.
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.
Bruce Norris Thanks for joining us. My name is Bruce Norris and today our special guest is Charles Karich. Charles is a local California real estate investor, realtor and broker who has been serving the real estate market for over 43 years. Charles began his journey with Century 21 Masters in Walnut, California before moving on to South Coast Properties. He was instrumental in building South Hills properties to one of the leading independent owned non franchise firms in Southern California. Charles’ knowledge, expertise and background in the residential resale market. His extensive, long standing relationships with banks, financial institutions, along with a network of experienced real estate agents have made Charles and South Hills properties a company well known for its exemplary service. Charles also believes in giving back through volunteering, and financially supporting local and international charities that include Habitat for Humanity, the Sheepfold, and Royal kids, Royal Family Kids to name a few helping others in need as part of his company’s heritage and a core pillar. So, Charles, we welcome you to our show.
Charles Karich Thank you, Bruce. Thank you. Thank you, ah, you’ve aged me a bit. It’s actually 33 years, 1988 is when I got into real estate, but..
Bruce Norris Well, you know, I didn’t understand that number myself. When I looked at that. I went, well, what did he do? Start when he was nine?
Charles Karich Yeah, actually, but 33 years is a long time. Yes, it is.
Bruce Norris But it changes something, too. So, you said What now? 1988? Or..
Charles Karich Yes. That’s when I started into real estate.
Bruce Norris Okay, well, that that’s a big. See, I think there’s something about when you when you get into real estate, and what happens, like I got into it in 1981, 1980-81, right at the end at and you know, interest rates were crazy. They were 17%. And in some, so in some ways, it, it altered my way of thinking about 10% interest rates. You know, if you’re, if you’re a kid, all you’ve ever seen is four and now there’s two. And somebody said you’re going to see six someday, you know, freak out. For me, that’s still, that’s still a deal.
Charles Karich That’s right. And I didn’t get to see, I saw the 17 and 18% that my parents had to deal with. But I, when I did get in to the real estate in 1988, we’re happy if they were single digits, because at that time, we weren’t dealing with 17 or 18. But when I first started, I think it might have been was definitely above single digits, which it had to be around 10 or 11%. So, if it was single digit, we were happy.
Bruce Norris Yeah. celebration time. Now, why real estate? Where, were your parents in real estate?
Charles Karich Oh, good question. I’m the son of a, sewer construction worker, Bruce. And my dad was extremely hard worker. That’s where I learned the amazing work ethic. And he never really wanted his boys to have an older brother going to construction. So, I was in the laborers union, actually, literally a ditch digger for a while and realize this isn’t really what, what I wanted to do. And then I started doing a little bit of tree service work and had a Tree Service Company, it was student’s professional Tree Service that I used to kind of pay my way through junior college. And then I realized at that point, too, it was really difficult work and really dangerous work with the chainsaw and just felt like that wasn’t what I was really wired to do. And through working at one person’s home, and then he moved up into this exclusive area in Diamond Bar in the country. And then he said, ‘Why? Why are you doing this? Why aren’t you in real estate?’ I actually did get my license in about ’83. I would only use it for a few months. I don’t even count that point where it just nothing took off. But he said ‘I will help you’. And he said, ‘Gosh, you have your license. People would really wish they had one you should take off and use yours.’ And he said I’ll help you this and that. So, I followed up with through much prayer. It was about maybe a year later and the Tree Service just kind of dropped out. Their business just went down. And I was left kind of wondering what to do. And I was thinking of going in with another friend’s company who was a huge company in Pomona, Tom Day Tree Service. And he and I had a talk and he said Charles I will hire you but he said Is this really what you, what do you want to do? And he told me kind of the Ben Franklin approach right down in the piece of paper the pros, and he said if you want do this, then I’ll hire you in a minute. And I had a follow up talk with them or looked at it and realized, gosh, you know what I really want to work with my mind. I want to do it just kind of all aligned with the real estate. And I’ll never forget it. At that point. And I was praying a lot. I’m a Christian, man of faith and really believe that God is there and helps guide and direct our life. And I was praying. And I called my friend Rick, the top agent, I didn’t even know he was the top agent. And at that time in Diamond Bar, the home and honestly Bruce at that time, I didn’t even, Oh! I didn’t even have money for a lockbox. I was legitimately and I said, Rick, I don’t even have money for a lockbox, ‘Oh, you can borrow mine’. And I said, ‘Rick, I really don’t believe I should be working on Sundays, either. I just that’s the time off that, that I spend it at church and with my family and time to take a break. And I believe that’s why I’m how I’m supposed to live.’ ‘Oh, you’ll be fine. Even though he works all days a week. In the end, it was amazing, Bruce, because he helped me. And he did he loaned the lockboxes. He was there, it was amazing. And I will say this. The very first person I told I was in real estate, said he wanted to sell this house. And I did! follow ups equal to this that it only took me about 200 homes afterwards or 300 to door knock later to find my next listing or months or year. The very first person, I really got confirmation by God, for me that I was supposed to be in the real estate and what an adventure and ride it’s been and amazing people, including you, Bruce, who as all the audience knows he’s been such a blessing to all of us. And I happened to get to know him in the mid 90s. Through his California Comeback as I was knee deep in the first REO market after all, the defense industry cut back and we had the real estate flat on its heels from about 91 to 97. And that’s where I heard Bruce to begin talking about his California Comeback and really been following you ever since. And because of all this great wisdom and information you’ve shared. That’s a huge part of my success. So, and I’m sure for other listeners as well. And for that we all collectively are very thankful for what you’ve done for all of us.
Bruce Norris Charles, thanks a lot. I appreciate that more than you more than you know, it’s been, obviously it’s been the best thing that ever went you know, going down a road where you don’t even know you’re going to head and that’s very interesting trying to figure out what’s next in California then turn it into a 25-year passion. But maybe as most things started did by stubbing my toe, you know, building, building some custom homes when the market was not ready to say you can sell them, you know, 1990 was a bad time to show up with a half a million or six half million dollar houses in Palm Springs.
Charles Karich Right.
Bruce Norris So, yeah, learning to survive that. I’m curious. Did you have an entrepreneurial bent to you when you were, when you were a kid?
Charles Karich Well, that’s a really good question. So, I grew up as I mentioned, my dad was in construction, sewer construction, extremely hard worker five in the morning, 4:30 in the morning, leave for the job and then come home at six always work, even rain. My dad would go check on the job. But he wasn’t much of an entrepreneur, but we moved from La Mirada to Diamond Bar in ’79. And my dad had this idea. Let’s start a business. So, he joined with two ideas, either, and back then when I was in high school, and some can relate maybe if Mike can choose listening, he probably could relate. The big thing for us was mopeds. And so my dad and we had this really extremely successful bike shop and marmorata Spence’s bike shop. And so we thought well bike and moped shop, or 711. 711 hadn’t been proven yet in the whole area was brand new kind of it. So, unfortunately, my dad didn’t pick 711 or I probably be the king of 711 and not on this show right now. Instead, we started RMC mopeds and bikes Roy, Mike and Charlie. And so, my dad let my brother and I run it, and we ran it straight into the ground. We didn’t know what we were doing. We were quite, quite successful for a while Bruce, we would sell mopeds. And at that time, so that was ’79 and ’80. The moped would cost $500 and I still remember this and we would finance it. And I think the interest rate to finance through Crooks motor corporate, Moped Corporation or Motor Corporation, Crook is made in Germany $18 a month, they would finance it with just an extremely minimal down payment. I don’t remember the length of the loan, but I think the interest rate was 18 a month. And I think it was about, yeah, eight, very cheap to finance of the moped. And then when Carter cut out the credit, as what you were referring to the interest rates just, there was no real interest, the ability to be able to finance a small ticket item like that. And when we had to just go for no credit sales that killed the whole part of it. But that’s why I learned from 17 to about 19. The entrepreneurial spirit kind of birthed in me my brother went into construction, he always wanted to do that. And he’s still doing it to this day, it wasn’t my dad’s heart that either one of us would want to do that. But my brother went that way. But I learned more. I only have my A.A degree, I dropped out of college for financial reasons, I didn’t have the money to continue to complete it. But I really feel that was an incubator for the entrepreneurial spirit of having that moped shop and my dad had to keep his regular job. And here’s an amazing thing, Bruce, this is no pressure to put on your 17 and 18 year old, 18 and a half year old brother, my dad took a second out of his house a Diamond Bar. And I think at that time, in 79, it was about a 10 or 20% of the value of the home of the second which was about 20,000 or a $100,000. So, $20,000 a second and he told my brother and I, by the way, boys, we lose the house. Pressure to put on us. But the good news is, they didn’t lose the house. And we did lose the business. We closed the business, but I learned a lot. And it really birthed the entrepreneurial spirit of just having the freedom and the flexibility and the time. And when I went to Mt SAC, I remember when I was taking principles of real estate Mr. Knames, the junior college professor used to talk about the freedom of real estate that he could go to his kids games, and he can do these other different things. So, maybe I was never wired for corporate America, we’ve done a lot as a vendor for them working in the world of corporate America. But on the side of taking care of the, the asset management piece form, but never working inside. I’ve been self employed really for, Gosh, pretty much all my life ever, almost since I’ve been 18. Just about.
Bruce Norris Yeah. Now, when you get into, when you got into real estate, you’re at. If it’s 88, you’ve got two really great years of inflation of real estate prices. And that, you know, in the mindset of somebody in California, hey, that’s kind of normal things, things go up. It’s always, it always does well. And then all of a sudden, and for the first time in 1990 through a very long stretch, the whole game changes. So, you’re you’re kind of at the beginning of that, you know, you only have a couple years experience. Did you, could you see ‘Okay, oh, I’ve got to change who my client is’. Because that’s basically if you’re an REO agent, you’re doing something that’s not, there’s no blueprint in 1990 for that.
Charles Karich No, no, really good point. Bruce. You’re right in ’88. It was go! go! gang, gangbusters. Uh, prices were going up. And it lasted for about two years. And then we hit Desert Storm, the first, first Desert Storm. And then with the aerospace industry, it all dropped out. And I used to door knock, I used to get regular listings people had equity at that time. I think in my area, which is, was primarily in the Diamond Bar area. Remember the homes were selling for about 180 or 200,000. And I think they ballooned up in about two or three years to just below in the twos to 50 to 80, somewhere like that. So, where that explosive growth, and then it just shut off, the sales just shut off. And the market just stopped. And then as the prices went down pretty fast from ’91, ’92 and three, about a year into it. I realized my gosh, and we didn’t have short sales back then. These people aren’t selling, a lot don’t have equity, and all the way that I used to work just dried up and isn’t working. And I was actually going out to, I mean at that time. I know our listeners that are maybe 20 years into real estate don’t understand but back 30 years ago, we had these silos for each individual MLS and you didn’t really… Now you can work the world we can see what’s happening and, but before if you weren’t a member of that board and that board you couldn’t even really… The territories were very small. And so, I was going out to a look at somebody’s property out in the Inland Empire. And I saw somebody sign up ‘REO agent’, and she worked in Chino. At that time, I worked in the City of industry, I believe. And I thought, wow, REO? What is that? And I thought, What’s your service area? Maybe I can talk with her. So, I had a meeting with her. And since it wasn’t a threat for her, and I was in entirely Eastern LA County, she was in the San Bernardino hub. And we sat down for a day and I said, ‘What do you mean you get your listings by, by fax, by FedEx, and, and such, or UPS? and I said, ‘Wow!’ And by these asset managers, and I just took copious notes, Bruce, I really just wrote everything down that she told me and a went back and just started cold calling these banks I got the daily, I think it was a daily…
Bruce Norris Default service.
Charles Karich Daily commerce or daily journal where it would show in a few days what reverted and I could see what reverted and I started calling and I landed on one company that was called EMC Mortgage Corporation, which was tied to Bear Stearns, which had 1000s of listings in California through a company called Westfall. And somehow we got in, they would have you do a million BPO’s. And after a while they throw you a bone. But we went through that. And after a while they liked our work, we really, really tried to do everything we could the best we possibly could, and one by one by one. But I remember one time I cold call Wells Fargo somehow got the asset manager, and then said, can I send you up a BPO? And I sent it up to him. It’s all it’s all the wrong form. And then I kind of started arguing with him I said ‘What do you mean, it’s the wrong form? I spend time on it? How can that be?’ I was young and dumb. But somehow I realized, okay, I need to give him what he needs and serve him with whatever it is. And we did and more and more and more. And it just started to where we became really immersed in working with the banks and really, really busy with them and all it Fannie Mae, Freddie Mac, did the multifamily for Freddie Mac, it was a lot, we did a lot, learned a lot in, in that five years probably sold as much as some of their entire careers. So, just learned a tremendous amount and valuations. And it was GE Capital that we got in with, which is also an extremely difficult account. And I’ll never forget, it was a one of their meetings. It was a Monday morning, showed up in Irvine. And I showed, and my dad was always if you’re not half an hour early to work, you’re late. And if you’re not the last to leave you left early. So, aspiring to that I was the first there there at 9am conference, maybe it was 8am. That’s kind of new on the block for GE. But they had a lot of properties. And I’ll never forget, I was the first to walk in the room. And they looked at me. They said we’re gonna make you really busy. Oh, that’s great. That’s great. And went back. And yes, they really did make make me really busy. But the very first REO conference, I went, this was probably ’92, or three REO Mac in Palm Springs, I had to borrow the money from my brother to go. And at that point, I’ve only sold one REO. And it was for a third lender, I believe he foreclosed on a property in Pomona. And I got called by one of the asset managers from RFC-Residential Funding Corp, which is the jumbo loans, a golden goose account. And somehow I struck up conversation with him at the conference. He said, ‘Well, Charles, yeah, maybe I could use it. Well, how many REOS have you sold?’ And I couldn’t. And I had to think really quick. And I said, ‘Well, I could just tell you this. I have 100% track record, every REO I’ve ever listed I’ve sold.’ And so, yeah, it’s been an amazing ride. I’ve flown around the country, met some amazing people. And yeah, it’s been, it’s been really, really a cool, cool journey.
Bruce Norris Well, what’s, what’s interesting about what you just said, is the transformation that buyers had to make for the first time as well. So, like you were saying, if you were door knocking people with equity, I was advertising to have them call me. And then in 1990, and 91, those conversations all changed. I felt I changed. I thought I was a counselor, you know. So, what’s your house worth? It’s worth 150 or 170. And that was a crisis, the calls were double normal, and everybody was in the same boat. So, I remember thinking, well, maybe the distance is over. In other words, the buying directly from people business is had its day. And then, luckily, I got a hold of an MLS. And I opened it up and went, ‘Holy cow! You’re sitting here?’ I mean, they were sitting there, like at 40 50% off on some of the stuff I wanted. And so, I went change my whole game plan. And that really was the beginning of me thinking of the quadrant system, how we teach people, you know, when you have foreclosures that are escalating, your buyer had changes from talking to people to talking to people like you, that control inventory, and short sale agents, and so forth to where it’s repetitive business, you can rely, you know, we’re not going to get a big percentage of what you do. But when one falls through the cracks, you know, you know, you can call the guy that’s going to write the check and be done with it. Well, that changed the whole dynamic, and then going to auctions. I don’t mean trustee sales, but I mean, the physical auctions that HUD used to hold. So, those that 90 was just an interesting period of almost a re-education. And then of course, that changes again, after ’97, ’98. You didn’t hear about REOs for a long time.
Charles Karich That’s right. That’s right.
Bruce Norris Not in great numbers. Now, maybe you did, because you had all the relationships. So, you got the few that they had. But by and large, it didn’t raise its head to what 2008, something like that.
Charles Karich That’s right, I remember distinctly where the market changed because GE Capital used to have us do while their property was through all the different stages, continually value it and even an eviction and it was in I think it was around 1998. And we would always say that it had depreciated. And we would say whatever percentage, half a percent or dropped 5000, since last reporting period, however, forget it was this eureka moment of Whoa! It’s actually leveled off. Actually, this is up ticked, we couldn’t believe it. Actually for that six year slide ish, six year period-ish or so. And then it’s Wow. And then sure enough, from ’98. And we did, we still had a little bit of REO up until about 2000, or 2001. And then those completely were gone. And from about maybe the end of 1999 to 2000 to ’05 they were they were gone, they were gone.
Bruce Norris But there was other opportunity, you just changed your hats and did did something else.
Charles Karich We changed our hat we did we started, I started working with the new home builders and tried to really entrench relationships with the builders using some of the same method or methodology that we would use for the banks and the valuation. And we’re really experts at valuing these properties. So, we let the builders know regarding their sales with contingencies when the people have to sell their home and buy a new one. If they refer those people to us, we’re going to make sure that that contingency doesn’t get bogged down, that they’re going to be represented, right, that we’re going to take good care of their people and help them get the most amount of equity so they can move into their new home. And we created this really cool reporting system use some of the same systems, we would report with valuation, and we could show a real quick snapshot of the real true value really pretty close. And it wouldn’t be one over inflated, was an honest opinion of really the value. And most of the time, we’re really, really on the mark on it. And then they can see, okay, here’s their position. Yes, this is a good one. We were kind of like their pre-qualif for the lender for the builder for their contingencies. And we did that really well. And then we also did really well by getting their listings as well.
Bruce Norris Were you able to buy some of those homes or did that that wasn’t really the intent?
Charles Karich Yeah, that really wasn’t the intent. And it feels like kind of a conflict. So, at that time, we ran two different businesses, we started buying at the trustee sale, and then we work with the builders at the same time. So, from about 19, maybe about 2000 to about ’05 while we were running the builder program, we also were buying at the trustee sale. So, we bought a tremendous amount at the trustee sale.
Bruce Norris Which is interesting. So okay, let’s let’s think about that. So, as an REO agent, your business was sort of done at about 2000 as far as the volume but the opportunity for the ones that had equity was still, was still good. So, you can become a buyer to trustee sale.
Charles Karich Yes, there were still at that point. They were not reducing like they did this last cycle where everything almost everything was underwater, the cycle before, it didn’t really do reduce bids and pretty much went out and you would just fine. Yeah, maybe, maybe whatever went it seemed like had equity because the values have come up. So, there was a lot going to sale a lot with postpone, but I would say 90% of that got snatched, got purchased by the third party purchaser because it didn’t have equity.
Joey Romero Thanks for joining us this week. That’s gonna do it for our interview with Charles Karich. Please tune in next week for part two.
Narrator 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.