WEBVTT 1 00:00:00.120 --> 00:00:02.839 For thirty five years, Cindy Stumpo has been a female 2 00:00:02.879 --> 00:00:06.440 home builder with a passion for design, a mastery of detail, 3 00:00:06.480 --> 00:00:09.400 and a commitment to her crack. With daughter Samantha Stumpo 4 00:00:09.480 --> 00:00:11.039 by her side, I don't need my whole. 5 00:00:10.880 --> 00:00:12.599 Family on a date with me. That's a good note. 6 00:00:12.599 --> 00:00:13.560 It's goddemn weird. 7 00:00:13.640 --> 00:00:17.160 See. Stumpo Development is the only second generation female construction 8 00:00:17.239 --> 00:00:18.320 company in the country. 9 00:00:18.399 --> 00:00:22.760 You're crazy, You're a wacko, You're insane. I mean, it 10 00:00:22.879 --> 00:00:23.879 just doesn't end together. 11 00:00:24.039 --> 00:00:27.640 Cindy and Samantha welcome guests to explore the world of construction, 12 00:00:27.960 --> 00:00:30.640 real estate, development, design, and more. 13 00:00:30.719 --> 00:00:32.719 Unpredictable. Every time I think I know what you want, 14 00:00:32.840 --> 00:00:34.600 you switch it out. But that's what makes sure. 15 00:00:34.479 --> 00:00:37.359 Houses all your dy discuss anything that happens between the 16 00:00:37.439 --> 00:00:38.439 roof and the foundation. 17 00:00:38.560 --> 00:00:41.520 Nothing is off limits. You truly do care about everybody. 18 00:00:41.600 --> 00:00:43.119 She can yell at, you can scream, but when you 19 00:00:43.159 --> 00:00:45.679 get her alone, she's the best person on the planet. 20 00:00:45.719 --> 00:00:51.240 Cindy Stumpo is tough as nails. 21 00:00:48.799 --> 00:00:54.079 Yea and welcome to Siddy stump with Tough's Nails on 22 00:00:54.359 --> 00:00:57.280 WVZ News Radio ten thirty. I'm getting tired of that opening, 23 00:00:57.320 --> 00:01:00.679 by the way, okay, and a student tonight we have 24 00:01:01.079 --> 00:01:02.119 Nna Garrillell. 25 00:01:02.200 --> 00:01:03.799 John Kelly Wren, Tyler Winder. 26 00:01:03.920 --> 00:01:05.959 What do you too do? I'mna play like I don't 27 00:01:05.959 --> 00:01:07.159 know you guys. What do you too do? 28 00:01:07.640 --> 00:01:08.000 Yeah? 29 00:01:08.079 --> 00:01:08.799 What do you do? 30 00:01:08.920 --> 00:01:11.319 I run a real estate credit fund in Boston, lends 31 00:01:11.319 --> 00:01:12.400 to real estate developers. 32 00:01:12.439 --> 00:01:16.280 Want to talk to the mic, not me. I'm gonna 33 00:01:16.280 --> 00:01:17.840 torch your daddy. Go ahead. 34 00:01:18.760 --> 00:01:20.840 So I'm a private lender. I lend to real estate 35 00:01:20.879 --> 00:01:22.439 developers in the Boston area. 36 00:01:22.719 --> 00:01:26.000 Okay, And what's your raid's going for? Right now? As 37 00:01:26.000 --> 00:01:27.359 a hard running guy, I know. 38 00:01:27.319 --> 00:01:30.359 Every deal is different twelve to thirteen so twelve to. 39 00:01:30.319 --> 00:01:33.519 Thirty percent, and these guys can afford to pay this 40 00:01:34.280 --> 00:01:38.000 plus the land, plus the product, plus the labor and 41 00:01:38.079 --> 00:01:38.879 still profit out. 42 00:01:38.959 --> 00:01:39.200 Huh. 43 00:01:39.719 --> 00:01:40.040 Yes. 44 00:01:40.400 --> 00:01:43.480 Anybody getting into trouble, any clients or anybody know. Of course, 45 00:01:43.680 --> 00:01:44.840 of course there's trouble now. 46 00:01:44.719 --> 00:01:49.239 There's always, But there's always trouble. I would say historically, 47 00:01:49.239 --> 00:01:51.519 I think one difference today, and I think we talked 48 00:01:51.519 --> 00:01:54.480 about this before, is that the environment for development is 49 00:01:54.519 --> 00:01:56.760 getting tougher today than it was several years ago. 50 00:01:57.359 --> 00:01:59.319 I'm so glad everybody sing of my tune today. 51 00:01:59.359 --> 00:02:03.239 Okay, so one of the the we have the rates. 52 00:02:03.280 --> 00:02:05.040 But I think that's one thing. I think the other 53 00:02:05.079 --> 00:02:07.519 thing is the development cycle is longer. And so what 54 00:02:07.560 --> 00:02:10.919 we're seeing is developers are carrying projects for one thousand 55 00:02:11.560 --> 00:02:14.840 and that that the cost may be slightly higher and 56 00:02:14.879 --> 00:02:17.199 the sales price may be the same, But because the 57 00:02:17.199 --> 00:02:18.960 project is stretched out for longer. 58 00:02:18.680 --> 00:02:20.759 We're not pulling their money out and we're not pulling 59 00:02:20.759 --> 00:02:22.759 the money on the other end. And to get the 60 00:02:22.800 --> 00:02:25.680 special permits and to get the it's just cuckoo crazy. 61 00:02:26.199 --> 00:02:28.759 Oh but let's build them because we need them. But 62 00:02:28.800 --> 00:02:31.120 while while they're saying that they got our hands tied 63 00:02:31.159 --> 00:02:33.919 behind our backs, and that's what nobody understands. 64 00:02:34.280 --> 00:02:36.560 And so it's a tougher environment. And I think historically 65 00:02:36.639 --> 00:02:39.080 what we've seen a while ago is we saw developers 66 00:02:39.080 --> 00:02:41.919 make mistakes and things go wrong and the projects didn't 67 00:02:41.960 --> 00:02:44.319 do well. I think what we're seeing today is some 68 00:02:44.479 --> 00:02:47.800 developers are great developers, that they've been great developers, and 69 00:02:47.840 --> 00:02:51.240 today they're running into problems because of cash flow, the 70 00:02:51.319 --> 00:02:54.199 sales cycles slowed down, the development processes. 71 00:02:53.759 --> 00:02:57.599 Taking in one way, developer, it's a problem, guys thirty 72 00:02:57.599 --> 00:03:01.919 eight years of experience, over leverage and undefunded the two 73 00:03:01.960 --> 00:03:04.039 words that will bring you to your niece and you 74 00:03:04.080 --> 00:03:06.199 will taste your own blood. I've said this all along, 75 00:03:06.639 --> 00:03:11.599 said this my whole career. Over leveraged, underfunded period. Stop 76 00:03:11.639 --> 00:03:13.560 trying to be the biggest guy in the block, right. 77 00:03:13.599 --> 00:03:17.319 Yep, take on. I mean we advise our clients. Hey, 78 00:03:17.520 --> 00:03:19.719 you know you better have one or two projects well 79 00:03:19.719 --> 00:03:22.840 capitalized than three or four thinly capitalized. 80 00:03:22.879 --> 00:03:27.080 Bingo. I agree. And what are you doing, handsome boy 81 00:03:27.120 --> 00:03:27.400 over there? 82 00:03:27.560 --> 00:03:30.280 Hello, handsome boy in the corner, Tyler Winder. I have 83 00:03:30.319 --> 00:03:32.840 a real estate brokerage and also real estate developer, one 84 00:03:32.919 --> 00:03:36.560 of Sean's clients as well as we're developing single families 85 00:03:36.599 --> 00:03:38.400 and condo conversions and then around Boston. 86 00:03:38.439 --> 00:03:40.319 All right, so let's be honest. How's it going for you? 87 00:03:41.199 --> 00:03:43.680 Don't be passing any bologna like give it to us hogh. 88 00:03:44.080 --> 00:03:46.360 No one likes boloney. That's what we're all on here for, Okay, 89 00:03:46.639 --> 00:03:48.840 I hit her out on the head. It's the sentiment 90 00:03:48.840 --> 00:03:51.360 in the development world right now is it's extremely difficult 91 00:03:51.400 --> 00:03:54.319 to get a product from acquisition all the way to 92 00:03:54.319 --> 00:03:56.199 the end because the sale cycle is longer. There's a 93 00:03:56.240 --> 00:03:58.400 lot of green tape, red tape, yellow tape that we 94 00:03:58.439 --> 00:04:01.800 have to walk through every single step of. 95 00:04:01.719 --> 00:04:02.439 The parade tape. 96 00:04:02.840 --> 00:04:04.719 That's pretty much it is. Yeah, yeah, throw some parade 97 00:04:04.719 --> 00:04:09.560 taper in hereally, but all of the outside noise that's 98 00:04:09.599 --> 00:04:12.439 making a development project longer and longer and tougher to 99 00:04:12.479 --> 00:04:13.639 get to a certain point. 100 00:04:14.039 --> 00:04:15.080 It's really putting it. 101 00:04:15.520 --> 00:04:19.480 Keep numbers simple, Let's keep numbers simple. We know what 102 00:04:19.519 --> 00:04:23.040 I build in. What's your average average land price and 103 00:04:23.120 --> 00:04:25.959 average development price? Like, give me your average. 104 00:04:25.600 --> 00:04:28.839 Average usually like let's call it a million dollars of 105 00:04:28.920 --> 00:04:31.399 land acquisition, Okay, anywhere from. 106 00:04:31.399 --> 00:04:33.519 Great, you know, nine hundreds. Well, let's stay at the million. 107 00:04:33.639 --> 00:04:35.759 Let's stay at the million. So let's say you borrow 108 00:04:35.800 --> 00:04:39.279 a million from him. Right, here's your buddy. Yeah, how 109 00:04:39.360 --> 00:04:41.079 much might does he have to put down because he's 110 00:04:41.079 --> 00:04:41.839 your buddy. 111 00:04:42.480 --> 00:04:43.439 Like close twenty percent? 112 00:04:43.759 --> 00:04:45.800 So you're still asking for twenty percent down as a 113 00:04:45.839 --> 00:04:48.720 hard money guy, right, because you want to be heavily protected. 114 00:04:48.800 --> 00:04:50.639 Right, And he has to be getting out of good value. 115 00:04:50.639 --> 00:04:51.920 And I think one of the things that we got 116 00:04:51.959 --> 00:04:52.360 to talk about. 117 00:04:52.560 --> 00:04:55.240 Hold on, let's throw all the sudden out he wants 118 00:04:55.279 --> 00:04:57.800 to know that you're buying it actually the good value, 119 00:04:58.000 --> 00:05:00.399 because if you don't, he's going to ask you for 120 00:05:00.480 --> 00:05:02.240 thirty percent? Am I correct? 121 00:05:02.560 --> 00:05:03.959 Or just say we're not doing the deal because we 122 00:05:03.959 --> 00:05:04.759 don't think it's good for you. 123 00:05:05.199 --> 00:05:07.839 So what makes you decide that, your Wizard of Oz? 124 00:05:09.439 --> 00:05:11.720 There you go, the Wizard of Oz. It's it's doing. 125 00:05:11.759 --> 00:05:14.240 I mean, we've done three hundred and fifty loans out there, 126 00:05:14.240 --> 00:05:15.680 we've left across over one hundred. 127 00:05:16.319 --> 00:05:19.079 Now, okay, but those three hundred loans that you've done, 128 00:05:19.160 --> 00:05:22.040 or whatever you've done, if I'm not mistaken, you've done 129 00:05:22.040 --> 00:05:23.839 it all in the good times, right the last twelve 130 00:05:23.920 --> 00:05:24.399 years I. 131 00:05:25.600 --> 00:05:28.439 At this current firm, Yes, but I have also gone through. 132 00:05:28.399 --> 00:05:30.639 Eight And how you're too young? How old are? 133 00:05:30.879 --> 00:05:31.560 I'm not too young? 134 00:05:31.720 --> 00:05:32.439 I forgot? How old you? 135 00:05:33.480 --> 00:05:34.959 Forty five? 136 00:05:35.000 --> 00:05:36.959 Forty five? A wait? Brings you back to when. 137 00:05:39.240 --> 00:05:41.959 I was in way. I was at Lehman Brothers, okay, 138 00:05:42.439 --> 00:05:47.040 in London, and I was working on financings. Brother Yeah, 139 00:05:47.040 --> 00:05:49.480 we did. I started six and ended in O eight. 140 00:05:49.560 --> 00:05:51.839 So I know, if you a bit about crisises and 141 00:05:52.759 --> 00:05:56.759 financial crisises and what happens when things go south with 142 00:05:56.839 --> 00:06:01.240 the financial you know system. So I've been around before. 143 00:06:01.639 --> 00:06:05.240 So you guys decide, okay, we're going to write his 144 00:06:05.360 --> 00:06:07.879 loan a twenty percent. I might come in, you might 145 00:06:07.920 --> 00:06:11.000 say I want forty percent on this deal. Thirty five right, 146 00:06:11.560 --> 00:06:14.160 as long as you're just safe and secure, worth good. 147 00:06:14.319 --> 00:06:17.000 Yeah, And we're underwriting it both on what it's worth 148 00:06:17.000 --> 00:06:19.639 today and then what it's worth that exit. And we're 149 00:06:19.639 --> 00:06:22.519 writing it on exit assuming you know, we'll underwrite and say, 150 00:06:22.560 --> 00:06:24.800 we've worked with Tyler enough that we know he knows 151 00:06:24.839 --> 00:06:27.160 how to run his projects, and he knows his budgets, right, 152 00:06:27.199 --> 00:06:29.600 we verified those budgets as well. We send it a 153 00:06:29.639 --> 00:06:31.600 cost consultant to go through the budget. But we'll know. 154 00:06:31.720 --> 00:06:33.560 You know, somebody comes in and it's they're building for 155 00:06:33.560 --> 00:06:35.319 a one hundred and fifty bucks a square foot. You're going, 156 00:06:35.360 --> 00:06:36.000 all right, that's. 157 00:06:35.800 --> 00:06:37.560 Not but you also know where the money is being 158 00:06:37.600 --> 00:06:40.879 heavy loaded when you look at the We do espressa right, 159 00:06:41.199 --> 00:06:44.519 we do, and every guy analog, every guy heavy loads 160 00:06:44.560 --> 00:06:45.160 on site work. 161 00:06:46.000 --> 00:06:50.879 Yeah, maybe and maybe right because every single budget line. 162 00:06:50.959 --> 00:06:53.319 You know, this happened to us recently. Somebody brought us 163 00:06:53.800 --> 00:06:55.959 a budget and said, hey, we want this construction budget. 164 00:06:55.959 --> 00:06:57.839 This is our budget and we looked at the framing budget. 165 00:06:57.879 --> 00:07:00.319 We said that's a bit high. And my team going, 166 00:07:00.319 --> 00:07:03.000 why is a framing budget so high? And I go, guys, 167 00:07:03.519 --> 00:07:05.560 you know what the framing budget is, right that that 168 00:07:05.639 --> 00:07:08.600 framing budget is their own crew. That's the dollars that 169 00:07:08.639 --> 00:07:10.920 they can take to bring back in for the cash 170 00:07:10.959 --> 00:07:12.600 for them to pay for the rest of the project. 171 00:07:12.600 --> 00:07:14.480 And that's why it's early on in the project. But 172 00:07:14.839 --> 00:07:17.120 we know that's the whole thing is that we don't 173 00:07:17.120 --> 00:07:19.040 we don't allow that. We don't allow you. 174 00:07:19.079 --> 00:07:22.120 Actually think think about this, when you actually think what 175 00:07:22.160 --> 00:07:25.920 a construction loan money is. We have to pay it 176 00:07:26.000 --> 00:07:28.720 before you guys give it back to us. Right, it's 177 00:07:28.720 --> 00:07:31.360 the most crazy thing you've ever seen. We have to 178 00:07:31.480 --> 00:07:34.800 do the work, pay the guys. So you have to 179 00:07:34.800 --> 00:07:38.879 have some money to self fund that development. Right. So 180 00:07:38.920 --> 00:07:41.360 when I say to people, well, before you start a 181 00:07:41.399 --> 00:07:43.680 custom home, whatever you're doing, do you have two one 182 00:07:43.680 --> 00:07:45.920 thousand dollars to dump in, because before you get your 183 00:07:45.920 --> 00:07:47.800 first K, you're going to go through one hundred easily 184 00:07:48.360 --> 00:07:50.920 depending on what you're building. Right. So that's the funny 185 00:07:50.959 --> 00:07:53.319 part about a construction loan or any loan that you 186 00:07:53.360 --> 00:07:56.920 take hard money loan is that you guys don't pay 187 00:07:56.959 --> 00:08:00.560 the developers or builders till the work is done. Yeah, 188 00:08:01.079 --> 00:08:02.920 and you are not going to get a good deal 189 00:08:02.959 --> 00:08:06.399 in a sub if you can't pay weekly like this. 190 00:08:06.399 --> 00:08:09.639 And the deposits upfront bing go. And so that's you mean, 191 00:08:09.720 --> 00:08:12.279 I think people a lot of you know, especially if 192 00:08:12.279 --> 00:08:14.120 you're doing larger projects. I think if people are doing 193 00:08:14.199 --> 00:08:16.639 smaller projects where there's less renovation, it's more of a 194 00:08:16.639 --> 00:08:18.759 down payment and you're really doing you know, kind of 195 00:08:18.759 --> 00:08:21.079 a small fix and flip where you're just you know, 196 00:08:21.279 --> 00:08:24.199 you'd say, putting lipstick on a pig. That's one thing, right, 197 00:08:24.240 --> 00:08:26.360 And we don't finance a lot of those. Those aren't ours. 198 00:08:26.360 --> 00:08:28.480 We're dealing more with the professionals. And we say our 199 00:08:28.519 --> 00:08:32.440 clients are bankable clients with non bankable situations. 200 00:08:32.480 --> 00:08:36.000 Okay, well let me stop you there. If they're bankable clients, 201 00:08:36.200 --> 00:08:38.120 why are they going to a bank and paying nine 202 00:08:38.159 --> 00:08:40.600 percent for construction loan or eight and a half? 203 00:08:41.879 --> 00:08:43.399 I mean, by the time, if you look it out, 204 00:08:43.559 --> 00:08:47.080 it's over a twelve month period with the profit margins 205 00:08:47.120 --> 00:08:49.600 in there, one two things, nine and twelve. Isn't that 206 00:08:49.679 --> 00:08:51.679 much of a difference? Especially when you're only paying on 207 00:08:51.759 --> 00:08:52.759 drawing funds. 208 00:08:52.960 --> 00:08:56.120 Okay, well, let's stop with that. He buys something from 209 00:08:56.120 --> 00:08:59.519 million dollars, he puts twenty percent down, he's putting two 210 00:08:59.600 --> 00:09:02.960 hundred though thousand dollars down. He's financing eight hundred thousand. 211 00:09:03.320 --> 00:09:05.440 That eight hundred thousand's costing him? How much a month? 212 00:09:05.519 --> 00:09:05.919 Right now? 213 00:09:06.519 --> 00:09:07.120 One percent? 214 00:09:07.799 --> 00:09:12.080 Was it? Eight eight thousand dollars a month? Right? We 215 00:09:12.200 --> 00:09:14.720 got a hold that thought that God, it comes in 216 00:09:14.799 --> 00:09:17.159 my face so fast, I hold on. You listen to 217 00:09:17.159 --> 00:09:20.720 Cidey Stumble Toughest Nails on WBZ He's Radio ten thirty. 218 00:09:20.759 --> 00:09:22.480 Oh you get up on the screen. Love it? Okay, good, 219 00:09:22.600 --> 00:09:23.200 We'll be right back. 220 00:09:23.240 --> 00:09:26.679 Sponsored by Floor and Decor, National Lumber and Village Band. 221 00:09:40.080 --> 00:09:43.000 And welcome to Sidney Stump o w Bzeen News Radio 222 00:09:43.080 --> 00:09:45.360 ten thirty Toughest Nails and we are back in the 223 00:09:45.399 --> 00:09:47.159 studio with Lena Grillou. 224 00:09:47.399 --> 00:09:52.080 Okay, Sean Kelly Wren Advisers and Tyler Winder. 225 00:09:52.200 --> 00:09:55.799 Okay, let's run through the numbers. So hypothetically, you got 226 00:09:55.799 --> 00:09:59.279 eight hundred thousand on the land acquisition, right you're paying 227 00:09:59.320 --> 00:10:01.759 eight thousand of the month. That's double to what you 228 00:10:01.799 --> 00:10:06.399 were paying two years ago. Right, Oh yeah, okay, how 229 00:10:06.440 --> 00:10:08.519 fast is that eight thousand? Well around as fast as 230 00:10:08.519 --> 00:10:10.039 when I was young girl and I had that twenty 231 00:10:10.080 --> 00:10:13.960 eight day cycle. Right, it comes back, roof comes really fast, right, boom, 232 00:10:14.000 --> 00:10:17.879 twenty eight days. So eight thousand a month, Now, time's 233 00:10:17.919 --> 00:10:20.600 that by twelve let's just say, twelve months before you 234 00:10:20.840 --> 00:10:23.399 actually get the excavator to the ground. That's how much 235 00:10:23.440 --> 00:10:28.279 money ninety six that you're never getting back, right, that 236 00:10:28.360 --> 00:10:32.120 we're never getting back. But because that's never had to happen, 237 00:10:32.120 --> 00:10:33.240 it's what I'm saying, he's. 238 00:10:33.120 --> 00:10:36.759 Not getting he's coming into these almost These are not 239 00:10:38.039 --> 00:10:40.360 you know, projects where you're taking and we're just not 240 00:10:40.399 --> 00:10:43.440 going to fund something where it's twelve months before you 241 00:10:43.440 --> 00:10:45.200 get an excavator in the ground. Right, if you're not 242 00:10:45.279 --> 00:10:47.879 ready to go and you can't go, go go. 243 00:10:47.799 --> 00:10:49.519 But what if we can't go, go go. 244 00:10:49.559 --> 00:10:52.240 Then don't borrow. This isn't this isn't the project for you, right, 245 00:10:52.279 --> 00:10:53.440 this isn't the loan for you. 246 00:10:54.519 --> 00:10:56.720 But how do you know he's not going to get 247 00:10:56.720 --> 00:11:00.279 held up in engineering for three months? Because because a 248 00:11:00.320 --> 00:11:04.279 new engineer says, okay, so now engineering department works right now, 249 00:11:04.279 --> 00:11:07.519 the building pot works as long as they buy the 250 00:11:07.799 --> 00:11:10.360 twenty nine day send you well, we want you to 251 00:11:10.440 --> 00:11:14.320 change that drainage, it stops all over again. You realize that, right, 252 00:11:14.720 --> 00:11:16.919 they can do that by the state of Massachusetts and 253 00:11:17.000 --> 00:11:19.960 many other states. So you have to the twenty nine 254 00:11:20.000 --> 00:11:22.279 day to tell you go back, and then they have 255 00:11:22.320 --> 00:11:26.480 to get in touch us civil engineer. You can't control that, and. 256 00:11:26.440 --> 00:11:28.679 There's always going to be those kind of hiccups are 257 00:11:28.679 --> 00:11:29.279 going to come along. 258 00:11:29.320 --> 00:11:30.200 So everything out. 259 00:11:30.279 --> 00:11:32.799 They weren't every one of my plans every civil. 260 00:11:32.639 --> 00:11:35.039 Two years ago, three years ago, and money was extremely cheap. 261 00:11:35.080 --> 00:11:37.840 We're able to move things quicker. We're underwriting these as 262 00:11:38.000 --> 00:11:40.559 twelve month carry times. Now we're looking at it, it's 263 00:11:40.559 --> 00:11:43.080 like you automatically have to bump a by right, single 264 00:11:43.120 --> 00:11:45.879 family build from twelve months to eighteen months because the 265 00:11:45.919 --> 00:11:49.399 permitting process, the engineering process to get started is so 266 00:11:49.519 --> 00:11:52.200 much more difficult. So to Shaun's point, where he's going 267 00:11:52.240 --> 00:11:55.320 to say, is like how much you're actually carrying. He's 268 00:11:55.360 --> 00:11:56.919 not going to look at something that needs a special 269 00:11:56.960 --> 00:12:00.840 permit that might take a year to get approvals. 270 00:12:00.840 --> 00:12:07.360 Okay, so if we take let's say, let's not even 271 00:12:07.399 --> 00:12:09.080 play in my game because we can't play in my 272 00:12:09.120 --> 00:12:09.919 game because that's. 273 00:12:10.039 --> 00:12:13.120 But I think part part of it is, and this 274 00:12:13.159 --> 00:12:15.519 is underwriting it right. This is going out and saying, well, 275 00:12:15.519 --> 00:12:17.879 what is the advantage of somebody using a private lender 276 00:12:17.960 --> 00:12:19.879 versus a bank? And I always tell people go to 277 00:12:19.919 --> 00:12:21.840 a bank. If you can get financed by a bank 278 00:12:21.919 --> 00:12:23.679 and you can get the cheap rates, go to the bank. 279 00:12:24.320 --> 00:12:28.200 That's not my this is and my clients are borrowing 280 00:12:28.200 --> 00:12:29.879 from banks, just not. 281 00:12:29.919 --> 00:12:32.759 On that at first. Hard money guys to me, we're 282 00:12:32.799 --> 00:12:35.519 guys that need to get to closing fast. You could 283 00:12:35.519 --> 00:12:38.360 get them to closing fast, then they could refinance within 284 00:12:38.399 --> 00:12:39.159 three four months. 285 00:12:39.200 --> 00:12:41.519 We have no prepayment penal, so you can refinance. And 286 00:12:41.519 --> 00:12:44.080 we have guys we we finance something and somebody's already 287 00:12:44.080 --> 00:12:46.159 telling us they're going to refinance us. They've already got 288 00:12:46.200 --> 00:12:48.600 a bank. The bank just couldn't close in the timeline, correct. 289 00:12:48.600 --> 00:12:52.000 So we have those projects. What we find often enough 290 00:12:52.519 --> 00:12:54.960 is once people do a loan, they go, oh, you 291 00:12:55.000 --> 00:12:57.639 know what, we're going to refinance with the bank. But 292 00:12:57.679 --> 00:12:59.120 instead of doing it in thirty days, we're going to 293 00:12:59.159 --> 00:13:01.320 add some value to the so we can bump up 294 00:13:01.360 --> 00:13:03.200 the value or we can season it and maybe we 295 00:13:03.240 --> 00:13:05.639 only need to get six months to seven seasoning, So 296 00:13:05.720 --> 00:13:08.039 we'll hold the loan for six months because we're going 297 00:13:08.080 --> 00:13:10.559 to see the value on the back end. And then 298 00:13:10.559 --> 00:13:13.279 if you're looking at let's say it's a six percent 299 00:13:13.360 --> 00:13:16.320 versus a twelve percent, well that's only half a year, 300 00:13:16.559 --> 00:13:19.679 so that's three percent versus what you're paying six percent 301 00:13:19.759 --> 00:13:22.000 for half a year. So it's only three percent differential 302 00:13:22.440 --> 00:13:24.720 on the rate. And then at the end somebody's going 303 00:13:24.799 --> 00:13:27.559 to refinance into another loan, but is getting the value 304 00:13:27.600 --> 00:13:29.480 added by the bank. So there's a bit of a 305 00:13:29.480 --> 00:13:31.120 strategy there from the borrowers. 306 00:13:31.200 --> 00:13:35.600 So let's just take you were in lending and you 307 00:13:35.679 --> 00:13:39.679 got stuck in COVID and your your developers couldn't get this, 308 00:13:39.720 --> 00:13:43.320 couldn't get that. Delays, delays, delays. Prior to COVID, it 309 00:13:43.320 --> 00:13:46.559 would take c Stumble Development eight to nine months to 310 00:13:46.559 --> 00:13:49.200 build a nine ten thousand script for house. We'd blow 311 00:13:49.240 --> 00:13:51.879 up a thirty five hundred squrift for house in four months. 312 00:13:52.039 --> 00:13:55.200 It was like, phof I can't do it has nothing 313 00:13:55.200 --> 00:13:57.159 to do with my age. It has to do that. 314 00:13:57.240 --> 00:13:59.519 The guys don't want to work as hard anymore. They 315 00:13:59.559 --> 00:14:02.200 don't want to go was fast and furious anymore. COVID 316 00:14:02.240 --> 00:14:04.600 was a game changer. And I think a lot of 317 00:14:04.639 --> 00:14:07.039 my subs are aging out. A lot of my direct 318 00:14:07.039 --> 00:14:09.679 guys are aging out. They're getting tired. I'm not getting 319 00:14:09.720 --> 00:14:12.399 tired out there. I'm still like crazy Cindy out there. 320 00:14:13.039 --> 00:14:16.639 But you got to get back to a time frame 321 00:14:17.200 --> 00:14:20.080 that these guys are not going to let interest eat 322 00:14:20.080 --> 00:14:22.279 them up and spit them out for breakfast like you 323 00:14:22.399 --> 00:14:25.679 just can't when you're working to pay interest and you're 324 00:14:25.679 --> 00:14:28.279 working to pay overhead, and when you see your bottom 325 00:14:28.320 --> 00:14:31.399 line number and then you step in and then the taxes, 326 00:14:31.720 --> 00:14:34.279 especially in a state, the mass tax, is this that everything? 327 00:14:35.000 --> 00:14:36.200 What am I going to work for? And then I 328 00:14:36.240 --> 00:14:38.080 got to get forty eight percent of the government, I 329 00:14:38.120 --> 00:14:40.120 might as well retire. It gets to a point where 330 00:14:40.399 --> 00:14:44.200 it doesn't make sense, right. So the question is to 331 00:14:44.279 --> 00:14:46.440 make when back in the day, when guys went to 332 00:14:46.480 --> 00:14:49.679 hard money guys, they moved that project along really fast. 333 00:14:49.720 --> 00:14:52.440 They were banging them out. But you can't bang them 334 00:14:52.440 --> 00:14:55.840 out anymore. So when you write alone, what's the average 335 00:14:55.879 --> 00:14:58.320 time twelve months, fifteen months, eighteen months. 336 00:14:58.360 --> 00:15:00.399 I mean we talked about so we typically long term 337 00:15:00.440 --> 00:15:02.879 for us is twelve months with a six month extension, 338 00:15:03.240 --> 00:15:05.799 and the six month extension is there to say. 339 00:15:05.679 --> 00:15:08.960 Okay, but then you charge that six month extension of course, right, 340 00:15:09.399 --> 00:15:12.399 so let the listeners know that you do pay. So 341 00:15:12.440 --> 00:15:15.320 the first twelve months you pay a cent amount of points. 342 00:15:16.000 --> 00:15:19.080 If they need to execute the next six months, it's 343 00:15:19.240 --> 00:15:20.679 this amount of points again. 344 00:15:20.879 --> 00:15:23.720 Yep, it's you pay another point and an additional three 345 00:15:23.759 --> 00:15:24.480 percent on the rate. 346 00:15:24.720 --> 00:15:27.600 Now with hard money, guys, you have points fluctuating with 347 00:15:27.639 --> 00:15:30.399 what the market's doing too, or you locking them in 348 00:15:30.399 --> 00:15:30.960 for that year. 349 00:15:31.399 --> 00:15:33.000 So we lock in for the year. 350 00:15:33.200 --> 00:15:34.080 You lock in for the year. 351 00:15:34.159 --> 00:15:36.919 Yeah, we don't. We don't fluctuate the rate at all. 352 00:15:36.960 --> 00:15:38.799 It's just paying. And it's a twelve month long right. 353 00:15:38.840 --> 00:15:41.240 If you can't get the rate right within those you know, 354 00:15:41.279 --> 00:15:44.039 twelve months, you know, don't write the loan right if 355 00:15:44.039 --> 00:15:44.279 you're so. 356 00:15:44.799 --> 00:15:46.879 It's actually funny one of my good friends, and I 357 00:15:46.960 --> 00:15:49.639 won't mention a name, because very well known guy in 358 00:15:49.679 --> 00:15:51.080 Boston said, what the hell am I doing? 359 00:15:51.120 --> 00:15:51.159 So? 360 00:15:51.159 --> 00:15:52.639 Then I just might as well open up a bank 361 00:15:53.360 --> 00:15:57.720 like guy's worth over a billion? So he's what am 362 00:15:57.759 --> 00:15:59.879 I messing around with here? Anymore? I could do so, 363 00:16:00.039 --> 00:16:04.080 but a bank and lend money right period and not 364 00:16:04.200 --> 00:16:06.720 to the stress of the aggravation of all the buildouts 365 00:16:06.679 --> 00:16:10.440 of the commercial and this and that. But that's he 366 00:16:10.480 --> 00:16:12.120 could say that, but I know who he is, and 367 00:16:12.120 --> 00:16:14.120 that's his high It's like what gets me out of 368 00:16:14.120 --> 00:16:16.960 bed every morning. I should be retired, right, That's that's 369 00:16:16.960 --> 00:16:19.159 the truth. Let's call it what it is. I'm going 370 00:16:19.200 --> 00:16:19.799 to do myself. 371 00:16:20.039 --> 00:16:20.919 Yeah, get boring. 372 00:16:21.279 --> 00:16:25.200 Right, So begins the banking industry. But I've saw how 373 00:16:25.240 --> 00:16:27.559 that went too in nineteen ninety ninety one, ninety two, 374 00:16:27.639 --> 00:16:29.759 nine three. That wasn't pretty sight, by the way, And 375 00:16:29.799 --> 00:16:31.480 I think and I think that stayed with me, by 376 00:16:31.519 --> 00:16:32.000 the way. 377 00:16:31.879 --> 00:16:33.159 And I think a lot of people think of the 378 00:16:33.159 --> 00:16:33.840 hard money lending. 379 00:16:33.879 --> 00:16:33.960 Right. 380 00:16:34.000 --> 00:16:36.279 It's easier to do one loan, and people talk about, oh, 381 00:16:36.320 --> 00:16:37.679 I'm going to do a private loan. I'm going to 382 00:16:37.720 --> 00:16:40.080 do a loan in this and it's give one loan 383 00:16:40.159 --> 00:16:42.600 and you collect the interest on one loan. Okay, Well, 384 00:16:42.679 --> 00:16:45.039 let's do one hundred loans. You've got to And then, 385 00:16:45.080 --> 00:16:46.759 by the way, you have to have one hundred loans 386 00:16:46.879 --> 00:16:48.879 almost at all, you know, somewhere between seventy and one 387 00:16:48.919 --> 00:16:51.080 hundred loans for fund at all times. Right, you have 388 00:16:51.120 --> 00:16:54.080 to have diversification. You've got to collect payments in all those. 389 00:16:54.600 --> 00:16:57.240 You've got to give issue construction draws and all of those. 390 00:16:57.399 --> 00:16:59.840 You've got to review the paperwork. You've got to do payoffs, 391 00:17:00.200 --> 00:17:03.960 you have to do modifications. So it's not you know, yes, 392 00:17:04.000 --> 00:17:05.960 the loan, the lending. Everybody's like, oh, it seems like 393 00:17:06.000 --> 00:17:09.160 it's passed well, the single loan. You're in and running 394 00:17:09.160 --> 00:17:09.960 a business. 395 00:17:09.759 --> 00:17:12.319 Yeah you are, but you're pushing paper, you're moving, You're 396 00:17:12.400 --> 00:17:14.279 you're you're sitting in an office. You can do this 397 00:17:14.319 --> 00:17:16.599 from Florida. You can do this from Alaska. I got 398 00:17:16.640 --> 00:17:19.279 to be out there on job sites. Yeah, which one 399 00:17:19.279 --> 00:17:20.960 you want to do? At my age? Sit with you're 400 00:17:21.000 --> 00:17:22.359 sitting or suit we're up sitting. 401 00:17:22.640 --> 00:17:23.920