1. Strategic Holding for Long-Term Benefit: A significant lesson highlighted in the podcast is the value of holding onto a portion of real estate investments for long-term gains. The discussion reflects on missed opportunities from the foreclosure crisis, where the benefits of retaining properties could have compounded over time. This advice is particularly relevant for small builders and investors who often look for immediate profits from sales rather than considering the long-term wealth accumulation that comes from holding properties and benefiting from appreciation and rental income.
2. Impact of AI on Real Estate Efficiency: The episode delves into the transformative role of AI technology in the real estate industry. AI platforms such as Expectify and Creo are improving the construction bidding process by enhancing speed and precision, while companies like Parcel Labs and Spatial Laser are leveraging advanced data analytics for underwriting and market predictions. These technological advancements are reshaping how real estate professionals approach tasks, enabling them to work more efficiently and make more informed decisions, ultimately leading to potential cost savings and improved management of investments.
3. Diverse Strategies for Different Investor Scales: The podcast discusses how investment strategies differ between large institutions and small or mid-sized investors. While large institutions may employ simpler investment formulas due to economies of scale and a capacity to absorb losses across a larger portfolio, smaller investors need to be more detailed and risk-averse. This includes considering a capital improvement plan for property investors and leveraging data to predict and manage future repair needs effectively. Understanding these differences is crucial for investors at all levels to optimize their approaches according to their scale and resources.

00:00 - Vikas Gupta (Co-host)
This is the Hacking Real Estate podcast, season two, episode six.

00:06 - Noel Christopher (Guest)
One of my great regrets was not when I was buying thousands of homes during the foreclosure and I ended up selling a lot of them was not holding them and taking it for small builders, for any investor, that if you're working and you're trying to find people to buy your deals and make the spread half of those, just hold on to half of them, or a third of them For every 10 homes you do keep one or two and you will be very happy in five years from the first one that you bought and it'll just start multiplying from there.

00:37
I think the other part of advice is that in any type of a market, there are transactions. There's deals at work. You just have to find the deals at work. Right now it's more equity heavy, so it's kind of like your forced savings because you can always leverage more later down the road if things change. But there's deals at work. There's not as many, but there's deals at work. I mean, look at the transaction volume of investors. It's gone down mostly because of institutional investors, but small investors are still out there buying because people need homes to live and there's opportunities within markets. So don't just think that there's no opportunities.

01:14 - Brandon Hall (Co-host)
Welcome to the Hacking Real Estate Podcast, where we dive into the stories of seasoned, hands-on and tech savvy real estate investors. We'll learn the strategies and tools they use to maximize returns and minimize hassle, all while navigating the rapidly changing real estate market. I'm your co-host, brandon Hall, and managing partner of Hall CPA, and I'm sitting alongside my co-host, vikas Gupta, ceo of Azibo. With our combined 15 years of experience in real estate investing and entrepreneurship, we're here to help you up your real estate game. Let's get hacking.

01:47 - Vikas Gupta (Co-host)
Hi everyone, welcome to this week's episode of the Hacking Real Estate Podcast. Our guest today is Noel Christopher. Noel is a seasoned executive with 24 years of experience in real estate, specializing in single family rentals and build to rent. Over his career he's overseen over 10,000 transactions. He's a thought leader with expertise in sales strategies, partnerships and corporate real estate M&A. Noel, welcome to the show.

02:15 - Noel Christopher (Guest)
Welcome, thank you. Thank you very much. Welcome to my version of your show.

02:22 - Vikas Gupta (Co-host)
Can't wait. In your own words, can you tell us your real estate journey?

02:30 - Noel Christopher (Guest)
Sure, I'll give you the far away very quickly and then the up close a little longer. I grew up my family was always in real estate. My dad was an entrepreneur in real estate and he was in Texas in the oil business and just all kinds of different things Always been an entrepreneur and that really not until I was in college and getting out of college I started to realize that was more in my blood. I also was a little bit lazy and decided to take the corporate route. For a little while I was a professional ski racer in high school and in college I also was a rugby player. I still do both those things. I live in Colorado. My kids ski race. I still do ski racing, but I was always involved in professional sports at some level. I did that until I was about 30. Really I did some kind of I'm living the ski bum life. Really I realized that when I, if I wanted to live the lifestyle that I was watching everybody else live, I needed to go make some money and figure out how to make money and then how to live the lifestyle, live the life I wanted, live where I wanted.

03:42
I moved to Chicago and I had been working for a time with a guy named Tom Hopkins who does sales training seminars, and he wrote how to master the art of selling how to master the art of selling anything. I promoted his sales training seminars in. A company called Inland Real Estate was one of my clients that I went to and gave a seminar and then a week-long training session. They were like why are you selling stuff to real estate guys? Why don't you become a real estate broker? That's what I did and I was thrown into the fire of Chicago Real Estate in 1999 and fast forward to today. Some of my longest term clients and friends and associates that I do business with today are some of the first people I met in 1999, or are their sons sometimes.

04:31
I worked in commercial real estate for Inland Real Estate REIT for a few years. The great financial crisis happened. I got into doing distressed real estate like everybody else. I took a little different flavor. I started working with the National Community Stabilization Trust on revitalizing Chicago neighborhoods and figured out how to get for-profit investors and developers into that program.

05:02
I went to college with an Arizona. I was good friends with Dallas Tanner, who is now the CEO of Invitation Homes. He made that introduction and from that point in 2011 into 2012, I was involved in the single-framed rental business. I realized that's what I wanted to do. Everybody else kind of gone in and out of the business and some people are newer, some people are old and got out of it. I stayed in it consistently since then and started.

05:30
I worked for, you know, with Invitation Homes and bought all kinds of homes in Chicago thousands of homes and around the country and created an underwriting team to underwrite homes around the country, did all these different things and then also ended up working you know which I thought I would never get into the business got into a property management business and on the institutional side it's a long story. I am in conference in Phoenix. I was meeting a buddy out for a drink before the conference and I ran into a private equity group that was about to buy Runners Warehouse and so I became a consultant for them and got into that side of the business and I've been in it ever since. Now I am well. Any questions on that, because my story goes on a little bit. I've kind of taken a turn after working the corporate side of the real estate side, but now I'm doing more things for myself and doing a couple other kind of startup ventures and really taking a different flavor on my experience.

06:36 - Vikas Gupta (Co-host)
Yeah, I would love to hear more about that experience in Chicago coming out of the great financial crisis and you know the revitalization like, tell us more about that. I mean I can infer some things, but love the details.

06:55 - Noel Christopher (Guest)
So the first look program I don't know if you're familiar with that is where now Homism, foreclosure or Ben, through foreclosure, they give either nonprofits or home buyers 30-day first look at a property. And there's a group called NCST that manages a lot of that first look program for nonprofits. And so I was buying, you know, two and three flat buildings in Chicago at foreclosure for $30,000, $40,000, rehabbing them, taking a hard money loan and then refinancing that loan into a rate and term Fannie Mae deal, because you couldn't get Fannie Mae purchase loans but you could get a refinance as long as you weren't doing cashouts. So I did that. I mean, at the time it was a big scale, you know, we did about 300 buildings in a couple of years and just, and I kept buying homes from a nonprofit and I'm like, okay, you know, and I've been around the block and I'm like, okay, this guy's coming from that closing room and then walking into my room and he's double closing. So I finally went into the other room and I'm like, okay, what's the deal here? Who are you guys? And they're like, oh, this is being bought directly from Fannie Mae through this NCST. And so I just kind of did an end around and realized that there are a lot of fly-by-night nonprofits who are buying these homes and supposedly revitalizing neighborhoods, where they're just flipping them to another investor. So they were getting it for 15, selling it to me for 30, and just playing the game.

08:21
So I went to this, the NCST in Dallas, and said, hey look, I own 25 buildings that you guys went through your program and I don't want to call it names, but these are nonprofits that aren't really nonprofits and we're the actual ones rehabbing the building and putting tenants in there and revitalizing it. And they said, well, you're not a nonprofit, now that's. The whole point is that you should allow a for-profit. Community-minded, for-profit developers actually care about the neighborhoods and want to revitalize neighborhoods and so created a program in Chicago, helped create a program for the entire country, but I got exclusivity in Chicago and added a lot of for-profit developers into that program and even some of the larger institutions For a while. They only wanted them to be then sold to homeowners and they started to realize, well, not everybody's destined for home ownership and not every building Something. You need renters. And so we did some things with some of the larger funds, with invitation homes, with Waypoint, and bought a lot of homes and revitalized the neighborhoods and fixed these homes up, got them back in the tax base. There's a lot of good things that happened with that.

09:31
So I worked with that program for quite a while, even through a while I was working with invitation homes. It was just a business that I built up and started building a big database of investors as well, because then we started underwriting thousands of funds. We were underwriting every home on the market and the institutional investors would buy to 1% or well, actually 3% or 5% of those. And then the rest of those homes were institutionally underwritten homes. And so we started. I created a list and started sending it out to all of the investors and said, hey, this is institutionally underwritten, why don't you buy this? And so I created a very huge network doing that and then started doing that in other places around the country and it was an interesting and we still do that today. We took that same model when I was at renters warehouse and we were buying homes. We were taking everything that we underwritten and sent them to all the investors and say, hey, you should buy these homes. Here's some financing, and it's hustling really is what it is.

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11:20 - Brandon Hall (Co-host)
Can you go a little bit more into the systems and the people that you need in place to underwrite every house on the market?

11:28 - Noel Christopher (Guest)
Well, I'll talk about then and I'll talk about now. So it's not much different, believe it or not. So then we were. The way we had trained an analyst is. I had a lot of VAs also doing a lot of grunt work and administrative work, but we would train an analyst and we'd give the analysts every new analyst that came in we'd give them, and usually these were internships in Chicago, going to Northeastern School of Real Estate, and they just need a place to work. And, lo and behold, most all of these interns their parents were some sort of a real estate developer or real estate investor on a big scale. So the connections are unbelievable.

12:07
If you take interns, they're the sharpest people, they're the ones that are usually come from a family that wants to do more business. So we would have them underwrite the city of Naperville same set of homes every time and have a set of homes, and so they spent about three days underwriting that and either at the end of those three days they hadn't figured out or they didn't. So we'd have a team that was taking in every single home that came on the market and we would underwrite every home and after a while you don't have to underwrite every home. You can look at a home and know in this neighborhood, a over here, if it's a 3-2, and it's more than $180,000, it doesn't work. Now it's like it's more than $400,000. So we were working in spreadsheets. We had a pretty straight formula, while some of these what I noticed is that the institutional funds had a very simple formula for calculating a yield and then as you got to the smaller funds, they had more complex formulas because they're trying to play this numbers game. So the institutional guys, it just doesn't work on a yield basis, is it in the right neighborhood? Is it the right type of home? Back then we were looking at replacement costs, which people don't look at too much now, but I had a team that was just constantly underwriting Today and then obviously the actual transaction. So it's getting offers out, managing that transaction, doing all those things a lot of minutiae depending on what market you're in title. There wasn't the national title groups you could go to that. You could go today. That could handle a lot of that work for you where you could buy multiple markets, whether it's scale or not. And it's interesting because of the most recent real estate downturn.

13:51
As far as a real estate industry, there's a lot of people that built these complicated acquisition platforms and you'd be surprised at how many of the larger funds. They just look at a spreadsheet and they take the data that they can get as far as the location and they do a lot of their research on the locations to find the places they think you're going to appreciate or have rent growth and have solid. What drives that job growth? Is it open to business type of a community or not? Things like that taxes and then it's just what's the rent? There's only so many things you're underwriting in a home. When you're looking at it, once you've picked your location, you're looking at what's the value, what's the rehab, what's the rent, and so you don't need a complex platform to do that. Now you need a complex platform to maybe pull in that information. Maybe you need it to manage the transactions and manage the rehabs, the scopes and all those things, but for underwriting you don't have to overthink it. It's pretty straightforward.

14:56 - Vikas Gupta (Co-host)
You can't predict the future, so and you had mentioned that on an institutional scale it's sort of like the larger they are, the sort of more simpler their formulas are. And is that mainly because they're just in the? They're like, on average, this is going to work and we can make so many bets and we have the pocket, so that if one goes south it's not that big of a deal, Whereas, like, if I'm going to make five investments, I have to kind of make sure that I can't take as much risk or I can't sort of like have that large portfolio approach.

15:31 - Noel Christopher (Guest)
Yeah, I think that yes, because economy is a scale. Another thing is I see some of these mid-sized funds, the guys maybe they're the five to 20 million dollar type funds that are just trying to figure out how to massage the numbers so they come up with these interesting or what I might call convoluted business models where it's just like does it work, does it yet? Yeah, you can look at your cost segregation and try to try to predict what your RM major or your major expenses or improvements are going to be over that 10, 20 year period and then try to put that into a model the massage numbers, but really it's is the rent more than the expenses.

16:17 - Brandon Hall (Co-host)
Yeah, and to echo that too, I run a CPA firm that works with a ton of real estate investors and every once in a while you get the exotic idea of running it through a B Corp or a non-profit or just something. That's just totally different and it all sounds really great in theory. But there's always a revision to the norm. There's always a revision to best practices, because at the end of the day there's you don't have to reinvent the wheel to run a business effectively and make money, and we see it in the accounting space a lot too Like.

16:52
I started my own firm extremely differently from what was out there at the time, and I've reverted a lot of my things to the norm. It's like you just realize that that's what you have to do to continue moving forward and you can do it better, right, but doing something better and even driving a lot of change to an industry doesn't mean that you have to reinvent the wheel, and there's a lot of wasted effort and time and money spent on that, when all you had to do was just figure out how to I don't know underwrite it a little bit better than the next guy or manage your repairs a little bit better than the next guy. That's really all you had to do, but instead we just created this massive amount of cognitive load to try to do something totally different and make the Forbes 30 under 30.

17:41 - Noel Christopher (Guest)
Yeah, I agree with you completely, brandon, and there's only so many things you can control on a real estate investment. So you have controllable costs and uncontrollable costs. Then there's certain things you can't change and the beneficiaries retention, how quickly you reply to our repair order or an issue with your tenant, and if you're investing or managing for others, we found that you get over 35% expenses to income. Property managers start to see a lot of churn because people are just it just doesn't make sense, and I'm talking about repair expenses. So when those repair expenses start getting high so there's so many things you can control and not everybody can act as like an institutional fund that puts in an extraordinary amount of money on the front end to defer those issues down the road, and it's a smart path or it's a smart move, but not everybody can do that. So you have to start then looking at okay, what is your what I call a capital improvement plan? You should be looking at it for five years. What's your capital improvement plan?

18:51
There's great data out there. Looking at, okay, what kind of water heater do you have? What kind of washer do you have? There's a company called 0.7 that does this. That works with the insurance industry, it's now working with a single family rental industry where you can look at what's the, what's the failure rate of your, of your, your appliances, and so you may have something.

19:14
You say, well, the useful life of this water heater is 10 years, but you actually look at it, truly only five, and when it fails it fails big. So you might as well replace it at year five instead of waiting till it fails. And so that's where data comes in, and then you can manage your plan for a five to 10 year period of what you're going to do that house, and then it becomes more apparent. And then you're looking at rent growth during that time and you kind of a lot of people just live month to month and and it's like, oh you know what, what just happened? Especially smaller investors are in one or two homes. They're not really trying looking at the bigger picture. And then they get to a certain point where they're like I need to sell this and they're, you know, throwing the baby out with the bathwater.

19:52 - Vikas Gupta (Co-host)
I could continue down this path and I want to. I want to get to. What are you up to now personally, and I think you know along the way, or maybe as a follow-up, like you know what scale are you at now and sort of what lessons you started to get into, a little bit Sort of like, what lessons did you learn at an institutional level that you've been able to apply at? You know as an individual, and what lessons you know? What do institutional guys do that like just doesn't make sense at the individual level.

20:21 - Noel Christopher (Guest)
Sure, so I'll talk about what I'm doing now. I was with a company called Renner's Warehouse from 2016 till 2022. I left Renner's to join a company called Evernest, which is a great property management company. The story of Renner's Warehouse they're invested into by private equity group started hit the end of the timeline of their investment. So then they decided to do a SPAC and the rest of it is kind of public knowledge. I can't go too deep into it because I'm still bound by confidentiality, but the SPAC has not been. They've been delisted and it's that story of that SPAC story which is not good for the majority of the people who do the SPACs and it's a cautionary tale with private equity. It just it just says you know you've got a timeline and a gun to your head at some point. So I left Renner's. We managed for about 8,000 institutional doors.

21:19
I was there from day, you know, as an employee, like six at the company built that up, moved to Evernest and my role at Evernest was to, you know, evernest was raising capital for an SFR fund. I joined Evernest in a year ago, almost exactly, and the whole real estate capital markets went off a cliff exactly a year ago. So I joined, built up a whole process to be able to acquire homes that scale. Evernest is a property manager. They manage about 16,000 homes. They wanted to get into the ownership side of things and realize that we weren't going to raise any capital. So I moved on from Evernest and I joined Evernest as a chief real estate officer. I moved on in July and that's kind of where I had this inflection point of what I was doing with myself to not immediately want to jump into something that was just a job where I was helping others make a lot of money and deploy capital and I was making a good paycheck and would be considered good money. But was I really creating wealth for myself? And so I decided to do two things. One was join into a family business that is a. It's a family business that we rehab Walmart's big big box stores, so they do the interior rehab and then the exterior restoration of Walmart's. For example, walmart just announced they're spending $8 billion or $9 billion on fixing 1500 of their stores. So right now we're in the process of bidding all those stores With that.

22:49
I saw, you know, over the months, all of these single family rental vendors and operators and platforms and everything, just trying to figure out what they were going to do, because everybody was was geared around transactions and when the transactions died, many of these support for the SFR industry died with it or are slowly dying with it. So I found an inspectify and said, hey, you guys should be doing commercial inspections. We have to, we have to bid 500 Walmart stores. Why don't you guys do the inspections for us? And we'll take some machine learning and AI and and and look at those pictures and look at plans and pull call outs and be able to do the bidding faster and then maybe sell those bids to other other vendors and competitors, start working with them.

23:35
And then we're making a strategic investment to a company called True Home, which is a, which is a platform that has, in the end, sfr from from sourcing acquisitions all the way through asset management, but the meat of it is construction management platform that is robust in the SFR world and it's currently doing hundreds of transactions a month which is crazy to think that that's even happening on SFR managing the construction. And we're repurposing that company to manage the rehabs of these big box stores that we're doing. And so I've kind of taken a lot of my contacts in SFR industry and and put that towards, towards some things in the construction industry. And then, you know, as I'm talking with the family business, it's like, well, you know, we did build a rent development over here locally in Texas. We're building single family homes because we have construction crews that are all over the country, so when the time is slow we point them towards building houses.

24:34
And so I'm taking a position also in True Home to help build up that platform and stay involved in the SFR space, but just taking a different position to where now I can advise for companies and get you know, I have a couple of companies I'm advising for where I'm getting some advisor shares and doing some different things. That opens me up to do what seemed like the scale is so much smaller than what I was used to doing, where we're buying hundreds of homes a month and hundreds of rehabs a month, but then the the return is way higher because you're you know you're able to personally invest in some things and get a better return and build some wealth and just get your fingers involved in more things. And so I'm trying to leverage all of my experience I've had over the years in order to do that. So that's, that's what I'm doing.

25:24 - Brandon Hall (Co-host)
So when you bid on all these Walmart stores and you, let's say that you win the bids and this is just probably just a super rookie question but how do you build teams across various geographies to get the work done?

25:40 - Noel Christopher (Guest)
So you know it's really about labor and so we so, uniquely to most of our competitors most of the competitors are, for example, they might be located in Atlanta and they'll bid all the Atlanta stores. We're bidding stores all over the country and we have mobile teams that go out and live maybe 30 to 90 days in a market and do the outside. You know, when they're doing their outside restoration of Walmart, so Walmart, and then through a process where they're just kind of painting over and doing things, now they're stripping, they're taking everything off and starting over and redoing the outside of the stores. And this goes with Home Depot's and Sam's clubs and you know all that kind of stuff which we do some of that business too. So so yeah, we're managing the labor, having project managers that are in house, then project managers that are in the field and then superintendents in the field, and I mean it is very, very, I mean the margin of error is very little, because what the margin error is? You do the job poorly and they call you back three months and tell you to go Remobilize and they're not paying you for it to go fix the work that wasn't done properly. So you learn your lessons very quickly.

26:45
So, and you know, as these want, for example, walmart, who's really a marketing company they start to realize more about their facilities. It is, you know, you have to bid the job, you have to inspect the job. So we sent out a team of inspectors from Inspectify. They went out and took these great photos and and then we're analyzing those photos and really looking at it so we can bid them remotely without having to always go to every location. Because if you, if there's something that was visible in the inspection, then you can't call up and say I need a change order for this. It's when you open the walls.

27:18
So it's, it's very, it's very structured. And then we're taking a lot of that and taking some of that processes and looking at okay, how can we do a build, a rent development, for example, or by investing some homes, and just take, I started in the commercial real estate world and I took a lot of those processes and put it into the single family on the programmatic you know underwriting and how you communicate with people. And then I've kind of gotten back into a little bit of commercial real estate and taking some of the things I've learned and and doing real SFR, investing at scale and then taking those processes and trying to put them in place. So you know, it's just learning by experience.

27:55 - Brandon Hall (Co-host)
Well, it's also interesting how you how you're using AI, so talk to us a little bit more about that. So so Inspectify is going in and they're taking pictures. The inspectors are taking various pictures. How are you using AI? Because, did I hear you right? You're using AI to review the pictures and try to write a bid.

28:12 - Noel Christopher (Guest)
Yes, so well, what we're doing and, as you all know, this AI, machine learning and everything is used pretty broadly. So this is, you know, taking machine machine learning and teaching it. What a crack in a wall looks like, what a maybe over doing progress photos, painters tape left on a door hinge, which you know. You leave painter's tape on a door hinge. Somebody could pull it off, but they're not going to do that. They're going to call you and say send somebody out here and it could be 1000 miles away. So taking those photos and and speeding up the process for a physical person to be able to look at them very quickly. So they call out and say you know, it's really good when you have photo taken on this date and then you have a new photo taken on this day and comparing those same photos, it's amazing and you can teach it, teach it some of those things. But really for the, for the bidding process, is just to speed things up. There's some AI platforms that can replans and do takeoffs and then do the bidding process, and so we're taking a lot of data so that we can instantly bid stores by what we see. We get over, we get a inspection report. That's a couple of years, that's a year old, and then take that and then look at it and say, okay, you know the plan, that first inspection. It's calling out on this wall, that is, you know, 20 by 50, 33 times there's a pain issue. Well, we don't even need to look at it anymore, we need to scrape that off and do new paint, for example. So instead of having to have a person go through every photo and try to figure it out, we're taking some, some averages and some numbers and pulling out plans that have that have inspection callouts on them, and reading those plans and just kind of deducting and then getting down to an exact number. So and then you know it's doing the same platform where you're looking at hours work.

30:03
So, like somebody, for example, doesn't, you know, walks off a job and doesn't, doesn't check out, it's going to, it's going to ping them right away. Get them to understand that you know they need to fill out their work. Taking a photo and when you take the photo, if it's blurry, it's automatically coming back and saying this is a blurry photo. Or if you're taking a photo and say I'm taking a picture of a wall but then you take a picture of a door. It comes back and says this isn't a wall, this is a door. You need to take a picture of a wall, or in that picture of the wall when you took it, there's actually paint missing. Here are there's painters, tape or there's different things. So they get instant feedback, so you can do your QC a lot faster.

30:42 - Vikas Gupta (Co-host)
So you've mentioned expectify. You said there's some, some AI platform, so what are the names of some of the other ones? So if I'm interested in checking this out, I can do some diligence.

30:55 - Noel Christopher (Guest)
So platform that we're working with is true, true home. I would probably be aggressive to say it's a full AI platform for reading plans. Creo is a platform that we're, that we're using and then you know, besides the standard, when you're looking at documents and and just being able to quickly take multiple spreadsheets and summarize up a lot of data and things like that, which is out of the box, there's not many things to do that, but you can write the algorithms to be able to take. I mean we were able to take, you know, initial scopes from Walmart of several hundred stores and then summarize them into one sheet and be able to look at things very quickly and then put our numbers and see the differences and like that stuff. I mean it takes hours to do, it would take us hundreds of man hours to do, and you can do. You know, in 20 minutes we have plans analyzed with every single call out on those plans telling you you know how many times it was called out on elevation, how many square foot was it that they that they noticed? You know things like that. I mean that's just that's. That's where I mean it's amazing, and so I don't have a lot of other names for some of that.

32:09
I mean, there are a lot of guys that are using some what they would call an AI or machine learning for underwriting and trying to predict markets. I honestly haven't found I probably the best company for that for underwriting homes and in looking at market intelligence. There's a couple on the data side. Parcel labs is my favorite. I don't know if you guys are familiar with those guys. Really, yeah, the great parcel P a, r, c, l, some of the best data. I call them the kind of the new school of the data guys. When you get away from black knight and core logic and all of this, they're pulling some great data. And also for underwriting. I think probably my favorite platform right now is spatial laser and they they can pull information.

32:58
If you're looking at doing build a rent development what the rental saturation is in that market kind of where you're taking it to a level where you would normally hire a consultant and pay them $10,000 to do a market report. You're taking it all. You're taking it further so you can know if you really need to spend the money on that report, because we're going to still need to do that report down the road. You know you're able to look in it. You're able to look in a in a neighborhood and see, okay, not only who owns what in that neighborhood or what are institutional investors what the saturation is. So you might be looking to underwrite a home in a neighborhood and you go, wow, this neighborhood is 70% rentals. That might not be the best neighborhood for you to go into and try to compete with a large investor because you have no control over the rental market there. As opposed to a market that is more traditional, which I like to say is no more than 30-35% rentals, is a stronger market to own a rental home in. So there's a lot of that data out there. That's great. What's great with Parcel Labs is that they can take a neighborhood or an area and tell you all the institutional investors. They can also give you a list of all the small investors in that market, at least their entities, and you can do some research and start doing some reverse engineering to find who they are. And then also you can see because it's public, it's public record what's their loan amount. Usually that's on the public record there. So then you can start doing some things that the guys that own we buy ugly houses at one point, home festers they've been doing that for a long time where they can pull up somebody and go hey, you haven't made a payment in three months. Your loan amounts 350,000, your houses worth 500,000, we'll give you 360, walk away today. So there's that kind of information, because a lot of people are locked in their homes Not that people are missing a lot of payments, but there's some people that may want to get out, and so that's the interesting part.

34:55
One other thing I want to make a comment on that's interesting. I don't know if you guys have thought and I think that's where we started talking was with home equity investments. A home equity investment is they're called HEIs If you look them up. They just got rated by Morningstar Crawl and a couple of the rating agencies about to rate the bonds sells their equity in the house. They stay in the position of the home. They stay in the home, the traditional home equity investment. They stay in the home. They sell their equity just like they sold the house. They continue to make their payment. It's not a second loan. When they sell the home they pay back the equity that they took and then they split any upside with a predetermined split. It depends on the home equity investment.

35:37
Devil's in the detail. So there's groups like Unlock Redwood Trust is doing one, and so that is for a lot of people who are locked in their equity. They can actually get out of it without having to give up their loan. They can get that equity out. They don't have to do a second. You know a HE lock, which is the rates are not very great for those right now. And there's a group called Bonus that's doing a SFR flavor of this to where they're saying okay, we'll get out of the home, you move out, we'll take it over, we'll put a tenant in there and eventually we'll buy you out of this equity and we'll split the profits with you. And so it's just like they're selling the home. And it's crazy because we call it just an assumption, but it's not a true assumption because some of the lenders are tough on that stuff. So just that part is really interesting to me and I think that's going to be a big, big, big part of the housing finance in the next few years.

36:34 - Vikas Gupta (Co-host)
Yeah, that's cool. That's also a way to diversify concentration to a certain extent. Right, if 50% of your net worth is tied up at your house, you still want to live there. But okay, it's only sell off some of the equity and go buy a rental home right Somewhere else.

36:54 - Noel Christopher (Guest)
Yeah, and it's not hurting your DTI. It's not another loan. You're not going to have to make more of a payment. You are giving up a percentage of your future home price appreciation, but today that's. You know what is that? It's going to be somewhat flat for a little while, but you are giving up some of that and there's a formula and that was probably the most interesting thing, as I was taking a break from the real estate world for a few months that I started to talk to these home equity investment groups and it's very interesting. I think that's going to be a huge part.

37:24 - Vikas Gupta (Co-host)
Who's funding them right? The overall capital environment for real estate is not great right now, so I'm curious as to where the appetite is for that.

37:37 - Noel Christopher (Guest)
So they're selling these bonds. So you need to have the capital, but there's a securitization market for it. I mean, there's a securitization market for it. There's institutional capital available. You know, obviously the numbers aren't what they were a few years ago, but they're still pretty envet to envetages, I mean. I think it's. You know, something on the three-year IRR is 20% a year on those things for an investor. So it's very works very, very, very well. Those that are doing unique business models really start to innovate, compared to when the money's free and there's not as much innovation or there's over innovation because they have so much free money. They just have to make up business models just to try to over complicate things, and so I think that's really interesting.

38:24 - Vikas Gupta (Co-host)
Cool, well, we're coming up on time. This has been great, though We've touched a lot of things and I feel like we could easily do a series of follow-ups, follow-up episodes Definitely, definitely, if we can get you back, I'd love to do, like a dive on, like if I'm interested in buying out a foreclosure or what I need to know, because that's not a, that's not a subject that we've we've gotten into on this podcast.

38:49 - Noel Christopher (Guest)
It has a subject for many people lately.

38:52 - Vikas Gupta (Co-host)
Yeah, but we are coming up on time. So, if you don't mind, we'd love to go into our three closing questions. Let's do it. So question number one what is your favorite book? And it doesn't have to be real estate related.

39:10 - Noel Christopher (Guest)
So my favorite book right now it's been my favorite book for a few years it's Primitive by Marco Greenberg, great book. Marco is kind of a real estate guy, but it's just about finding your primitive self and tapping into that and using that to drive your ambition and all those things. It's a really good book. Usually if I was at home, I have it on my desk here. I like promoting his book.

39:32 - Vikas Gupta (Co-host)
Nice. Brandon, in the bookshelf behind it tends to have a lot of the books that I recommended. Brandon, do you have this one?

39:38 - Brandon Hall (Co-host)
I don't have that one, no, but I'm looking it up.

39:42 - Vikas Gupta (Co-host)
Great. So question number two and I think this is the first time this actually hasn't really come up during the course of the podcast, so feel free to go a little bit more deeper into it what is more important to you in real estate investing? Cash flow or appreciation?

39:57 - Noel Christopher (Guest)
Ooh, I would say both, but cash flow. I mean, if you have no appreciation, you need to have cash flow. Appreciation is a cherry on the pie, right. So if your model is based around appreciation right now, you would not have a model right. You would be really hard to find investors and a lot of people built a real estate, raise a lot of capital buying it. This is the low low yield with no appreciation, and there's a lot of guys who are in trouble. If you raise money in 2021 and deployed it in 2021 and 2022, you're kind of having some trouble there.

40:33
So appreciation has saved all of these huge real estate investors, make them look really smart the last 10 years. Now you're gonna see who can really operate and drive efficiencies and operational. And so that's all of the big real estate operators. That's what they're doing. They all of a sudden just spun it around, looked inward and trying to figure out how to make themselves more efficient on those controllable costs. But cash flow is cash flow. I mean, unless you're don't care about making money, I don't see how cash flow is the most important.

41:11 - Vikas Gupta (Co-host)
I appreciate you picking one and final question, any other final piece of advice, insight for our audience that we didn't get a chance to touch on during the course of the episode.

41:25 - Noel Christopher (Guest)
Yeah.

41:25
So I think one of my great regrets was not when I was buying thousands of homes during the foreclosure and I ended up selling a lot of them was not holding them and taking it for small builders, for any investor, that if you're working and you're trying to find people to buy your deals and make the spread half of those, just hold on to half of them or a third of them For every 10 homes you do keep one or two and you will be very happy in five years from the first one that you bought and it'll just start multiplying from there.

41:58
And I think the other part of advice is that in any type of a market there are transactions, there's deals at work. So you just have to find the deals at work. Right now it's more equity heavy, so it's kind of like your forced savings because you can always leverage more later down the road if things change. But like there's deals at work, there's not as many, but there's deals at work. I mean, look at the, look at the transaction volume of investors. It's gone down mostly because institutional investors but small investors are still out there buying because people need homes to live and there's opportunities within markets. So don't just think that there's no opportunities.

42:36 - Vikas Gupta (Co-host)
Yeah, there's some great names that you had mentioned. That may help some people do some research that they may not have thought about otherwise, and we'll list them in the show notes. Great, well, thank you so much, Noel. This has been fantastic. You certainly. I think we barely scratched the surface of your expertise and all the various lives you've led in real estate, but thank you for coming on, sharing your time and sharing your wisdom with us.

43:04 - Noel Christopher (Guest)
I appreciate it. I look forward to let's do this again, All right?