REI190: Old Vintage Homes w/ Tyron McDaniel

22:57You're surrounded, you're learning the industry, you're learning the financial side of it. It sounds like that was a bit of your plan to know that first. How did you get into buying homes, fixing them up, buying them like you say, old raggedy houses? I love that phrase too. Again, it was a step being, becoming a mortgage broker was a stepping stone. It was a serendipitous step. I wanted to understand finance. And so what began to happen by virtue of dealing with, in certain cases, subprime, we would get people that will call us that were in situations where they were behind three, four or five months and stuff like that and facing foreclosure or something like that.

23:33And so the first house I bought was from, it was a referral from a colleague of mine who was an investor and it was coming around Christmas time and he was just so bombarded with some stuff. He's like, man, here, call these people. They want a loan. If they can't get a loan, they want to sell. Long story short, it was a family. It was an older couple that they had just really, they weren't in a financial bind as much as they had just gotten tired of being homeowners. They're up in age and they just wanted to get basically what I call a hassle-free lifestyle. And so they're like, hey, listen, refinancing will be cool, but we still would have a mortgage.

24:08We don't want that. We just want to be done with all this. And so I was like, man, I'll buy this house for me. Let me buy it from you and I'll give you some capital so that you can move on. And so I bought a house. We put$9 ,000 in it. We paid one of our painters. And to this day, I laugh. We paid him $6 ,000 to paint this house, which was a lot. He was the expensive painter. So we wouldn't put him in this house. Today, I get that same job done for$2 ,500. But anyway, paint the house for$6 ,000. and then I did$1 ,000 in landscape and$2 ,000 in something else. But we spent nine grand and we turned around and lifted the house and sold it.

24:45And I think we made about$22 ,000, $24 ,000,$22 ,000, I think, net. That feels good. Yeah. I looked at my wife and my wife like, wait a minute. As I was a broker, we would buy a house or two here or there. I bought a duplex of$42 ,000 and I learned a valuable landlord lesson that I'll into in a second year if that comes up. So we started buying a house or two here or there. And this was before the 2008 crisis, right? Like 2005 or so? Exactly. Yeah. This is 03, 04, 05, 06 and stuff like that. So we're buying a house or two here or there. We keep one, we sell one. At this point, this was a side hustle, right?

25:25You were doing this on the side. You still... Yeah. The transition out of lending was one day, I'm talking to someone like yourself, you want a six and a half percent interest rate. And I'm like, man, Patrick, listen, the best that we can get right now, six and three quarters. And I looked up against the wall and I'm like, dude, I didn't get into the game to be hackling over a quarter or eighth of a basis points on a rate. This is all the stepping stone. And so it was like that was that moment where I said, you know what, let me go ahead and transition into the next phase of this. And so I told my wife, hey, listen, we're going to start doing more investing.

25:57And so that's what we did. I went out and bought an old raggedy house over in a part of Houston we call Sunnyside. And I'll never, 5146 Higgins is the address. And the reason why I remember because that house gave me pure hell. Everything from, there was a homeless guy that was stealing the aluminum siding off the house. So I'd come and we had this amount of siding and come back two days later. One and a half of my whole wall is gone. I see him parked down the street taking my side to go sell it. We were doing the roof I didn't know that there was a fire that had happened in the house. So we uncovered all this fire damage.

26:34My contractor was taking advantage of me. It just every mistake that could possibly happen, happen on that house. And the nail in the coffin on that deal was I knew it had termites, right? Cause we saw a little dirt. So I'm thinking, okay, we got a couple of boards we're going to replace around this window. And we pulled the sheetrock back and I see this two by four stud. And I literally, I grabbed the stud. Some made me grab the stud. Let me find a piece of paper here. I have to give you a visual. I can imagine it just went like poof. Yeah. So there's this stud, right? And I grab it and Patrick, literally, this paper is giving me more resistance than the stud.

27:11The termites had eaten up the entire interior of this two by four. And the only thing left was the shell. And you come to find out the whole front wall of the house had just been decimated by termites. And I said, dude, I could actually build a house with less headache and hassle than this piece of crap. Like this is crazy. And so that house made me start to look at wanting to do new construction because I was like, new construction is easier. Then I went out and found a new construction project where there were 12 houses to be built on a lot. They had already built it. They had already built the streets and something about it.

27:44All you had to do was basically get your plans approved and then go out and build the houses. At that stage, I still was a mortgage broker. We had a real estate team. And I started to now say, okay, let me set up a home building company and start to go in the direction of home building because I'd done investing, had some rentals, had flipped some houses. The next iteration was becoming a builder. So how did that end up? You bought 12 lots? Is that what you said? Yeah. Well, so one of the advantages of becoming a lender was it taught me a concept I call deal structure, understanding how to structure a deal, how to finance and so on and so forth.

28:20So I put$5 ,000 earnest down. It was$750 ,000 to purchase. It was 14 lots. Yeah, it was 14 lots. And so the way I negotiated the contract was I had a takedown schedule. So I take down these lots at these different timelines. And so I took down the first one, got started, took down the second one. And that's as far as I got. I got two houses constructed and ultimately had to sell off the other remaining lots and cut my losses on that project. And my valuable lesson in that particular scenario was at that stage of the game, what I've ultimately figured out about myself is I love design. I love the minor nuances, you know, designing the cabinets, what kind of crown molding and tram is going to go here?

29:00You know, all the little minutiae stuff that you have to do as a builder. But see, that wasn't a builder project. That was a developer. I needed to be in a developer mindset. So having conversations with capital partners, having conversations about what our IRR is going to be and making sure that the builder or project manager was taking care of all that minutiae. I needed to be focused on the big picture. So the lesson I learned there is the differentiation in the roles. There's a builder, there's a developer, there's even a project manager. A lot of times or at that stage of the game, I got all of those confused because I just didn't know what I didn't know.

29:38That was one of many lessons I learned. Then I also learned the power partnership because I did that whole undertaking by myself. However, the guys I bought it from, one of the guys that was a partner in that project that who sold me the land was worth 23 million. Here I am by myself. I definitely wouldn't work 23 million. But the point is, if this guy's worth 23 million and he has three other partners, what makes me think I can play in that same arena by myself as he man? So I learned the value of partnership. I learned the value of understanding what my strengths are, becoming self-aware. I wanted to be on site with the guys on the daily races, bring them tacos.

30:14And I wanted to be there to see the magic happen. Did you take a hit financially then on that? Or was it more just like you got in a little over your head and you were able to get away from the project without too much damage? No, definitely took a financial hit. Definitely took a financial hit. Lost a lot of money and time because one of the concepts is you got to fail fast. If you're going to fail, fail fast. And so, you know, I prolonged it. I should have sought out partners earlier on. I should have did several things that would allow me to be able to recover from that quicker, but I didn't.

30:49So it took a while to get through that and really hurt my emotions, you know, hurt my ego, had to go back and kind of reevaluate. So when you, what I always tell people is when you get it wrong, you actually go back and start second guessing yourself. And that's really when you get introspective and it causes you to be a little bit more humble. And then you start to recognize your mistakes. When you get it right, you think I'm the smartest guy in the world and everything is going to go the way that went. So what began to happen is after that, dusting myself off. And then in the process of going on, here's the other thing.

31:23Other thing that was transpiring is I had my mortgage business that now began to suffer in our real estate team because I was so focused on the building side. So it really put me in a compromising position. And like I said, I had to spend some time, regroup and come back and get ready to go at it again. So did you regroup after 2008? At what stage of the game did you start getting, kind of get back into feeling good about what you were doing and on more firm, a foundation that's firm? When did that happen? After that project, you had to do some more loans and keep the lights on, if you will. but you know, I knew that, you know, Hey, I'll get this right.

32:02You know, that one didn't turn out right, but I just got to dust myself off and keep going. And so then I'd done, you know, the new construction, I'd done old houses. And so I figured, well, let me go back and start buying some old houses again. And so, you know, I bought an old house, we renovated, fixed it up and sold it. And at that stage, when I did that particular house, I was a, because I didn't have all these projects going on. So I could just focus on this one house and really give it the attention it needed. And it became an amazing little house. It just has some really cool features.

32:34And that house was the house that really opened the can of worms from a design perspective for me to help me figure out, you know, you're really gifted in this space if you dedicate the time and attention to doing what you're good at, figure out what your genius is and zone in on that. And so that house is when I started to develop a formula for how we like to buy and help me develop what my buy box is. It helped me figure out where I wanted to play, what kind of communities I wanted to start to impact. And so I started to formulate this vision of something that I had when I was a kid. One thing we didn't talk about early on in my life, I remember there was a period when my mom was trying to buy a house and it was very difficult for her.

33:12We had some land she wanted to build a house. And so ultimately ended up buying a house in fifth war. But long story short, I remembered looking at some of the houses like, man, if I were selling this house, I would have done this or I would have done this. And there's these different little design things I would have done just to make it nicer. You know, it's one thing to be affordable, but it doesn't have to look like it's affordable housing. So that's when I started to develop this design sentiment. And so from there, I started to say, OK, let me go find another house that's old house that has this character, you know, old craftsmen houses.

33:43Let me go find another one of those. And I did another one and I started to get good at taking really old houses, keeping the things, some of the old aesthetics about them that made them houses that people love, but also bringing them up to date so that the people who want, you know, the creature comforts that we offer now with the modern amenities and things that nature. So it's more like a design fusion, if you will. What were you paying for these homes back when at this stage? We paid. So like when I first started buying, we were buying from say 40 to 60 and we were putting somewhere between 40 to 60 in these houses and we were selling them anywhere from 140 to about 180 or so.

34:25Because one of my things is I wanted to redevelop communities like my neighborhood I grew up in, which is Fifth Ward, Third Ward, Second Ward, Sunnyside, and communities like that. The hood, if you will, I wanted to make the hood nicer. And then I came up with what became the mission statement for my company, Houston Bend and Charles, was reshaping the face of inner city Houston one home at a time. Yeah, I love that. I've done something similar just buying old raggedy houses because it's like, I mean, you can go wrong, but you can't go too wrong. You know, it's a great way to get started and just to learn, you know, for anybody that's getting started by an old raggedy house and maybe it'll work out.

35:01Maybe it won't. But you'll learn a ton is kind of my feeling. I've heard it termed as baptism by fire. Right. That's true. It's true. But what I tell people that, you know, I talk to people all the time now and say, oh, hey, listen, I want to become a developer. I want to get started building. I say, OK, great. Go buy the ragliest house you can and renovate it. And to your point, you're going to learn so much. See, doing an old house is way more is more difficult than building a new house. But see, here's the thing. But if you go build a house first, you're going to think that's the most hardest thing you've ever done.

35:33versus if you do that old house first, building new is going to be easy because you got a point of reference. You got something to compare it to. Then there's certain things you're going to do different from a management perspective, how you handle your trades. And then one thing I love about old houses or by having an existing home versus new construction is very difficult to pivot when you're doing new construction. Having lived through the global financial crisis, I saw so many builders go out of business because you got a new development, you got all this money sunk in the ground, you can't pivot.

36:03This was before build to rent. So you can't pivot. Whereas if you have a house and it's existing, like right now we have a house where our budget was$90 ,000. We saw the market start to shift a little bit. So we said, okay, rather than spend all 90 on this house, we're only going to do about 60, which means we got an extra$30 ,000 while we refinance out. And since we're not selling it at this dollar amount, we'll sell at a lower amount or we'll just refinance, keep it as a rental and wait till the market to transition. So when you have an existing structure versus a going from the ground up new construction, it gives you a little bit of opportunity to pivot if you need to.

36:37But I think it's a great way to start. Now, here's the thing. As you're going through that process, you're going to hate it. You're going to get frustrated. You're going to get ticked off with all the stuff that's going to happen. But it's literally giving you a bachelor's degree in real estate investing, construction management, budgeting, and things of that nature. And so there's so much that you'll learn from doing that initial old house. And then if you hate it, never do it again. You have that experience. If you love it and you're weird like me, you're a pain freak or crazy like you, you'll do it again.

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39:45To begin getting smarter about investing, just visit theinvestorspodcast.com slash get started with stocks. That's theinvestorspodcast.com slash get started with stocks. And for a limited time, you can use code stocks15 for a 15 % discount at checkout. All right, back to the show. I wanted to hear what your strategy a little bit. Once these are fixed up, are you holding them in a portfolio? Are you selling them off? Is it a mix of both? Talk to me about how you think about that. So part of our mission in reshaping these communities is helping people from these communities who now left. Like, so when I was in Fifth Ward, my first whole thing was, we got to get out of here, right?

40:27Then, now Fifth Ward is the hottest area in the city of Houston right now. So my mission is we have to sell some units, one, to create liquidation events. The other reason why we got to sell is because we want to help more people get into these areas, people that are from these areas. And then the reality of the matter, they're in the city that's growing. So everyone in these areas aren't going to be from the community. So there are other people that deserve living in a nice neighborhood as well. So we want to be able to service them a product. We keep some, we sell some. And what dictates whether we keep it or sell it at this stage of the game is where is that bill placed?

40:59Where are we at in the market? What's going on around us that will dictate if we're going to sell it or not? Our buy box, what dictates what we buy is this. So my strategy is simple. I'll buy any house in any condition if you sell it to me for land value. Because my premise is now I have a structure. I've gotten that structure for free. Now, here's a little bit more thought into that. And a lot of houses I buy, people say it's a teardown. Why would you buy that house? I say, well, here's the thing. If I tear it down and now I got to get plans designed, engineered, permitted and approved, that's anywhere from four to six months in a city like Houston on the low side.

41:34that same house that you think is a tear down in four months. It's a brand new house. We've renovated, ran through it backwards, and now it's ready to be sold or rented out. If I tore it down, I haven't even started construction yet. I don't even have a permit yet. Not only is it faster in certain respects, it can also be financially more advantageous. Because if I'm buying a vacant lot and I'm building, or if I tear it down and I build, I'm pretty much got to pay cash for because the lender is not going to give me the money to tear down, then wait six months for me to start building it for another four to six months.

42:09So I'm at the pay cash, which that's more capital intensive. If I'm going to renovate it, it's easy to get hard money or private capital or whatever to buy it, renovate it and service it to the market. Yeah. And at minimum, you probably have the foundation. You probably have, you might have to do a little framing, you know, like it's not like one of the projects you had to fire. you might have to do a little reframing, but it definitely expedites things and you're buying it at a great price. So it sounded like you got in early to these areas when nobody else really wanted to be there. They weren't maybe a handful of people, but are you seeing more and more people as the Fifth Ward becomes the place to be?

42:46What's it like now? What's the market like now? Is it harder to buy homes? Yeah. So I put to you like this. Now they call Fifth Ward East River. So, you know, when the phraseology changes, that's a marketing thing. And so you can already understand what's happening. You know, now, if you were to wrap, if you know, if you came to Houston, we grow around, you'll see people walking their dog and stuff like that. When I was growing up, it was the bloody nickel, the bloody nickel for a reason. I tend to be a trailblazer. I tell people I want to be a reason. I want to be a part of the reason why in the future people feel comfortable in these areas.

43:16When I first bought my but the first lot I bought in Fifth Ward was seven thousand dollars. Fast forward to today, I have a lot that I'm selling in that area and we're going to sell it for one hundred and fifty thousand. Just a lot. Yeah. So and when I bought that lot, I bought that lot pre GFC. I think I bought that lot in around 2007, 2006, 2006, 2007. I paid seven grand today. They're one hundred fifty thousand. them. So no, Fifth Ward and all of inner city Houston has just taken off because back in the mid-90s, Houston started growing at 10, 15 % a year annually. And so our inner city corridor took off, but also our perimeter, our slumpers took off as well.

44:00And so these close-in areas though have really thrived. And my biggest regret is most investors have is I didn't buy more, didn't buy more when I had the opportunity to. Yeah, I've got the same feeling. I was in a similar area that is now since gentrified. But 10 years ago, nobody wanted to be in this area in my part of Columbus. And now it's the cool place to be. And there's whatever, art galleries and breweries and restaurants. And it's totally changed. And so I interviewed a guy. I wanted to hear your thoughts on this when people maybe critique you for gentrification. So those neighborhoods change.

44:36It forces out people that have lived there. They say you're a gentrifier. I interviewed a guy who I don't know if you've heard of. John Marsh is his name. Chris Powers interviewed him. He lives in a town called Opelika, Alabama. And I highly recommend you check this guy out because you would love him. He basically rebuilt his depressed old town in Alabama. And I think he's done like 300 buildings. He's helped start 60 businesses in the town, be a part of that. But he calls it... When he started, it was a depressed area that nobody wanted to be in. And now people come from hours away to check this town out.

45:16And so he calls it redemptification. He says, I didn't gentrify this place. I redemptified it. And I love that. I love that phrase. How do you respond to people that are like, ah, you're just a gentrifier? Well, my first question is how much land do you own in the area where you're from? You know what I mean? My thing is everybody has an opinion. And who am I to say it's valid or invalid? It's OK to own an opinion, but I want you to own something else. See, I don't have to tell you my opinion because you can drive to the communities where I'm from and see my opinion in the real world. So I'm less interested in hearing your opinion.

45:51I'm more interested in seeing it. Point number one. Point number two, remember I said this was the bloody nickel. Where were you at when the lenders wouldn't lend to me in Fifth Ward and I had to figure out how to buy the property. What were you calling it then? And then there's an education. There's two things. There's an educational component that's lacking as it comes, as it relates to this topic. And gentrification as a word has a bad PR. They need a better PR team. Most people really want gentrification. They really do. Because like, you know, I'm buying houses that have been vacant for 10, 15, 20 years that are derelict properties.

46:27Most people want more money for the schools. They want cops. They want sidewalks. They want lights on the street. Well, in my neighborhood, which is Fifth Ward, it had the highest concentration of tax delinquent locks in all of Houston. So when we're seeing bad crime and things of that nature, what we're not connecting to that is there's no tax base because most of the land is vacant or derelict. So how can you have all these services that you're mad aren't being provided when the city can't provide them because the funds aren't there? So you really want gentrification. What you're mad about and what you don't want is displacement.

46:59Most people conflate or confuse the two. Gentrification and displacement are two totally separate things. Displacement is creating an environment where the people from those areas or you push those people out of those areas. We are bringing people from those areas back into those areas or people like me who one day I recognized that when I was growing up, the guys that were on the block that I looked up to were drug dealers. And I recognize that as much as I love my neighborhood, my community, I can't raise my son here because I don't want him having to endure the same things I did. So that became a part of my reasoning for wanting to change the area.

47:34So it's important for us to understand what we're really talking about, what we're calling gentrification. Gentrification has a negative connotation. What you're really mad about is displacement. And the bigger issue of displacement and gentrification is affordable housing. America's short six to eight million houses, depending on whose math you want to subscribe to. That's the bigger issue, is that we don't have enough affordable housing. If we have more affordable housing, then displacement wouldn't be an issue and people wouldn't be upset that the neighborhood is looking nicer. But because we don't have enough affordable housing, any progress you see in an area, you automatically have a negative connotation and you call it gentrification.

48:11You call people like us that make neighborhoods better gentrifiers. But if you really understood the reason why your sidewalks are jacked up, the streets are torn up and things of that nature, then you would see it a little bit differently. So to me, I love having these conversations because, you know, I ask people, you know, when these areas were derelict, I have a property that we did not long ago where the property had been vacant over 15 years. Let's think about this. If you're the city, they're probably getting five hundred dollars a year in taxes on that house. Boom. Fast forward. We fixed up and make it nice.

48:43Now they're getting two thousand dollars a year from that one property. Now, let's extrapolate that and do that over 10, 15, 20, 30 houses in a concentrated area. You've now just changed what that area looks like from a civic perspective, which means now you have school, you have money to enhance the schools, get a park built and things of that nature. It's a multi-pronged conversation with several different layers to it. It's an onion. There are all these different layers and we got to peel them back and deal with each one. Yeah. I mean, the thing is, you're taking something that's just like a blight on the neighborhood.

49:14And if you're fixing a house up, that alone is making a huge difference to the people that are around that house. Psychologically, spiritually, everything. This John Marsh guy had an interesting saying talking about his town. He said he didn't feel like he'd be a success until the person that's lowest on the socioeconomic ladder is enjoying the kind of life that the person at the top is. That there's some equity and that the guy at the bottom is enjoying his town and is having a great time living there. Most certainly, you know, Patrick, one of the things I tell people is like, I post a picture of a house or something like that online and, you know, people say, hey, it's great.

49:52And just another. And I appreciate that. What I always tell people, what's most impactful to me isn't those great comments from people who are distant and just see it from afar. It's when the guy walks up to me and say, man, let me tell you who used to live here. Man, thank you for doing what you're doing to this house. Let me tell you, you know, I remember there used to be people in here doing drugs and there was this happening, this happening. And that happens over and over and over again. And we have a project right now where when the neighbors saw what we were doing to the two houses next to him, the son called me or he left his number with one of my guys.

50:25I called him. He said, hey, listen, when we saw what you were doing to that house, we wanted you to have our house. Our mom is we're going to move her into a facility. We would want you to have our house. And they only did that because they saw how nice we made the house look to him. And so, again, going back to the people who generally have and this isn't everyone, but my thing is the people that are in the community, what do they say? And the people in the communities where we operate and how we operate, they bring us other houses. I can show you example at the example of we go and renovate this one house.

50:56There's somebody down the street since, hey, listen, won't you come by this house? Yeah, I've had the same experience and it is a great feeling. I do want to get into like the affordability issue. what do you feel like are some concrete steps that could be taken to, you know, I don't know if it's going to solvable, but start moving in the direction of fixing it. So the first thing, and this is what I always tell, so I'm fortunate enough to be in Houston. We have a community called Livable Places, and they are the people who are responsible for creating our development guidelines and things of that nature in the city.

51:26And so by virtue of that, I end up talking to a lot of people who are in politics and things of that nature. I want to say, they asked me that same question. I say, well, the first thing you can do is get for affordable housing, we should be able to get a house permitted in 30, maybe 60 days max. If we could cut down the time it takes for me to have a set of plans like this to having them permitted and approved, if we can cut that time down, that's going to help guys like me who provide this housing because for me to go buy a lot and then have my capital tied up in this lot, four, five, six months going through permitting, I mean, all I'm doing is having to forward those costs over to the buyer, which increases the price.

52:04So the first thing is allow us to get houses permitted and approved quicker is the first thing. There are obviously different kind of tax incentives that they can offer, down payment assistance for the buyers, subsidized financing, where you can get maybe lower rates for first time home buyers and people who are buying and, you know, at certain price points with certain income levels and things of that nature. So there's many different things that we can do. There's no shortage of land bank programs and things of that nature that are already around. But to me, I think one of the hinge that swings this really big door is if we could get plans approved quicker, like it would change.

52:41And this is why we tell city officials, not even just for affordable, but for all of your housing, like that's the biggest bottleneck is, hey, I want to build a well, the amount of time that it takes for us to go from here's what can be built there to actually having a permit to build is so long, so cost prohibitive that it forces the cost of housing to go up because we as developers have to take all these risks or you buy land. I have a scenario right now where one of my mentees bought some land. And unfortunately, because the city didn't do in Houston, our drainage guidelines have changed because of flooding and rightfully so.

53:19But because basically the city doesn't have a water connection to this property, which is on city, you know, it's on city water. they have to spend what would take about 170 to$180 ,000 just so that they could have city water and drain. And I'm like, that piece of land will never get built and developed. And from the city, like you guys, that's a part of your responsibility as a city to provide these things. And so there's different levels, but I think helping us be able to get properties permitted quicker is going to be something that would really open the door to a lot more affordable housing being provided in the marketplace.

53:56Yeah, it's a good point. I experienced the same thing here and it's super frustrating. I wanted to get your thoughts on, are you still sticking with old raggedy houses or are you doing more ground up? Right now, as business evolves, you start getting older. I have a son who's a junior in high school right now and things of that nature. I love that there's a part of me that operates in a comfort zone. And so that's me buying old raggedy houses and we do build as well. So we do new construction, build big plexes and single family stuff like that. And so I always keep a mix. But over the last year or so, I've started to wean off of my buying as many old raggedy houses as much.

54:33We've been buying some apartment complexes and some bigger projects. I also have a design firm. So we do a lot of design work of different areas for other people. And so I've kind of been growing that. I really want to grow that to be a little bit bigger. It affords me the opportunity early on, you asked, or before we got live, you asked about doing work like in Cleveland, other markets. So my design firm allows me an opportunity to impact other markets without it having to be my project or dollar. So that's what I love. I've been ramping that up. But going back to asset classes, so we started looking at a little bit bigger projects.

55:06Right now, we have a pretty extensive pipeline of new construction development projects that are coming down that, you know, we have a courtyard development project that we're working on that's going to be really cool because there hadn't been any courtyard developments in Houston since like the 60s or 70s. We have some just some really cool patio home projects that we're developing right now. So we do do new construction. I just love old raggedy houses. So I talk about it more. I don't really talk about new construction because it's just not as exciting to me because the part of me that is not very patient, you know, see, when you're doing new construction, you got to do a whole bunch of planning work so that you can then do a whole bunch of permitting work so that you can then get ready to actually do the work of building it.

55:48So you got to work three, four or five times before you actually get to an end result. Whereas if I find a house today, we close in three weeks. The day I close, we actually got activity and stuff going on. So that's why I like all houses because I can get to activity faster. And then the other thing is for us, I like to have a mix. I don't always want to only have all houses going. I always want to have all new bills going because for me and my how I like to operate, I think you need a comfortable mix if you want to be able to coexist and last through these ebbs and flows of the market.

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59:45All right, back to the show. We talked about Donovan Adesoro, who's doing duplexes, and I think he's moving on to some bigger projects. How are you seeing things in Houston with rates going up, home prices going up, just like where we are in the market cycle. I wanted to hear your thoughts on that, how you're, what strategically, how you're thinking about it. Which goes back to, so to me, I think you have to have an evergreen business strategy. And so what I mean by that is you'll always have minor pivots and adjustments you'll make within your business model. But ultimately, fundamentally, I don't want to have to change wholeheartedly everything we do.

1:00:21And so that's why we keep a certain amount of these types of, that's why we keep a certain amount of old houses, if you will, and a certain amount of new bills. The market as a whole and general in Houston, like Houston is a very thriving market, is continuing to grow, you know, between Houston, Dallas, San Antonio and Austin. They project, you know, somewhere between 20, 25 percent of all Americans who live there over the next zero to 10 years. So we, by default, are very blessed to be in this market. I think Houston is one of the best markets in the country. And the biggest thing is we're kind of losing our affordability reputation because, you know, we're still relatively affordable compared to the other major metropolitan cities.

1:01:00But for those of us that have been here, we've watched, you know, in 2015 in some of the same areas Donovan and I both work in. And I can recall you can buy a three bedroom, two bath, a brand new home, 1500 square feet for one hundred fifty nine thousand in 2015. Today, that house, exact same house is now$330 ,000,$340 ,000. You know, those of us that have a long member, we remember when it was$159 ,000. Well, we're never going back there. And so Houston's growing, it's thriving, it's a wonderful market, it's very dynamic. And there's so much that you could do. Like there's so many niches here that you could, you know, build a tremendous business in.

1:01:38So it's a great market and yeah, it's just going to continue to go up. Yeah, I wanted to hear your take. I saw a tweet that you put out within the past week or so. I was talking about what asset class would you choose to have passive income, truly passive income. Do you know what I'm talking about? The tweet you sent out. And it got a ton of responses. I wanted to hear your thoughts on it. What are some of the thoughts that people shared that you liked? I mean, man, it was so many great ideas there. So there's one of the things I wanted to do. Houston's a big metro transportation hub. And obviously, I have a transportation background.

1:02:13One of the things I've always wanted to own and even more so now as I get older is basically truck storage parking lots. So, you know, guys who drive an 18 wheeler, you know, they want to be able to park their truck somewhere close to where they live. And that and so I had several people that mentioned parking lots. And so that's that's a niche that kind of because once you put your asphalt out, you got a mechanic shop, a little restaurant there. like, you know, the mechanic shop is ran by a mechanic, the restaurant, some guy with a taco truck or lady with a taco truck, and that's it. And so there's not anything to manage.

1:02:46I mean, it's just dirt. You're just collecting rent. So that's one of the really passive ideas that's been juggling around in my mind. I've been watching some guys do that here locally, but there were several asset classes, you know, everything from a single tenant net leases, STNLs of people talked about those triple net opportunities. And then there were the people that said there's no such thing as passive. I said, okay, great. I got you. The tweets it as close to passive, right? We all know you're going to have to do something, but there are asset classes and there are different structures that allow you to be more passive than others.

1:03:18Another one is lending. We've done some lending before and we'll probably do a little bit more here in the future, but being able to lend to quality operators who you understand their business, they don't take too much risk and they're able to get in and out of projects is a fairly profitable and quasi-passive opportunity. And yeah, and so those are some of the opportunities that were highlighted. And yeah, it was a great tweet, though. It was very informational. And I like to sometimes tweet stuff or put information out there that will cause smart people to think and share their ideas. And that was the really goal that I wanted to have there.

1:03:53And I had so many people reach out to me and say, hey, thank you for tweeting that. I got so many great ideas. And that was really what I wanted to do there. Well, you've got a ton of followers. I'm not sure how many now, like 20 or 30 ,000, at least I think. What's your take on Twitter? How's it affected your business, your personal life? Twitter, I jokingly, I tell people, I say Twitter's like revenge of the nerds. Like all the nerds get the hangout vibe and be cool on Twitter. Twitter's been amazing, man, from connecting with people like yourself from various parts of the country. And to me, it's like the entrepreneur college is what I call it.

1:04:27It's like entrepreneur. It's like entrepreneur college slash country club slash business fraternity slash the high net worth social media platform amalgamation, if you will. Like it's just a lot of different things all in the one. Now, obviously you can go into these little silos of politics and all this other stuff and, you know, you can curate your feed however you want. But for me, Twitter has just been a great place to network with some of the greatest minds in the world and freely. People are so freely given. Like I tell, there's literally a million dollars worth of information on your timeline on any given day.

1:05:07And if you just read a tweet or two or three or four or five and then go offline and take action on some of that. So go study it deeper, get some more information. It's amazing what you can learn there. So Twitter's been very, very instrumental. I always tell people, hey man, you should get on Twitter. They're like, what? Twitter? Trust me, You have no idea. And some do, some don't. But hey, listen, I'm glad I'm there and active and engaged in the market. They're missing out if they're not on. They really are. 100 percent. I mean, I think and it's continuing to grow. Like I remember when retweet wasn't really a thing.

1:05:42Now it's a big thing. You know, it's written about and so on and so forth. And it's a really cool place to network and meet really cool people to learn, grow and then create value for others. You had mentioned some mentees. I wanted to talk about that a little bit. What are some of the things, aside from getting on real estate Twitter, that you tell some of the younger people that are coming to you asking for advice? What are some of the things I tell them? One, get started. A lot of times, so what happens a lot of times, you'll come on a place like Twitter and you get all these different ideas and stuff like that.

1:06:13So you got to be self-aware. There's guys out there to do big industrial stuff like that. Hey, there's plenty of money there. It's cool. It's awesome, exciting, but you got to be self-aware. It doesn't really interest me. You know what I mean? So I'm more, you know, so I find the things that interest me. Now I can learn from them, right? But that's not what interests me. So I always tell people, one, what do you want to accomplish? Be self-aware. Real estate's a dynamic industry. So you see me, I'm over here doing these raggedy houses. It looks fun, cute, sexy, but you may hate that. You may not even, you maybe should never buy an old raggedy house.

1:06:45You may need to go buy 10 or 20 or 30, a hundred year in an apartment because that suits you and what you're trying to accomplish. So the thing about real estate isn't mimicking what I do, what Patrick does, what Chris or whomever else does. It's figuring out this is the way I ask it in a statement. I say, Patrick, what do you want real estate to do for you? Once you can figure out what you want real estate to do for you, then it's about how do you want to accomplish those things? And so that's one of the first things I tell people is, you know, you can learn from anyone, learn what to do, what not to do, how to do it better, faster, slower, more efficient, things of that nature, but you have to come to the table with something.

1:07:21You have to come with initiative. You have to come with a sense of direction. You have to come with a goal in mind that you want to get to. And then it's just about figuring out how real estate as an asset class can help you get to whatever that end goal or destination you're looking to get to. It doesn't seem like you're super money motivated by the whole real estate game. What is it that is like your mission, your drive? What is it that gets you up in the morning? I don't have money goals. None of my goals are attached to a dollar. Oh, I got to make this amount or that amount. To me, it's about living a fulfilled life for me.

1:07:55And so my thing is I want to impact my community, my city, my country in a positive manner. And one of my main ways of doing that is through real estate, design, development, and renovations. And so that's what excites me is knowing that I'm doing something that long after I'm gone will still will be here. There will be buildings that we built that will be here, you know, 100 years from now, houses that are already 100, 200 years old that we now just added another 100 years to their life. And there will be someone that will get to live in. And my son, my grandkids, my nieces, nephews and whatnot will be, hey, my uncle did this or my dad did this.

1:08:29And so those things tend to mean a lot to me. And it's not necessarily what we do as much as it's how we do it and the people that we impact. And so part of why I do what I do and why I share is because I want to help more minorities get into real estate development. I want to help more women get into real estate development. I want more of our communities to, going back to the gentrification topic. Gentrification isn't bad, but what's bad about gentrification inherently is none of the historical stakeholders or people in these areas are able to guide that gentrification. So I want to create processes and pathways for people to have a little bit more control over what happens in the built environment.

1:09:08And so those are some of the things that excite me about what I'm able to do or what I get to do. I'm fortunate enough to be able to wake up and do the things that we do. And I don't take it for granted at all. Yeah. You're doing good work in the world and I love it. I love sharing like this today. I want to do a quick fire round if I could with you. Let's rock and roll. You said you're a book nerd. Talk to me about a book that I should be reading right now. There's a book I read called Risk Game. It's a phenomenal book. Oh, Risk Game. Yeah. I think I've heard of this. Yeah. Yeah. They were talking about it on Twitter, but a while back.

1:09:43Yeah. Risk Game is a phenomenal book. It's a real estate book. It's like a real estate entrepreneur or no? No, it's a guy who's a venture capitalist wrote. It's a kind of more of an autobiographical autobiography, but it's just written. He was very candid in how he wrote the book. And it's just some wonderful stories. And there are a lot of different lessons that one can extrapolate from that book and apply into their lives. Yeah. I think like Moses or Levi Bankard or somebody mentioned that. So it's on my list. So. Yeah. Both. It's one. Yeah. Move it up to the top of the list. Trust me. Okay.

1:10:19I will do that. I will do that risk game. I'll put it in the show notes too. Who's your entrepreneurial or real estate hero? Man, I'm an entrepreneurial real estate hero. Now that's one I hadn't been asked before. You kind of stumped me on that one. Let's come back to that one. Give me a second and to marinate on that one, Patrick. Okay. Okay. What about your worst job? Oh, gotcha. You know what? I'm going to tell you who my real estate entrepreneur hero. So when I was a mortgage broker, there's these two clients. This lady, I was, she was refinancing one of her properties because there were some past due taxes.

1:10:53And I'll never forget asking her. I was like, what is your income? And she said, well, 25, baby. I was like, 25, what? My month, a year? What are you saying? She said, no, baby,$25 ,000 a month. And long story short, there was just this lady's dad as gave her and her brother. She didn't give her dad didn't give them gifts, regular gifts. She gave them houses. And by the time she was in her mid 40s, she had retired and her income was$300 ,000 a year from the assets that they own. I never forgot that lady. Then there's a gentleman, another person we were refinancing, and he drove an old Chevy Silverado trucker hat, Western T-shirt with the marble buttons on pearl buttons.

1:11:36and I say, what do you do for this? He says, son, I'm retired. Where do you retire from? He says, all I do is cut the grass in my yards and pick up my rents. And just a regular old guy in an old raggedy truck, which was rich as all get out, earned several million dollars, probably about two or three million dollars worth of real estate free and clear throughout some of the Houston neighborhoods and just lived a really nice, cool, basic life, volunteered at his church, was a pillar in his community. And so those were my real estate heroes because they were people that looked like me that served as an example of what I could become if I had enough discipline, I added enough time, hard work into what it is I want to do.

1:12:12So those are my real estate heroes. I love stories like that. Yeah. And so you said, what was my worst job? Worst job. Yeah. Anything come to mind real quick? My worst job was working in this plant for Texas Instruments, making like computer chips or something like that. Like it was, yeah, it was, it was horrible. I can't, were you like in a, those like white gowns and all that? What the heck? Yeah. Like you had to wear these suits, these masks and you know, it was just a sterile environment. You couldn't really talk to people. Like I'm a people person. I like to be out and about, you know, it was very regimented, you know, they timed how fast you got from here to there so on and so forth.

1:12:53And ultimately I got fired from that job. So that's the other part about it that made it. That's awesome. I've got an uncle who says like the best job you can have is actually the worst one because it teaches you exactly what you don't want to be doing in life. And that's some good information to know about yourself. Sairon, this has been a lot of fun. I've really enjoyed meeting you, talking with you, hearing about your stories. And in Houston Vintage Homes, you are up to some good stuff in the world and really appreciate it. For our listeners that want to learn more about you, find out about what you're up to, what's the best way for them to do that?

1:13:22I highly recommend following, checking us out on Twitter, Tyron McDaniel, the Urban CEO on Twitter and on Instagram is Houston Vintage Homes. Okay. Thank you, man. I really appreciate your time today. Thank you, sir. I appreciate it. Okay, folks, that's all I had for today's episode. I hope you enjoyed the show and I'll see you back here real soon.

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