A (2:29)

Charlotte today.

B (2:29)

For letting me beam in.

A (2:31)

Because you. You are. You are. Because the company is based in Charlotte, but you personally are based in Dallas. We know that, yes.

B (2:37)

Yeah, man. I mean, if you. God, guys like you just get it. I mean, even though I live in Dallas, the mortgage talent is in Charlotte, and I started the company at a down market, which meant I got talent that normally wouldn't be available. So you just go where the talent is.

A (2:54)

Yeah, it's much easier to hire people that are qualified where there's a lot of that stuff, for sure. Now let's talk a little bit about, obviously, for those that are listening to this, thinks I don't want to hear this because I don't do fix and flip real estate. You probably should, because this is more today about business models than it is about fix and flip stuff. Because the fix and flip lending industry, if you will, if you don't know what it is, is. Let's say you want to flip a house. Well, you go out and you procure a deal, and there's money. You have to. You have to buy the house, and then you have to have money to fix the house so you can flip the house. And a fix and flip lender provides that money on an estimate of what the house is going to be worth once it's fixed up. They put all of the money, they give you the money to kind of buy it. You got to have some skin in the game. But then they put the money that you need to fix it into kind of their own little personal escrow account. And you can draw against it as you do repairs. So they finance the repairs as well. Then when you flip it, you pay them off and you make a bunch of money. That's the idea. And that idea has been around for a long time. I mean, there's a lot of people that have been doing that. It started as kind of a mom and pop boutique deal. Then it got very big with some larger companies. I know that Tim ran one of those companies for a while, and I'll let him tell that story. But I want to go from the origins of that business to what you've decided to do now.

B (4:11)

You know, God, you go back 20 years ago. I read the E. Myth, and Michael Gerber always talked about entrepreneurial seizures. And ultimately, John, two and a half years ago, I had an entrepreneurial seizure and founded the company. And you know my wife pretty well and made her very uncomfortable because at the time I was the executive director of this large national company doing billions a year in business. And I was bored and unfulfilled. Right? You talk about drifting. I mean, I just, you know, made a bunch of money and did business. I reread Simon Sinek's book Start with why and it was crazy, dude. Like, the first time I read it, it was all about my why. The second time, it really connected me with the business philosophy of understanding your customers why and crafting your business around fulfilling that intrinsic need. And we were just talking about, you're a luxury. You have a luxury business, not a everybody can sell a house business. And you started learning about Nike. You know, just do it because it's a Seattle based running company and it rains all the time. And the ethos was just, if you're a runner, you got to be a runner and you just do it right. Apple, right? Like innovation and, and, and you know, God, I remember when they had the ipod. A lot of people don't know what that is. The whole thing was a thousand songs in your pocket. Right before that we had the CD changer that hung on your wall, you know, your belt. And, and so I, I just, I was listening and I got all inspired and I found Eternus. And you're right, the real lesson is in business because I've had, this is my 17th startup, about half have failed. I've sold several of them. I took one public and I'm just a serial entrepreneur. But this one, I spent eight months planning. From detailed financial models to variable input models, to positioning statements. It really has been, knock on wood, the best executed startup I've done yet. And that's just from all the experience of the ones that weren't the best.

A (6:22)

If you could go back to any of those early startups that failed, what's the what's. Give me a couple key lessons you learned from those failures going forward.

B (6:31)

It's 100% capital and a plan for capital. You know, a lot of times we're good at making money doing something and we think, wow, I should just start a business around this. And you don't think about all the capital needs, you don't think about all the investment requirement in future like infrastructure, technology training, staffing, human resources. You just don't think about those things. And all of a sudden you're still making money personally, but the business can't survive because you're under capitalized. As you know, it takes a lot to get a business self sufficient and growing. Like if you're fine where you're at, it's easy but if you're trying to grow. So it took me 12 months to do my first hundred loans. It took six months to do the next hundred loans. At the end of this month we'll have done the third hundred loan in three months. And then literally I was doing the trajectory today. We'll do 100 loans in the next 45 days and most likely we'll do 100 loans in December or January, in a month. And so that curve means I think today in my company meeting, I've got eight new hires from the last 30 days that I'm introducing to the team. Those are people that I have to pay but they're not really doing anything for me yet. They're training, they're learning, they're using the wrong freaking acronyms on reports and nobody understands what the hell they're saying. So yeah, I mean, I think the number one thing that's made my businesses either fail or be so unfulfilling that I even shut them down was poor capitalization strategy, not understanding how to budget for the growth capital you need.

A (8:12)

Well, let me ask you this because not every idea is a good one. Yesterday I was, I was on a call literally yesterday kind of talking about this. I was doing a consult for Equity call yesterday with a guy that has quote, unquote inherited this product. He was, he was the attorney on the deal for like six years. It's an automotive product and they've been working for like two years to get this thing like AutoZone and some other places like that. And the founder that had this, there's half a million dollars in inventory of this product sitting in an Amazon warehouse. I'm like, okay, first of all, mistake number one. But they're going through the whole thing and the founder's just like, I'm out of capital, I can't keep going. So I'm going to relinquish 50% to you and I'm just going to hang on to 10% as a royalty. You can have the inventory and see what you can do with it. And so, you know, this person was smart enough to reach out to a couple of us that know kind of what we're doing, especially in the online space and, and, and, and do consult for equity deals that we think we can make that thing go. But for him, I think. And even that meeting yesterday, I said, I don't even know if you have a product yet because just because you have a warehouse full of something doesn't mean anybody wants to buy it. And putting it on the, on an end cat or putting it on a, on a shelf in autozone does not gauge customer demand. I'm like, you got to go, you got to go direct to consumer online and see what your return on spend is and fit with the real ROI on this to see if you even have a product. And I think that's the mistake that a lot of people make because they, they, they burn through their capital chasing a market that doesn't exist when they should have gone out and discovered the market first, verified the market to make sure you've got one. And then you go, you go capitalize the idea. That's what Kickstarter's for, right?

B (9:57)

Yeah. I mean, if you look at the. So we're about 19 old now, and I think back to January last year, formed the company, brought on some equity partners and the first deals, I was the loan officer, the processor, the underwriter, the closer, the post closer, the runner.

A (10:18)

The wire, myself the runner. You went to the office.

B (10:22)

But it's because I needed to tell, I mean, I had this vision and, and, and mind you, it's informed by 20 something years of experience, but still, how hard is it going to be to sell? What's the process going to be like? What questions am I not thinking about that the customer's going to have? And so like I did that at first and then I brought on a salesperson because if you think about it, that, and this was all modeled out, I had it planned because then once you sell it, then you got to focus on the fulfillment once you prove up the market. And then like next thing you know, you bring on an operations person, an accounting person, and then you keep testing and you keep tweaking and testing and tweaking. And that's why it took, I mean, in the first six months, I think we did like 15, 20 loans and we were down a million bucks. But the point was we were learning and changing and learning and changing. I think we're on our fourth or fifth set of underwriting guidelines in 19 months because we're always listening to the customer. We're always looking at the product performance, we're looking at the profitability of the product. I mean, it's kind of one of those crazy things. Like I do 100% financing for real estate investors, which everyone wants, but If I can just get 10% down, I can charge 2% less on the interest and I can make literally 5% more in profit.

A (11:42)

Sure.

B (11:42)

On each loan because it's more marketable to the capital markets. So now we're in this weird crux of we've got a lot of revenue, we've got a lot of business, and we're going to change, we're going to offer additional products. I think the key is we're not going to change the core product that everyone already knows and loves. We're just going to offer additional products. So when John Gafford calls and says, I don't want to pay 12%, I say, great, put 10% down and you can pay 10%. And then John Gaffer says, no, I want 100 finance. I'm like, you got to pay 12%.

A (12:14)

A or B, buddy, not yes or no.

B (12:16)

I mean, but, but we won't abandon that core initial product that's been tested and modified and tested and modified. And I think that's what you're saying is I didn't just come up with it in the garage and then start 100 person company. Right. We grew into this.

A (12:31)

But I don't think your, your products are your products, but I think the unique selling feature of what you have is the equity piece. I want to walk back and walk me through the thought process or the discovery phase of maybe I could do a company with this. Walk me through that. Like, what did you see? What sparked the idea? What sparked it? Just walk me through that process.

B (12:50)

So I was listening to the Simon Sinek book again and it hit me like a ton of bricks because he talks about when you have a product that's commoditized, it's just a race to the bottom and a race to consolidation. And it just hit me like a ton of bricks. I mean, lending is the most commoditized product ever. Because the first question anyone asks is, what's the rate? What's the rate? Right. And then in the hard money space, the next thing they say is, what are your feet?

A (13:15)

Yeah.

B (13:16)

And I mean, it's just. And when. Those are the first two questions, with any product, with any business, you're not, you're just commoditized. And it's a race to the bottom. And it, it's very unfulfilling business because you just feel cheap all the time. Almost like your desire to be in the luxury space. So I said, okay, well, there's all these millions and millions of customers. I've met tens of thousands of them. What do they all have in common? So I was really just developing an avatar and that's actually, I'm going to get really. I don't even know if I've ever told you this. So the word turnus is Latin for threefold and it was based on the Simon Sinek golden triangle premise. Right. And so the reason we have a triangle with three triangles is each as our logo. Each triangle stands for something different. So the first one is every customer I've ever met in this business wants to make money. They get into real estate investing just to make money. Maybe they're limited by their education or their background and they see it as a way to make money. So that's kind of number one. And how does my company fulfill that promise? We make it easy to fix and flip a house and make money. And then you can also own stock in the company that, I mean, it's a dollar a share right now. And I can't say a lot of things, but I can say I intend it to be worth more than a dollar a share. That's, that's the plan. So that's kind of premise number one. And then the second thing that everyone that gets in this business for is everyone says it different, but it's passive income or cash flow. Right. Like those are just the what the reasons people get in this business. They want that mailbox money. So how do you make mailbox money with our company, you buy rental property and we help make it easy to buy rental property. That's one way. The other way is you can invest in some of our different offerings like our cash flow fund or buy our stock because we intend to pay dividends one day. Or you can buy notes from us and we pay you monthly, we send you monthly checks. So that's kind of like premise number two. And then the third part of the turn is threefold kind of thought thesis is everyone that gets in this business wants to leave a legacy for someone. It's the reason I think the most quoted real estate makes more. Real estate investing makes more millionaires than anything else in the world. Right. And so by letting us help you build your portfolio by owning part of the company and by having a company dedicated to your success, we enable people to make a help create a legacy that's greater than they could without us. And so we really wrap the entire company. The reason we exist is the reason the customer is in the business.

A (15:56)

Right. So is it when somebody does a loan with you guys, do they get, is it if they bring somebody New to do them with you guys. How do they get stocks? Like, like don't you award stocks that way to. For people that bring folks in or deals? You do. How's that working?

B (16:11)

So not yet.

A (16:12)

Not yet. Not yet.

B (16:13)

Currently we have a regulation CF crowdfunding offering where they just go online and for as little as a thousand bucks, that's the minimum purchase. You can buy a thousand shares in the company.

A (16:22)

Yeah.

B (16:24)

And. And you get. It's all online. It's easy to do. Takes five minutes eventually. Some of our ideas are when you pay off a loan, we send you stock. Right. When you refer someone, we send you stock. We're even looking at ways there's actually securities you can do now where you tokenize the securities. So like we're looking at every application, every referral, you get a token and then you can, you can trade those in for stock, you can trade them in for discounts on loans. We're really looking at every way that we can reward the customer for doing business with us with shared ownership. As you know, the legal process of some of those things is rather expensive and complicated. Yeah. But the intention, and this is something most people will never do when they're in the business. My partners and I currently own a little over 90% of the business. And the intention is when we're done building this, that we own less than half the business. Like, we literally started the company with the intention to dilute by sharing ownership and sharing the success with the customer base, which would. We're already the largest customer owned hard money company in the nation. And we believe that by sharing in the upside, we'll be able to create raving fans and fulfill people's real need of being in this business.

A (17:52)

Well, I think anytime you can let people have a piece of the company, they're more apt to stay a loyal, B, more vested, and C, they become your best salesforce.

B (18:04)

Yeah. I mean, you know, as you know in the Facebook army that is real estate investing people, they just refer whoever the last person was that bottom a drink. You know, it's like, oh, I was at the happy hour with, with Matt Stickley. Call Matt. Right. It's like, is that a referral? They're like, no, we have no idea who he is. But the other thing is on that is very funny. If you own a restaurant or, or, or a bar, even If I invest $5,000 in it, every time your friends ask for somewhere to go, you're gonna, oh, go to, you know, Tim's cafe. Because, you know, I own part of that, like I'm, I'm one of the owners. I mean, and, and so there is part of that. It's definitely a unique selling proposition that you can build. You know, just this army of salespeople that are share, have shared interest in your success.

A (18:55)

So beyond that, what, what's, what do you have planned to keep Turnus unique and on the cutting edge?

B (19:01)

So, like, the 100% financing we do is kind of funny. When I tell people they're like, what do you mean 100% finance? I'm like, you know, it's like the way it was when I got in the business 20 years ago. I mean, if you buy a good deal, I'll loan you the purchase and I'll loan you all the purchase and loan you all the rehab. And they just don't believe it because, you know, John, 10 years ago or 12 years ago, when I started B2R Finance with Blackstone, there was no institutional capital in this space. You know, at that same time, I know you were helping sell a bunch of houses to the hedge funds. And in the last 12 years, almost all of the capital in the space is now institutional capital. And I see myself, I helped cause that problem. I mean, I kind of helped deliver Main street to Wall street by starting B2R with Blackstone. We were the first institutional lender. And I see Turnus as a way to take Main street back from Wall street and share it with Main Street. And I think the long term effect of that will be something that grows beyond my ability. And then the key to manage even, I mean, I'll hire a CEO soon.

A (20:15)

Yeah.

B (20:16)

The key is, do you know who invented the digital camera?

A (20:21)

Not Kodak.

B (20:23)

No, it was Kodak.

A (20:24)

Was it Kodak? Okay, got it.

B (20:26)

But Kodak was founded originally by Eastman and Kodak to put the power of film in everyone's hand. Because at that time the film industry was really just controlled by professional photographers. And then they did it, and then they developed and patented the digital camera. But the board decided to put that thing on ice because it would take away from their film sales. Sales. And so how do I want to keep changing the industry? It's to make sure that the people on my board and the people that have voting rights in this company and the company vision stays at the heart of every decision we make, which is we have to have products and services that serve the everyday investor. We cannot become institutional and only cater to the customers that have a lot of money because we loan to newbies. I mean, I've got a firefighter in Georgia that it was so fun to give him his first loan on his first house and then help him get it refied as a dscr, a long term rental loan. Because here's someone that is a first responder that the big companies say, no, we're not going to work with you. You're new, go find your experience elsewhere. And we're able to help him in the name of his company. I can't remember, but it had the word legacy in it. Like I'm telling you. Like, he wanted to buy rental properties to change the future for his children to, so they don't have to run into burning buildings to make a living. And like the fact that we get to be a part of that. As long as we keep that mission at the core of the decisions we make, at the core of the leadership, at the core of the board of directors, I think we'll always innovate with products and offerings. And that's where once we become fully owned by the shareholders, I mean, it will probably be an exit to an IPO or a large private offering to where we become controlled by the customer. And you just do your best to maintain that ethos throughout it.

A (22:29)

Well, I think if people are listening to this and they're thinking like, God, how can they do that? How can they take that risk? How can they, how can they. They extend that kind of terms to people that are new, it's because of this. What makes. One of the things that makes your company unique is you. You've actually flipped houses, you've actually done this job. So you can look at a valuation pretty quick and be like, that's accurate. That's not. Because of course, as investors, you get after repaired values flung at you that are a little crazy sometimes. And you can be like, nope, no, no, no, no, no. This is what the comps actually say and this is what it's actually going to be. So I think that's what makes you different as you guys understand these deals.

B (23:04)

Yeah. When we say for investors, by investors, I've done a couple thousand flips. My wife Jennifer and I still actively acquire real estate investment properties in Texas. And most importantly, Kiavi, who's the largest lender in the space, they don't do appraisals. Their internal valuations have actually been proven to be more accurate than appraisals. Which is why when, by the way, I didn't even tell you the best part. Not only do we do 100% of purchase, 100% of rehab, we don't pull your Credit or order appraisals because it's asset based lending. The deal is what we're looking at. And you know, know, thanks for pointing that out. I mean, we are really good deal people and it's a family business. I brought my brother in because he used to work for me in my flipping business. And I, I, I needed a, a way to scale because I can't look at every loan right. Like, I mean, I could at the beginning, but now, yeah, I don't, I don't. You asked me, hey, what about this address? I'm like, I don't know.

A (24:02)

I mean, who knows?

B (24:04)

$20 million in assets under management. So yeah. Now the challenge, John, is how do I scale it? And we're working on building technology. We're spending a lot of money on technology right now. We're working on building training manuals. How do I duplicate my knowledge and make sure that it's ingrained in every department? How do I duplicate my brother's knowledge? Because now in the valuations team, I was texting him before this. I said, hey, dude, people are complaining about your responses. We, what's up? And he said, man, I've never been this busy in my life. We're gonna have to hire, bring someone else on. And then as you know, being a founder yourself, how am I going to train that person? How am I going to count on them? Like, I count on Jamon, right? Like, and, and I'm, I'm fairly certain that we'll figure it out. We've got a plan in place and it comes down to appraisal management software and valuation management software and workflows and reviews. But yeah, I mean it's, it's being asset first is definitely a differentiating point of view and it brings its own challenges because as you know, sometimes we close these loans and they're great loans with great customers and we perform really well, but the banks don't want to loan us money against the loans. And so you start running out of capital.

A (25:22)

And that's where I come in. No, no. For full disclosure, if you're listening to this, Tim's got a, Tim has a, we'll just call it a big chunk of money of mine. And, and yeah, and I love it because here's why. You know, there's levels to the game and there's levels to this, to this game that we call real estate. And yes, there's flipping and there's wholesaling and there's buying rentals and that stuff. And luckily, you know, you get to a Place where sometimes you just want the return. You don't necessarily get the write offs, but you want the returns without the headaches. And if that's where, that's kind of where I am in a lot of places. So when Tim runs out of capital or these guys, you can buy these first position notes from him and the risk is pretty low. Your first position, there's normally 70% LTV on them and the return is massive because the velocity of the money is very quick. The money goes out, the money comes back. And it's something that I have been very happy with since we started doing it, and I love that. But that's one of your triangles though, is you're taking it away from Wall street, the institutional money, and allowing your Main street investor like me to, to be the, to be the wholesale line that you need.

B (26:37)

Yeah, I mean, we put you in the position of Wells Fargo, right? Yeah, I mean, you, you're able to obtain capital at a certain price and then buy revenue at a higher price and strip the difference. And, you know, that's, it's, honestly, it's the reason I love the money game. So, like, the Banker's Code is a book I love. Richest man in Babylon is like, was one of the first ones I read. I was like, okay, there's levels to this game. And, you know, I was raised in a family where you trade your time and energy for money and money is a reward. And I've been blessed to transition to where I now view money as a tool. And money is a tool to, to buy time and a tool to make more money. And, and that's how I teach my children. And you know them, you've met them, it's all about like, no, I know dad didn't go to college, but you're going to college and you're going to learn about finance and you're going to learn that money makes the, is the language of business and money is a tool that you can leverage. And eventually you have more money than you ever thought you would, and you have more time than you ever thought you would. And that's the amazing power of what you're doing and what we hope to enable more and more people like you to do.

A (27:55)

Yeah, I was telling an agent that works for us yesterday, they were talking about commissions or something and I said, commissions aren't the go, that's not the gold. Commissions are fuel to run the, to run the engine for what you should be taking that money and putting it into. It's like, it's like yeah, you got to pay your bills and stuff. But before you go buy a handbag, maybe go buy a. You know, go buy an investment or make some. Make a return on that money that buys the handbag, and then you never lose the money. It's the game here.

B (28:21)

It was cool the other day. And so we offer really great benefits. It's something I'm proud of because some people just don't know how to invest. Right. So we do 5% matching and all that for the 401ks and give them great health insurance and all that the other day, and an employee of ours was taking a loan out against their 401k, and I always get worried, like, am I paying them enough? Are they okay? Uh, so we approved the loan. And then I went to that employee later and I said, hey, you know, is there anything you need? And it was so cool. They were like, no, I'm starting a business. You've encouraged me to be an entrepreneur, and I want to create other revenue streams. And it was just like, you want to jump up and down and cheer because that's, that's. That's, you know, the salary in the 401k is not the goal. Like, getting to a position where, you know, you're making money passively and you're building a legacy. Like, it's just. I just love entrepreneur. So I get excited about anyone that gets into business.

A (29:24)

Well, it's. It's one of the themes in my book that if you don't get busy planning your life, somebody else is going to plan it for you, and it's not going to be a plan that you like. It might be a plan you tolerate, but it's not a plan that you like.

B (29:36)

Yeah, and I think, you know, sometimes, you know, you do have to tolerate things, but you need to be working on your exit strategy. I mean, it's. My personality is I'm a builder, I'm a creator. I'm not a manager. And so I've been really clear with everyone here that, you know, there's a time in the next 12 to 18 months where I'm no longer the CEO and I step up to the board and I stay in that visionary genius zone and let someone else run the day to day. We're still in the infancy, right? Like, our kid is still learning to walk, so I still have to be here every day. But, you know, the hope is sometime in 2026 to bring on a CEO that will be so much better at so many things than I am, and then I can Go back to the board and just be the strategy guy, the, the visionary guy and keep the company on mission.

A (30:32)

Well, let me ask you, it's funny you talked about mission yesterday. I think you saw my, my post about it yesterday. But an experience with a. Had obviously been purchased by, rolled up into a larger pool. My pool got retired right after like three years. My pool guy just said I'm going to retire. Okay, cool. So I need a new pool guy. So I just jump on Google and I see a place with like 50, you know, five star reviews. I'm like, cool. I fill out their online form and there you go. And it takes them like two days to get back to me. They get back to me. We got to. And you got to go into their calendarly link and schedule an appointment. And then the guy comes over and I'm like well how much is going to be. And he's like well they're going to send you a bid to approve. And I'm like, for pool service? And he's like yeah, so, so I get this bid that's got all these extras put on. I'm like no dude, I just need the pool. Like just get rid of that, that, that. I just need my pool cleat, right? And then it takes them like four days to get back to the just see adjusted bid. And now I'm like day eight or whatever. And I'm like what, what in the world? And then finally send me your bid is approved. And on day nine they send me a link to. Okay, now you got to set a calendarly link for an onboarding call. I'm like, we're cleaning my pool. And I call the guy, I just call the company and I go, guys, I don't have time for this, right? I'm terrified if there's a problem now I'm going to have to set a county league to do this. I just. Do you want to clean my pool or do you not want to clean it? And the guy with, I mean pissed off about it, he goes well if you don't want to go through with our procedures, we can just cancel the order. And I instantly knew what happened, right? I've been around long enough and I've scaled enough businesses to understand that this is where SOPs have now gone too far. They spent all this time and energy to develop this standard operating procedure to make them more streamlined and more efficient and more transparent to the customer and all this stuff. And at the end of the day all it's done is make it harder for me to do business with them. So as you are. That's coming to a question. I just didn't want to, I didn't want to. About that pool company. Notice I didn't give their name because. So I'm not that guy.

B (32:32)

But I am.

A (32:34)

But no, no, no. The only company I'll ever disparage is Chili's. Chili's. Suck at Chili's. Suck it. You suck it. I'd rather starve than meat at your restaurant. But anyway, as you're building your company, man, how do you, how do you, how do you craft the sops to a place where you don't lose that ease of people doing business with you? How do you, how do you, how do you make sure that doesn't happen?

B (32:58)

So for one, not only am I the founder, I'm also a customer. And I have this amazing, amazing wife named Jennifer that goes through the loan process about once a quarter. And John, I know you have this amazing wife named Gidget, but she doesn't really hold back her feedback to make you happy, does she?

A (33:20)

No.

B (33:21)

So that's one way is Jennifer and I do loans with the company and when they're doing something stupid that we never agreed on, I get an email, I get a text, I get a screenshot. It's like, why are you making me do this? And it's like, I'm not. It's an SOP going off the rails. Let me get involved. And then, you know, I, I, I, we. I believe every business owner should secret shop their company consistently.

A (33:44)

Amen.

B (33:45)

At least once a week, I'll call from a mass number and just go through the phone tree, right? And I get stuck on hold sometimes and I'm like, what the, and by the way, then you know how much salary you're paying by the hour and you're kind of like, I can't even get my phone answered. And so, and then I'll call after hours and I'll test the, the answering service that we use on the weekend and, and they won't be able to answer my questions. And I'll turn that into, hey, marketing team, we need to, we need to go back over the scripts with the answering service. So I think it's a, I call myself a velociraptor, which means I kind of run around and test the fences as much as possible to find out where the vulnerabilities are. It's a good way to picture me, actually.

A (34:30)

That's great analogy. Yeah.

B (34:31)

Yeah. I mean, I think you have to, you have to be obsessed with customer experience and customer service. Otherwise you will become just like everyone else and then you lose your strategic advantages. So I mean before this call, I was in there with our loan officer team going over what their problems are. Like why, why is this file in processing for seven days? Why, why, why aren't you fire the customer call? Because by the way, if my process is, John Gafford has to click this link. If John Gafford doesn't click it in three or four days, I need to call John and say, hey John, maybe we're not the right fit for you. Like let's just move on. I don't want you to have a bad experience. You just want your fucking pool cleaned. I, I'm not the guy for you. Like we are, you know, whatever. And so we do that and then out of that meeting, here's a fun one for you. I know you have a ton of mortgage experience. Legal review of entities is complicated. We get people with serious LLC and with limited partnerships and everybody wants to form a damn Wyoming llc now that owns an LLC in the state and we pay an attorney to give us to review the entities and to make sure that we're protected before we close.

A (35:45)

Yeah.

B (35:45)

So we tend to let that ride till the end of the process so that we're not burning legal review fees. Well then what's it become? A hold up at the last minute. And so we had a, I pulled my chief revenue officer aside after that meeting. I said hey, we need to find out. I feel like one entity should be included for free, but maybe we increase the application fee by 240 bucks since it's 120 per entity and half are going to fall out. And which by the way, we credit the application fee to you at closing. Right. And I said and then we can do it in parallel and then we don't run the risk of, you know, burning that cash and. Or we need to figure out the exact number that fall out, which I think it's right now around 43% that fall out after processing and just, it's a sunk cost and it goes into your loan level economics. But bottom line is you can't wait to review entities until the day before closing because you're going to have unhappy people and you're going to miss deadlines and I'm going to fix that next week.

A (36:54)

Yeah, I think. What did I read? I remember, I read it the other day. It was saying the only real job of a CEO is to increase revenue and remove bottlenecks.

B (37:01)

That's It, Yeah, I, I believe that increasing revenue is, you know, you were talking about the model and the plan earlier. We believe we'll be break even around 72 to 73 loans a month, which should be sometime in the fourth quarter, which will basically mean for the first 24 months. We ran in the negative, but it's been very intentional. You know, we, you have to build the platform in order to scale the platform. But we are looking at ways to increase revenue without impacting the customer. Right. You know, it's, or at least the customers that close. I'm not, I'm not that worried about the dipshits that went to one real estate guru class and can't read or write or don't have a bank account. Like, I mean, we're not that worried about that person, but the customer that has good intentions and is willing to listen and follow instructions. We want to make sure that we're providing rapid service and amazing customer experience.

A (38:06)

Let me ask that, let me ask this. How can you, have you looked at other verticals to try to snap onto this to increase revenue?

B (38:13)

Yes. One is obviously loan sales and capital markets is a big one. We've got, I mean, through a lot of hard work, we've got a group that's literally about to give us nine to one leverage. So with a million bucks, I can do 10 million in loans and they're going to loan us the money at eight and a half. So I mean, we turn a 12% interest mortgage into a 39% return. So that works in other ways. Insurance relationships. Because every file needs insurance. And, and, and, and this actually goes exactly what you said. Half the files are delayed because insurance agents are lazy.

A (38:57)

Yeah.

B (38:57)

And someone just called their stupid State Farm person that doesn't understand how to insure one of these. So we have actually already formed Turnish Insurance llc.

A (39:05)

That was, I was gonna, I was gonna ask. That's, that's the move that's the easiest bolt on in the world.

B (39:10)

Yeah. I mean, and, and so we're working on that technology. We believe that some of the technology we're creating can be licensed out. We've taken some strategic investments in a couple different technology companies and there's some lead generation revenue we can generate there. Our fund management business, we take management fees, so we raise capital from accredited investors. So that's a way we add revenue servicing. We service all of our own loans, so that adds revenue. Eventually we could service for others. I don't really want to, but it is an option. And then, you know, look, there's this space of events that can add revenue and lead to sales and lead to capital raising and lead to reputation. That could make a lot of sense.

A (40:08)

Well, I know you're working on something with Colt, with Justin Colby, our friend coming up soon. Yes. You want to talk about that?

B (40:13)

Yeah. Yeah. So I mean, tomorrow actually in Dallas, I'm working with Justin Colby and Bobby Triplett to do our first event and we're going to call it the Find Fund and Flick Find Fund and Fix event. Justin's great at finding off market deals. I'm obviously great at funding them. And Bobby Triplett, you know, he ran all of the construction for Blackstone in the state of Florida during the ramp up and now at Offer Pad they did tens of thousands of renovations and now they're doing renovations for normal people. And when I first heard it, I wrote it off. I thought it's going to be way too expensive for me or my customers. It is amazingly affordable. And most importantly, they hold themselves to.

A (40:58)

This is through Offer Pet. This is through Offer Pad.

B (41:00)

Yeah, yeah.

A (41:01)

Okay.

B (41:02)

And so they, they now we did a partnership with them. We'll pay them directly for our customers. So if our customer will use them, I'll give them their half down and I'll give them the rest when it's complete and the customer says it's complete.

A (41:16)

Did I ever tell you I'm a sidebar because it's my podcast, I could do this. Did I ever tell you that? I personally believe this, right. I don't know if it's true, but I personally believe this. The idea for Offer Pad was stolen from me. I don't know if it was stolen. It was just improved upon. Let's leave it at that. So I'll tell you the story real quick. So, and again, if it was stolen and improved upon, God bless you for doing it, Brian. God bless. Whatever. So we were, when we were buying for the hedge funds in Vegas, right, I was buying for Blackstone. I was also buying for an entity backed by Goldman Sachs out of Arizona called Freo. F R E O LLC was their front Goldman Sachs backed hedge fund and I was their biggest buyer here in Vegas. Their biggest buyer in Arizona was a guy named Brian Baer. All right, so Brian, we used to also bought some stuff in Vegas, so could see what I was doing. So we invented a platform and I built it out called Listing Dealer. And my idea for Listing Dealer was agents could come and put their pre marketed listings directly on our platform and then get multiple offers because I was representing multiple hedge Funds multiple offers directly from one from Blackstone, one from Frio and then they could double in their listing. Right. It essentially worked exactly the same way OfferPad does just for agents. And then he just cut the agents out. He just essentially took my idea and cut the agents out and then just did it straight to consumer. And I was like, but wait, no. Oh man, geez. So anyway, God bless him for taking my idea and improving upon it, which I think is the magic of the free market. So good for you. But yeah, at the end of the day I'm responsible for that.

B (42:59)

Well, I mean look, that entire ibuyer thing, I mean they were one of the few that did it, right? Yeah, they, they actually made money and didn't get loose in their criteria. And then now you talk about adding revenue. They decided we've got all these crews, we've been doing this for five or six years. Why not do it for the normal customer? And Bobby and I were talking about it. It's going great for them. They love it. They love working with the normal customers. And like what a amazing thing. You get a hedge fund quality renovation where they're completing the work. Literally they have an SLA service level agreement where they will complete at least a thousand dollars of work per day. So we're seeing 30, $40,000 rehabs market ready in 30, 40 days. Wow. And, and so for a new investor where that's where you're probably going to lose your money, you know, you're going to screw up on the rehab or have a contractor Yankee around. It's just one heck of a deal. So we're doing that find fund and fix event this week in Dallas. But then, so let me, let me.

A (43:59)

Let me put that together for those who just missed kind of what you said. So essentially if you find a deal, Tim will give you 100% financing on it regardless of, kind of if you've ever done this for if the deal is right because they lend on the deal, not so much the human. And then you can hire this hedge fund that'll can come in and do the entire rehab very quickly at a decent price and get you on the market and get and make money and.

B (44:21)

You don't even have to handle the money. If you, if you sign a little agreement, we'll give them their 50% down and then you don't even have to go check the house and then they call you when it's done and let John go walk it and play Mr. Investor. And then we wire them the final payment.

A (44:37)

Oh my. Gosh wow. Yeah, right. That's a great deal. What states are they doing that in?

B (44:45)

Nevada, which I don't loan there yet. I'm trying to ask John Gaffer for help. Colorado, Arizona, I'll help you whenever you want.

A (44:55)

You always get my up.

B (44:56)

Texas, Tennessee, Florida, Ohio, they've got a pretty good footprint. They're going to grow. So it's basically everywhere. They were doing their own houses and the coolest thing is their crew has no idea if it's a corporate home.

A (45:11)

Oh, wow.

B (45:11)

Or. Or an independent customer home. So you get literally the exact same treatment as if you were the big hedge fund.

A (45:18)

Wow. Yeah, that's good.

B (45:20)

That's cool.

A (45:20)

That's great. That's very cool. Very, very cool stuff. All right, what else, man? Well, we got a big event coming up in Dallas, not too distant future. So real quick, how do they come to the event tomorrow if they want to do that?

B (45:33)

Lord, I don't know. Just find me on social and click the link in my bio. It's on eventbrite and it's on like all of our social channels. I don't even. We should have like a Turnus Events webpage. I. I definitely talked to the BD guys over in the corner shaking his head like, yeah, yeah, I know. This is now a task for me.

A (45:53)

How do they. Well, how do they find you? Where do they find you?

B (45:56)

Yeah, just. I'm at Tim Herridge on every platform.

A (45:59)

Tim Harry's on every platform.

B (46:01)

Yeah. H E R R I G E.

A (46:04)

If they want Turnus, how do they find Turnus?

B (46:06)

T E R N u s@turnus.com Fun story. I've only got 11 minutes left, but it was actually some dude's last name. And before I even registered the company, I went and bought the URL. Had to hire a domain broker. I paid $15,000 for the URL and Jennifer gets the AmEx text at GoDaddy for $15,000.

A (46:27)

Yeah.

B (46:27)

And I get the call. What are you doing? You know, And I'm like, it's that idea I told you about. She's like, oh my God, I cannot believe I married this man. But yeah, so that's how I get started, you know.

A (46:40)

That's a good lesson in itself. You got the URL first.

B (46:44)

Well, I mean, I was Chad GPT and like Threefold Triangle, Golden Triangle, Three Way Capital. There were some weird names there. Don't go there, John. But like, it was like. But I found it and it worked. And I wanted a short URL. I wanted something that was really super short and had meaning because the whole company's about a vision. But then we just bought a couple hundred of your books. I think I've already bought like 200 now. I don't even know you put the first link out and I think I did the max order on Amazon, but no. So we're doing a big event as part of the five Star Conference, which is near and dear to my heart. I got my start there. That's where I met Blackstone and That's where the Five Star Conference is in Dallas, September 28th through October 1st. It's all about defaulted servicing, the, the real estate, the foreclosure business, reos. And as part of that they invite me to do a workshop all day, Wednesday, October 1st. So the. It's all a Wednesday, October 1st. If you register for the workshop, you actually get to go to the entire five star conference for free. So that's like an 1100 ticket. And just all day what I've done is ask my friends to come in and I've crafted an agenda where we're going to go through the current state of the market. The real estate market is struggling right now. 73% of metropolitan areas are down year over year and that's in value and in transactions. And I've invited a bunch of people that have done this before. So John Gafford's going to speak and you know, we're going to be really raw and real about how do you make money in a down market. Don't let it scare you, but don't be dumb, right? Justin's acquired for the hedge funds. He's going to be there. Bobby obviously does the work for the hedge funds. He's going to be there. I've got Greg Herlene coming in to talk about self directed IRAs and obviously he's got enough experience that he's been through this rodeo before. Yeah, My partner Ron Cedillo is coming in and he's just, I mean he's got several big REO contracts and he's going to talk, but I'm just saying.

A (48:48)

It'S so funny, man, because you don't realize it, but when you've been doing this as long as we have, right, it's like you, I, you know, I see the reports, I watch the data, I see the stuff and I'm just like, I'm like the old grizzly vet in the corner, you know, just like what? Nothing, you know, wake me up when it craters, you know, it's like who care? And like these agents that have Been in the business since like 2017 or flippers or investors, when, you know, it's just been a hockey six straight up. They're all running around like the hair's on fire. It's like, calm down, all will be well. As a matter of fact, you know, it's like I tell people all the time, you know, yes, it's terrible because I'm a residential broker and we do so much business and we have so many clients that own homes, but, dude, if the market was to crash, I get rich when that happens. Like, that's like, nobody's secretly kind of rooting for that more than me. And that's why when I say I just don't see it happening, I just don't see it happening. Hey, it's John Gafford from the Escaping the Drift podcast. And big news. My new book, Escaping the Drift, is coming out November 11th. You can pre order it right now at thejohngafford.com There are tons of bonuses, tons of giveaways. Get the book. If you are somebody that feels like you might be drifting along, this is for you. If you know somebody that feels like they might be drifting along, this is for you. Available everywhere, all bookstores, everywhere, Amazon, Barnes and nobles, the whole nine yards. But pick your copy up right now at thejohngaffer.com and get a bunch of the awesome bonuses I've thrown out because I promise you, I put my heart and soul into this thing. I want it to help you change your life. Pick it up everywhere.

B (50:30)

I don't see a crash, John. But, you know, people need to adjust the way they're doing business, right? And, I mean, there's certain parts of Florida that are down 13% year over year. And if you're still out there expecting to buy at $0.80 on the dollar and flip a house and make money, you're wrong. And so as a lender, I have to really pay attention to that. And we. There's some areas that we won't loan in right now because they're so unstable, or if we do, you're looking at, you know, 60 leverage instead of 70. Which is why we're doing these events, because people like me and you and Justin and, and the crew I'm bringing in, that's what you do in the down market. You can still make money. You just have to adjust the way you're buying houses. You can't still pay full price.

A (51:18)

Your. Your risk analysis has to change is what it is. You can't. You know, there's been so much speculation in the marketplace and dude, I, I got burned. I mean, I, I took a seven figure loss when rates shot up to 7% because we just happened to be sitting on, you know, $20 million worth of houses that were all, you know, luxury homes that we were flipping. And just unfortunately, the carry of the carry cost on the, on the notes ate us alive. And you know, you just get caught with too many cards in your hand, too many cards in your hand when the, when the, when the music stops. Sometimes that's what happens. But again, you just have to be smart about what you're doing. And I think the fact that, you know, you and I both have taken some of those lumps over the years makes us really qualified to talk about how to evaluate risk in markets like this.

B (52:07)

Yeah, and, and, and it's just, it's all on who you listen to because I'm a big consumer of information. But everybody's like, oh, I can't wait. The, the, the person that's saying, I'm glad the market's going down or, you know, you don't wait to buy real estate. You buy real estate and wait. I, it's, it's, it's just don't follow people that just repeat clichy little headlines. I mean, it's, maybe you do wait to buy real estate. I mean, you know, I mean, at least in certain areas. I mean, why catch the falling knife? Or if you're not going to wait, you need to make sure that you're adjusting your strategy because paying full price and hoping for future appreciation. Hope is not a strategy.

A (52:50)

Yeah, it's not. You know, for me, just going forward, just tell you what my thoughts are on the market. When I'm telling everybody is it's a hundred percent. Our market is being driven right now less by economic factors and more by public sentiment. And the public sentiment is wrapped around the rate. It's the mental thought of that rate because so many people got those rates in the threes back when they could in the early 2021, and they're married to them. And so what's going to happen is when you see that rate they're projecting now, Fannie said, what, 6.1 by the end of the year. I think it's going to be lower. I think you're going to see, I mean, now that the jobs report are coming in nice. I mean, I would, I saw the best jobs report tweet ever that it said after the Gators, the Florida Gators lost the, the Bulls, South Florida Bulls that said, yeah, the jobs report. Trump said they weren't going to get adjusted anymore, but they are because it did say 25,000 jobs were created. Now it says 25,001 because I guess Billy Napier's gonna get fired. But, but now that you're seeing that data come in right, I think you're gonna see us tip in the fives before the end of the year. And I think, I think the psychological effect of that rate hitting the fives, I think you're going to see people that have been, God, I'm so sick of living in this house. But I'm, I got this great payment. You're going to see them. Okay, maybe I'll swallow a rate there now. And when it gets to 5 5, it's going to be an absolute onslaught. It's going to be a. Just a waterfall.

B (54:11)

I completely agree. That's why we're building Turnus for a DSCR refi boom in, in Q1 because, you know, saying the same thing in the, in the investment property space rates have. They went from I was locking at three and a half to you were lucky to lock at eight. And some people did because they had vacant inventory. They had to get refi. And, and, and so I think next year is going to be a great year for all real estate industries. But there's certain markets that are going to have to come down a little bit. I mean they just agreed just gonna happen. Doesn't mean they won't one day recover. But again, hope is just not a strategy.

A (54:52)

Well, I think some of it, some of it's been driven by such heavy speculation. Parts of Florida, parts of Texas, I, I think are, have been overvalued. I think Austin is in for a reckoning at some point. Bloodbath it is. But I think if you look at Vegas in particular, our market here, you know, you look at what's happened to this city in the last 10 years versus any other market in the country. I mean what other city in within 10 years got every major pro sport to come come there? I mean they just greenlit. They just greenlit that NBA arena. So we're getting the NBA when they come. So that's going to happen. But you've got that, you've got Marky Mark, even though, you know there's some problems with the tax stuff that. But I think you're going to see the legislation come back in and push through those tax credits that Marky Mark wants to build. The studios here. I mean everybody was talking about gaming down and the casinos down on the strip and you know, visit visitorship is down 13%. Yes. Vegas will always depend on, on the, on the tourism, on the industry here, on gaming. But less and less every day we're getting more and more industry here. We're getting more and more different things that can drive an economy here.

B (55:57)

And so, yeah, I mean, I mean.

A (55:59)

I'm, I'm always bullish about Vegas. I'm always bullish about it.

B (56:02)

Look, it's gonna, it's always gonna, it's gonna be up, it's gonna be down, it's gonna be up, it's gonna be down. But it's getting more and more diversified. And you know, if you think back in the 80s, Texas was oil. That was it. That was our entire economy. And now like less than 20% of the Texas economy revolves around oil. So these things change. And the, the people that are willing to be pro business and attract businesses and diversify their job, you know, base is, is they're the ones that are always win.

A (56:31)

Yep. Cool. All right, buddy, well, I know you got to go because you got a meeting you got to get to. Any last thoughts for the folks at home?

B (56:38)

No, just, I mean, I think the way you started this thing was perfect. It's. No matter what business you're in, you have to understand the language of business is money. And you have to know where your money comes from and where it's going. And you need to make sure you're well capitalized. Other than that. October 1st, five star conference. Come see me, find me on socials and check the link in my bio. You can register and buy tickets.

A (57:02)

There's. Love it. Thanks, buddy. I'll see you soon.

B (57:04)

Thanks, John.

A (57:06)

Man. Well, that was a fascinating talk. And like Tim said, if you're going to start a business, it's one thing to have an idea, it's another thing to have a product. But if you don't have the capital, I mean, you're going to talk about they're not even profitable yet and they're going to be profitable at the end of this quarter. So give yourself, understand what the Runway is, understand what your burn rate is, how much capital it's going to cost to get you from a to where you want to be. And don't go into it with the. I'm just going to figure it out because it's a recipe for disaster. We'll see you next week. What's up, everybody? Thanks for joining us for another episode of Escaping the Drift. Hope you got a bunch out of it or at least as much as I did out of it. Anyway, if you want to learn more about the show, you can always go over to Escaping the Drift dot com. You can join our mailing list and. But do me a favor, if you wouldn't mind, throw up that five star review. Give us a share. Do something, man. We're here for you. Hopefully you'll be here for us. But anyway, in the meantime, we will see you at the next episode.