Hannah Hammond is a self-made entrepreneur who overcame a challenging childhood to build a successful career at a young age. Graduating Summa Cum Laude from ASU with a degree in Engineering, she went on to found multiple companies, including a national hard money lending firm, a real estate brokerage, three construction companies, and a property management company. By age 25, she became a self-made millionaire and now serves as CEO of Kashed Lending and The Firm RE, with plans to expand the Kashed Capital Fund to over $1 billion. Outside of work, she enjoys learning, traveling, and equestrian pursuits.
Here’s some of the topics we covered:
- From Rock Bottom to Real Estate Mogul
- The Power of Letting Fear Drive Your Success
- Owning Multiple Companies & Leading Teams Like a Pro
- Must-Have Archetypes for Crushing It In Your Business
- Make Game-Changing Decisions That Win Big For Investors
- Securing the Best Opportunities for Your Investors
- Navigating Inflation, Cashflow & The Market Cycle
- Bridge Debt & The Billion-Dollar Fallout
To find out more about partnering or investing in a multifamily deal: Text Partner to 72345 or email Partner@RodKhleif.com
Full Transcript Below
00;00;00;12 – 00;00;18;27
Rod
Welcome back to life time cash flow through real estate investing. I’m Rod Cleef and I am thrilled that you’re here. And I know you’re going to get tremendous value from the young lady I’m interviewing today. Her name is Hannah Hammond and she’s from Phoenix, and she’s got a very interesting story. She is a multimillionaire in her early 20s.
00;00;19;00 – 00;00;29;10
Rod
Probably worth a lot more than that now. And, just done done more than most people have done in their 60s. So very excited to get into this interview. I know you’re going to get value. Welcome to the show.
00;00;29;12 – 00;00;31;04
Hannah
Thank you so much. I’m so happy to be here on.
00;00;31;09 – 00;00;53;02
Rod
Well, I’m happy that you’re here. And, I’m excited to hear your story because you’ve accomplished so much. Already. And she’s the sky’s the limit for you. So tell us who you are and and how you got to where you’re at. So I know you already own a real estate brokerage. You already have, you do private lending, you’ve established a debt fund.
00;00;53;02 – 00;01;06;16
Rod
I mean, you’ve got all these different things happening and very successful real estate brokerage. So, you know, I want to I want to talk about or have you talk about how you got to that place and why you’re so driven and maybe talk a little bit about your background.
00;01;06;18 – 00;01;25;24
Hannah
Absolutely. So I’m actually third generation native to Arizona. My great grandmother was a cotton picker in the cotton fields that are now car dealerships. And, we had very little money growing up. My dad worked and still works at a pawn shop making minimum wage. And my mom tried to take care of the kids because babysitting is expensive.
00;01;26;01 – 00;01;42;17
Hannah
I was a third child. My brothers were much older than me. Just kind of an accident down the line somewhere. And, she was a bagger at bashes to try to support the family. So that was the, environment that I was raised in. My dad would keep the AC at 90 degrees in the summer in Phoenix.
00;01;42;17 – 00;02;15;08
Hannah
So I remember, you know, crying and pouring sweat and having nowhere to to get air conditioning, really. And then he would try to use interesting character for sure. So I knew really young that that was not a fun environment. And it wasn’t a fun life, and it wasn’t something that I wanted to be a part of. And fortunately for me, I think I’m really blessed to have been exposed to a family that had a lot of money and from a very young age, and she was a friend that I met in school, and she had horses, and they had a big house, and they had a happy marriage, and they had just everything.
00;02;15;08 – 00;02;40;18
Hannah
That was not what I was experiencing. And it really motivated me, to go towards that. And I fell in love with horses. And, for those who who may not know, horses are very expensive to purchase and take care of. Like multiple six figures a year. And, I just loved the nice cars and the nice houses and, and the joy that was in the household versus the fighting and the, the pain that I was experiencing in my household.
00;02;40;18 – 00;02;40;29
Hannah
So.
00;02;41;04 – 00;03;02;08
Rod
So you’re able to see it. And that’s a huge piece. You know, I remember, just as a sidebar, I remember, you know, growing up the same way. And, and I had a girlfriend who had a house like that. They had a three car garage. I’d never seen a three car garage before. A pool, you know, and all the jet skis and snowmobiles and motorcycles and all this stuff that I couldn’t believe they had.
00;03;02;08 – 00;03;05;10
Rod
So that’s very interesting. I had the same experience. Please continue.
00;03;05;12 – 00;03;22;06
Hannah
Yeah, I think it’s important because some people grow up on a farm and Ohio and they don’t see it, you know, and so I’m, I’m happy. I was in an area close by to a lot of wealth. And Scottsdale, Paradise Valley, the school I went to was out of my district. But so, you know, half the school was pretty low income and half of the school was very high income.
00;03;22;08 – 00;03;39;08
Hannah
And, so I definitely had that opportunity. But, the first moment that was kind of a tipping point in my childhood where I said I wanted to be a millionaire, was when my dad wouldn’t buy me an ice cream from McDonald’s. And I was so upset by it, and I wanted a McFlurry, and he would buy it for me.
00;03;39;08 – 00;03;45;21
Hannah
And I was crying. And I said that, you know, I’m going to be a millionaire, so I could buy myself a McFlurry. And I was that out loud.
00;03;45;21 – 00;03;46;21
Rod
Yep. Good for.
00;03;46;21 – 00;04;00;05
Hannah
You. I said that out loud and and, you know, and then my, my brother threatened to kill me and went to jail, and, he said I would never amount to anything. And so I was very driven to provide for myself and.
00;04;00;05 – 00;04;02;14
Rod
Prove yourself, probably to him. Yeah.
00;04;02;17 – 00;04;26;10
Hannah
Very low self-esteem, very low self-worth, you know, suffered with feelings of abandonment and rejection and hopelessness and just fear of, not having not being taken care of or loved. And, I, you know, that fear drove me in the beginning, for many years. And I felt like achieving in school was the one thing I could control. And so I was always the best in my class from kindergarten.
00;04;26;10 – 00;04;45;11
Hannah
Right now I have the stock principal’s list. I graduated engineering school and college in three years with 4.0 GPA. It was something that I really pushed myself to be good at because I just it was like the only place I could find my identity and self-worth, and it was just a really deep coping mechanism for me. And, if I wasn’t the.
00;04;45;11 – 00;04;49;28
Rod
Positive one, because some people pick negative ones drugs, alcohol, all sorts of things.
00;04;49;28 – 00;05;00;19
Hannah
Yeah, good for you. Which I experimented with all that. But yeah, fortunately business was my like my true addiction and and just, not business, but accomplishment.
00;05;00;21 – 00;05;01;00
Rod
Yeah.
00;05;01;00 – 00;05;08;09
Hannah
So I would fill balloons with flour. It’s like what I found in my house, and I would sell them as stress balls to my neighbors. I would, build.
00;05;08;09 – 00;05;09;15
Rod
Balloons with flour.
00;05;09;16 – 00;05;10;08
Hannah
Yeah.
00;05;10;11 – 00;05;19;14
Rod
I’m not sure I follow that. Like, was that a stress ball? Oh, God. Oh, you squeeze it, guy. Okay. I was 16. Explosion with flour everywhere. Got it. Okay.
00;05;19;14 – 00;05;35;02
Hannah
All right. Yeah. So just creative things like that. And I was babysitting when I was young. Like, I should have had my own babysitter. And then I really loved horses, so I studied how to train horses and became good at training horses, and convinced the person at the barn to let me work there to keep my slaughterhouse rescue there.
00;05;35;02 – 00;05;37;01
Hannah
So I just had a very entrepreneurial spirit.
00;05;37;04 – 00;05;37;27
Rod
Nice.
00;05;38;00 – 00;06;00;13
Hannah
And, I read Rich dad, Poor Dad, and I was probably, I don’t know, seventh grade middle school somewhere around there. And it just clicked in my head when I read that book by Robert Kiyosaki and Assets versus liabilities. And he said, to build up your assets and your passive income so you can make money in your sleep and then ultimately allow your assets to pay for your liabilities.
00;06;00;15 – 00;06;17;22
Hannah
And so I was very adamant about that. Fortunately, I knew how to stretch a dollar because of the family that I was raised in. And I decided I’m going to stay in Arizona. I’m going to get my real estate license as soon as I can. When I turn 18, I’m going to get a full ride scholarship to college based on merit, so I can have that on my resume.
00;06;17;23 – 00;06;24;10
Hannah
I knew being a young female in commercial real estate, I need some sort of something to help gain some.
00;06;24;10 – 00;06;27;29
Rod
Outcome or respect. Interesting. Okay, so you thought the degrees would help you?
00;06;28;02 – 00;06;33;29
Hannah
Yeah. Okay. Yep. Just, have, you know, a dual engineering degree and, that.
00;06;34;04 – 00;06;35;16
Rod
That’s what you got.
00;06;35;18 – 00;06;51;08
Hannah
Yep. So, that was my my path. So I got signed up for real estate school. At 18 years old. I held an open house in my neighborhood before college started. I got a full ride scholarship to college. I picked engineering because I would have to go into debt. It was just a quick degree that would pay a lot of money.
00;06;51;11 – 00;07;03;05
Hannah
And, I wanted to check the corporate America thing off the box. Even though I knew I was going to be an entrepreneur. But I wanted to not ever regret trying that path. Sure. And also see how a large organization was run so I could learn how to until.
00;07;03;05 – 00;07;05;00
Rod
You realize that it’s not what you wanted.
00;07;05;01 – 00;07;05;09
Hannah
Yeah.
00;07;05;15 – 00;07;06;09
Rod
Right. Yeah.
00;07;06;13 – 00;07;12;29
Hannah
Okay. So, yeah, I bought, my very first sale was Moon Valley Nursery, actually.
00;07;13;01 – 00;07;15;26
Rod
Like, like a tree nursery or plant. Sorry. No kidding.
00;07;15;26 – 00;07;33;06
Hannah
There are really large nursery on the West Coast. Okay. And, this person walked in the open house is the only person that showed up. It was the middle of summer. I was an 18 year old, broken little kid, and, he ended up listing a $1.1 million property with me. That was ten years ago.
00;07;33;06 – 00;07;35;10
Rod
Well, that’s when 1.1 million was a lot of money.
00;07;35;11 – 00;07;56;17
Hannah
Yeah, yeah. Wow. And I made $36,000 on that sale. And then my next sale was $1 million mansion and in, very nice neighborhood in Scottsdale, which now is probably 8 million. And then I made another 36,000, and I used those funds to purchase my first investment property, which I had to live in because of course, I had to support myself.
00;07;56;17 – 00;08;00;26
Rod
So you bought a house and you moved into it, and that was your. But you considered an investment property. Yeah.
00;08;01;01 – 00;08;01;15
Hannah
Yeah.
00;08;01;15 – 00;08;06;21
Rod
So right away, that’s a clue, guys. You buy a house. Look at it like an investment property. All right. Good.
00;08;06;21 – 00;08;13;27
Hannah
Yeah. And that was my intent with it is it’s going to serve me a purpose to live here. I’m going to get a better interest rate, because I’m owner occupier.
00;08;13;27 – 00;08;14;17
Rod
Was that.
00;08;14;19 – 00;08;15;29
Hannah
To 2014 okay.
00;08;16;03 – 00;08;16;17
Rod
Okay.
00;08;16;21 – 00;08;38;22
Hannah
And it was $76,900. Wow. And I put about 20,000 into doing a full rehab on it while I lived there, which was fun. And then I furnished it. Then I bought another one that was bigger for a couple hundred thousand something around there. And then I rented that one, not fully furnished, and I did really good in the fully furnished rental industry for many years in Phoenix.
00;08;38;23 – 00;08;40;12
Hannah
In Phoenix, yeah, I was a.
00;08;40;12 – 00;08;41;20
Rod
Long term rental.
00;08;41;23 – 00;08;59;10
Hannah
I would do whatever works for the tenant. Okay, so I self-managed everything and started my own property management, you know, entity to manage my portfolio. And if it was, if they wanted a short term, the price would go up. But I would allow it if they wanted. Mid term price was middle. I’d allow it if they wanted long term I’d.
00;08;59;15 – 00;09;14;25
Rod
But by the way, guys, that’s, you know, short term would be like, well I probably not Airbnb short term but maybe a couple of months mid term, maybe six months then long term, of course, a year. And yeah, I’ve got students that are killing it with mid term. Airbnb is getting crushed right now. But okay.
00;09;14;25 – 00;09;16;01
Rod
Well wow. Awesome.
00;09;16;03 – 00;09;34;07
Hannah
Yeah. So that was kind of what’s are the real estate. And then I read that I found out about you because I was, it was super like my favorite asset class was multifamily. And I wanted to be a multifamily broker and invest in multifamily and all of those things. And so I went to work for Cat, the construction company.
00;09;34;08 – 00;09;50;01
Hannah
Okay. And as an engineer and I got into a management position there right out of college. Wow. And I learned about construction and just they were $1 billion organization. So I learned how they operated their company and really got some good experience there. And then I quit and started my own construction companies.
00;09;50;02 – 00;09;52;13
Rod
Really? Yeah. Have you built anything?
00;09;52;16 – 00;09;57;01
Hannah
I had three. Yeah, we built them pretty good size. I was only involved three.
00;09;57;01 – 00;09;57;09
Rod
One.
00;09;57;10 – 00;09;59;01
Hannah
Homes or three construction companies.
00;09;59;01 – 00;10;08;22
Rod
Oh, you built three construction? Yeah. Okay. So what sort of construction did you do? Did you do new build or remodel or what sorts of things did you do? Or did you just use it for your own terms or what were you.
00;10;08;25 – 00;10;29;20
Hannah
So we were doing, I brought a business partner and that’s what I say. We use me and him and we did a general construction company where we did mostly remodels, primarily commercial though. Okay. So, like, Topgolf was our client. What? A broker was our client. And we were doing those projects, and then we had a high end home division, because I was big in the real estate market because I was an agent broker.
00;10;29;25 – 00;10;47;23
Hannah
And so we would do glass. We had a glass company, a roofing company, and a general construction space. So we had about 75 employees, a bunch of trucks on the road, shop and everything. But for multiple reasons, I did not like the construction industry. Yeah. And it was through that I was during Covid that I was running those.
00;10;47;23 – 00;10;49;06
Hannah
So supply chain labor.
00;10;49;06 – 00;10;56;20
Rod
Oh my God, I remember seeing that. I remember seeing the memes of of a pile of wood saying, this is my retirement fund, you know. Yeah. Because pay went up so high, right?
00;10;56;20 – 00;11;13;16
Hannah
Oh, it was a nightmare. And then, you know, employees would be like, oh, I have Covid every two weeks. And so nobody was showing up to work. We had to pay them. And it was really difficult. And and I didn’t know I had like me trying to tell contractors what to do. Right? I didn’t really have a place in that, in that.
00;11;13;19 – 00;11;19;29
Rod
It’s tough because that’s that old good old boy, you know. Yeah. You know, I could totally see where you’d have a struggle with that.
00;11;19;29 – 00;11;31;25
Hannah
Yeah. And I didn’t like the feeling of not being able to step in and do what my staff was doing. I couldn’t go install a piece of glass at Topgolf, and I hated feeling, like I wasn’t. I was imposter syndrome a little bit.
00;11;32;03 – 00;11;33;06
Rod
But you know, I totally get it.
00;11;33;08 – 00;11;58;14
Hannah
Yeah. So I, exited those, gave ownership fully to my partner, and, and, then at that point, I opened the real estate brokerage and focused fully on commercial real estate. And, the brokerage is called The firm. And we do something unique about us is that we allow agents to do residential or commercial. And so most brokerages, it’s either, you know, one.
00;11;58;14 – 00;11;58;26
Rod
Or the other.
00;11;58;26 – 00;12;07;18
Hannah
One or the other. Yeah. And so I had built both businesses pretty big. And I didn’t want to give up one or the other. And so I just had to create my own solution. And that was starting my own firm.
00;12;07;20 – 00;12;08;12
Rod
The firm.
00;12;08;12 – 00;12;09;00
Hannah
The firm.
00;12;09;00 – 00;12;11;26
Rod
Never movie, I think. Yeah. I’m pretty sure it’s a movie. Right?
00;12;11;26 – 00;12;13;13
Hannah
I haven’t seen it, but everyone asks. Yeah, yeah.
00;12;13;13 – 00;12;23;20
Rod
Yeah, it’s a movie for sure. It’s, Yeah. But anyway. So, so so you have some agencies do residential. Some of they do commercial. That is very unusual. Okay. Yeah. Yeah. And how long have you been doing that now.
00;12;23;22 – 00;12;39;12
Hannah
I launched that company January of 2022. So two and a half years and about the same time I had started a 1031 exchange company and a, hard money lending company and serial entrepreneur. One of the things I’m focusing on.
00;12;39;12 – 00;12;43;21
Rod
Is do you do you bring in partners on these different businesses?
00;12;43;24 – 00;12;54;18
Hannah
Yeah, I usually do. I can always bring in one partner. Good. Good. Because there’s like there’s visionary, there’s operations. There’s so much in in order to, in my opinion, in order to scale rapidly.
00;12;54;22 – 00;13;12;04
Rod
It’s you’re the visionary. Yeah, yeah. And guys in any business, Tony Robbins has these different archetypes. And there’s the, there’s the visionary. There’s the manager leader, which is the operations person. Oh, God. What’s the other one? I’m drawing a.
00;13;12;04 – 00;13;13;05
Hannah
Blank. The integrator.
00;13;13;06 – 00;13;34;08
Rod
Yeah, there’s an integral that’s in the ethos, but Tony’s got different archetypes for this. But bottom line is there are several different personality types that you need for every business. And you see, you know, like in Silicon Valley, you’ll see the creator. The innovator will be the software nerds that created something. But then they’ve got to bring in VC money and they bring in their whole C-level suite to really operate the business.
00;13;34;08 – 00;13;46;28
Rod
And you were smart enough to realize that because I was a little concerned when you’re talking about all these different businesses. I mean, I built 28 businesses and you get this dilution of focus and everything suffers. But but if you’re bringing in partners to help with that, then that’s the way to do it. Good for you.
00;13;47;03 – 00;13;56;20
Hannah
Yeah. And that’s really the strategy is, be the visionary, be the leader. And then someone else is the integrator accelerator. And then I could and they’re all vertically integrated businesses, right?
00;13;56;21 – 00;14;01;19
Rod
I’m not they all they feed off each other as well basically. Which is really smart too. Yeah. Good for you.
00;14;01;19 – 00;14;13;20
Hannah
But I’m a big follower of Alex Hermosa, and he talks about the woman in the red dress. Like all these opportunities. And as you become more successful, you get presented with better opportunities and I’m sure you get presented with opportunities.
00;14;13;20 – 00;14;31;08
Rod
Every shiny penny syndrome, boom, boom, boom. You just got to be careful, you know, because you want to do it all. And and you know, but but if you if you maintain that focus and you don’t dilute that focus and you bring in people like you, like you’re doing, you you got it much earlier than I did.
00;14;31;08 – 00;14;31;24
Rod
Good for you.
00;14;31;29 – 00;14;35;26
Hannah
Thank you. It’s Yahoo, not how I read that book. And it changed everything.
00;14;35;27 – 00;14;53;01
Rod
And that’s a great book. It’s downstairs in my library. Yeah. Talk about the mechanics of your debt fund, because my understanding is you have investors invest their money, and then you loan it out and and they get a return on their money, and then you loan at a higher rate, and you and you’re making the spread. Correct. Is that how it works?
00;14;53;01 – 00;14;53;29
Rod
Or maybe I’ve got it wrong.
00;14;54;01 – 00;15;13;05
Hannah
Yeah. So there’s two different structures that you can have your debt fund. One is that which is basically arbitrage. So I would say I’m paying you 8% as an investor. And then if I charge 12, right, I keep the difference or whoever the gaps are, keep reference. Right. And that one model to do it, I’ve gone with the other model which is a straight profit share.
00;15;13;09 – 00;15;28;01
Rod
Yeah. No, that’s that’s really smart because, you know, I was going to ask you on the previous model, then you’re paying money where the money’s out or not. And in most cases I would get or in some cases. But but yeah. And a profit share. That’s perfect because you’re loaning the money and splitting the profit. Yeah.
00;15;28;01 – 00;15;40;14
Hannah
And that way the investors which I will be at LLP as well, it’s a true partnership. And they actually have all the upside of the business. And like in this fund, we pay an 80% profit to the LPs, which is a huge.
00;15;40;16 – 00;15;42;06
Rod
8020 split. Good for you.
00;15;42;10 – 00;15;55;06
Hannah
Yeah. And that way we would never be like my team would never be motivated to do anything that wouldn’t benefit the investors. It’s a win win, right? If we we win together, we make more money like that too.
00;15;55;06 – 00;16;08;03
Rod
Because yeah, I could see on the other relationship that you might be more aggressive in your underwriting than you want to be because you’re trying to get the money out there. This is a very valid point. I think your model is much safer for an investor, for sure.
00;16;08;05 – 00;16;27;10
Hannah
Thank you. And yeah. And as, as the economy changes, I wouldn’t want to tell an investor, hey, I’m paying you 8% with rates in this environment. And then next year, rates are down back to 3%. And then I have to go back to everyone and say, okay, now it’s 6% that I’m paying, you know, or rates go up and then they’re still only getting 8%.
00;16;27;10 – 00;16;49;13
Hannah
And then now we’re making 18%. So I really wanted for the longevity of the relationships and the longevity of the fund is we are in this together as partners. And if the fund if something happens, the economy where we are have more defaults or our interest rates have to drop, or any situation like that where the whole fund’s not going to implode because we have this 10% or 8% rate that got it right.
00;16;49;13 – 00;17;00;27
Rod
You have these expectations. So you have to meet as well. Yeah. No, I think that makes complete sense. No, I, I really like that model a lot. And did you just started or is this something that’s been going for a little bit.
00;17;00;29 – 00;17;09;21
Hannah
Yeah. So I’ve been doing fix and flip loans and, hard money loans for a few years now, but the, HB capital fund just launched and.
00;17;09;21 – 00;17;13;03
Rod
HB capital r.com. Correct. Right. Okay.
00;17;13;03 – 00;17;30;08
Hannah
Good. Yeah. And that’s going to be the feature. And the nice thing, you know, because the traditional commercial real estate funds are amazing and I love them. And the depreciation and all the reasons we’re in commercial real estate. Right. Sure. But those are generally 3 to 5 to 7 to 10 year funds. They’re longer term investments.
00;17;30;11 – 00;17;38;01
Hannah
And you do have some more advantages such as the depreciation and things like that. Where you don’t get the depreciation on the a dead fund.
00;17;38;01 – 00;17;40;04
Rod
But but you get the money back quicker.
00;17;40;05 – 00;17;54;00
Hannah
You can do a redemption at any point. And because there’s always these are very short term bridge loans, you know, six months to 24 months. So as these loans refill, you can put in a redemption. And most people will have a redemption in 30 days and they can just it’s more or.
00;17;54;00 – 00;17;57;01
Rod
Less than what you. I don’t understand what you mean by redemption.
00;17;57;04 – 00;18;00;28
Hannah
Like a redemption for their money. So they just they they say they want to take their money back or.
00;18;01;01 – 00;18;04;06
Rod
Oh, so you can you can, you can basically allow them to take their money out.
00;18;04;08 – 00;18;05;03
Hannah
At any time. Yeah.
00;18;05;05 – 00;18;07;25
Rod
Just replace it with somebody else or whatever. Okay.
00;18;07;27 – 00;18;09;02
Hannah
It’s an evergreen fund.
00;18;09;03 – 00;18;09;15
Rod
Gotcha.
00;18;09;15 – 00;18;12;05
Hannah
So they could just put it in. Take it out.
00;18;12;07 – 00;18;28;24
Rod
Is it, is it, is it governed by the SEC. Is it like a rigged thing? So is it, is it, for accredited only or it’s for accredited only. It has to be. Otherwise we couldn’t have said it on the show here, right? Yeah. Okay. So you have to be accredited. So it’s at 5 or 6, see?
00;18;28;26 – 00;18;46;12
Rod
Got it. Okay. Wow. Love it Hannah. That’s that’s awesome. So you’re going to your point. Your work in this debt fund. You’re going to be looking for bridge loan opportunities. Keeping the loan to value at a safe rate. Right. And, yeah.
00;18;46;16 – 00;18;48;27
Hannah
And we’re specializing in asset classes that.
00;18;48;28 – 00;18;50;02
Rod
Yeah. What asset classes.
00;18;50;02 – 00;19;04;08
Hannah
So storage storage facility, small bay industrial mobile home parks and multifamily. Yeah. Our our specialty and our bread and butter is about like the 1 to $20 million range. And there’s some large institutional commercial lenders.
00;19;04;10 – 00;19;08;14
Rod
So you’re doing 1 to $20 million loans. Wow. Those are significant loans okay.
00;19;08;14 – 00;19;24;24
Hannah
Yeah. And generally they’re about 12% interest. And a couple points were pretty on par with market. Stay competitive with market. You know, tertiary markets are higher risk investments might be a little bit higher. But we really try to work with the investors on a loan that is structured to where their deal can be successful.
00;19;24;28 – 00;19;31;21
Rod
So are you geographically, do you, do you try to stay in a particular geographic region or area?
00;19;31;23 – 00;19;44;05
Hannah
We’re national. You’re national. Yeah, we’re national. And we try to stay in states that are friendlier on foreclosures, such as deed of trust states versus mortgage states. It’s it’s a judicial foreclosure process.
00;19;44;08 – 00;19;52;22
Rod
It’s I know all about it. I had a litigation support company, and we we fought foreclosures. I built law firms in five states this is a long time ago. Yeah.
00;19;52;25 – 00;20;08;14
Hannah
But but now there’s structures. And we have the best attorney out there in the private money space, but they’re structures. You could, create the debt to where you are a partner on the asset. And if they default, the asset becomes yours. And so you bypass the whole foreclosure process.
00;20;08;14 – 00;20;16;07
Rod
Now, it’s like a strict foreclosure process. Now, that’s very interesting. I may I may talk to you about that after we stop recording. That’s very interesting okay.
00;20;16;08 – 00;20;17;00
Hannah
Yeah. It’s awesome.
00;20;17;00 – 00;20;35;10
Rod
Yeah. Yeah. And and, yeah, we when I, when I did what I did with the litigation support, we, we built law firms in five judicial states because we could stop the foreclosure with, with litigation. And then, then I had 60 employees doing loan mods. This is that that’s what I built out of the ashes of losing $50 million in 2008.
00;20;35;10 – 00;20;50;15
Rod
Yeah, nobody had ever done it before. And it wasn’t a fun business because nobody’s happy when they’re losing their house. Or I sold it a few years ago, and they’re killing it now because they had a backlog of foreclosures. A friend of mine owns it now, but, yeah, no. So I you want the opposite. You want the deed of trust?
00;20;50;15 – 00;20;54;02
Rod
Where? It’s where it’s locked, right. For the foreclosure. So you can get them out, correct?
00;20;54;02 – 00;21;01;10
Hannah
Yeah, yeah. As far as debts where we have ownership on the entity, but the the difference here is like most,
00;21;01;13 – 00;21;11;19
Rod
So you call it. So it’s mess debt so that when you’re saying you get an ownership interest. So that’s classified as debt in that case. Interesting. Okay. Okay.
00;21;11;19 – 00;21;25;07
Hannah
Yeah. And, I know multiple people that have large, debt funds, mostly in the residential space, fix and flip, which is a red ocean, in my opinion, because everybody’s in that space and they’re doing 90% LTV and lower rates, and it’s just.
00;21;25;07 – 00;21;44;01
Rod
Way they’re going to get their asses handed to them. I was telling you before we started recording that, that that market got killed first in 089. I remember the private lending market. It because people have been loaning 9,000%. They thought the gravy train was going to last forever. Yeah. And we still got a little bit of that sentiment now, but, definitely in the single family.
00;21;44;03 – 00;22;02;08
Rod
Be interesting. You know, what are your thoughts economically? With the election coming and where we are in this country? Do you have any trepidation or are you are you are you a bull? Are you a bear? What are your thoughts on where we are?
00;22;02;08 – 00;22;02;29
Hannah
I’m a bear.
00;22;03;00 – 00;22;03;20
Rod
You’re a bear?
00;22;03;22 – 00;22;18;24
Hannah
Yeah. I’ve been I’ve been, I don’t want to say this incorrectly, but it’s a market cycle, right? The market has to go up. The market has to come down. That’s how finances reset. Things get re scooped up at a lower price, and then the whole thing starts over again. If you look at history, it’s always happened.
00;22;18;24 – 00;22;41;04
Hannah
And I believe it always will happen because nothing just goes up forever. Ultimately the government will continue to print and inflation will continue to happen. And that’s why I believe real estate’s such a great investment because over time it will continue to go up. But we need opportunity to be able to rebuy assets and add value to them and actually make money, because real estate is supposed to be an investment that provides you cash flow.
00;22;41;11 – 00;22;58;09
Hannah
And right now it’s frickin impossible to find anything that is an investment that provides you cash flow. Like the only real advantages you have right now is the the cost segregation and tax advantages that you have. But, you know, it’s like when you’re already paying for all the value add potential in it at the buy. That doesn’t work.
00;22;58;09 – 00;23;08;15
Hannah
And then with all, I think that we have to be having a pretty large correction, especially in the commercial space. The last crash, I think the residential market took the commercial down with.
00;23;08;15 – 00;23;09;02
Rod
Us for sure.
00;23;09;03 – 00;23;09;18
Hannah
This time.
00;23;09;19 – 00;23;28;04
Rod
Not as bad. I mean, I remember when I lost everything, it was the houses for sure that pulled me down. I had some apartment complexes. They only pulled back about 11%, but I lost them because I’d cross collateralized them with packages of houses. But but it’s the other way around this time, right? You know, office, you know, is is very low occupancy right now.
00;23;28;04 – 00;23;50;04
Rod
There’s they’re dying a lot of multifamily operators in trouble with with bridge debt, myself included. Got a couple of deals that I’m dealing with. And, so we’re going to see a reckoning. For sure, but, yeah, it’ll be interesting to see if it’s if it’s more global, if it’s more national versus just specific to commercial real estate and interesting to see what happens.
00;23;50;04 – 00;23;53;24
Rod
And it’d be interesting to see, of course, what happens with whoever gets elected.
00;23;53;24 – 00;24;00;02
Hannah
But yeah. And yeah, that’s a big determining factor. I think,
00;24;00;05 – 00;24;09;23
Rod
Obviously if you’ve got help us, if you’re willing to change, that’s all I can say, you know. So if you don’t like that, stop watching me. Yeah, that’s how I feel. Come. Same. God help us from this current administration.
00;24;09;28 – 00;24;25;25
Hannah
But, I mean, the thing with, like, the rate caps, and I know so many people that bought value add assets and multifamily and all these different investments that, you know, all the rate caps have expired and they’re going from a 2% rate to a 7% rate, which is you just can’t stay afloat. And that you can’t.
00;24;25;25 – 00;24;48;29
Rod
They can’t you can’t do it. And I’ll tell you the cost of a rate cap. I tell this story in 2020. You could get $100 million, 3%, three year rate cap for $23,000, 100,000,003 years. Rates not going to go up for 3%. That same rate cap for one year. Like I check this like eight nine months ago for one year, not three years was 2.3 million.
00;24;49;05 – 00;25;02;19
Rod
Okay. So you know and I’ve seen you know, we were looking in essence San Antonio where the reserve payment that this bridge lender was asking for went from 8000 a month to 80,000 a month. Hello. Yeah. No that’s not going to happen.
00;25;02;19 – 00;25;20;04
Hannah
So it’s not and I know lots of people I think the good news is, is on the, commercial real estate side, most of these assets are funds that are money from accredited investors. So as they lose their money, it’s I guess less of, impact on their like they’re not losing their houses.
00;25;20;07 – 00;25;37;00
Rod
Well, I gotta tell you, I’m taking over some assets from, a shit show. And, you know, there’s some investors that have a good chunk of their net savings in some of these deals. I’ve had to take those phone calls, and I’m trying to save them, you know? But it’s it’s a struggle. And, you know, I’m.
00;25;37;00 – 00;25;56;11
Rod
I’m going to do everything I can to try to help these investors. I’m helping some friends of mine with some troubled assets, basically. And I’m taking over a portfolio and it’s, it’s a it’s a bit of a shit show, but no, for the most part, you’re right. But I have seen some widows where their whole all their savings are in and some really sad situations.
00;25;56;11 – 00;26;11;23
Rod
But, we’re gonna do everything we can to pull them out. But, you know, it’s it’s it’s I’m hoping that the rates start coming down. I don’t think they’re going to come down in a big way. And of course, that doesn’t impact Sofr for a long time, which is what we, you know, commercial debt is based on in most cases.
00;26;11;23 – 00;26;24;04
Rod
So it’ll be interesting to see how it all shakes out here. But I do believe there’s going to be incredible opportunity. You know, I’m in a lot of cash. I’ve got access to a lot. And cash is king in a crisis. Right. So you feel the same way I do?
00;26;24;05 – 00;26;39;27
Hannah
Yeah I do, and I’ve already seen I have friends who have funds and one GP, she, they just the bank short sale their multifamily in Phoenix for 18 million. And they bought it a couple of years ago for 27. Yeah. So those are you know, they’re not on the market that’s happened.
00;26;40;04 – 00;26;57;03
Rod
They sell very quickly. But you know, as that compounds there’ll be more and more of that. I saw it in oh nine and there was unbelievable deals back then. But I was hiding under a rock. But. Well, it’s been a real treat to have you on the show, and, I can’t wait to see you ten years from now.
00;26;57;03 – 00;27;05;16
Rod
I’m good God, it’s going to be, It’s going instead of with an M, it’ll be with a B, right? That’s the I love. It was such a pleasure to meet you and have you here.
00;27;05;18 – 00;27;06;28
Hannah
Likewise. Thank you so much. On.
