Innovate Special Edition | Kristina Sawyer, Arixa Capital; Ruben Izgelov, WeLend LLC; Vincent Balagia, Stallion Capital

lender-lounge-with-kevin-kim-innovate-edition

Share This Episode

Sponsors
Lender Lounge White

Stay Updated

We send emails on the 2nd and 4th Mondays of the month to alert you of new episodes. Get links, behind-the-scenes content, and messages from Kevin himself.

Geraci’s Innovate Conference for 2021 was a massive success. While we were there with all of our wonderful clients and friends, Kevin had the opportunity to interview Kristina Sawyer with Arixa Capital, Ruben Izgelov with WeLend, and Vincent Balagia with Stallion Capital. The purpose of this episode was to get a better understanding of their local markets. All three individuals have immense expertise of their local and surrounding geographies and shared their insights in where the market was headed. One interesting point was how popular ADUs are in all three markets. Listen in and learn more!

Kristina Sawyer

Kristina Sawyer is the Vice President of Lending for Arixa Capital Advisors and Crosswind Financial. In her role, she primarily focuses on the launch of new ventures and loan originations for various Arixa-managed portfolios, while managing client and broker relationships. In addition, she manages the technology operations and development of Arixa’s operating platform. In her nine-year tenure, Sawyer has spearheaded strategic priorities for the firm that have enabled the company to expand and deliver exceptional client servicer. She has played an integral role on our team and has helped service over 1,600 loans and counting.

Ms. Sawyer was formerly the Director of Loan Operations at Arixa Capital, where she was responsible for the day-to-day operations of Arixa’s four real estate funds. Ms. Sawyer comes to Arixa with over 23 years of real estate experience in all aspects of real estate lending, portfolio management, risk management, asset management, and property management.

Ruben Izgelov

With over a decade in the real estate industry – acquiring, flipping, developing and financing over $500 million worth in real estate – Ruben has quickly become a renowned real estate expert, speaker, and guide for many professionals in the industry. The most successful time in Ruben’s career was during the 2009 financial crisis; during this time, he bought, fixed, and sold distressed properties, which showed his determination in both bullish and bearish markets. After using private money financing himself, he quickly saw the innovation desperately needed in the private lending space and decided to spearhead it by co-founding We Lend, LLC (a private lending platform).

Ruben originally, however, started as a hard-working eight-year-old boy distributing flyers on the streets of New York, and to this day still takes that work ethic with him everywhere he goes. He is a graduate of St. Johns University and Touro School of Law, where he earned a BS in legal studies and his JD, finishing cum laude and magna cum laude.

Vincent Balagia

Vincent began his career working with banks, investment brokerage firms, and non-traditional asset management companies. In 2005, he joined a private lending firm in Austin, Texas and managed the origination department until he founded Stallion in May, 2007. Since starting with one investor and one loan, Stallion has now deployed more than $250 million into the Texas real estate markets, and, under Vincent’s leadership, produced consistent, high-yield returns for its investors. Vincent has developed expertise across property types through various market conditions, and has a history of hands-on property management.

Vincent is passionate about entrepreneurship and is involved in the C12 Group, a Christian business leadership development organization. He is also an active member of the American Association of Private Lenders, an organization dedicated to excellence, ethics, and education in the private lending industry. He currently serves on the Board of Trustees for the Austin Bridge Builders Alliance, a non-profit which strategically attempts to build stronger links between organizations for the good of the city of Austin.

Vincent graduated from the University of Texas at Austin with a BBA in Finance.

Episode Transcript

Kevin Kim:
All right. Hey, guys. Kevin Kim here. We’re doing a live episode of Lender Lounge here at Innovate 2021. We are here in beautiful Newport Beach, California. It is nice and sunny out. Today I have some friends with us from all across the country. That’s what we’re all about.

Kevin Kim:
We have clients coming from Texas, LA, and New York. Today I wanted to have kind of a casual discussion about just… We’re all here now. We’re all in person. We’re finally out of the house. Talk a little bit about how you guys are feeling about 2021, how it feels to be out of the house. We’re networking again.

Kevin Kim:
Then also I wanted to get a feel from a more middle market retail standpoint how you guys feel about the market from your local perspective. We’ll talk. We’ll just open it up. I don’t really have any set questions but first of all how does it feel to be back out here? We have about 230 people here today and we’re all networking, having fun. How are you guys feeling?

Vincent Balagia:
It almost feels normal.

Kevin Kim:
Almost?

Vincent Balagia:
Almost, yeah.

Kevin Kim:
Because we’re all wearing masks still.

Vincent Balagia:
We’re wearing masks. We’re doing some precaution. But it’s great to just be able to sit down with people, especially from across the country. It’s good to see a lot of old friends-

Kevin Kim:
Yeah.

Vincent Balagia:
… and people that we do business with. It’s just great to make connections again. Almost feels like we’re back. Yeah.

Kristina Sawyer:
I agree. It also felt a little weird just to be around so many people without a mask on, like at the networking event and outside it was-

Kevin Kim:
First time for me.

Kristina Sawyer:
Right.

Kevin Kim:
Yeah.

Kristina Sawyer:
Which I didn’t like it. It felt weird. But now day two is much more normal.

Kevin Kim:
Right. Right.

Ruben Izgelov:
Yeah. I get to a point where I don’t even realize I have my mask on. But now I’m sitting there with my mask on, I see that no one has put their mask on. Someone comes up to me. “Are you still with a mask? Why are you going with a mask?” I guess that’s a good point because at the end of the day many of us got our vaccines. I know I did. I got my first vaccine. But yeah, it’s good to be back. It’s good to shake hands rather than just seeing people over the-

Kevin Kim:
Good to hug people for once.

Ruben Izgelov:
Oh, my God. Forget it. Forget it. I don’t think…

Kristina Sawyer:
Physical touch. We lost that-

Kevin Kim:
Yeah.

Kristina Sawyer:
… aspect I guess.

Kevin Kim:
The only hugs I get is from my kids and that’s cool, but you know I prefer to-

Ruben Izgelov:

Kevin Kim:
… be hugged by Ruben.

Ruben Izgelov:
That’s why you went in for a hug right away. As soon as I saw you you’re like, “Give me a hug.”

Kristina Sawyer:
That’s why he sat by you too.

Ruben Izgelov:
Right?

Vincent Balagia:
It’s just weird to see your face. It’s like, “Oh, look.”

Ruben Izgelov:
Right? Finally.

Vincent Balagia:
…there’s some faces.

Kevin Kim:
…I’ve seen you through here like this and that’s it you know?

Kristina Sawyer:
My last event live was your event last year, which was in-

Kevin Kim:
Yeah.

Kristina Sawyer:
… February so it’s been-

Kevin Kim:
Yeah. Yeah. Yeah. Yeah. Yeah, me too actually. I’ve only had some brief meetings with clients. I had this one really risky lunch that was like, I don’t know these people at all and they wanted to have a client lunch. I’m like…

Ruben Izgelov:
All right.

Kevin Kim:
That was a little weird but besides that yeah, I’ve been at home the entire time.

Ruben Izgelov:
I’ve been working out of the office probably I would say the second month of COVID. I just, I couldn’t work from home anymore.

Kevin Kim:
I’m the same way.

Ruben Izgelov:
It’s tough. It’s tough. Kids weren’t around, the whole nine. I mean there’s just no way to focus but it’s good to finally see that other people are doing it as well which means that things are going to start revitalizing.

Kevin Kim:
Yes. Yes. That’s a good point. I want to ask about that, like how are you guys doing? You went to the office?

Vincent Balagia:
We went to the office. Now we don’t have a big multi-tenant office. We have our own building. It’s small, so it’s us and it’s our transactional attorneys, our real estate attorneys. We felt fine about it a couple months in. Whoever wanted to come back got to come back, but really it was everyone wanted to come back.

Kevin Kim:
Oh, really?

Vincent Balagia:
Yeah. I think we have one person that had some health issues, wanted to be virtual and that was fine. But everyone else was ready to get back in the office really pretty early so really haven’t had that virtual break…

Kevin Kim:
Nice.

Ruben Izgelov:
Yeah. We actually have two offices. We opened up our second right in the middle of COVID kind of, in the city in Manhattan. It’s an office building, multifamily building. I can tell you right now about 80% of it is vacant.

Kevin Kim:
The building?

Ruben Izgelov:
The building is vacant. I mean there’s still office space that’s occupied but no one is going to the office. But as of like, I would say two weeks now we’re starting to see a transition where a lot of people are showing up. I don’t know if it’s the weather or what have you. People just want to get out of the house, but it’s starting to fill up. We’re bout two weeks now starting to see the same thing that you’re seeing. Yeah.

Kevin Kim:
You guys are all working from home in Arixa right? Most of you guys?

Kristina Sawyer:
For the most part.

Kevin Kim:
Yeah.

Kristina Sawyer:
…and Greg own the office. They live very close to it. I think there’s a handful of people that… I mean you still have to get mail and process a few things. But myself I’m at home working.

Kevin Kim:
You’re at home?

Kristina Sawyer:
Yeah.

Kevin Kim:
Because I remember talking talking to Greg about it and Greg said, “No. I’m going out. I’m meeting people.” That’s Greg though.

Kristina Sawyer:
Yeah. No, Greg’s been out in the field. I mean even, especially actually when COVID first hit he was out there. He thought it was very important for people to see him, know that we’re still here, we’re still going to fund your draws.

Ruben Izgelov:
That’s important.

Kristina Sawyer:
We’re picking up your phone calls because it’s really important to us.

Kevin Kim:
Yeah. We’ve been closed down. We have two buildings, we own them thankfully, but we have two buildings. Nema has little kids so he has to go in. He can’t work from home.

Ruben Izgelov:
Yeah. It’s tough.

Kevin Kim:
Same with Tae. He’s got two kids so he’s like… He lives in a two bedroom apartment. he’s like, “I’m not doing this.” I stayed home primarily because my wife was pregnant-

Ruben Izgelov:
Congrats on that by the way.

Kevin Kim:
Thank you.

Vincent Balagia:

Kristina Sawyer:
Yeah. That’s awesome.

Kevin Kim:
Thank you. And she had… We had some preterm labor scare so she’s like, “If you can stay home I’d appreciate it.” That was good because there was one night where, well one day, one afternoon where she got sick. “I need to go see the doctor.” And if I wasn’t home-

Ruben Izgelov:
Yeah.

Kevin Kim:
Yeah. I mean I’ve been on Zoom, way too many Zoom calls. I am sick and tired of Zoom and I’m so glad that we’re able to do this. For our audience the podcast was never intended to be via Zoom. We launched during… We decided to launch it during COVID just because we were all cooped up in the house and we wanted some more content, but going forward you will see more live content from us and we’re hoping to commit to that. I will be visiting each one of you guys at your office as I’m-

Ruben Izgelov:
[crosstalk 00:05:40]

Kevin Kim:
… doing an actual live in person podcast. And we’re going to have more live in person conferences. [inaudible 00:05:50] conference. With this new vibe out there this is one of the first in person conferences, you guys travel from all across the country right?

Ruben Izgelov:
Yeah.

Kevin Kim:
New York. Texas.

Ruben Izgelov:
Yeah.

Kevin Kim:
Even-

Kristina Sawyer:
I came a long ways.

Kevin Kim:
Hey, that’s still a long drive. LA traffic is a bitch.

Kristina Sawyer:
Yeah.

Kevin Kim:
You know? Now that you’re out and about, and you guys think you guys will be hitting the circuit, back going to all the [inaudible 00:06:14] shows? I think we got one more coming up in Dallas.

Ruben Izgelov:
Can’t stop me.

Kevin Kim:
Can’t stop you?

Ruben Izgelov:
I’m going to [crosstalk 00:06:18]-

Kevin Kim:
Let’s do this?

Ruben Izgelov:
Yeah. That’s it.

Kevin Kim:
All right. All right.

Ruben Izgelov:
I’m ready.

Kevin Kim:
You guys have been seeing clients though right? I guess you haven’t stopped seeing clients right?

Ruben Izgelov:
Yeah. Yeah.

Kevin Kim:
[crosstalk 00:06:24].

Ruben Izgelov:
All the time.

Vincent Balagia:
Yeah. I’ll be there. I’ve been hitting flats here and there. It feels like things are going the right way.

Kevin Kim:
Good.

Vincent Balagia:
I’ll be there.

Kevin Kim:
Fantastic. Fantastic. Well, let’s talk about the market a little bit. Because the reason why I asked you all here is because first of all I like all of you, and I respect all of you. I consider you all friends, but you also have a very strong understanding of your local markets. I really want to talk about this at a much more nitty gritty level, like at the borrower level on the street. How are things? How are things locally? How are you guys feeling?

Ruben Izgelov:
I mean there’s one thing that I’m noticing is there’s a reservation to buy in the New York City area. Mainly it’s really with just all the new legislation and moratoriums that came out specifically surrounding the evictions.

Kevin Kim:
You still can’t evict anyone in New York right?

Ruben Izgelov:
We’re landlords ourselves. I have a tenant that hasn’t paid me going on to about two and a half years now.

Kevin Kim:
Wow.

Ruben Izgelov:
Even obviously before COVID-

Kevin Kim:
Wow.

Ruben Izgelov:
… I was battling with her. It was almost impossible to get her out. Here we are now two and a half years later, and I can’t even start the eviction again. This issue of evictions or what have you has really grew a reservation in many multifamily investors or investors in general to not buy properties that are occupied unless they’re paying tenants with a proven track record. There is a reservation. What we’re seeing is that a lot of our investors are looking at properties that are only vacant. Yeah.

Kevin Kim:
Are they looking at it from like the trying to go after it as a value add play, or-

Ruben Izgelov:
Whether it’s a… I mean multifamily right now I think there’s a concern to enter that market in New York City area, but on the fix and flip space especially there’s really no one buying a property that’s occupied.

Kevin Kim:
We jumped the gun a little bit, so forgive me for being a little bit too casual. Ruben, tell the audience who you are and what you do. [inaudible 00:08:24]. I know you guys-

Kristina Sawyer:
You don’t know who Ruben is?

Kevin Kim:
… so well-

Kristina Sawyer:
Come on. Come on.

Kevin Kim:
… that I forgot to tell the audience and ask you guys what you do, so please tell us.

Ruben Izgelov:
All good. All good. Ruben Izgelov, management partner of We Lend. Based out of New York. Most of what we do is fix and flip, bridge, one to four and multi families in New York City, New Jersey, and really just down the eastern corridor.

Kevin Kim:
But you guys are expanding right? Georgia?

Ruben Izgelov:
Oh, yeah.

Kevin Kim:
Florida?

Ruben Izgelov:
Oh, yeah. You know, and it’s happening naturally-

Kevin Kim:
Good.

Ruben Izgelov:
… because a lot of our investors today who have the dry powder are going out there and looking for properties outside of New York. So it’s Connecticut, Pennsylvania, Georgia, South Carolina, North Carolina. I mean I’ve even seen deals in Alabama.

Kevin Kim:
Yeah.

Ruben Izgelov:
Never even been to Alabama.

Vincent Balagia:
There are a lot of [crosstalk 00:09:17]. I was interested [crosstalk 00:09:17].

Ruben Izgelov:
Yeah. Yeah. Yeah. Kristina?

Kristina Sawyer:
I’m Kristina Sawyer with Arixa Capital. I’m the VP of lending. As far as what I’m seeing in the market, before COVID we were about 60% multifamily and 40% resi. Now that’s flipped.

Kevin Kim:
Really?

Ruben Izgelov:
Mm-hmm (affirmative).

Kristina Sawyer:
We’re probably 85% resi. We’re just started towards quarter four started lending on the multifamily space again. Because you know the big play was the value add where you’d buy it, get the tenants out. We’d finance the tenant relocation and then do the whole process. Now you can’t do that-

Kevin Kim:
[crosstalk 00:09:48]-

Kristina Sawyer:
… so it’s very selective with our multifamily products. That’s the biggest, I think, adjustment for us.

Kevin Kim:
Same thing then? Are you looking for vacant-

Kristina Sawyer:
Yeah.

Kevin Kim:
… more vacant properties around [inaudible 00:09:57] or like good-

Kristina Sawyer:
They’ll definitely do some more-

Kevin Kim:
… good tenants?

Kristina Sawyer:
… yeah some more vacant properties. Which we’ve done several multi families that I think that they were actively getting tenants out before COVID hit. You also have some tenants who are willing to relocate for a price, even though the restrictions were there. But the eviction process has to change. It’s really affecting… Even the small mom pop investors, even myself I have tenants in there that aren’t paying as well so it affects us.

Kevin Kim:
Yeah.

Vincent Balagia:
Wow. Vincent Balagia, Stallion Capital management out of Austin, Texas. We’re a fund manager. We also lend on one four, family, multifamily, land and light commercial, a little bit of light industrial which has been really strong-

Kevin Kim:
Oh, yeah.

Vincent Balagia:
… in Texas. It’s interesting because we haven’t had these eviction problems that [crosstalk 00:10:42]-

Kevin Kim:
Because you’re in the great state of Texas man.

Vincent Balagia:
We’re in Texas. If you don’t pay you’re out.

Kevin Kim:
Yep. Best foreclosure laws in the country.

Vincent Balagia:
That’s right. That’s why wear boots right?

Kevin Kim:
Yeah.

Kristina Sawyer:
That’s why you wear boots, to kick them out.

Vincent Balagia:
But so that has been good because there just isn’t that risk. Now on a county by county basis there have been some counties where we’ve had some foreclosure issues. Bexar County, San Antonio, hasn’t allowed foreclosures for most of the last year so-

Kevin Kim:
Really?

Vincent Balagia:
… that’s, yeah, that’s been an issue. But they’re allowing foreclosures.

Kevin Kim:
You’d think that’d be Austin, not San Antonio.

Vincent Balagia:
Not the case.

Kevin Kim:
Oh.

Vincent Balagia:
We were worried-

Kevin Kim:
Yeah.

Vincent Balagia:
… a little bit about that because our mayor did shut down construction for about two weeks until the governor came in and reestablished construction as an essential activity. But yeah, only Bexar County has been an issue. With evictions and foreclosures there is that risk of default, that risk of being taken out of a property.

Vincent Balagia:
That hasn’t been a big deal, but the thing with us though is that we just don’t have enough housing so everyone continues to come into central Texas, or Dallas, Houston, San Antonio. Those are our four main cities [crosstalk 00:11:47]-

Kevin Kim:
There’s so much new construction going on in Texas.

Vincent Balagia:
There is. There’s a ton, but still we’re really under supplied.

Kevin Kim:
Yeah.

Vincent Balagia:
What we’ve seen lately has just been some incredible value increase in Austin, almost to where it’s scary. Almost to where, being someone that’s from Austin I’m a little bit worried about-

Kevin Kim:
Yeah.

Vincent Balagia:
… depreciation.

Kevin Kim:
I was shopping house in Austin just for the heck of it in the middle of COVID because I had two friends that had moved to Plano and I was like, “I’m not moving to Plano. If I’m moving to Texas I’m moving near Vince. I’m going to Austin.”

Vincent Balagia:
That’s right. [crosstalk 00:12:16]-

Kevin Kim:
I was looking at houses in Austin. They’re close to Orange County pricing. I was like, “This is kind of ridiculous.” I was talking to, I think it was Jaden over [inaudible 00:12:25] he was like, “Yeah. It’s getting kind of bad. You guys got to stop coming out here because the pricing out here is getting ridiculous.”

Kristina Sawyer:
Well, I’m curious as a lender how do you… I mean your LTCs and LTVs, are you moving up with the value so quickly?

Vincent Balagia:
In our loan committee meetings that we have we’re getting these appraisals in and I’m saying, “Okay. Where are the values coming from? When did these things close?” Really the values are substantiated based upon the comps, but honestly I’m coming in and just hacking off some of the value that [crosstalk 00:12:58]. I’m saying, “Okay. The deal still works at a 60% LTV.” We still obviously want cash and we want to be doing good loans, but I just want to be careful that we’re not coming up here to these values underwriting up here, and then the pendulum swings the other way and we’re at 100% LTV, which is what I want to avoid.

Kevin Kim:
Do the local, I guess realtors also echo that sentiment that property is overly inflated, like hyper inflated? Because that’s what we’re hearing here is in Orange County and LA I’ve had realtors tell me that you’re overpaying, but it’s just it is what it is.

Vincent Balagia:
For some I think it’s just party time.

Kevin Kim:
Oh, yeah.

Vincent Balagia:
But because the environment right now is… Some people are coming into the market kind of at a traditional value, or even a little bit below to go and get 60 offers on single family. Then it gets bid up higher than people would ever think.

Kristina Sawyer:
Yes. We’re seeing that too.

Vincent Balagia:
Are you seeing that too? Yeah.

Kristina Sawyer:
Mm-hmm (affirmative).

Kevin Kim:
Are the big builders coming in droves to Texas right now?

Vincent Balagia:
Well-

Kevin Kim:
Because you know how in LA and in California there’s not much room to build anymore. Unless you’re doing it in the inland part it’s not much room.

Kristina Sawyer:
No. You’re taking existing properties.

Kevin Kim:
They’re redoing-

Kristina Sawyer:
Right.

Kevin Kim:
… everything right. You guys have been posting some great photos. Those houses look amazing.

Kristina Sawyer:
Yeah. We have 10 developers.

Kevin Kim:
In Texas there’s so much land.

Kristina Sawyer:
Yeah.

Vincent Balagia:
There’s a lot of land but really a lot of the big parcels, especially in your kind of around Austin, a lot of them have been bought up. We just sold 300 acres in fact on a property, a loan that didn’t go well. We took it back and made a nice profit on it, but that… We started to get calls on that property after it was already under contract. We knew that had we not been under contract I think in the fall of last year we’d have got a really pretty penny. But there’s just not… There’s these large tracts that builders want to come in. They’re just not available the way that they used to be.

Kevin Kim:
Wow. Interesting.

Vincent Balagia:
Now, Dallas metroplex, different. Houston may be a little bit different, but things haven’t gone crazy in Houston or San Antonio like they have in Austin, and then to a similar degree Dallas.

Kevin Kim:
Okay. Okay. The inventory question is a interesting one because each locale, each geography has its own unique inventory issues. Even in comparatively LA to Orange County right? But New York is a very interesting place. Because you guys have aging inventory. Yeah, there’s not a lot of room to build but I’ve heard that a lot of people are starting to invest and build more in-

Ruben Izgelov:
Upstate.

Kevin Kim:
… upstate-

Ruben Izgelov:
Upstate.

Kevin Kim:
… in the suburbs.

Ruben Izgelov:
Suffolk and Nassau County we’re starting to see a lot of transitioning happening over there. For us I mean we’re seeing inventory, but the problem is that it’s occupied. For an investor or a speculator who’s trying to go in there and gut renovate the place or try to reposition it, their only concern is that it’s occupied with squatters, non-paying tenants and there’s this hesitation.

Ruben Izgelov:
But a lot of our investors are now looking into Suffolk and Nassau, and upstate for land to be able to develop on. We’re also seeing the same transition. We’re also seeing a transition of going into other states like New Jersey or what have you. I mean today [inaudible 00:16:06] right before we came here I was looking at some of the numbers. My loan sizes in states like New Jersey or in Connecticut have almost grown by about 20% to 30%-

Kevin Kim:
Really?

Ruben Izgelov:
… in just a few months. But just to offset the risk on that end similar to what you’re doing is we’re shaving off maybe 15% to 20% off the after repair value, or after the position value to make sure the deal still makes sense even if that was to happen again. We’re going in cautious considering what’s happening today.

Kevin Kim:
Well, how about California? I mean it’s a huge state, biggest account in the country. But even in LA proper I mean there’s so many… We have again inventory. You have some new development going on in pockets of the valley. But in Orange County we don’t see any new development anymore. All you basically see are the apartments being built by Lennar.

Kristina Sawyer:
Well, the big blowup is the ADUs right? That-

Kevin Kim:
I forgot about that.

Kristina Sawyer:
Yeah. That is a-

Kevin Kim:
That’s a huge trend right now.

Kristina Sawyer:
… trend. [crosstalk 00:17:03]-

Kevin Kim:
Yeah. Yeah. Do you guys see that in your guys’ neck of the woods?

Vincent Balagia:
We do. Yeah. We’re talking about the-

Kevin Kim:
No?

Vincent Balagia:
… senior and the junior ADUs. That’s happening [crosstalk 00:17:11]-

Ruben Izgelov:
Explain to me what-

Kristina Sawyer:
[crosstalk 00:17:12]-

Vincent Balagia:
No.

Ruben Izgelov:
… an ADU is.

Kristina Sawyer:
It’s accessory dwelling unit is wet ADU stands for.

Ruben Izgelov:
Oh, yes.

Kristina Sawyer:
Right?

Ruben Izgelov:
We’re seeing a lot of that today as well. Build in your backyard right?

Kristina Sawyer:
Are you guys calling it-

Ruben Izgelov:
Build in your backyard.

Kristina Sawyer:
… ADUs in New York?

Ruben Izgelov:
We call it an accessory dwelling use, so similar in its own way. I’m looking at my garage today and thinking all right, what can I do out of it? What can I make out of it? I mean is there something to do with this you know?

Kristina Sawyer:
Well, even like with the granny flat construction they rolled out, they have 10, what’s the word, like 10 template plans that you can go get approved in one day-

Kevin Kim:
Wow.

Kristina Sawyer:
… to really expedite-

Kevin Kim:
In California. In LA that’s impossible.

Kristina Sawyer:
In LA it was just impossible.

Kevin Kim:
Impossible.

Kristina Sawyer:
Yeah. I mean I think the biggest complaint with developers right now is how long it’s taking to get CMOs, and [crosstalk 00:17:50]-

Kevin Kim:
Yeah.

Kristina Sawyer:
… and that whole process.

Kevin Kim:
It always took a long time.

Kristina Sawyer:
Yeah. If you could find the right property and you can go get this one day permit to build this, I mean you don’t have a lot of artistic influence on it.

Kevin Kim:
No.

Kristina Sawyer:
You have to choose one of… But it’s a interesting product. The problem is just like you mentioned. We have people with 60 offers for each property.

Kevin Kim:
It’s hyper inflated.

Kristina Sawyer:
Yeah. A lot of our developers, I mean we’re sending them proof of fund letters. They come back and we’re like, it doesn’t pencil anymore.

Kevin Kim:
No, it doesn’t. Yeah. But are you guys [inaudible 00:18:17] down too if you want to make it happen?

Kristina Sawyer:
Yeah. I think it depends. Like in Los Angeles I think we have a very interesting market a lot of people are leaving LA. It might be a little of a not such a great market today economy wise, but we have the Superbowl coming in 2022. We have the Olympics coming.

Kevin Kim:
We’ll see.

Kristina Sawyer:
[crosstalk 00:18:38]-

Kevin Kim:
I’m hoping we get the sports.

Ruben Izgelov:
Keeping our fingers crossed-

Kristina Sawyer:
I’m very optimistic.

Ruben Izgelov:
… right?

Kristina Sawyer:
My point is I think the LA economy in general, even if the prices dropped a little bit they’re always going to continue to appreciate.

Kevin Kim:
Yeah. Exactly.

Kristina Sawyer:
Whereas you may not see that in every metropolitan area, but LA is definitely one of them.

Kevin Kim:
But you guys don’t just concentrate in LA because you’re doing all over right? All over southern California?

Kristina Sawyer:
Well, we’re doing all over California, and we are in other states too. We just kind of organically expand [crosstalk 00:18:59]-

Kevin Kim:
I know you guys have been expanding, but mostly west coast states right?

Kristina Sawyer:
Mostly west coast. I mean we have a handful in the east coast states but that’s just following really good clients.

Kevin Kim:
Oh, I didn’t know that.

Kristina Sawyer:
We’re not out there marketing.

Kevin Kim:
Okay. Well, you guys [crosstalk 00:19:09].

Kristina Sawyer:
Yeah. Absolutely.

Kevin Kim:
I didn’t know you guys were expanding to the east coast. That’s cool.

Kristina Sawyer:
Mm-hmm (affirmative).

Kevin Kim:
Well, you just mentioned something that I really want to touch on is the whole, this great migration. I did a short video on it but like I mentioned earlier one of my… A lot of my friends have moved, just personal friends have moved.

Ruben Izgelov:
Yeah. Same here.

Kevin Kim:
Arizona. Texas.

Ruben Izgelov:
Florida.

Kevin Kim:
Florida. Right?

Ruben Izgelov:
Yeah.

Kevin Kim:
Out where you guys are. A lot of celebrities-

Kristina Sawyer:
[crosstalk 00:19:31]-

Kevin Kim:
… have moved right? We had some clients-

Ruben Izgelov:
Montana.

Kevin Kim:
… that holed up… Yeah, Montana. We had a client in San Diego, he holed up in Montana for a solid like six months. He’s like, what’s the point? I think he’s planning to move, so how has that influenced you guys? [inaudible 00:19:45]. What’s that impact on your guys’ actual business on a day to day basis?

Kristina Sawyer:
Well, I’d say LA, go. LA an use a little less people in it.

Kevin Kim:
I agree with that. I agree with that. Yep. Yep.

Ruben Izgelov:
Yep.

Kevin Kim:
Yep.

Ruben Izgelov:
Today I have a lot of, same as you, friends and family just moving to Florida. We’re starting to get calls, “Are you [crosstalk 00:20:01]-”

Kevin Kim:
You thought about it too.

Ruben Izgelov:
“… Florida?”

Kevin Kim:
You thought about it.

Ruben Izgelov:
Oh, forget it. I would love it. I would love it. But [crosstalk 00:20:04]-

Kristina Sawyer:
You’re all the way back right, from Florida?

Ruben Izgelov:
It looks like they’re starting to regret it, because now that they’re seeing that everything is returning back to normal, [crosstalk 00:20:12]-

Kevin Kim:
It’s a big difference. If you lived in a metro New York, and you moved to Miami it’s a huge difference.

Ruben Izgelov:
Different scene.

Kevin Kim:
It’s an adjustment, yeah.

Kristina Sawyer:
Sure.

Ruben Izgelov:
It really is. Especially for someone that’s lived in one area or one place for so many years, and for you to just get up and go considering what’s happening. Now that everything is transitioning back to normalcy I mean you’re starting to look back in the rear view mirror and starting to reconsider you know?

Vincent Balagia:
Yeah. We’re kind of saying stop, or slow down.

Kevin Kim:
Yeah. You’re the victim of it right?

Vincent Balagia:
[crosstalk 00:20:38]-

Kristina Sawyer:
[crosstalk 00:20:41] exactly.

Vincent Balagia:
… [crosstalk 00:20:41]-

Kristina Sawyer:
Yeah.

Vincent Balagia:
I you see California plates in Texas, no offense to anyone from California but it’s surprising just the number of people that are coming from around the country. They haven’t been through an Austin summer yet though and that might change their mind.

Kristina Sawyer:
Well, that Austin winter… I knew several people from LA that didn’t have water for like three days. They were like-

Ruben Izgelov:
That’s true.

Kristina Sawyer:
… “Why did we move?”

Ruben Izgelov:
My brother was actually one of those people that moved into Texas so he’s experienced exactly what you just mentioned. He went through hell.

Vincent Balagia:
Never in my life, or have even heard of anything about like what happened.

Ruben Izgelov:
Yeah.

Kevin Kim:
Well, 2020 had a lot of surprises for us.

Vincent Balagia:
Yeah.

Kevin Kim:
I feel like it tailed in 2020, because in LA I don’t know about you we had hail this past winter?

Kristina Sawyer:
Yes.

Kevin Kim:
It hasn’t hailed here in 30 years. I remember I was a child when it hailed.

Kristina Sawyer:
Yeah. By the beach.

Kevin Kim:
Yeah. Yeah.

Vincent Balagia:
Wow.

Kevin Kim:
We had hail here. I feel like the devil just kind of went, “Ah!” You know? Like, “Here!” But Texas suffered a lot.

Vincent Balagia:
Yeah. Yeah.

Kevin Kim:
Yeah.

Vincent Balagia:
No, he hit us no doubt.

Kevin Kim:
Yeah. Yeah.

Vincent Balagia:
But still people are coming in.

Kevin Kim:
Yeah. You said they’re inflating values?

Vincent Balagia:
Well, I think that’s just it because I think when you’re coming from a place like LA or the rest of California you see these low prices per square foot and you think you’re getting a bargain. Now those bargains are not there the way that they used to be. It is. We’re getting crowded. The ADU thing is picking up quite a bit so you’re getting a lot more density but there’s… We’ve been talking about really structuring the city, and looking at transit and everything else.

Vincent Balagia:
Austin and a lot of Texas is always behind the times. We’re really not prepared for the amount of people that are coming in. It has created a number of problems and we’re starting to get some… We’ve had traffic problems forever, not LA traffic problems but-

Kristina Sawyer:
You’re getting them.

Vincent Balagia:
… it’s getting there. Especially… Well, it’s funny because right, the roads have been dead for the last year. I would say about six weeks ago we started to slow down. And before I left I thought, “Oh, wow. This is getting really bad again.” We’re pretty open. You can just tell by how stuck we are. But lots of other cars.

Ruben Izgelov:
Do you think it’s all temporary? I mean are people actually buying or are more people renting?

Vincent Balagia:
People are buying because really the inventory is not there to rent. That’s really one of our biggest issues. Even though we have the land we’re not land locked. It still takes 24 months to develop a significant project [crosstalk 00:23:08] or longer. A single family less than that, but builders cannot get lots fast enough. Then developers can’t get land. We’re a little stuck right now.

Kristina Sawyer:
Well and the housing prices are much lower than in California-

Vincent Balagia:
Absolutely.

Kristina Sawyer:
… so a lot of people who probably were renting here are moving there to buy-

Kevin Kim:
Yeah.

Kristina Sawyer:
… for the space and the remote work.

Kevin Kim:
I feel like Austin though is a little bit inflated. Like the price per square foot is pretty close to LA now, but it’s like California prices. I feel like Austin’s prices and Orange County’s prices are pretty on par now, maybe a little bit cheaper. But you look at parts of San Antonio and Dallas, I was like, at Plano. It’s like half.

Kevin Kim:
I have a friend that was, he was showing off his house. It was a beautiful 5,00 square foot like mansion. He’s like, “Because I don’t have to pay for it.” I hate you so much. I told him though it’s going to be hot. It’s going to be humid, and your wife has curly hair so you wait.

Kristina Sawyer:
Yep. Yep.

Kevin Kim:
You wait.

Kristina Sawyer:
This hair would not work in the humidity.

Vincent Balagia:
There are disadvantages.

Kevin Kim:
Yeah. Yeah. Yeah. Because [crosstalk 00:24:08] got. We’ve got good weather all year round but that’s an interesting thing is like, the inventory question. I wonder with the ADUs… We have a good friend and client who specializes in ADUs and he can’t… There’s so much business coming his way and he thrived in the pandemic. But do you think you guys see yourselves jumping into that bandwagon a little bit and doing more of that? I know you guys are doing them, but are you guys-

Kristina Sawyer:
Oh, we’re in. We’re financing them.

Vincent Balagia:
We’ve been doing it for years and-

Kevin Kim:
Fantastic.

Vincent Balagia:
… now we’re having… I thought it was interesting, the discussion we had today where yes we have our ADUs, but now we have our junior ADUs and what we call them are casitas. You’ll have two structures that can be sold independently, but one of them will have this casita. It can’t have a kitchen. It’s really just kind of an extra-

Kevin Kim:
Like a guest house kind of thing?

Vincent Balagia:
… [crosstalk 00:24:55]. Exactly.

Kevin Kim:
Okay.

Vincent Balagia:
But what’s happening is is that the buyers are coming in and they have a place that they’re renting out, or maybe putting a mother law in and they’re really pushing a lot of value.

Kristina Sawyer:
How? Are they on the same parcel?

Vincent Balagia:
They are on the same parcel.

Kristina Sawyer:
But you can sell them independently?

Vincent Balagia:
No. What will happen is you’ll take a single family house, take that down. Put up two units that can be sold independently, but then one of those units will have this casita on the back so it has to stay with that unit. But you have a stream of revenue that comes in because people will rent those for a pretty penny.

Kevin Kim:
Airbnb it out. Whatever you want.

Vincent Balagia:
Yeah. Any of those things.

Kevin Kim:
Yeah.

Vincent Balagia:
Exactly.

Kevin Kim:
When South by Southwest comes to town those things are probably real popular.

Vincent Balagia:
They will be when it… Yeah. Maybe next year.

Kevin Kim:
Yeah. Yeah. Yeah. Yeah. Yeah. Yeah.

Vincent Balagia:
We kind of missed these past two years.

Kevin Kim:
Yeah. Yeah.

Vincent Balagia:
[crosstalk 00:25:38] next year after that yeah.

Kevin Kim:
Well, let me ask you this. The Texas lot sizes, I mean comparatively speaking because LA, the older properties have medium sizes lots, but even in LA the lots aren’t that big. In Orange County, some parts of Orange County have pretty big lots and it makes sense for a really nice ADU, but Texas lot sizes are huge aren’t they?

Vincent Balagia:
They are.

Kevin Kim:
It’s not really an… In my mind when I hear ADU it’s like a smaller house in the back, but it’s not like a cottage. It’s actually, they’re building a full on house-

Kristina Sawyer:
It’s probably bigger than most of our houses [crosstalk 00:26:05]-

Kevin Kim:
Yeah. Yeah. Exactly. That’s what I’m saying right? Right?

Vincent Balagia:
Most ADUs as you’ve heard about them are anywhere from say 900 to 1,100 square feet. But then these little casitas are usually 450 to 500 square feet.

Kevin Kim:
Okay. It’s close to what we’re doing here in LA.

Vincent Balagia:
Right.

Kevin Kim:
Yeah.

Vincent Balagia:
and there’s always a trick where you’ll build that and you’ll put a porch on, maybe 200 square feet. Then after it’s sold you might accidentally enclose that and have a new bedroom or something like that. [crosstalk 00:26:30].

Kristina Sawyer:
Well, and if you even look at like the middle of California those markets are really booming right now too because people are moving outside of the metropolitan city.

Kevin Kim:
Orange County is suffering that problem. A lot of folks are moving out of LA and coming to Orange County even.

Kristina Sawyer:
Exactly. Mm-hmm (affirmative).

Kevin Kim:
My friend sold this, he has this really old like 1970… It’s the oldest development in Irvine, and two bedroom condo or townhouse. He sold it in three days for 100,000 above asking. I was like-

Ruben Izgelov:
Wow.

Kristina Sawyer:
Wow.

Kevin Kim:
… “You got to be kidding me.” Because of just inflation right? But he luckily found a place to buy. But another interesting thing is like other parts of the state. You’re saying other parts of the state are seeing transitions and migrations-

Kristina Sawyer:
Like Bakersfield and Fresno are booming right now.

Kevin Kim:
Fresno and Bakersfield?

Kristina Sawyer:
Yeah. Mm-hmm (affirmative).

Kevin Kim:
All the dust and the-

Kristina Sawyer:
Yeah. Look, no. It may not be your most desirable place but if-

Kevin Kim:
You’re getting out of LA.

Kristina Sawyer:
Yeah. But if you go like to the valley of LA and then just go 40 miles more to get to Bakersville-

Kevin Kim:
That’s true. That’s true.

Kristina Sawyer:
… and you’re getting quadruple the size space, and you’re working remotely you’re seeing a lot of that too.

Kevin Kim:
That makes sense. I mean I would get… I mean if I were in LA I would probably flee and be in Orange County, or maybe Porter Ranch or something like that. What have you got senior? What have you got that’s in New York? What’s going on?

Ruben Izgelov:
I mean a lot. It’s in a way that-

Kevin Kim:
You moved right?

Ruben Izgelov:
I [crosstalk 00:27:45]-

Kevin Kim:
You moved?

Ruben Izgelov:
I moved right before COVID. I moved into finally a house. I sold my condo and I finally moved into a house right before COVID, so really lucked out on that. Speaking of Texas my wife was looking, because her brother moved there and she was looking at, on Zillow on some houses. She was showing me some house for like 600,000, 700,000. I mean they’re ginormous compared to what I have. We’re talking about two or three acre-

Kevin Kim:
[crosstalk 00:28:09] the lot size.

Ruben Izgelov:
… lots. Yeah, two three acre lots. I mean the whole nine. She’s looking at me and looking at this house. She’s like, “What are we doing here?” I’m like, “We just moved here. What are you thinking? I don’t get it.” We might be one of those people that might just come join.

Vincent Balagia:
Give me a call.

Ruben Izgelov:
Yeah.

Vincent Balagia:
Give me a call. I’ll try to dissuade you but [crosstalk 00:28:28].

Ruben Izgelov:
Well, you’ve got humidity. You’ve got humidity so-

Kristina Sawyer:
Don’t worry about me. I’m staying put. I’m staying put.

Kevin Kim:
Yeah. Yeah. Actually yeah, part of the problem was I tried to get my wife to go and my mom didn’t want to do it. I need my parents nearby for my kids.

Ruben Izgelov:
Yeah. Same here.

Kevin Kim:
They wouldn’t do it. They’re like, “We’re staying.”

Ruben Izgelov:
Yeah. That’s the biggest thing. I mean we have too much holding us down in New York for us to make any transition. But we’re seeing a lot of people just moving out. You’re seeing people coming in. You’re seeing people transition from one county to the other. For us they’re just moving out.

Kevin Kim:
Now when they move out is the majority down south to Florida, to Texas or is it the New Jersey, Connecticut?

Ruben Izgelov:
Well, what we’re seeing is a lot of people moving out to Florida, but also to New Jersey just because of when COVID happened everyone was in their apartments, and selling their condos being able to buy something in Florida and New Jersey was absolutely doable. But now if you look at the New Jersey market, I mean kind of same thing as what you’re seeing in Texas you’re looking at 50 to 60 offers on one single property with $100,000, $200,000 over asking. Unless you’re coming in with all cash, or a significant amount of cash, you really just can’t outbid or even compete. Yeah.

Kevin Kim:
Yeah. That’s crazy. How are other parts of Texas doing these days? I mean you guys still lend in other parts of the state.

Vincent Balagia:
Texas is huge right?

Kevin Kim:
Yeah. Massive. Massive.

Vincent Balagia:
It is. If you look where we lend, we’re a lot along the I-35 corridor which is Dallas, then Austin, and San Antonio. Then you have Houston over here. But-

Kristina Sawyer:
All the basketball teams right?

Vincent Balagia:
Right. Exactly.

Kevin Kim:
Major metros.

Vincent Balagia:
But you have Waco which is a little town a lot of people haven’t heard of that if you’re not from Texas [crosstalk 00:30:01]- heard of it.

Kevin Kim:
[crosstalk 00:30:01] in the news.

Vincent Balagia:
Well, that’s right. That’s right.

Kevin Kim:
In the ’90s yeah.

Vincent Balagia:
Everyone knows about Waco now. It’s [inaudible 00:30:06] especially after Baylor right?

Kevin Kim:
Yeah.

Vincent Balagia:
But Waco is really blowing up.

Kevin Kim:
Oh, really? Okay.

Vincent Balagia:
Then for Waco. Then in between Austin and San Antonio you have these two little towns called San Marcus, New Bonsal. Really it’s almost becoming one city in between Austin and San Antonio. Then same thing, you have just a lot of growth north that’s from Austin to Waco, Waco down. Everything is just kind of filling in along the transportation corridors. You go outside of that and it’s hard to buy land because everyone over this last year has bought every large tract of land that’s [crosstalk 00:30:42]-

Kevin Kim:
Oh, really? Oh.

Vincent Balagia:
Yeah. But then Houston still has some room as well. We’re not locked in like what your markets are, but we’re getting a lot of building and it’s moving quickly.

Kevin Kim:
Because there’s a lot of speculation about, like Oracle just moved… The CEO of Oracle has moved there. There’s talk that Goldman Sachs was thinking about moving its entire alternatives desks to Dallas. The disruption that will cause is going to be… If Tesla moves its operations to Texas, I mean the amount of disruption it’s going to cause in the market… You guys, any news on that kind of stuff or any updates on that kind of stuff?

Vincent Balagia:
Specifically I say I’m not sure. I’m going to wait. But I think the expectation is more and more are coming. More headquarters are coming. More manufacturing is coming. More good jobs are coming.

Kevin Kim:
That means more apartments? That means more condos?

Vincent Balagia:
It does, and it also means that you have a constant demand for single family because people do… People in Texas, we’ve become much more dense in our housing, but at the same time people live to have a yard, a house, a neighborhood. Of course the traffic has died down tremendously even though it’s on its way back. There’s definitely a shift there, but we keep seeing these major employers coming in, and we do have a pro business environment.

Vincent Balagia:
I don’t know that it’s going to stop, and that’s the discussion we’re having is when do things slow down? Nobody knows and we’re not seeing it happen yet, because we do have room to grow.

Kevin Kim:
Let’s talk about, before COVID happened I had been on a bunch of panels and talks about the race to the bottom. It is becoming a race to the bottom. There are lenders doing all kinds of crazy stuff.

Ruben Izgelov:
Yeah.

Kristina Sawyer:
Yes.

Kevin Kim:
We saw everyone pull rank and be much more conservative during CV, but now things are stabilized. Everyone is saying things are back to normal in the residential world at least. Commercial is still kind of hobbling its way along in the traditional asset classes, but in residential at least.

Kevin Kim:
How are things for you guys when it comes to that kind of stuff? I mean how are you feeling? Is it aggressive again? Are the brokers demanding, and the borrowers demanding all kinds of crazy loans?

Ruben Izgelov:
The brokers are always demanding right?

Kristina Sawyer:
[crosstalk 00:32:56]. That’s part of their job right?

Ruben Izgelov:
Right. That’s their job.

Kristina Sawyer:
Yeah, that’s their job.

Ruben Izgelov:
Zealously represent their client.

Kristina Sawyer:
We love brokers.

Kevin Kim:
We all love brokers.

Kristina Sawyer:
We all love brokers [crosstalk 00:33:03].

Kevin Kim:
Sure. Sure.

Ruben Izgelov:
They’re supposed to do that.

Kristina Sawyer:
Appreciate your broker.

Kevin Kim:
[crosstalk 00:33:06]-

Ruben Izgelov:
What would we without them? But ultimately there was like you said a compression in underwriting in terms of conservativism. We feel that with everything that’s still happening we don’t know what’s to come. We don’t know if there’s going to be a new strand that’s going to resurface and things are going to get just as bad.

Ruben Izgelov:
We hope it’s not, but we are thinking longterm. We want to see a bit more level kind of playing field just moving forward. I think that’s when we’re going to go back into the aggressiveness. But as of today a lot of what we’re seeing instead of the fix and flip is that that service coverage ratio [crosstalk 00:33:45].

Kevin Kim:
Oh, yeah. Yeah. Yeah. DSCR-

Ruben Izgelov:
[crosstalk 00:33:47]

Kevin Kim:
… rentals are massive [inaudible 00:33:48] right now.

Ruben Izgelov:
It’s huge. It’s huge. New Jersey for us has been growing exponentially in that specific program. That’s kind of the transition that we’re seeing.

Kevin Kim:
But even that, I just heard today rates are going down to conventional mortgage rates.

Ruben Izgelov:
Yeah. Yeah. Yeah. Yeah.

Kevin Kim:
Two and a half. Three and a half. It’s getting pretty dicey out there.

Ruben Izgelov:
It’s becoming very competitive with the conventional lenders which is a good sign.

Kevin Kim:
How about you guys?

Kristina Sawyer:
You know, it’s interesting. I think when we first started lending again like the summer of 2020 we were seeing better rates than we were used to because-

Kevin Kim:
California lenders were excited. We were excited.

Kristina Sawyer:
We were excited.

Kevin Kim:
Like, “Oh, is it 10 and two again guys?”

Kristina Sawyer:
When I first started working for Arixa it was like 13% right?

Kevin Kim:
Yeah.

Kristina Sawyer:
[crosstalk 00:34:32] that good. Yeah.

Kevin Kim:
It was 12 and two and I remember I was like, “This is amazing.” Then literally like a couple years later it was like 10 and two, or eight and one.

Kristina Sawyer:
I also think it rebalanced the playing field, because a lot of the… It was a very competitive market with all the private lenders and a lot of people were giving 98%, 100% leverage-

Kevin Kim:
Yes.

Kristina Sawyer:
… which we’re not your lender if that’s what you’re looking for.

Kevin Kim:
Yes.

Kristina Sawyer:
I think some of those people didn’t make it through. I think some of the bigger companies, the ones that had a little more of a cushion you saw come through. But now I think our rates are pretty much back to what they were pre COVID.

Kevin Kim:
High singles.

Kristina Sawyer:
Mm-hmm (affirmative). But then you have some competitors that are providing really low private money rates that are [crosstalk 00:35:17]-

Kevin Kim:
Someone told me about last night they were seeing a flip in California in the sixes or something.

Kristina Sawyer:
Yep.

Vincent Balagia:
Wow.

Kevin Kim:
Yeah.

Ruben Izgelov:
I was hearing the same thing. Mid sixes-

Kristina Sawyer:
Well, I just saw it happen on one of our loans.

Ruben Izgelov:
Wow.

Kevin Kim:
Oh, gosh.

Kristina Sawyer:
Yeah. Which is [crosstalk 00:35:28]-

Kevin Kim:
You and I have been talking about rate compression in Texas for nearly for four years now, five years almost now?

Vincent Balagia:
The people keep coming. The rates keep dropping. It was-

Kevin Kim:
Well, what happened was-

Kristina Sawyer:
You’re having a really good time aren’t you?

Vincent Balagia:
I don’t know [crosstalk 00:35:40] what is going on?

Kevin Kim:
See the message of the entire podcast is the great state of Texas. Wait, so last year though did rates do anything last year?

Vincent Balagia:
They did.

Kevin Kim:
Yeah.

Vincent Balagia:
When this thing hit, March-April, the rates had been coming down because people had been using so much leverage, or originating and selling. That’s never been our model. We’re a portfolio lender. We would see these rates come down. Then in end of March and April we got a bunch of calls from those lenders because their warehouse lines had been turned off.

Kevin Kim:
Yeah. “Help us out please.”

Vincent Balagia:
Yeah, “Please help.” We didn’t. We said, “Sorry. That’s what happens.” No. We didn’t. No. We tried to help to help them out as much-

Kristina Sawyer:
Leave Texas.

Vincent Balagia:
… as we could. Right? [inaudible 00:36:17]. But no, so we did. We had kind of a little bit of a spike in rates. We weren’t trying to do too much, but then I would say it was quiet probably until the end of the third quarter. Then at the end third quarter it seemed like okay, the confidence has kind of returned. Then you saw those rates come back down in the fourth quarter and they’ve continued.

Kevin Kim:
But Texas is still pretty healthy numbers though right?

Vincent Balagia:
We’re still healthy but money coming in from outside is pushing those rates down.

Kevin Kim:
That’s true. Wall Street loves Texas right now.

Kristina Sawyer:
What’s a healthy rate?

Kevin Kim:
That’s true. What is a healthy rate?

Kristina Sawyer:
What’s a healthy-

Vincent Balagia:
Well, it’s-

Kristina Sawyer:
… rate?

Kevin Kim:
As Californians like what, like eight? I mean seriously.

Kristina Sawyer:
That’s healthy.

Kevin Kim:
Yeah.

Kristina Sawyer:
Yeah.

Vincent Balagia:
Yeah, we closed a loan this week I think at three and 11 which was-

Kristina Sawyer:
Oh, that’s very healthy.

Kevin Kim:
That’s amazing.

Ruben Izgelov:
You chase that [crosstalk 00:37:06]-

Kevin Kim:
That’s amazing.

Vincent Balagia:
Yeah, it’s healthy but where it is soon will be 10 and two, and where it could be might be one and a half, two, and maybe nine. We are [crosstalk 00:37:18]-

Kevin Kim:
It was creeping like that at the tail end of ’19.

Vincent Balagia:
Yeah.

Kevin Kim:
Yeah.

Vincent Balagia:
But really a lot of it’s just because of people not being balance sheet lenders coming in-

Kevin Kim:
Well, you have Wall Street disruption.

Vincent Balagia:
Yeah. That’s really kind of what’s happened.

Kevin Kim:
But it’s like Texas and parts of, not all of the southern states but Texas, some pieces of the Midwest are kind of insulated from Wall Street in the sense that while we were seeing… I was seeing construction loans at like 6.5% on deals that should have been priced at 10.5% here.

Kristina Sawyer:
Mm-hmm (affirmative).

Kevin Kim:
But Texas never really fell below 10 that often, and the relationships you guys had seemed to be driving the answer too.

Vincent Balagia:
Well, I think so. I think it is. That’s really… What our strategy is is to really know and understand our clients, and to make sure that someone can’t come in with just a lower rate. If we’re your lender in town, or at least very close we’re hoping to maintain those relationships. [crosstalk 00:38:16]-

Kevin Kim:
Now I know Texans are very proud of their heritage. Do your borrowers tend to choose local shops and stick with local shops and stuff like that?

Vincent Balagia:
They do, right, because I think everyone wants to deal with someone that you can meet with, and we can go meet at a job site, but we can really discuss things versus someone you don’t really know that you’re talking to on the phone. I think that’s a big deal so we’re trying to maintain that. Actually really over the last year that’s what I’ve been talking about with the team is to say, “Let’s leverage what we can do with our clients [crosstalk 00:38:46] really know them well and really serve them through this really difficult time.”

Vincent Balagia:
Then what happened was where there was a ton of fear in the second quarter of last year, all of the sudden people figured out that wait a minute. No one is building right now. Everyone is being very gun shy about putting new product on the ground. I was kind of calling last summer saying if this continues we’re going to have a major supply shortage come end of the year slash first quarter of this year, and that’s what’s happened.

Kevin Kim:
Yeah.

Vincent Balagia:
I’ve just been encouraging people that really execute well, builders that execute well, don’t stop looking. We’re happy to be your partner right now because we know that you’re going to be building into a really good [crosstalk 00:39:27]-

Kevin Kim:
For sure.

Kristina Sawyer:
Mm-hmm (affirmative). Did New York stop construction?

Ruben Izgelov:
No. I mean it’s still ongoing. I mean there has been-

Kevin Kim:
Really, even with Cuomo?

Ruben Izgelov:
There’s been an issue, but when I say ongoing I mean for those that were already mid project.

Vincent Balagia:
So no new construction?

Ruben Izgelov:
New construction, I think a lot of people are just taking a step back and are just waiting to see what’s happening, especially now with the mayoral run. But aside from that I think there’s also been a lot of wonders who kind of stepped away, and Wall Street especially stepped away from funding or lending in New York, or financing those type of deals because of all the uncertainty in that area.

Kevin Kim:
Yeah.

Ruben Izgelov:
But as far as the rates I mean it’s amazing to see 11 and three. I think the most we’ve seen in just the past couple of months is 10 and two, sometimes might get away with two and a half but that’s kind of where we are [inaudible 00:40:19]. Yeah.

Kristina Sawyer:
That’s very [crosstalk 00:40:20].

Kevin Kim:
Yeah. It was kind of funny. We were talking about this because you were telling me in ’19 rates were hitting California levels. They were hitting up.

Ruben Izgelov:
Yeah. Yeah. It was hard to compete. It was really hard to compete.

Kevin Kim:
I’m just kind of laughing on the inside like, “Ha ha hah.” Feel my pain. Feel my pain. Thank you Wall Street. But you know that’s the reality of it right-

Ruben Izgelov:
Yeah.

Kevin Kim:
… because New York is the hub of where all of Wall Street loves the New York lender.

Ruben Izgelov:
Oh, yeah. Oh, yeah. It’s been a good trend up until obviously COVID, but it also seems like there’s been a trigger of interest moving forward.

Kevin Kim:
Good.

Ruben Izgelov:
We look forward to what’s to come in the next couple of quarters.

Kevin Kim:
Yeah. Let’s talk about now… We’ve got what? It’s April? It’s April. We got eight months left in the year. We’ve got 2022 upon us. There’s been a lot of speculation about where we’re headed next year, this year too I guess. How are you guys feeling? What moves are you guys making the rest of the year? What are you guys planning on for in 2022?

Kristina Sawyer:
Well, Arixa is having it’s biggest origination month. We’ve already this far midway through April will already be our highest origination month, so we’re almost going to double it.

Ruben Izgelov:
Wow.

Kevin Kim:
You broke your own personal records-

Kristina Sawyer:
Mm-hmm (affirmative). In two weeks.

Kevin Kim:
… and you’re doubling it?

Kristina Sawyer:
And we’re going to probably double it by this month.

Kevin Kim:
This… We’re only two weeks into April.

Kristina Sawyer:
Yep.

Kevin Kim:
Really?

Ruben Izgelov:
That’s awesome.

Kevin Kim:
But you’re not the only one who told me that. A lot of people have been saying the past few months have been record this or record that. It’s like, that’s amazing. I’m so happy to hear that.

Kristina Sawyer:
Well, and I contribute most of it to them not stopping construction because, I mean they did a little bit in the northern part of California but in the southern part they didn’t.

Kevin Kim:
Only in San Francisco proper.

Kristina Sawyer:
But it would have been catastrophic-

Kevin Kim:
Yeah.

Kristina Sawyer:
… if they would have.

Kevin Kim:
Yeah.

Kristina Sawyer:
But luckily they didn’t stop it. Everyone kept building. Then-

Kevin Kim:
It was the one thing Garcetti did right is he let us build.

Kristina Sawyer:
I agree with that.

Kevin Kim:
Yeah. [crosstalk 00:42:06].

Kristina Sawyer:
Then across the nation the interest rates definitely has helped the market too.

Kevin Kim:
Yeah.

Ruben Izgelov:
For sure.

Kristina Sawyer:
That will be a interesting thing to watch over the next year but I don’t see us really slowing down.

Kevin Kim:
Are you guys making more investment in LLOs and back office, and all that kind of stuff?

Kristina Sawyer:
Yep. We are, yep. Definitely-

Kevin Kim:
[crosstalk 00:42:23]-

Kristina Sawyer:
… have run our origination team and definitely building out the ops team. We’ve hired a lot of really great, quality people to the team.

Kevin Kim:
Yep.

Kristina Sawyer:
This is kind of the year that-

Kevin Kim:
I concur.

Kristina Sawyer:
Yeah. This is the year I think that we really step up. I don’t see it changing. I think we will adapt as the changes, as they come, we roll out new products and different things like that as it permits.

Kevin Kim:
Expanding to new markets?

Kristina Sawyer:
We will be expanding to new markets, opening up the Arizona office.

Kevin Kim:
Yes.

Kristina Sawyer:
That’s the newest and greatest.

Kevin Kim:
Yeah.

Kristina Sawyer:
We have no interest in going to Texas right now-

Vincent Balagia:
Good.

Kristina Sawyer:
… because I’m sure it’s… And no interest to go to New York either so there you go.

Kevin Kim:
Leave the boys alone. Leave the boys alone. [crosstalk 00:43:11] yeah.

Kristina Sawyer:
Yeah. I mean I think there’s certain states if you don’t… There’s certain states that only make sense if you’re actually there because they’re already heavily populated with lenders.

Kevin Kim:
Yeah. Yeah. And it’s very also like… I mean New York is just a saturated market like California, but Texas is a very relationship driven market. Because there’s not a lot of lenders in Texas.

Vincent Balagia:
There’s not a lot. It’s not like out here, but you have seen lenders do well, and we have seen proliferation over the last five or-

Kevin Kim:
A lot of folks enter Texas-

Vincent Balagia:
That’s right.

Kevin Kim:
… but they’re not there.

Vincent Balagia:
They’re not there. Right. They don’t have a home base there which is a big deal.

Kevin Kim:
Yeah. What are you guys doing… Looking to the rest of the year and 2022 how are things?

Vincent Balagia:
I think residential is going to continue to be really strong, same thing with multifamily because again we’re not dipping into these eviction issues. Still being really careful with office. I really want to see what happens if people are going to be coming back. Really staying away from multi tenant buildings. Hospitality is still scary but I think that things are getting better there.

Kevin Kim:
Are you guys seeing a trend? Actually we haven’t talked about hospitality but hospitality conversion have become a big trend. Are you guys seeing that?

Ruben Izgelov:
Yeah.

Vincent Balagia:
Yeah, two multi family [crosstalk 00:44:12]-

Kevin Kim:
Yeah. Apartments? Condos?

Vincent Balagia:
That’s exactly right.

Kevin Kim:
Yeah.

Vincent Balagia:
I think that’s a big deal because that’s a way to get a lot of units on the ground-

Kevin Kim:
Yeah.

Vincent Balagia:
… quickly.

Kevin Kim:
Yeah. Yeah. Yeah. Yeah.

Vincent Balagia:
But I think that you’re starting to see the occupancy rates pop up more for hospitality so we’ll see. It’s funny. I was downstairs today on the phone with a guy who we have one property that is a hospitality property that had issues. Now we’re starting to get a lot of interest on it over the last three weeks or so, so that may be coming back but we’re going to be very careful with it. Mostly residential and multi family, and I think that’ll do really well.

Kevin Kim:
Well, staffing wise because I know the boys are here [inaudible 00:44:50] the quarantine here. But you guys have other staff members?

Vincent Balagia:
We’re hiring, trying to… I’ve got three positions right now.

Kevin Kim:
Well, they you go.

Vincent Balagia:
[crosstalk 00:44:56]-

Kevin Kim:
Stallion’s hiring you all.

Vincent Balagia:
We’re hiring because [crosstalk 00:44:58]-

Kevin Kim:
That’s been a interesting topic because I’ve had this discussion with a lot of clients, so some clients are saying, “Okay. We’re going to wait because it’s so hard to hire right now. It’s so hard to find good talent right now.

Kristina Sawyer:
We’re all taken.

Kevin Kim:
Yeah?

Kristina Sawyer:
Yeah.

Kevin Kim:
Well, you guys picked up some great talent.

Kristina Sawyer:
Yeah.

Kevin Kim:
But other folks are saying, “We’re [inaudible 00:45:14]. We’re going to go. We’re going to pick up as many back office people and LOs as we can.” We already saw some lateral moves on the back office side, processes that we’ve known forever. But it’s interesting on the staffing side because a lot of people were dislocated, or let go, or laid off from a lot of the big institution shops.

Kevin Kim:
Now they’re working retail, and working at various different retail shops. They’ve joined forces as LOs. They’ve either partnered with a family office or whatever have you to be their head of origination or what have you. I’m glad to see people on their feet but it’s a ripe market to find talent. Let me ask you this. You’ve always had a really a solid team.

Ruben Izgelov:
Yeah.

Kevin Kim:
I know you’ve been hiring, but you’ve always been on a great [inaudible 00:45:56]. You and I had a discussion about [inaudible 00:45:58].

Ruben Izgelov:
Yeah. Yeah. Yeah. Yeah.

Kevin Kim:
What’s the plan going forward in 2022, 2021?

Ruben Izgelov:
COVID was kind of a blessing in disguise for many people in the sense that for us at the very least it allowed us and gave us the time to restructure and regroup. One of the things that we emphasize on is technology. That’s exactly what we’ve been doing since COVID hit is just focusing on our technology, trying to automate as much as we can to be able to do just as many loans as we did in the past [crosstalk 00:46:27]-

Kevin Kim:
Are you going through the process of like, creating your own software, or are you buying software? What’s going on?

Ruben Izgelov:
We bought software and we’re just building on top of it through other software. It’s becoming expensive but it’s like a rabbit hole in and of itself. [crosstalk 00:46:42]-

Kevin Kim:
Try to build it yourself. I mean a lot of… One of the common threads we’ve heard was a lot of folks built… I interviewed Steve in this very room and [inaudible 00:46:49], they had to build their own software because it doesn’t exist.

Ruben Izgelov:
Thankfully I did not-

Kristina Sawyer:
We built ours.

Ruben Izgelov:
… go that route.

Kevin Kim:
Oh you guys did too didn’t you?

Kristina Sawyer:
Mm-hmm (affirmative).

Ruben Izgelov:
[crosstalk 00:46:53]-

Kevin Kim:
Yeah. Well, a lot of folks had to build it up, build themselves.

Ruben Izgelov:
We’re thinking that eventually we will go that route but we want to just build a software on top of the software that we already have.

Kevin Kim:
This is a back office like LOS?

Ruben Izgelov:
Exactly.

Kevin Kim:
Okay.

Ruben Izgelov:
It really just helps automate a lot of the processing and sales, where there’s really very little thinking that’s required of whether it’s a loan officer or of the processor. We want to minimize as much as they… We want to minimize the amount of time that they put into every single file.

Kevin Kim:
Speed the process up. Yeah.

Ruben Izgelov:
This way it’s a lot more efficient and we can just scale up as fast as we can. Because in the past several months since COVID hit what we’ve been doing, and we had to do other than building the technology is focusing on other states, Texas not being one of them.

Vincent Balagia:
Great.

Ruben Izgelov:
California not being one of them.

Kevin Kim:
I’ve told him stay out of California. Do not come here. It’s not worth it.

Ruben Izgelov:
I can’t compete.

Kristina Sawyer:
It’s not wroth it.

Ruben Izgelov:
I can’t compete.

Kevin Kim:
It’s not worth it.

Kristina Sawyer:
Yeah.

Ruben Izgelov:
It was more of a out of necessity than as anything else.

Kevin Kim:
But you basically just had nearby states, southern markets.

Ruben Izgelov:
Exactly. We can’t wait for New York to come back because once it does not only did we get this market share in other states but we’ll always have our market share in New York. We’ve always been trying to continue developing those relationships, and not only develop them but maintaining them, guiding our existing investor base in New York to try to transition to other states, showing them the ways, making the introductions just to make sure that we’re always involved with them in one capacity or another so that when New York does come back we’ll still have that connection that we had even before COVID.

Kevin Kim:
Sure. From a lending standpoint besides going to different states what products are you going to be pushing [inaudible 00:48:31] focusing on?

Ruben Izgelov:
DSCR.

Kevin Kim:
DSCR?

Ruben Izgelov:
I think that’s huge, and-

Kevin Kim:
Are you guys all doing DSCR right now?

Vincent Balagia:
Not as much.

Kevin Kim:
You guys aren’t? I know you guys are? Yeah.

Kristina Sawyer:
For sure [crosstalk 00:48:40]-

Kevin Kim:
Yeah. Yeah.

Ruben Izgelov:
Yeah. I think it’s the future, at least for the next year or two.

Kevin Kim:
There’s a lot of demand for it.

Ruben Izgelov:
[crosstalk 00:48:46] three years. Yeah. It’s huge.

Kevin Kim:
How about… I’m hearing concentrating more on software.

Ruben Izgelov:
Yeah.

Kevin Kim:
You’re downsizing?

Ruben Izgelov:
We had to-

Kevin Kim:
[crosstalk 00:48:55] processes?

Ruben Izgelov:
Exactly. For us what we’re preparing for is scalability, high efficiency, low margins but high efficiency. That’s really the model for us moving forward. The only way that we see that that can happen is by investing into the technology that we had.

Kevin Kim:
Is that because though it’s so hard to find good talent? Is that part of it? Because you and I have had this discussion.

Ruben Izgelov:
Yeah. You know-

Kevin Kim:
It is so hard to find good talent up there.

Ruben Izgelov:
It really, really is. To your point one of the things that we started kind of playing with is looking for people abroad right?

Kevin Kim:
Yeah.

Ruben Izgelov:
Whether it’s in Israel, Philippines, South Africa, Colombia. I mean there’s really amazing talent, people that have relocated from New York not to Florida, or to Texas or California-

Kevin Kim:
To Israel.

Ruben Izgelov:
… but to Israel.

Kevin Kim:
Yeah.

Ruben Izgelov:
Or to Colombia or what have you. Amazing talent. They know what they’re doing for a fraction of the price. That’s kind of [crosstalk 00:49:51]-

Kevin Kim:
We talked about that one time, yeah.

Ruben Izgelov:
Yeah. Yeah.

Kevin Kim:
The Filipino, Philippines. We use some staff in the Philippines.

Ruben Izgelov:
I mean these are people that work-

Kevin Kim:
Smart. Smart people.

Ruben Izgelov:
Yeah. [crosstalk 00:49:58]-

Kevin Kim:
Hard working.

Ruben Izgelov:
Amazing.

Kevin Kim:
One of our-

Ruben Izgelov:
Amazing.

Kevin Kim:
One of our staff members in the Philippines is actually a licensed attorney over there so she’s got the skills to be a great, great resource for us.

Ruben Izgelov:
Same thing. I mean we have people that work for JP Morgan. We have people that are professors [crosstalk 00:50:11]-

Kevin Kim:
Yeah. One of ours was a [crosstalk 00:50:11]-

Ruben Izgelov:
… at universities over there.

Kevin Kim:
Yeah. Yeah. Yeah.

Ruben Izgelov:
I mean it’s amazing. It really is.

Kristina Sawyer:
Is this more of your back office support?

Ruben Izgelov:
It is, yeah. Yeah. Yeah. It’s-

Kevin Kim:
Administrative work, [inaudible 00:50:16].

Ruben Izgelov:
… that plus marketing. I mean it’s just a little bit of-

Kevin Kim:
Marketing.

Kristina Sawyer:
Ah, marketing.

Ruben Izgelov:
Yeah.

Kevin Kim:
Because that requires a lot of admin now you know?

Kristina Sawyer:
It does. Do you guys do everything in house?

Ruben Izgelov:
We do.

Kristina Sawyer:
You do.

Ruben Izgelov:
Yeah. Yeah.

Kevin Kim:
We all have a different perspective on marketing but we all market right?

Vincent Balagia:
Sure.

Kristina Sawyer:
Mm-hmm (affirmative).

Kevin Kim:
We invest, Geraci invests so much. This is all part of our marketing campaign and a lot of people have complained about all the email blasts. And so let me ask you this. What’s the marketing plan going into 2021, 2022?

Ruben Izgelov:
Social media.

Kevin Kim:
Social media?

Ruben Izgelov:
I mean I don’t know about you guys, and I never thought I would say this but we’re on TikTok. I mean-

Kevin Kim:
Really?

Kristina Sawyer:
You’re on TikTok?

Ruben Izgelov:
We’re on TikTok. You’ll see-

Kristina Sawyer:
Yeah?

Kevin Kim:
He actually has some great videos.

Ruben Izgelov:
You’ll see me out there with my iPhone and you know.

Kristina Sawyer:
That’s awesome.

Ruben Izgelov:
It’s amazing. If someone… My niece about two years ago told me, “You should go on TikTok. I mean this, it’s amazing.” I’m like, “You’re 14 years old.” Why would I go on TikTok?

Kevin Kim:
But college graduates who are…

Ruben Izgelov:
You know.

Kevin Kim:
They’re on TikTok.

Ruben Izgelov:
It’s amazing. We’re actually getting business from TikTok where there are borrowers that are very active, very good at what they do, guys that have done 10 deals in the past two or three years. Surprisingly they’re on TikTok.

Kevin Kim:
There you go.

Ruben Izgelov:
That’s really been our play is social media, not only TikTok but social media in general. We’re really doubling-

Kristina Sawyer:
[crosstalk 00:51:35].

Ruben Izgelov:
… down on that. We’ve really built out a good team here in the States and abroad to be able to focus on all that.

Kevin Kim:
Fantastic. You guys are on the Gram because you guys tagged me last night, but what else?

Kristina Sawyer:
We’re on the Gram.

Kevin Kim:
Anything-

Kristina Sawyer:
We’re definitely not on TikTok. You know I-

Ruben Izgelov:
They soon might be though.

Kristina Sawyer:
We might be. I mean we’re really, as far as hiring we really have boosted up our marketing department as well. I think compared to a lot of our competitors we’re not heavy on the marketing like some. We’re not… We don’t have booths at events and things like that. Most of our business is referral or repeat.

Kristina Sawyer:
Jan is very big on the educational piece. We do a lot of webinars, and a whole lot of events in that sense. We like to meet people through providing some type of value add service in education. It’s not really my area of expertise, but we definitely are actively working on our marketing module that we use to boost that up. We’ll be doing some things for the near future.

Vincent Balagia:
Yes?

Kevin Kim:
Yeah.

Vincent Balagia:
I guess I’m getting on TikTok.

Kevin Kim:
Yeah.

Kristina Sawyer:
Really? [crosstalk 00:52:39]-

Kevin Kim:
One of our clients here [crosstalk 00:52:39] rented a Lamborghini-

Ruben Izgelov:
Come to the dark side.

Kevin Kim:
He rented a Lamborghini for a TikTok video.

Ruben Izgelov:
Love it.

Kevin Kim:
He said-

Ruben Izgelov:
[crosstalk 00:52:45].

Kevin Kim:
I asked, “Why’d you rent the Lambo?” He was like, “For TikTok [inaudible 00:52:45].”

Vincent Balagia:
Oh, that’s funny. Well, [crosstalk 00:52:46]-

Kevin Kim:
Anyway. Sorry to interrupt.

Vincent Balagia:
… you know that’s a great idea. Yeah.

Kevin Kim:
Yeah.

Vincent Balagia:
That’s a great idea.

Kevin Kim:
Yeah.

Vincent Balagia:
We’ve got our traditional stuff but to me, I’m going to continue this press into I want to be talking to the people that need our services before they need it right? Obviously the clients that we have now are serving them well and staying in front of them, but really just looking to see. Who do we want to work with? Because we really limit ourselves to four main markets. Really my push has been to be, who do we want to work with? And then make sure that we really support their projects.

Kevin Kim:
Are you doing like local meetups, stuff like that with your borrowers?

Vincent Balagia:
You know meetups, but even really just trying to be really aware of who’s delivering really good product in the market, and then just being very intentional about developing a relationship whether we have one that’s maybe… Maybe we know them and we’ve met them, or maybe we don’t and we just want to get in front of them.

Kevin Kim:
Now, are you guys using account managers or anything like that?

Vincent Balagia:
A little bit. That’s one thing that we’ve been pushing and we’ve hired on is to say, “Okay. We need people to help identify exactly [crosstalk 00:53:54].”

Kevin Kim:
Prospecting.

Ruben Izgelov:
Yeah.

Vincent Balagia:
Exactly.

Kevin Kim:
Yeah.

Vincent Balagia:
Then go out with our LO, really LOs now and say, “Okay. Let’s make sure that people know who we are, know what we can do, but let’s…” It was like one thing that we talked about today, what can we really do to customize our financing to really meet their needs? What do they really need? Hopefully that way we’re not competing against someone from out of state who does come in with a single digit rate and almost paying to do a loan for someone.

Kevin Kim:
Yeah.

Vincent Balagia:
Right? Instead it’s saying, well what do you really need? Because it’s probably more than just the cost of the loan.

Kevin Kim:
Right. And pricing is actually probably not as important a factor probably?

Vincent Balagia:
Yeah. I think when you can really listen to people and look at their project, how do you really get them from A to B and get them an exit, I think that can be really helpful. That’s what we’re focusing on [crosstalk 00:54:40].

Kevin Kim:
Fantastic. Yeah. We’re going to continue blasting your inboxes with a bunch of content and emails so don’t… We’re not going to stop so look out for that.

Kristina Sawyer:
I think all of it goes to my clutter. I don’t think [crosstalk 00:54:49]-

Kevin Kim:
Dammit.

Vincent Balagia:
[crosstalk 00:54:52] filter. It’s like [inaudible 00:54:53] is it a bill or is it [crosstalk 00:54:56]?

Kristina Sawyer:
Ruby emailed me and she says, “Kristina you haven’t opened any of the links yet on these,” so I was very impressed that you guys even track-

Kevin Kim:
Yeah.

Kristina Sawyer:
… at that level.

Kevin Kim:
We do. We do.

Kristina Sawyer:
That’s impressive.

Kevin Kim:
The value of a CRM is massive.

Kristina Sawyer:
But that’s when I realized it was going to clutter so [crosstalk 00:55:05]-

Kevin Kim:
Yeah. Yeah. We’ve invested heavily in CRM technology, tracking, digital marketing and all that fun stuff. And it’s been useful. Data is the most important thing with marketing…And anything actually-

Kristina Sawyer:
Yes, data.

Kevin Kim:
… it informs your decisions. It informs your allocation of resources. Our team has become immensely talented at utilizing data. I mean all credit goes to Dani. Dani is our data wizard, but yeah.

Kristina Sawyer:
Go Dani.

Kevin Kim:
Yeah. Go Dani. Yeah. Last question for you guys. I want to look at a little bit further away, so 2021, 2022, 2023 bullish? Bearish?

Ruben Izgelov:
Probably bullish.

Kevin Kim:
Bullish?

Ruben Izgelov:
Yeah.

Kristina Sawyer:
Bullish.

Kevin Kim:
All right.

Vincent Balagia:
Bullish but just cautious.

Kevin Kim:
Cautious?

Vincent Balagia:
With interest rates, with changes in taxation.

Kevin Kim:
Oh, yeah.

Vincent Balagia:
That’s it. That’s just looking, but it feels right where we are. It feels like we’re going to continue to have that growth. I just want to look for any disruption that we have.

Kevin Kim:
Right. Prepare for a disruption.

Vincent Balagia:
That’s right.

Kevin Kim:
All right. All right. Well, thank you very much for joining us today guys.

Kristina Sawyer:
Yes.

Kevin Kim:
Have a great one.

Kristina Sawyer:
Thank you for having us on.

Kevin Kim:
A great one for the records.

Vincent Balagia:
[inaudible 00:56:11].

Kevin Kim:
I will be in your towns doing a live-

Vincent Balagia:
[crosstalk 00:56:13]-

Kevin Kim:
… episode. We will be doing more live episodes so look out for that, and once again thank you very much for joining us. That’s a wrap on this episode Lender Lounge with Kevin Kim. See you on the next one.