Real Estate Success: The Power of Taking Action with Derek Harms | Part 2 #867

Derek is well respected within the industry, not only for his high ethical standards but for conducting his business honestly and morally while doing absolutely everything in his power to ensure his clients’ success.

An active investor and award-winning realtor, Derek is connected in many different facets of the real estate industry. He purchased his first investment property in 2010 for $22,500 and since then he has owned and been involved in flipping houses, mobile home parks, apartment building syndications, development, property management, lending and creative financing. He currently spends most of his time managing his company, We Buy San Diego, cumulatively, focusing on single-family and multifamily, renovations, sales, and rentals in San Diego county.

Derek joined NSD REI Board of Directors in 2014 and has served as president since 2019 Derek currently lives in point Loma and when he’s not enveloped in real estate, you’re most likely find him enjoying all kinds of outdoor activities.


In this episode:

• Just make offers and stay consistent.
• Writing offers is like playing the lottery for free!
• Taking advantage of zoning with overlays for income restrictions
• Lot splits, ADU’s and Manufactured housing.
• Learning from your mistakes and staying true to your fundamentals.
• Inventory and the lock-in effect.

The Norris Group originates and services loans in California and Florida under California DRE License 01219911, Florida Mortgage Lender License 1577, and NMLS License 1623669.  For more information on hard money lending, go www.thenorrisgroup.com and click the Hard Money tab.


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Narrator: 0:01

Welcome to The Norris Group real estate podcast, a show committed to bringing you insights from thought leaders shaping the real estate industry. In each episode, we'll dive into conversations with industry experts and local insiders, all aimed at helping you thrive in an ever-changing real estate market. continuing the legacy that Bruce Norris created, sharing valuable knowledge, and empowering you on your real estate journey. Whether you're a seasoned pro or a newcomer, this is your go-to source for insider tips, market trends and success strategies. Here's your host, Craig Evans.

Bruce Norris: 0:45

When I first started, I had some, you know, I didn't have any idea what I was doing. And I was just mailing offers. That's all I did. And it was interesting, because there were things that happened for me that would never have happened if I asked,"Is this a good idea?" So within like the first month, I had made an offer on six new custom homes in Riverside County and back then this is 1980. They were asking 200, I made 120 offer, and it got accepted. And the owner of the company was like flabbergasted "Are you kidding me?" There was he was blown away because he was just used to buying, you know, junky stuff in San Bernardino and Riverside that needed a lot of work and these were brand new homes. I didn't know what I was doing but I just wrote offers. And yeah, I took I took a lot of heat. Yeah, we we had lots of people mad at us calling my broker all the time going, "Who is this guy?" One of the offers was in after those six were accepted. He says let's throw you in Newport Beach. I want to see if you can buy a waterfront property. And in three days I was in front of one that was worth it was listed for 1,000,050, our offer was 650 and the guy after arguing agreed to the 650, but he wanted a 10 day escrow. And I had to call back the owner of the company, I got the 10 days if I could get his boat included in the purchase. So that was a, I'm 28 years old. And I've got 31 days of experience. And I say well, I've got good news for you got your 650 got your 10 days, all I need is your boat. Five minutes after getting yelled at I got their boat when I left that house that night. I remember thinking, wow, what's possible if you just have the nerve to ask, and...

Derek Harms: 2:48

That's very, like, That's so incredible that you said that. And you know, I refer back to to Mike again, because I could do this all day. But you know, Mike, it might have been Mike who pioneered it? I don't know. But that's where I heard it. You know, writing offers is like playing the lottery for free. And it's just so true and I tell Lawrence and Drew that all the time. I'm like guys, we just got to make more offers. It's we're playing the lottery here and real estate's an imperfect market. And you'd be surprised that but what deals he can do, and he just put pen to paper.

Bruce Norris: 3:22

Well, you know what, sometimes your circumstance, the owner circumstance changes, I'll tell you a story about myself. My wife and I had three boys and the when Aaron was born, he was the third boy, my wife wanted a girl. And we met with the adoption agency and found out we had, we own two small house. And I had a home that was for sale up the street. And I had within a few days I had a chance to buy 150 grand house for 76 grand. And all of a sudden mind motivated change. Now, the guy that was a realtor, got an offer for my $85,000 house for 62 grand. And I just happened to meet him and he says I'm so embarrassed that I have to give you this offer. And he said the offer was 62 grant and I had a residence that was similar. And I told him I said well, not only will I say yes to that offer, I'll only say yes to that if the guy pay 62 grand for the house I live in and the realtor about to fell off his chair. But my circumstances had changed. I wanted a home where I could get a baby girl. And I bought it so cheap that I could pay for it with a net of those two little houses and live in a 48 or 2800 square foot house where the professor's lived. So I was a motivated seller and all said it made sense. So you never know what circumstances are on the other side of that.

Derek Harms: 4:51

Absolutely. And you know, we get calls all the time, Bruce from someone who said,"Hey, I got your letter two years ago and I put it in the drawer, and I wasn't ready then. But my mom just passed away. And now we want to sell the house. Oh, and by the way, can you get this done in a week?" And, you know, like that happens it happens a lot. But again, it comes back to consistency. You have to do it regularly and in like and do it over time and then those things will happen.

Bruce Norris: 5:21

So your main concentration now, are you concentrating on inventory that you can add an ADU or some other square footage?

Derek Harms: 5:31

Yes and no. We, the way I'm looking at the next couple of years is like for instance, I have a nine unit building that I bought a property and amazing a location that we're turning one house into nine units in this project. I think I mentioned this. Yeah, I was still in permitting phase when I when I talked to you last time.

Bruce Norris: 5:55

Okay.

Derek Harms: 5:56

And there are some cool opportunities like that. And I think I'm focusing on having one or two of those, for me bigger projects going at a time, while the bread and butter for us is still flipping houses and peeling off rentals where we can where the numbers may or may not or make sense. Now there is something I want to mention that I think is, I think may change the game a little here in San Diego, maybe not too much because our lots are somewhat small. But for instance, I have a house in La Mesa, which is a suburb of San Diego. And it's a six, no 8000 square foot lot with a three bedroom two bath house on it. And what I'm doing is I am building another three bedroom two bath house on the back of this lot. Now granted, the city of Mesa's ADU ordinance only allows one unit so I couldn't go any denser. So I'm gonna build the biggest one I can as a three bedroom two bath. And but I'm doing a manufactured house. And I am, the difference though is I'm going to leave it stucco ready. So when we're done, we're going to stucco the exterior. And we're going to just make a couple of extra bells and whistles. So this property will look like the stucco house on the front of the lot. But my build costs are at about 225 a foot whereas the Kensington project, the nine unit project you're at like 375 a foot, so we're getting a huge discount for going manufactured but my rent is going to be the same as the house in the front. So I've just been looking lately for lots in San Diego that are in certain zone, based zones with certain overlays that allow you bonus at US based off of you allowing one of the other ADUs to be income restricted. So if you do want to add low to moderate income, then they give you a bonus I say cool if you're gonna designate one of your units to be lower moderate income. Then we'll give you another bonus ADU, you can build. Now granted the, you know, the manufactured house. They're single storey and they require space. So you got to have a big enough wad and in San Diego, they're they're hard to find. But they're still out there. And so I think that there's a cool little opportunity for a while, while some of these lots are still found and figured out to throw some manufactured house on it and houses on it. And because of the build costs are much lower than the stick built counterpart. Their returns are therefore accelerated quite a bit and make sense, they actually make sense to hold here whereas it's really hard to typically make these things pencil.

Bruce Norris: 8:44

Have you heard of Boxable?

Derek Harms: 8:47

Hmm, I have not.

Bruce Norris: 8:49

Okay, that's Elon Musk's manufactured home basically. That comes in. I think it's I think it's 800 square feet. It comes delivered in a trailer and it unfolds on your lot. It's done.

Derek Harms: 9:07

...this after what have that you owe the utilities Foundation, etc all that done and then rise

Bruce Norris: 9:12

Yeah, looked that up Boxable, it's gonna be a big deal like everything else he touches you know?

Derek Harms: 9:19

Of course. Yeah, I just read his book or is there his biography. Super cool.

Bruce Norris: 9:27

I am just astounded at what goes on in his head.

Derek Harms: 9:33

Yeah, like he thinks different than the common person like even the successful entrepreneur. Like he's like, he had these like, massive ideas and dreams that...

Bruce Norris: 9:43

Yeah, well, it's like they really don't even exist. They don't even exist. The stuff he's thinking of. He was asked when did you know you were different? He said when I was six, it dawned on me that none of this that's going on in my head is going on in anybody else's

Derek Harms: 10:00

Yeah.

Bruce Norris: 10:01

Like, bursting ideas. I'm just curious. You know, from the interest rate of the good old days to now we're about tripled, close to it. What impact has that had on San Diego price?

Derek Harms: 10:20

Not that much, Bruce. You know, there was a freakout moment, back in May of 2022 when the rates started to spike, and buyer sentiment fell precipitously, and we saw a hit in pricing around that point. So Q2, Q3 2022 was tough. I personally lost money on multiple deals that I had bought at Q1, buyer mood and sentiment and pricing and interest rate, therefore had to sell in the end of Q2, Q3 at that timing of interest rates and mood, etc. And the prices were certainly affected and definitely lost significant amount of money like enough to make you vomit a little bit. And, which is okay, though, because it, it, it shaped the way I looked at deals moving forward, I will admittedly say that I got a little loose with my underwriting at the time, and I got a little caught up in the euphoria. And I probably bought properties, I normally wouldn't, for instance, a couple of the properties I bought that I lost money on, I normally don't buy because I've had bad experiences with them. I bought one house that didn't have a garage, in a neighborhood in San Diego, that everybody wants to garage, I bought another house where I was using a new construction, comparable sale granted, it was a block away, but it was new construction. And I knew that the comps, this may or may not work, and it didn't work. And another one was backed up against a hillside off of a busy road. And I, you know at the time didn't matter what you had it everything was selling. But I normally wouldn't buy that stuff. And I'm not buying it anymore. So it kind of shaped the way I ran my business. But to get back to your original question, pricing has rebounded and it didn't take long, you know, back towards the middle part of last year, 2023 we were already back to the pricing, we saw pre interest rate boom, it felt like there was initial shock the in then buyers started to absorb the idea that hey, this is where the new normal this is going to be for a while and couple that with the lack of inventory. You know, it's people are still paying paying it. And they're happy to do it. And matter of fact, all of our recent sales have had multiple offers.

Bruce Norris: 13:03

Well, it's interesting that you just said that lack of inventory. So from what I've studied, the market needs to have a group of inventory that has the characterization it has to sell. So if you think about how that could come about foreclosures can occu but that isn't going to occur this time. You can you can go online to YouTube, and it looks like oh my gosh, you know, and they always use percentages. So you know, they don't use the numbers when they use percentages. But you know, so you go to nine to 27 foreclosures, you're up 300% Oh my god, and then you realize it's meaningless. So we just did a presentation in Florida, their market is very stable price wise. And the percentage of short sales and REOs combined are half a percent of the volume.

Derek Harms: 14:05

That doesn't move any needles.

Bruce Norris: 14:07

No needles moving. Matter of fact. See, that's the part like you in 1980 and 81. You had 16, 17% interest 10% unemployment, 22 months of supply of inventory. No price damage. Those three charts together just make your head scratch you go oh my god. And so you know, you're looking at what was stable here. That went crazy in 2008 and nine and 10. It was the REOs, the REOs dictated the value of everything. And in the 90s they did some what they had, it was 40% of the market. So I look at that and say, you know, we're not going to touch that this time. But if I were and I am an investor I constantly look at is there another supply of houses that could alter the outcome. Because you don't have a lot of volume of sales, right? San Diego is about half of normal.

Derek Harms: 15:08

No, yeah, we don't. It's a it's it is about half. And like I, before we jumped on here, I looked at the numbers and if you just type in active for sale detached homes in San Diego County, today, we're at like a little over 1400 of a county of 3 million people.

Bruce Norris: 15:29

Yeah.

Derek Harms: 15:29

It's, it really is rock bottom, and certain little neighborhoods have less than others. And you know, that may or may not be certain neighborhoods, we're targeting with some of our mailers is you know, if you can get any sort of inventory in some of these neighborhoods that have nothing for sale, even if you pay a little more than you want to you still end up being alright, because there's nothing else.

Bruce Norris: 15:55

Do you fear any inventory. So in Florida, you can look at a couple of things you can say VRBOs for instance, there's a lot of a lot of VRBOs, if those stopped working for some reason, maybe they get put up for sale and the quantity. I don't even know if there's a chart on how many those are. But in Florida, there's a lot of deaths because of older people. So eventually you produce 50,000 homes a year in because people died.

Derek Harms: 16:27

Sure, yeah. So San Diego, the Airbnb thing is interesting. I have a couple of myself. And granted depending on the area and like city of San Diego has their own rules and regulations city of Mesa has their own and so it depends where you're at. But city of San Diego, for example, and I don't want to be quoted on these numbers, but I'm pretty sure these are correct. They offered something around 5000 permits for short term rentals. And everyone in the industry was like, oh, man, you gotta get your application in, it's going to be a feeding frenzy and who, you know, people are gonna be fighting for these these permits. Well, actually, after they released, some, not all of them are taken only on something like 3500 were actually applied for. And so how many of those were bought recently, underwriting as short term rentals? Maybe some? But how many of those have been properties bought over the last seven, eight years at a low interest rate? Probably a lot. How many of those were owned for many years before that whether, you know, no mortgage or paid with cash or something? Probably some. So even if let's just say the rug was pulled out from underneath the short term rental market, is that really gonna create a huge splash in inventory? I don't think so. There will be some but I don't think that much here.

Bruce Norris: 17:51

It's not just the inventory, it has to be motivated have to sell inventory. That's because somebody would just say no, right? The 1980 You got 22 months of inventory. But apparently there was enough evilness. Nevermind.

Derek Harms: 18:05

Sure.

Bruce Norris: 18:06

You know. So right now, in California, we're at the highest, it takes the highest percentage of our median income ever to buy a house. And normally, that's followed by some type of correction.

Derek Harms: 18:22

And how much is that,do you know?

Bruce Norris: 18:24

70%.

Derek Harms: 18:26

70%?

Bruce Norris: 18:28

70% is the median, okay, take the median price at 20% down, apply the interest rate, it takes 70% of the median income. So but that includes what 35% of people are buying cash. So it's, no one's qualifying for 70% of the house payment. But but the charts accurate in the sense. And this is the chart we renamed moodometer. So moodometer basically calculates the urgency of the buyer. So you have urgency of the buyer and San Diego, because there's nothing for sale and they want one. Okay, so they have to pay a premium. That number when you go to say a depression mentality in 2008 goes to 28 but it's very normal to go a decade and not get over 40. So that's how exuberant California is right now.

Derek Harms: 19:28

Well, what could change that Bruce? Like what would it be would it be another series of large interest rate hikes would it be some sort of massive job loss like what could possibly change that in in Southern California? You know, if we've already gone through the largest interest rate hike in like multiple decades and buyers absorb that? Like what would could be a catalyst for a big moodometer change?

Bruce Norris: 20:00

I don't think there will be one. Actually, I think what's going to happen is I think you'll return to a lower number, but say 50, 55%. But as far as inflation expecting real estate to inflate, that'll be really interesting if that happen. So let's just play within a year, interest rates are 5%. What group gets off the sidelines? The seller or the buyer?

Derek Harms: 20:31

That's a good question. You know, I love, being reading John Burns stuff, you know, the magic number he has is 5.5%. I think, you know, it's a good question. I think it depends on what which seller, right? Is that seller need to go replace their their house with another high balance mortgage or the downsizing? You know, I think you could probably get both off the sidelines.

Bruce Norris: 20:59

I think it leans toward the buyer. I think that's why your volume is so low, I think your volume is low, because people are just, they're just waiting, they don't want a 7 or an 8 or you know, but if that gets into five territory, I think the people that come off the sidelines, so the buyer, and because the interest rate is now lower, it'll take less of their percentage of income, they will also be getting raises. So I think, you know, for the next 7, 8 years, you've got this journey of gradually, that number of 70% goes down just because of the earnings are higher, the interest rates lower. And I don't think you have that urgent moment of all of this stuff is for sale. But this is see what's fun about this is this has never happened. And so whenever you look at charts, you usually look at what's repeating here. And this isn't repeating, which is why we when we did the report, Uncharted Territory was a tongue in cheek title. Basically saying this is yeah, this is uncharted. We haven't seen these combination. And the other thing Derek is there were for like about almost two years, over a one to see, gosh, I'm about to say trillion. It is right. A trillion dollars of refies. every quarter, every every quarter there was refies. We didn't have that many houses. So what happened was people said, Oh, my God, look at that four and three quarters, never thought I saw that. Oh, my God, look at 4. Oh, 2.75. I think a lot of the same people refied over and over again. And what also happened during that journey is, let's say when you refied it for three quarters, and then at two or three quarters, it dawned on you, wow, we could add an office and have a pool and we wouldn't even change our payment, the loan amount will go up, but our payment won't. And so I think people built in their permanent home. And I don't think those people are going anywhere.

Derek Harms: 23:05

No, you know, I've talked about this with with my wife too. I'm like, I look around, I'm like, we have 3% interest rate on our house. And when you compare it to what else we can get for it, it like at today's rates, you know, the mortgage almost doubles. And it's like, you know, honey, I don't think you know, we need that we were thinking about maybe a second story or whatever we're doing, you know, maybe add some space, building out a little bit. But I think a lot of people are having those conversations, and a lot of people are doing it now even as opposed to back then as well.

Bruce Norris: 23:46

What percentage of San Diego's sales or cash, would you say?

Derek Harms: 23:51

That's a good question. I don't know the answer. I'd be I'd be guessing to be honest. I don't think that much. I would say maybe 10%.

Bruce Norris: 24:02

Really? That would surprised me if you did that well.

Derek Harms: 24:06

Well, I mean, really, So who are these cash buyers? Are we talking to strike writing checks for owner occupied homes or?

Bruce Norris: 24:16

Yeah.

Derek Harms: 24:18

Are you talking investment?

Bruce Norris: 24:20

No, no, no people coming to live? Do you have migration coming in from somewhere?

Derek Harms: 24:26

San Diego, not really. We have a lot of out migration. We have a lot of immigration. But we certainly don't have that much in migration from other states. Okay, well, except the NorCal. We get some like San Francisco tech guys that come down some guys from LA, but we're starting to catch up to them and pricing so it's no longer as attractive.

Bruce Norris: 24:49

That's true. You know what, where we build homes. There was Cape Coral and return to West you know what the percentage of cash buyers are? 65.

Derek Harms: 24:57

I'm guesssing 50 or 60.

Bruce Norris: 24:59

65%

Derek Harms: 25:01

Wow, that's crazy.

Bruce Norris: 25:03

Yeah, so that's a big help when the financing goes up. It's like, eh?

Derek Harms: 25:07

Yeah, seriously? Yeah. That those people don't care. They're not interest rate sensitive. I just googled it really quick. And according to Financial Samurai, I've never heard of that. But it looks like in San Diego, it was like, what was that? 25%? So yeah, yeah. rough spot on.

Bruce Norris: 25:28

How many times have you gotten to say, I talked with my wife? That's for you.

Derek Harms: 25:34

I'm still getting used to it. Yeah, that's so funny. We both are not quite used to saying wife or husband or hobby or whatever. But it's.

Bruce Norris: 25:46

Yeah, that is so cool. I'm glad you recognized who she was. And that you guys tie the knot, and you have a wonderful future man. That's pretty exciting.

Derek Harms: 25:58

Thank you. I'm very grateful and blessed and so thankful for all those along the way who have helped. And, you know, nobody gets there alone. Nobody does it unless they're independently wealthy without borrowing money. You know, it's, here's so many factors that go into it. And I'm just so grateful for, you know, all the help have had along the way.

Bruce Norris: 26:18

Yeah. Well, congratulations on your success. And thank you for contributing to other people's success by the roles that you've taken.

Derek Harms: 26:26

For sure. Can I ask you one quick question? Sure. Okay. So, you know, I love at our interviews at the NSDREI, I always like to, to finish it with like, you know, a question like, you know, fill in the blank or a, or something along those lines, something fun. But in this case, you know, first let's say, someone in San Diego is listening to this right now. And you're familiar with San Diego, similar to most southern California markets, like What is the lens someone in San Diego in the investment space should be looking looking through? And right, you have these meetings every week, you're like, Alright, guys, we are running an investment business here in San Diego, how do we project the next 5 to 10 years? Like what what do you tell that person that says, "Bruce sit in our board meeting, and help us look through the lens of the next five to 10 years and how we potentially see what what, what

Bruce Norris: 27:29

I think over a long period of time, real estate may be happening." is already used up its upside. So I don't think you're going to make yourself a lot of money by buying and holding something and having it do its normal journey, where you know, you got 50% equity and five years, that'll have to be built into something. So the process has to be okay, I'm going to buy something that exists and add value to it. So like what you're doing is perfect adding ADUs, or another house behind it, or improving what you've got. The other thing is I'd mentioned that one of the things that happened to me, I got into the business in 1980 in November, so interest rates were completely crazy. But prices from 1975 to 80 had tripled. And that was a really interesting thing about getting my offers accepted because people were saying yes to offers at 65% of value, and making more than they ever thought they would on a house. So that was part of the what was going on in their head is they were thinking okay, I put up, you know, 15 grand to get into this house. And I'm netting 100. It was just, it was a calculation. And I started actually doing that. I would ask questions about just curious what did somebody have to put his downpayment in this neighborhood? And of course, they would answer me well, we put 20% $20,000 down or something. And then later that would be part of my formula saying, you know, if they were upset at the number, they couldn't be upset at the yield. And so I think you have to think like that. I think you have to take a look at what people just what happened to San Diego real estate from let's say 2008 to now has it tripled?

Derek Harms: 29:25

Probably.

Bruce Norris: 29:25

Yeah, more probably. Yeah. So I would, when you're looking for a discount. That's not a normal upside on a house. So could they just take a double and leave the last third for you? Yeah, it happens. If you ask.

Derek Harms: 29:43

Yeah.

Bruce Norris: 29:43

So that's, I guess that's what I would do. I would look for people that have huge equities. And maybe a change in life. You know, like I was adopting Sarah or I needed a bigger house or you name it people have. You just have to have opportunity. give opportunities for people to say"Yes". One of my favorite comments from agents, when I bought houses was if I knew they would take that offer, I would have bought it myself. But they never made the offer.

Derek Harms: 30:12

We've had some top producing agents at the NSC, Rei over the years. And I'm always baffled as to, you know, typically, and this is not not a knock on on on all of them. But it's hard for me to understand like, Hey, you, you have access to all this inventory off market because they're your deals, and you're not buying any of them why? And I think a lot of it's a mindset thing and fear, etc. But a lot of those have shifted, and a lot of those guys have have shifted their game, and it's been cool to see but but anyway.

Bruce Norris: 30:46

One of the one of the properties I bought when I worked for the company, so I only worked there for 90 days. So somewhere in that timeframe, I bought this house and I made the offer and the lady that was the agent, she stood up and

Derek Harms: 30:57

Yeah, what is their true motivation there why now screamed at me. And the buyer let the seller said sit down and shut up. So when she got out I said What was all that about? She said I was I was figuring he was going to be pissed. So I was just defending him so I could get keep my listing. I said Oh, okay. It was all a hoarse, really. But you know, the guy wanted to take the offer. I don't know. I just think people don't ask enough, and sometimes it's it's circumstance driven. I'll tell you one story. You may have already heard it. But this is typical of if you ask enough questions, we've we finally decided to do a bootcamp where we're teaching people live in the Riverside office, I bought the building to do that. And the first time we had to training, there was a we ran an ad and people called in, the guy said, you know, I got 140 grand house. It's all completely fixed. I just need to toss carpet, and I'll take 120 for it. So the person that took the phone call, they couldn't get him to go off of the 120 no matter what they did. So hung up now is the end of the call. I said I'm going to call the guy back because I'm just curious, why doesn't toss carpet in and sell it for 140? So I call up and ask that question. He said, I don't have time. I said, well, here, let me save you some time. There's no investor. I know that's gonna buy 140 house for 120. He said, How about 100? I said, No. How about 90? I still want you to just listen. He said, I told you don't have time, what's the element of time, I have a chance to buy a $500,000 business this week for 72 grand. I said if I walk over 72 grand, you own the business? Are we good? He said yes. So there's just questions that are you know, you just have to say, "Okay, did I get to the bottom of it?" And on that one, it was just a few questions away. that's, that's a really good, a really good story. And just along the lines of helping people buy stuff, I'm a huge advocate for it. So I've numerous times helped people who were either A just getting started or B agents who wanted to break over into the investment ownership world, and happy happy to do it, right. You don't need all the deals, but if you help create a, you know, a plan a vision and a lifestyle for someone else, it comes back to you and so some of those guys that, you know, that we've helped along the way are still come back and bring us deals but you know, they're now in the ownership world. They have portfolios, and they're flipping houses or whatever it is, but it's really cool to see.

Bruce Norris: 33:44

Well, you know, it's interesting you said 60% of your business comes from referrals. That's from probably is that mostly agents?

Derek Harms: 33:53

Mostly agents. Yeah.

Bruce Norris: 33:54

Okay, so those listings aren't seeing the light of day.

Derek Harms: 33:58

No, they do every now and then. Yeah, every now and then one will have to per whatever agreement they have with the seller or trust attorney or whatever, but for the most part no, most of them will just go get marked pending and sold on the same day.

Bruce Norris: 34:12

Yeah. Well, that is a good group of agents to add because they'll find those things all your you know, that's what they do.

Derek Harms: 34:20

Yep. And we take care of them for sure. We're happy to pay extra commissions like we work out bonuses so like, let's say we hit our our ARV or more will then they'll get X percentage bump and whatever. Like we want to share the wealth because we know like they'll come back to us.

Bruce Norris: 34:39

Absolutely. That's smart. All right, Derek, I better let you go. Hey, I've had a great time. Go ahead.

Derek Harms: 34:45

Oh, always nice chatting with you sir. And please don't be a stranger at the NDREI, I know you kind of have shut down your worldwide speaking to her. But you know if that may ever change in the future. We would love to host you again.

Bruce Norris: 35:00

Okay.

Narrator: 35:01

For more information on hard money loans, trust deed investing, and upcoming events with The Norris group. Check out thenorrisgroup.com. For more information on passive investing through the DBL Capital Real Estate Investment Fund, please visit dblapital.com.

Joey Romero: 35:21

The Norris group originates and services loans in California and Florida under California DRE license 01219911. Florida mortgage lender license 1577 and NMLS license 1623669. For more information on hard money lending go to thenorrisgroup.com and click the hard money tab.