Also known as The Warehouse Whisperer, Erik focuses on industrial real estate. Erik's specialties include active tenant/buyer representation, landlord representation, land sales and development and investment sales and analysis.
Erik's real estate career now spans over 20+ years in the Inland Empire. Erik has achieved recognition for many notable transactions he has been involved with over his career, having been involved in over $1 billion worth of commercial real estate transactions during his career.
Erik is known as an expert in Inland Empire industrial real estate for his knowledge and analysis, and has been a guest speaker and moderator at many local and regional business events over the years.
In this episode:
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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Radio Show
Also known as The Warehouse Whisperer, Erik focuses on industrial real estate. Erik's specialties include active tenant/buyer representation, landlord representation, land sales and development and investment sales and analysis.
Erik's real estate career now spans over 20+ years in the Inland Empire. Erik has achieved recognition for many notable transactions he has been involved with over his career, having been involved in over $1 billion worth of commercial real estate transactions during his career.
Erik is known as an expert in Inland Empire industrial real estate for his knowledge and analysis, and has been a guest speaker and moderator at many local and regional business events over the years.
In this episode:
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.
Video Link
Radio Show
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.
Craig Evans:All right. We are here today with Erik Hernandez, the Senior Vice President and Principal of Lee and Associates-Ontario, Eric also known as The Warehouse Whisperer focused on industrial real estate. His specialties include active tenant buyer representation, landlord representation, land sales and development and investment sales and analysis. Erik's real estate career now spans 20 plus years in the Inland Empire. Having been involved in over a billion dollars worth of commercial real estate transactions during his career. Erik is known as an expert in the Inland Empire industrial real estate. For his knowledge and analysis. Has been a guest speaker and moderator at many local and regional business events over the years, Erik brings a unique perspective to the review and analysis of the commercial real estate market. He previously directed the market research efforts for Lee and Associates offices, and another firm from 1995 through 2000 before transitioning to the real estate brokerage side of the business with Lee and Associates of Ontario in 2000. Erik enjoys giving back to the community and as a supporter of several organizations in the Inland Empire. He is a past member of the Board of Directors for the Inland Empire United Way, has been a supporter of the YMCA, the Chaffey College Scholarship Award, and has been a coach and certified referee for the local AYSO in Rancho.
Erik Hernandez:That is true.
Craig Evans:Erik, that is a bio my friend. So I gotta get into this Erik, The Warehouse Whisperer. First of all, it's rare that you spent most or just about all of your career with one company. But before we get into all of that, I have to know about Erik, the person tell me how you got the nickname Warehouse Whisperer.
Erik Hernandez:So probably, gosh, maybe 10 years ago, I was part of a networking group, we get together, and you're really close group of people. And we would come up with little intros for ourself, right. And one day, you know, there was a few that I used it, you know, didn't stick it all in one day, I used that. And everybody got a chuckle. And I used it a few more times. And then, you know, one of my good friends there came up to me and he said, Erik, I don't think you realize that's like really good, you should trademark that. And I chuckled like now what are you talking about? And then maybe a few weeks later, I was like, well, maybe I should. And I, you know, go on Google and I started searching the term. And no one had it, right. Like, there was no website, you know, like, there was no registration. So I called an attorney friend of mine, and I said, 'Hey, I need your help on, you know, helping me figure out how to, you know, trademark this right'. And so he got one of his partners involved that was specialized in, you know, patent and trademark work and we processes through the US Patent and Trademark Office. And it took I think it took over a year to actually get it through. Because there were a few different rounds of submittals you know, where when you submit, you're saying hey, I want this to cover all these categories. And you know, they kicked it back they said we can give you all of these but we can't give this particular one because I think there's a guy in Florida that does building inspections, right so it didn't cover building inspections, I think but everything else you know, regarding, you know, real estate and brokerage and pertaining to that and marketing services, and there's a whole list of categories and falls under. That's where it lands up. So in my home office, I got a little you know, thing from the US Patent and Trademark Office saying the warehouse was burned.
Craig Evans:So listen, I know you've got a long history with the Norris group and especially with the radio show, you've been on several times with Bruce and you know, you and I have not had the opportunity to meet in person so really appreciate you coming on today spending time with us. Are you originally from the Inland Empire area?
Erik Hernandez:I am yeah.
Craig Evans:kay.
Erik Hernandez:Yeah, I was born at the old Kaiser Hospital in fontana.
Craig Evans:Okay.
Erik Hernandez:I grew up in Colton and Grande Terrace.
Craig Evans:Okay.
Erik Hernandez:Graduated Colton High School in class of 1991. And then I attended UC Riverside and graduated from there with a Business Begree in 1995.
Craig Evans:Okay.
Erik Hernandez:Yeah, so I'm local boy, you know, born and raised at that point in time, Colton in Grand Terrace, there was only one high school. So Colton High School was our school, I think today I'd probably go to Grand Terrace high school because I, at that point in time, I lived in Grand Terrace. But I lived in both Colton and Grand Terrace over the years, and just kind of local guy born and raised, you know.
Craig Evans:Growing up what I mean? What did you think your career in that era growing up? What did you think your career was gonna be?
Erik Hernandez:I actually thought I was going to be a doctor. My mom was a nurse. And I thought that, well, she's a nurse, I'll be a doctor, right? And, actually funny story. I was at the time, UC Riverside, you know, they have their own medical school that's getting up and running now. But back then they had what was called a biomedical sciences program. And basically, you would apply to the biomed program. You know, going into college, you do two years of that. And then I think that third year or fourth year, you would transfer to UCLA, and basically, fast track into the medical school. There UCLA, because UCR didn't have its own. And it was super competitive. I think they started with 300 or 400 students. And I think 28 or 30 got it right. So 90%, you know, didn't, right. And I thought, well, that's what I'm going to do. And my mom set up a surgery rotation with one of, you know, her doctor friends, just to kind of say, hey, you know, you can take a look at, do a surgery round and observe and I scrubbed up, and I went in for observation. And one of the observation rooms I saw, they were doing a particular operation. I won't describe all the details, because it was pretty gruesome. But I realized that at that moment in time that I could not stand the sight of it. Yeah, it was just awful. I was like, I realized at that moment, that I was never going to be a doctor at that moment in time.
Craig Evans:So this year, we're gonna pass out band aids, right? That's it.
Erik Hernandez:And I think at that point in time, I was actually already working at Loma Linda University Medical Center, in the pharmacy there as a courier, right? So I was already in at the ground floor. And I knew that was not going to be my path. And so I then I thought I was going to be, I thought I'd switch and maybe be an attorney, because actually did speech and debate in high school, in high school with, with academic competition, and we had just, you know, probably one of the top five teachers and influences at that point in time of my life, from an academic standpoint was this guy named Bob De Graaff. And he was just, you know, holdover, hippie, liberal, you know, from the 60s and 70s, with like, a long beard. And, and I don't think I've ever heard him raise his voice once. It's pretty soft spoken guy. And if anybody ever had them, you know, about halfway through the year, you would get the story from him about how he had battled lung cancer, you know, and beat it. And it was a very inspirational story. And he would, you know, he would suck on cough drops all day, because, you know, he had a constant cough the whole day.
Craig Evans:Right.
Erik Hernandez:Or we would, you know, would fire up. But, you know, just influences, you know, for people like that and got me interested in maybe, you know, becoming an attorney. And then as I went through college, I shifted my focus to, you know, being a business major, because there were things that interested me, you know, about doing that. And that was the path that I went on.
Craig Evans:Well, you graduated, if I remember, right, from UCR. So did you make a conscious decision at that time to stay in the Inland Empire or was that just where the biggest opportunity was?
Erik Hernandez:So I mean, for anyone that is newer to the area, it might be hard to imagine what the region was like, in 1995, right. But a lot of the development that we see today, it was all fields, right, you know, Rancho Cucamonga was, you know, wineries are just dirt field. And you know, I mean, if you just drive through the Inland Empire, you know, it was just a lot of land. And at that point in time, my junior year, I'd actually started interning at this office at Lee & Associates - Ontario, a friend of mine, who was a year older than me, had interned here and he said, 'Hey, I'm, I'm moving to San Diego. They're gonna have a job opening, putting your resume.' And like of all things we were like at a party, right? It was like Saturday night, right? It is college, right? You know, we're having fun. And you know, I pursued it, but it was not like, you know, real estate kind of found me I didn't find real estate and this was not a profession that, you know, in college or even high school, you know, people talked about as going into for a career path, right? There was no, you know, like today, how many real estate shows are there's like, Million Dollar Listing selling sunset selling, you know, I mean, I mean, there's multiple Million Dollar Listing shows New York and LA, and, you know, everybody Oh, man, I look at these houses and like, people are understanding about real estate, but back then it was a, it was a sleeper industry. And I kind of fell into it, and have had been thoroughly happy that it found me, you know.
Craig Evans:So as you were getting into real estate, or even in college, I mean, who would you talk to about the one professor you had. Who were the early mentors? And what do you think that they taught you, that has stayed with you your entire career?
Erik Hernandez:You know, so, if you if you separate it in between, like, I had some great teachers, and, you know, junior high, high school, I had some great soccer coaches, you know, I did competitive soccer, for many years, when I was in junior high in high school, and our travel coach was just a tremendous influence, you know, he was hard on us, but he loved us, you know, and kind of that tough love and, you know, get after it, you know, it was always, you know, in hindsight, you know, really appreciated in college, you know, there were a few, colleges a little bit different, because, you know, sometimes you don't have that same personal relationship, you know, with people, but getting out of college, into the business world and I would say a lot of people that were in this office, you know, that I was just, you know, 19,20,21 years old, starting off, and there were some founders of this office. You know, one of the guys unfortunately, recently passed away, a guy named John Earnhardt was a tremendous influence. In fact, I wouldn't be here today, if it wasn't for him, and his brother, Paul, her and harden, and his son, Doug, who were early mentors of mine, you know, when I was in the marketing department side, you know, they always pushed and wanted to support our staff and what we did and just, you know, if you just kind of watch and listen, from these guys, they're, you know, legends in the industry. And so I definitely learned a lot from them. And some of the other partners in the office at the time, too, you know. I don't think at the time, I realized how much and how important those moments were. And then as you get older, you realize, you know, how inspirational and important those moments and mentors are in your career. And, you know, I was having a discussion last year with a few people, and I was looking back going, 'Well, who am I going to mentor?' You know, and help out, you know, give that helping and, you know, in my next phase of my career, for people that are now, you know, starting out, you know.
Craig Evans:That's right, that's right.
Erik Hernandez:That's kind of our job to pass it on.
Craig Evans:So, you know, I know this is your first time really getting to sit down and talk and you know, with my background, I've been in real estate, you know, some form or fashion construction sales everything since since I was a kid through my parents, that type of stuff. So, but so, you know, I definitely get where you're at, but I want to make sure for our listeners, walk us through you because, you focus in the industrial world of real estate.
Erik Hernandez:That's right.
Craig Evans:So you know, we've got listeners are gonna be listening and they invest in they're interested in anything real estate wise. Right. So let's walk them through, you know, where are we talking about warehouse, office, retail multifamily, land, what is it that you specialize in?
Erik Hernandez:So primarily industrial, real estate, and any land that you could put an industrial building on, right. And what I've seen certainly in the Inland Empire, and I think you could say, we've seen a lot of this nationally is, is a shift with institutions and pension funds having a preference for industrial real estate, no multifamily has always been, you know, popular, you know, and does well and good times and bad office, you know, has had its ups and downs, retail can have its ups and downs. The beauty about an industrial building, is that you can repurpose it and re utilize it and return it if you're an investor very easily right. Because it's, you know, it's a big box and the company that was in there before maybe they were a food processor, right, but when they move out, the next company that moves in, you know, they could make you know, widgets or they could be high precision machinery, they could be an ecommerce distribution company, you know, the number of uses and things you can do with an industrial building far surpasses, you know, if you look at all the other categories of real estate in terms of the utility, and the ability to reuse it for a different use, you know, I mean multifamily, someone moves out, some of them, it's in office building, you know, a group of attorneys moves out, you might have to demolish all the offices and build a brand new space plan, you're redesigning 90% of that footprint, retail restaurant moves in what happens when a restaurant goes out of business and a new one comes in, you rebuild the whole thing, right? I mean it's very costly and industrial building, you know, typically, you don't have to have that expense on a percentage basis over the footprint, you might have to redo the offices and fix the dock, high doors and paint and stuff like that. But generally speaking, I think it's the most resilient category of all the food groups of real estate.
Craig Evans:So, you've been in since 95. So you've been through a few cycle now. I'm interested to hear for you what it was like and how it differs from, say, the residential space?
Erik Hernandez:So, sometimes, I get this question a lot about how the real estate cycles compared to each other. So for example, a lot of people might think that, you know, residential and industrial, parallel each other, right? And sometimes they do, and sometimes they are divergent from each other, you know, just depending on what's going on. The big influence is, you know, on real estate in general, our, you know, interest rates, and the willingness of lenders to lend on that real estate, right? So, I mean, you've been through a few cycles, there are moments in time, when the lenders are very willing to give loans and very aggressive to do that. And then there are times when they go,'No, we're tightening up our purse strings, our lending requirements have become more stringent, we want a higher down payment.' And when the lending restricts, you know, when the lender gets restrictive, you know, the price has taken a hit. And I mean, it's not like, What's that movie? The Big Short. Right. You know, where they go, and they
Craig Evans:Right. investigate how people are buying homes, and they learn about what a ninja loan is no income, no jobs, no assets. And that was the case and you know, 2004, 2005, 2006. A lot of people forget that, you know, the first lenders that blew up. During that time, I believe it was late 2006, right? Wasn't it, like, new Century Home Loan and a few others. And so there were, you know, there were tremors in the force, you know, in 2006, but people, you know, they didn't realize the impact. And then in 2007, you know, they all came out on TV and said, Oh, no subprimes contained, remember. And, I mean, couldn't be further from the truth, unfortunately. Right.
Erik Hernandez:But but it's a cycle. And so, for us, we're
Craig Evans:Right. definitely tied to job creation. Because when you're creating jobs, you know, those jobs out here in the Inland Empire, they're going into industrial real estate, generally speaking, we have an office market here. It's not very large. Obviously,
Erik Hernandez:And so they could roll over their debts a we have a big retail market, you know, a lot of those are groceries, anchored shopping centers, and strip malls and things like that. And, you know, those tend to be pretty resilient and good times and bad, because everybody needs to eat, right? But on the industrial side, well, what so for our market, what typically has happened in the past, so let's compare different cycles. So, in the early 1990s, you know, we had the late 80s, we had the savings and loan crisis. And for listeners that weren't around for that, and by the way, I was in college when that happened. So, you know, a lot of information that I get are stories from people that live through that, right. But I came in at the tail end of that. And for people that don't know, back then the federal government and lenders, they showed no mercy, right? They took everything back. It was liquidate, liquidate, liquidate, the federal government formed the RTC, the Resolution Trust Corporation, and it took all this properties back. And then over a period of what, probably four or five years, they liquidated those assets. And a lot of people stepped in and bought those assets at a time when people you know, not ever really wanted to buy, and they came out looking very, very good. And so the difference between the 90s and the RTC bit. So they had to sell, they didn't want to sell they had to sell the difference between that and the residential side, right, versus let's say 2008 and the financial crisis, a lot of which were all bank loans or banks that had blown up and people may or may not remember who Sheila Bair is, she though then, you know, been PacMan by other banks, you know, by gobbled up by a Bank of America or JP Morgan, you know, go on, was the chair of the FDIC at the time, and there was a statement you know, all the lenders like WAMU. And the people that just kind of disappeared and blew up over a weekend, right? Those she came out with and she They basically said their objective assets had to be liquidated.
Craig Evans:Right.
Erik Hernandez:Right. So, they, you know, if again, if people was to avoid a repeat of the 90s, they did not want to see a don't remember, a lot of people lived in their homes, for a year or two, they had been struggling and got trapped in these loans mass liquidation of commercial real estate, residential real that, you know, they should have never been given to begin with, right. So, you know, a lot of people would say, Oh, they knew estate was a little bit different story. So that's where what they were getting? Maybe, maybe not, right, but the reality is, is that the lenders should have never given them the maybe the markets diverged a little bit, where on the loans to begin with, because they knew that they wouldn't be able to afford them. And unfortunately, they had to take commercial side, and credit to one of my partners here in the back a lot of those homes. And , you know, the I haven't heard this term in a while. But do you remember jingle mail? office, guy named Brian Ferris, he educated me on this in the
Craig Evans:Oh, yes.
Erik Hernandez:We're, you know, someone would live in their home for two years. And then, you know, they didn't literally put financial crisis for industrial real estate. A lot of the their keys in the mail and send it back to the lender. But then the lender would come and say, Okay, it's time to go. And lenders on those properties were not banks, they were pension sometimes they would get paid to leave. But the property would get liquidated and then as the market recovered, you started funds, institutional advisors, you know, money that could seeing short sales, again, because the equity started to come back. And then the market recovered. The industrial side, a lot of people thought we were going to get a repeat of the withstand a downturn life insurance companies. And so 90s. I remember having a lot of meetings with investors that there were not a lot of forced sales, for big quality have lived through the 90s and put together big funds, and hoping for a big liquidation. And it didn't happen. And some institutional assets. There were some distressed sales, but most of those funds shifted from being opportunity funds. And they became developers. of those were because they couldn't refinance the
Craig Evans:Right.
Erik Hernandez:And they started buying land. And some of those people have been, you know, some of the most successful real estate developers in this last cycle. properties, right?
Craig Evans:Well, so we're talking about some of this, you know, I would imagine the first cycle you probably kind of went through was probably what dot-com bust somewhere in in there, around 2000. So you know, the whole dot-com didn't have a major effect on the residential market. Walk me through what did that look like in the industrial? That was what 2000s? What does that look like on the industrial space in the 2000 time period of that?
Erik Hernandez:So it'd be easy to say that there was zero impact, right? But there's actually two deals that people may not be familiar with. And it was kind of at peak frenzy, right. In fact, I think this is a good story. So people may not remember this, but remember Toys R Us. Toys R Us had tried to do you know ToysRus.com. And I believe it was 1998 they started it and in 1999 ToysRus.com they missed Christmas. They...
Craig Evans:I remember...
Erik Hernandez:You ordered presents for your kids. And it was a disaster. I mean, the bad press they got at the time and Toys R Us in early 2000 I believe it was had come in and leased almost like a 750,000 square foot building in might have been, Yeah, it was early 2000 I believe in Ontario like Mira Loma area, and then they also leased one I believe in Pennsylvania. Directly across the street, literally directly across the street. eToys. Remember eToys least a 750,000 square foot building right and Toys R Us went in and spent, I believe it was like $20 million on this very sophisticated racking system to put in the building. And before they really got it up and running, you know, the phone rings, ding, ding, ding, ding. Hey, this is Jeff Bezos at Amazon. 'We'd really like to do all your fulfillment for ToysRus.com. You guys really blew Christmas last year. Let me take it over. I'll take care of it. I got you'. And he convinced Toys R Us to take over their fulfillment. And so after that happen, if you went to ToysRus.com. You were basically getting fulfilled through Amazon. And so that facility, the Toys R Us facility shut down. I think eToys went out of business six or 12 months later, right? So I had these two toy buildings that were sitting across from each other, both empty out Toys R Us was still on the hook for the lease, right? They'd signed a long term lease, and they'd put, you know, 10s of millions of dollars into this racking system, right? So one of my partners here in the office had done that deal, right before I started working with them. And I'm, you know, I just got my sales license. This is 2000. It's like August, I think. And he tells me, Eric, get the CFO for walmart.com on the phone, we think that they could use this building, right. And they actually flew out here and looked at it and they couldn't get to a deal. And then the market started to change. And that was kind of, you know, the end of it. But those were probably two notable dot-com, dot bomb deals that happened at the peak of that cycle. But other than that... I love your phrase dot bomb. Well, in the office world, you know, like in Santa Monica. And you know, other office heavy areas. You know, there were companies that were ahead of their time, like, there was a company called cosmo.com. Do you remember what their business model was?
Craig Evans:Couldn't tell you. I remember the brand. But I remember what it was.
Erik Hernandez:Grocery delivery, you could go on their website, and I want a pizza and some ice cream and this and that. Or, you know, whatever. And they would deliver it all, you know, to your house or apartment or whatever, there were 25 years ahead of their time, right? And back then you didn't have a mobile device to do it. You had to do it on your computer, right. So they had the right idea. They were just a little bit too early for their time and they didn't make it. You know, they at least a lot of buildings around the area. But just because they didn't make it doesn't mean that they didn't have the right idea. I wouldn't be surprised if some of those people wound up at some of these other delivery companies. I don't know that. That's my speculation, but it's pretty crazy.
Craig Evans:I did not know that about that, that's pretty interesting stuff. So how did the the industrial space bounce back? Was there? Was there a major catalyst for that?
Erik Hernandez:So here's an interesting thing. In 2000, okay, California was coming out of a real estate depression. Remember, we just talked about the RTC, the liquidation or real estate, and it was bad. And so price was just starting to recover. In
Craig Evans:Right. 2000, I remember going to a conference and there were, you know, people there from all over the country. And they were talking about the recession that we were in. And like the people from California, we all looked at each other and we said what recession and in 2000, it was a rolling recession. It kind of started on the East Coast. And this was the first wave of manufacturing towns getting shut down, and manufacturing capacity getting moved overseas. At that point it was Mexico and the Mikayla Dora as they were building, you know, different cities in Mexico and then eventually went from there to China, right. So back then the guys that were in ladies that were telling me that they were, you know, struggling in these towns were North Carolina, Ohio, Pennsylvania, you know, these towns that have been your manufacturing towns for many years. And I remember one of the guys from North Carolina, he said, I never forget it, he said, I wish instead of trying to find another furniture company to move in to this particular plant in North Carolina that had shut down. He said, I wish they would just demolish it. Because when people, see that they think that another company's going to come in and start making furniture again. And he said, and this is in 2000, by the way, and he said maybe it was 2001 I couldn't be off on the year. He said it's not going to happen. And looking back he was, boy he was right and then some. And in 2001 you know the market was soft, we're starting to see it. And I remember I had a project that I was the junior guy on with my partners in Chino. Okay.
Erik Hernandez:We had like 10 or 12 buildings under construction. And we were selling them. And we had sold most of them. And one of the buildings had been bought by an investor, he decided he wanted to flip it. And I think he wanted $75 per square foot at the time. And I had a client and I could only get him up to about$71. And we just kind of got to a stalemate. This was August of 2001. Okay.
Craig Evans:Okay.
Erik Hernandez:And then 911 happened. And for anybody that that was in the business world, at that point in time, I remember coming into the office that day, I wasn't even sure if I could, I should come in, right, because I was glued to the television that morning. And you know, there was an alert for LAX, we didn't know if another building was gonna get hit. My dad got stranded, and I think New Mexico and my dad's are really smart guy. He was at the airport, and he walked right to the rental car desk, give me whatever you have. And he drove himself home. I think they might have been the day after Actually, I'd have to go back and ask him which day it was actually that he was supposed to come home. But like, you know, remember all the rental car lot? No cars.
Craig Evans:Yep.
Erik Hernandez:So during that period of time, after 911 It was, you know, it's kind of a very scary time, because you didn't know what was going to happen. You know, there were, you know, people stranded all over the world. One of my buddies, we were doing a high school reunion, or let's see, that would have been our 10 year high school reunion at the Queen Mary. Two weeks from 911. And people were calling me going,'Hey, are we still going to do this?' And someone asked me,'Can you guarantee my safety on the Queen Mary?' And I was like,'No, I can't do that.' And there were people that were trying to get here from all over the country. And the flight started running. I think that Friday before our reunion, one of my buddies had literally got stranded on the tarmac in the Philippines. Wow. And, and he made it back at LAX, but he landed at like 11 o'clock at night. So he didn't make it to the reunion other people were flying in from Florida and other states, you know, barely made it. But the point of the story is, after 911, Alan Greenspan, the interest rates dropped like a rock, right, kind of like what we saw in the, in the, in the financial crisis. And then during COVID, when people are captivated by fear, the Fed, they come in, and they drop interest rates as low as they can, because they want to get people to spend money, because if everybody stopped spending money, it just becomes, you know, a tailspin, right. everything goes into a tailspin. And so I have to go back and look to see how many rate cuts they did in that first month or two. But it's very dramatic, I want to say they dropped them, like 100, maybe 50 or 100 basis points within that first couple of weeks, and then they dropped them again, I think an emergency rate cut in between meetings. But the rates have dropped so fast that I called a lender that I've been working with on this deal and Chino, and I said,'Hey, can you run the numbers again, and tell me what the loan payment would be? If the buyer stepped up and paid $75 per square foot because we were at an impasse'.
Craig Evans:Right.
Erik Hernandez:He was like at 69 or 70, seller 175. And the lender called me back a couple hours later, and I had done the math, but I wanted her to do the workup to send to the client, so she could see that it was the lender, you know, saying and not me, right? And the payment was actually less per month at $75 a foot than it would have been before the interest rates dropped. So I called the buyer and I said, 'Mike, I just talked to Joan, and, you know, do you still need a building?' And he realized, 'well, I do still need a building'. I said, 'if they'll sell it at 75 You know, do you want to buy it?' And he said,'You know what, let me think about and he and his wife talked he called me back and said you know what, we'll take it.' And I called the broker and I said, Jim, I think we got to deal with your guy still a seller and that was the first building I sold after 911 and we were off to the races, right that was November 2001.
Narrator: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: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.